Market volatility continued this morning after last week which saw the ASX riding a roller coaster as coronavirus fears spread.
The S&P/ASX 200 Index (ASX: XJO) plunged to below 5000 on Friday before staging a dramatic recovery to finish the day up 4.4%.
ASX travel shares were punished as governments worldwide introduced further travel bans, but many investors took advantage of the dip to buy up quality ASX shares.
Here we take a look at the 5 ASX shares that increased the most last week.
Xero Limited (ASX: XRO)
The Xero share price finished last week up 6.9% at $80.39. Although still well down from its February highs of above $88, Xero rallied from a low of just $71.40 on Monday. There was no significant news out of Xero this week, but as a New Zealand based accounting software provider, it may be less exposed to the coronavirus pandemic than some other ASX shares.
Xero's financial year runs to 31st March so we will be expecting full year results around May. In its most recent half year results, Xero reported strong growth in revenue while also achieving profitability following a loss of NZD$28.5 million in 2018.
Operating revenue increased 32% in 1HFY20 to NZD$338.7 million, supported by growth in subscriber numbers. Xero reached a significant milestone during the half, recording more than 2 million subscribers following growth of 30% in subscriber numbers. While it took a decade to reach Xero's first million subscribers, it took just 2.5 years to reach the next million demonstrating the pace of Xero's adoption across a number of markets.
Annualised monthly recurring revenue increased 30% to NZD$764 million during the half, up from NZD$589 in 1HFY19. EBITDA grew 91% to NZD$65.9 million leading to a net profit of NZD$1.3 million, an increase of NZD$29.9 million over the prior corresponding period's loss.
At lunchtime on Monday, the Xero share price is currently down 8.25% for the session, trading at $73.76.
Costa Group Holdings Limited (ASX: CGC)
The Costa Group share price finished last week up 6.1% at $3.13. Costs Group has been staging a comeback of late, recovering from December lows of less than $2.40. As Australia's largest grower, packer, and marketer of fresh fruit and vegetables, Costa Group may benefit somewhat from the current trend towards stockpiling supplies in the face of the coronavirus threat.
In its full year results announced late last month the company achieved its earnings guidance and recorded solid revenue growth of 5.8%. Costa Group faced significant challenges in 2019 due to drought and weather events over the second half of the year. In January and February however, key tomato and berry farming locations received heavy rainfall which has restored a high level of water security to these locations.
Revenue for the year was $1,048 million, up 5.8% from 2018. This was led by sales from the new citrus farm and increased table grape marketing volume. Earnings before interest tax depreciation and amortization (EBITDA), however, declined 21.5% on 2018 to $98.3 million.
Pricing levels improved considerably during January in most categories, particularly berries and mushrooms. Guidance for FY20 is for earnings before interest tax depreciation and amortization (EBITDA) of $150 million and net profit after tax (NPAT) of $56.6 million.
Currently, the Costa Group share price is slightly lower, trading at $3.07.
Cochlear Limited (ASX: COH)
The Cochlear share price increased by 5.4% last week to finish the week at $216.11. Although still well down from its high of $251.55 on 19 February, Cochlear staged a remarkable rally on Friday, surging 27% from an intra-day low of $169.51.
Today, however, Cochlear shares have plunged nearly 20% after the implantable hearing device maker withdrew its full year guidance in the face of uncertainty caused by coronavirus. In guidance released in mid-February, Cochlear forecast FY20 net profit of $270 – $290 million, a 2% – 9% increase on FY19, with strong cochlear implant growth partly offset by the impact of the coronavirus on sales in Greater China.
Today Cochlear announced that coronavirus is expected to have a substantial negative short-term impact on cochlear implant surgeries, particularly in the US and Western Europe. While China has been experiencing a small but growing number of surgeries over the past few weeks, these remain below pre-virus run rates.
Cochlear's CEO Dig Howitt said, "since the update, we provided on 18 February we have seen COVID-19 spread rapidly across many countries. We are now seeing a growing number of health authorities either recommend or enforce surgery deferrals. We expect these actions to impact surgeries in our major markets, particularly the US and Western Europe."
A significant decline in sales is expected in the near future. There is a high level of uncertainty surrounding the impact of coronavirus on the extent and duration of reductions in surgeries. As a result, Cochlear is not in a position to provide an earnings outlook to the market and has withdrawn its previous earnings guidance.
Fortescue Metals Group Limited (ASX: FMG)
The Fortescue share price ended the week up 3.4% at $9.93, led by gains in the iron ore price. The iron ore price has surged from a low of US$82.93 at the end of February and is currently trading at US$90.13.
Fears that mass disruption in China would cause a drop in the iron ore price have yet to materialize. Instead, the price has increased, up 7% over the past month, on expectations that China will fight the economic impacts of coronavirus with aggressive economic stimulus measures. Speculation of spending of as much as $570 billion by Beijing, primarily focused on infrastructure, has been floated.
The Fortescue share price currently trades at $9.66, down 2.77% for the session.
Bega Cheese Limited (ASX: BGA)
The Bega Cheese share price increased by 3.4% to $4.56 last week. However, at lunchtime on Monday, the Bega share price is down 7.24% for the session to trade at $4.23.
Shares in Bega Cheese are now up 17.5% from December's lows of $3.60. The dairy and snack producer is another company that could benefit from the current surge in stockpiling by consumers anxious about the spread of coronavirus.
In its half year results released earlier this month, Bega Cheese reported its supply chain and customer shipments had not been materially impacted by coronavirus. Earnings guidance of normalised EBITDA in the range of $95 – $105 million was maintained. Half year normalised EBITDA was $48.5 million, down 16% on the previous year.
Half year profit after tax was $15 million, a 21% decrease on the prior corresponding period, with underlying earnings impacted by reduced milk supply and margins in the dairy industry. A softening in Chinese infant formula demand also contributed to reduced earnings.
The branded consumer and foodservice business is, however, continuing to grow both domestically and internationally with strong growth in the core product range and from new products. A diversification strategy implemented by Bega has provided the company with significantly improved capacity and flexibility to respond to challenging conditions across the dairy industry.
