In today’s daily we have covered stock research on XERO (Expensive). To view Dividend Calendar click here

The U.S markets were shut on Monday due to the Memorial Day holiday. Among the major developments Pfizer Inc. abandoned its efforts to acquire AstraZeneca Plc (AZN). European stocks hit six year highs, led by big gains for Italian equities, while the euro edged higher as the markets shrugged off electoral wins for Eurosceptic and anti-austerity parties across the continent.

We also take this opportunity to present you with the Top 20 dividend stocks on S&P 500. The dividend yield is current as of the date of publishing this article (27/05/2014).



S&P ASX 200was up by 20.0 points or 0.36% on Monday and closed at 5512.8 points. Treasury Wine Estates has rejected the offer of private equity firm KKR worth $3.05 billion. Mineral Resources Limited has announced that fund manager Perpetual is no longer a substantial holder in them. AMP has disclosed a substantial holding in Intueri Education Group listed on the NZ stock exchange. SAI Global has received a non-binding acquisition proposal from Pacific Equity Partners.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Stock of the Day – Xero (FWD)
 
Xero Ltd is a New Zealand-based company. It provides an online accounting system, which is a cloud platform, designed for small business. The Company’s product integrates small business with their customers, banks, payment services, tax authorities and accountants. Its cloud platform approach allows market business applications, such as Expensify, ADP, PayPal, Stripe and Bill.com, to integrate with major financial institutions.

Xero has inked deals with three significant partners. We see strategic partnerships as crucial for Xero. The importance of these deals is threefold: 1- Xero is able to leverage large existing customer bases and expedite brand awareness and credibility. 2-These leading entities validate Xero’s technology, strategy and relevance. 3-The deals prove the calibre of Xero’s management to source and execute deals.


Source - Xero

We see collaboration as one of Xero’s core strengths and part of its DNA. Xero has executed a disruptive approach of partnering with both cloud software suppliers and accounting partners. We expect other large scale partnerships to follow over the coming year, likely with household names in U.S tech. The deal with H&R Block is a clear positive for Xero. The strategic alliance will expedite brand awareness and broaden Xero’s sales channel in the U.S.


Xero Daily Chart  (Source - Thomson Reuters)

We believe the strategic alliance with KPMG will expedite FY15 UK sales growth, as XERO uses the adoption by a big four firm to validate its offer with smaller accounting firms. XERO reported cash burn in the 31 March 2014 quarter of NZ$11.8mn. This compares with annualized cash burn of NZ$52-55mn over the past couple of quarters. While we don’t rule that quarters with deeper cash burn might be ahead, this is a sign that cash burn is stabilizing as Xero starts to realize some operating leverage in more established markets in NZ and AU, despite its substantial US ramp up. We believe the stock is slightly overvalued at its current price and would review the stock at a later date.

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