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2 COVID-19 amplified ASX shares to buy

The 2 ASX shares in this article have seen their revenue and profit amplified because of impacts of COVID-19 impacts like higher demand.
The post 2 COVID-19 amplified ASX shares to buy appeared first on The Motley Fool Australia. –

covid asx share price represented by man in face mask giving thumbs up

There are some ASX shares that have seen much higher levels of demand over the last year because COVID-19 has impacted both supply and demand in certain situations.

Obviously there are industries like travel and large events that are still struggling.

However, there are other businesses that are involved in e-commerce that are still seeing much stronger customer attention. There are also other companies that are directly involved in the healthcare response in some way.

Here are two ASX COVID-19 shares that could be worth looking at:

Ansell Limited (ASX: ANN)

Ansell is a business that is involved in manufacturing an array of safety items for people, including gloves and protective clothing.

The business is seeing customers from around the world wanting its products.

In the recent reporting season, Ansell reported that in the first half of FY21 its healthcare division saw strong volume growth across all business units, with a favourable price and mix impact, mainly in exam and single use products. The healthcare unit experienced organic growth of 37.3%.

Overall, Ansell HY21 sales went up 24.5% to US$937.8 million. This was driven by total organic growth of 22.9%, split between 12.3% volume growth and 10.6% from the price and mix.

Other growth statistics went up even more for the COVID-19 ASX share – earnings before interest and tax (EBIT) grew 64.3% to US$60.6 million and earnings per share (EPS) rose 64.7% to US$0.829.

Ansell Chair John Bevan said:

The first half of 2021 financial year continued to be dominated by the impacts of COVID-19, whether it was the need to ensure the safety of our employees, increased demand for enhanced personal protective equipment by end-users or the flow-on effects of lockdowns on the global economy. The company was able to successfully navigate through these to deliver record organic sales.

Ansell is now targeting a dividend payout ratio of between 40% to 50%, leading to a dividend increase of 52.6% to US$0.332 in the result.

According to Commsec, the Ansell share price is trading at 17x FY21’s estimated earnings.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an online-only furniture and homewares business that is experiencing high levels of demand as consumers shift to e-commerce.

The COVID-19-amplified ASX share says that it’s benefiting from multiple tailwinds at the moment. There’s the ongoing adoption of online shopping, an acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions and the recovery of the housing market and unemployment levels.

In the first six months of FY21, Temple & Webster saw revenue grow by 118% year on year to $161.6 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) shot higher by 556% to $14.8 million and net profit after tax (NPAT) surged higher by 320% to $12.2 million.

There were a number of other pleasing statistics including active customers rising by 102% to 678,000 and the trade and commercial division growing by 89%. The operating leverage was also shown with the fixed cost as a percentage of sales decreasing from 11.6% to 7.5%.

Temple & Webster said that the second half has started strongly, with year on year revenue growth of 118% to 23 February.

The Temple & Webster share price has fallen by over 20% since 15 February 2021. That means the COVID-19 amplified ASX share is now trading at 40x FY22’s estimated earnings.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Ansell Ltd. and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 COVID-19 amplified ASX shares to buy appeared first on The Motley Fool Australia.

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