Four growth stocks to look at in the current scenario

Four growth stocks to look at in the current scenario

The coronavirus epidemic has already caused significant human suffering and major economic disruption.

Output shrinkage in China are being sensed all around the globe, indicating the key and rising role it has in travel, global supply and commodity market. The adverse outcomes of these changes for other countries are substantial, comprising the direct disturbance to global supply chains, lower final demand for imported services and goods, and the broader regional drop in business travel and international tourism.

Global growth in 2019 experienced weaker international trade and investment, which led to a fall of by almost 0.3% points and reaching to 2.6 % below previous forecasts. Growth is likely to reach slightly weaker to 2.7% in 2020 and will slowly rise to 2.8% by 2021 based on benign global financing decisions and easing of trade tensions between key economies like the US and China. Global trade increased in 2019 has been revised down a full percentage point, to 2.6 per cent, which is slightly below the rate seen during the 2015-16 trade slowdown, and the lowest since the global financial crisis.

Nobody likes a low growth environment, and when macroeconomic growth slows, investors get nervous. There are many industries which are not really tied to the economic cycle and are taking advantage of technological innovation, longer-term trend or consumer preferences.

Also, in a rapidly growing economy, investors must pay close attention to a company’s business model, profit dynamics and sources of revenue.

Global Growth Prospects (Source: Worldbank)

Let’s look at four stocks in these low growth environment

LiveTiles Limited (ASX: LVT)

LiveTiles Limited is a global software company, which is engaged in the development and sale of digital workplace software through subscription agreement in Australia and other countries.

LiveTiles Reports Solid annualised recurring revenue (ARR) Growth

LiveTiles Limited, a global software company, has reported another good quarter of ARR growth. ARR reached $52.7 million as at 31 December 2019, indicating YoY growth of 130%, and up 7.6 times when compared with two years ago.

  • Q2 FY20 saw strong organic ARR growth of $5.1 million from 30 September 2019;
  • The company completed the acquisition of CYCL in early December with integration progressing well;
  • LiveTiles continues to expect another year of strong customer and revenue growth in FY20.

Source: Company’s Report

LiveTiles Partners with Canva to Increase Global Growth

LiveTiles Limited has combined with Canva. Canva is known as the world’s leader in creating data-rich visuals.

The collaboration will create together two rapidly growing Australian SaaS companies concentrating on inspiring people inside the workplace. The company will integrate Canva into its key platform. It shall offer users the ability to rapidly develop graphic design elements in the Intelligent Workplace. The partnership is supposed to drive a solid pipeline increase in the acquisition of additional customers.

Stock Performance

The stock of LVT closed the day’s trading at $0.150 per share on 13th March 2020. The company has a market capitalisation of $157.6 million as on 13th March 2020. The total outstanding shares of the company stood at 900.54 million, and its 52-week low and high is $0.145 and $0.610, respectively.

Select Harvests Limited (ASX: SHV)

Select Harvests Limited is engaged in the business of processing, growing, marketing and packaging of almonds from its investor-owned orchards and owned orchards, and the packaging, processing and marketing of fruit-based, nuts and related products to the Australian industrial and retail markets.

No Material Impact of Coronavirus on SHV

The company has verified that there has been no significant near-term effect on its financial performance from the COVID-19 outbreak.

However, to counter global uncertainty because of the impact of the outbreak on supply chains and customer demand, the company has mentioned the following potential risks-

  • The company has started the harvest and marketing campaign for 2019-20 crop.
  • It also anticipates a short-term reduction in almond demand and price from the coronavirus.
  • The extent and duration will differ on when the virus can be checked, and the China-linked supply chain and factories resume to normal.

Also, some raw materials are imported from China, but after the current lot received, there are no urgent issues that would affect the ability to service customers.

Select Harvests Reports FY19 Results for the period ending on 30th September 2019; Reports NPAT of $53.0 million

The company reported NPAT of $53.0 million for the twelve months of the new reporting period ended 30 September 2019. The growth in the results was driven by increased almond production and a firm almond sales price. In 2019, production stood at 22,690MT which was up by 45% on the last year.

Highlights:

  • EBITDA stood at $95.2 million;
  • Almond prices up by 7% to $8.60/kg;
  • Net debt to equity ratio at 30 September 2019 stood at 6.6%.

Stock Performance

The stock of SHV closed the day’s trading at $5.680 per share on 13th March 2020 up by 1.792% from its previous closing price. The company has a market capitalisation of $536.68 million as on 13th March 2020. The total outstanding shares of the company stood at 96.18 million, and its 52-week low and high is $5.190 and $9.430, respectively.

FlexiGroup Limited (ASX: FXL)

FXL offers several finance solutions to business and consumers, such as credit cards, Buy Now Pay Later (BNPL) products, and consumer and business leasing through a network of retail and business partners,

Strong Double-Digit Volume Growth for FXL in 1HFY20

For the six months ended 31st December 2019, the company increased its active customer base by 12% on pcp to 1.87 million. It also improved its esteemed partnerships with merchant base increasing by 15% YoY to 69,000 in countries including New Zealand, Australia and Ireland. Customer base growth and retailer segment is expected to improve future volume growth.

Cost to income ratio stood at 54% in 1HFY20, an increase from 1HFY19, led by investments targeted towards digital advertising, marketing technology and brand repositioning.

Transaction Volume Are Expected to Grow 10-15% in FY20

The Company anticipates transaction volume to increase in between 10% to 15% for FY20 led by new partnerships, new product launches and new customer segments as exhibited by volume in 2Q, which increased by 16% YoY.

  • It is increasing investment for upcoming growth, and a major portion of the funds are intended for high-performance digital marketing, people, brands and simplifying of operations in FY20;
  • The Company also expects to balance out margin with growth and to sustain a double-digit ROE.

Navigator Global Investments Limited (ASX: NGI)

Navigator Global Investments Limited provides hedge fund management services and products to investors worldwide via wholly owned subsidiary Lighthouse Investment Partners, LLC.

NGI Releases Performance for select Lighthouse Commingled Funds

Navigator Global Investments Limited has released its investment performance for select Lighthouse Commingled Funds as at 28 February 2020.

The Lighthouse Diversified Fund Limited declined by 0.22% and Lighthouse Global Long/Short Fund Limited increased by 0.87% on YTD basis.

Key highlights are given in the below table.

Source: Company’s Report

Total AUM Declines in First Half

For the six months ended 31st December 2019, total AUM stood at USD13.4 billion down from USD14.2 billion. The key factor for lower AUM was conversions from MAS client assets, which were bought for nil consideration on 1 July 2018. Net fund flows for Lighthouse were flat for the half, with net outflows of USD 271 million from Lighthouse Commingled funds off-set by USD 281 million of net inflows from Lighthouse Customised client.


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