Qantas Airways Ltd (ASX: QAN) shares are trading under $10, and I think they look attractive at that level.

Airline stocks can be volatile. Fuel prices, travel demand, competition, economic conditions, and aircraft availability can all move earnings around quickly.

But I think Qantas has enough going for it to make the shares worth buying for patient investors. Here are three reasons why.

The valuation looks reasonable

The first reason is valuation.

According to CommSec, the consensus estimate is for Qantas to generate earnings per share of 98.4 cents in FY26, $1.16 in FY27, and $1.15 in FY28.

With Qantas shares trading below $10, that puts the stock on less than 10 times FY26 earnings and around 8 times FY27 earnings.

That does not look demanding to me, especially for a business with Qantas’ market position.

Of course, those estimates are not guaranteed. Airlines can be affected quickly by higher fuel costs, weaker demand, or disruption across global travel markets. Qantas’ recent market update highlighted just how much fuel volatility can change the operating backdrop.

But I think the valuation already gives investors a reasonable buffer for some of that uncertainty.

The dividends are back

The second reason is income.

Qantas paused dividends for several years around the pandemic, which was understandable given the pressure on the aviation industry at the time.

But the airline is now back to paying dividends, and that changes the investment case.

CommSec’s consensus estimates suggest Qantas could pay dividends per share of 39.6 cents in FY26, 44.8 cents in FY27, and 56.2 cents in FY28.

Based on a share price under $10, that implies forward dividend yields of around 4% in FY26, 4.5% in FY27, and more than 5.5% in FY28.

That income stream could become increasingly appealing if earnings remain resilient.

I would not treat Qantas like a classic defensive dividend share. Airline dividends can move with the cycle. But I do think the return of dividends shows how far the business has come since the pandemic years.

The business has real strengths

The third reason is that Qantas is not just any airline.

It has a powerful position in Australian aviation, supported by the Qantas and Jetstar brands. That gives it exposure to different parts of the market, from premium corporate and leisure travel to value-focused flying.

I also like the Qantas Loyalty business. It gives the group a valuable earnings stream that is not simply about selling seats on planes. Frequent Flyer, partnerships, financial products, and customer engagement all add to the broader ecosystem.

Fleet renewal is another important part of the story. New aircraft can improve customer experience, increase efficiency, and help the group better match capacity to demand over time.

There are risks to consider. Fuel prices remain a major swing factor, and Qantas has recently taken steps such as network changes, capacity adjustments, and fare increases in response to the conflict in the Middle East. Higher costs can still affect customers and margins if conditions remain difficult.

But I think Qantas has the scale, brands, loyalty business, and financial discipline to manage through a tougher environment better than many smaller airlines.

Foolish takeaway

Qantas shares under $10 look appealing to me.

The stock is trading on a modest earnings multiple based on consensus forecasts, dividends are back, and the business still has a strong position in Australian travel.

I would not expect the ride to be smooth. Airline stocks rarely are. But for investors who can handle some turbulence, I think Qantas offers an attractive mix of value, income potential, and recovery strength at current levels.

The post 3 reasons I would buy Qantas shares under $10 appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One of the best ASX ETFs to own over the last 12 months has been the Global X Semiconductor ETF (ASX: SEMI). 

It has risen an impressive 148% in that span. 

A new report from Global X has identified the key catalysts for this growth, and why these are only likely to continue. 

Fund overview 

The Global X Semiconductor ETF seeks to invest in companies that stand to potentially benefit from the broader adoption of tech-enabled devices that require semiconductors. This includes the development and manufacturing of semiconductors.

It provides exposure to 30 of the world’s largest semiconductor companies through the Solactive Global Semiconductor 30 Index.

Rather than trying to pick the next breakout AI winner, the ETF offers diversified exposure across the global semiconductor supply chain.

For those unfamiliar, a semiconductor is a material that can both conduct and block electricity, depending on how it’s used.

This unique ability makes semiconductors essential to modern technology. They’re used to create microchips that power smartphones, computers, cars, and medical equipment.

Why business is booming 

Semiconductors are the “brains” inside modern technology. They process information, store memory and power computation. Without them, AI simply does not exist.

The semiconductor industry sits at the centre of several major structural themes:

• Artificial intelligence and data centres
• Cloud computing
• Electric vehicles and autonomous driving
• Robotics and automation
• Defence technology
• Consumer electronics

According to Global X, as AI adoption accelerates, demand for advanced chips has exploded. 

Training large AI models requires enormous computing power, which in turn requires increasingly sophisticated semiconductors.

That has created a powerful tailwind for the companies designing chips, manufacturing them and supplying the equipment needed to build them.

The companies leading the way 

This ASX ETF includes 30 holdings, including strong exposure to the four companies powering the AI boom. 

According to Global X, one of the reasons semiconductor investing has become so compelling is that the industry contains some of the most strategically important companies in the world, including:

• Nvidia (NASDAQ: NVDA) – is a leader in the AI revolution because its GPUs power many advanced AI systems and data centres.
• Taiwan Semiconductor Manufacturing (NYSE: TSM) – is vital to the global tech industry, producing many of the world’s most advanced chips for companies like Nvidia and Apple.
• ASML (NASDAQ: ASML) – is essential because it is the only company that makes EUV lithography machines needed to manufacture cutting-edge semiconductors.
• Broadcom (NASDAQ: AVGO) – plays an important role in AI by designing custom chips for major technology companies such as Google and Meta.

The opportunity for investors 

Semiconductors have become one of the defining investment themes of the decade because they sit at the intersection of AI, automation and digital infrastructure.

However it is important investors are aware that semiconductor stocks can be volatile, particularly after strong rallies. 

The long-term investment case increasingly centres on the idea that chips are no longer cyclical industrial products alone; they are now strategic infrastructure for the digital economy.

For retail investors looking to better understand the AI boom, semiconductors may be one of the clearest places to start. And rather than trying to identify the next individual winner, diversified exposure through vehicles like Global X Semiconductor ETF (SEMI) offers a way to participate in the broader transformation underway across global technology markets.

The post The growing case for this semiconductor ASX ETF appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool Australia has recommended ASML and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’d describe Guzman Y Gomez Ltd (ASX: GYG) as one of Australia’s top shares, or at least, it has the potential to prove it’s one of the best in the coming years.

As the chart above shows, the Mexican restaurant business has seen enormous volatility since it listed on 21 June 2024.

But, at the time of writing, it’s down 37% in the past year and more than 55% since December 2024.

I’m not sure if the company will ever see declines of that size again in the future. But, I’ve been looking for opportunities away from the tech sector because of the uncertainties of how the AI future could play out.

I’m not convinced AI will become as widespread as some people believe due to costs, but I still think it’s wise to look at a wide array of opportunities.

There are a few great reasons why I think GYG shares are on course for a very good future.

Exciting plans for Australia

The most important part of GYG’s growth plans is what it wants to achieve in Australia.

GYG wants to reach 1,000 locations in Australia within the next 20 years. It had 242 restaurants at the end of the FY26 third quarter and it expects to open 32 restaurants in FY26. That’s an excellent growth runway.

In the FY26 third-quarter, Guzman Y Gomez reported network sales growth of around 20%. I’d describe a profitable business growing its top-line at around 20% (or more) per year, definitely makes it one of Australia’s top shares.

But, it’s not as though the new locations are entirely stealing growth from the existing network. In the FY26 third-quarter, the company said the Australia segment (which includes Singapore and Japan) delivered comparable sales growth of 6.6%.

GYG expects to deliver Australia segment underlying operating profit (EBITDA) of approximately $85 million in FY26, that represents 29% year over year growth.

International expansion

Investors should remain focused on the Australian division because that’s the segment that is likely to generate the most network sales and earnings.

But, its Asian network sales are also headed in a very pleasing direction.

I’m not sure how much GYG’s network sales will grow in Japan and Singapore in the next five years, but at the current rate of growth, it could become a sizeable contributor to Guzman Y Gomez.

In the third quarter of FY26, Asian network sales grew by 15% year over year to $21.5 million. If the network sales in Japan and Singapore continue growing by double-digits for the foreseeable future, then the future looks bright. But, the Asian network sales were only 6.7% of the Australian network sales.

Plus, GYG could decide to expand into other countries where its success may look more like the Asian success (and less like the US, where it has decided to exit).  

Rising profit margins could be key for one of Australia’s top shares

While the top-line of Guzman Y Gomez is growing at a very fast pace, its bottom line could increase at an even stronger rate because the company is expecting profit margins to improve in the coming years.

In FY26, it expects the Australia segment underlying EBITDA as a percentage of network sales to expand to between 6% to 6.2% in FY26 compared to 5.7% in FY25. In the long-term that profit margin is forecast by the business to rise towards 10%. That would represent a significant rise in dollar terms for the business, which bodes very well for the future, in my view.

According to the projection on CMC Invest, GYG could generate earnings per share (EPS) of 64.2 cents. That means it’s currently valued at 30x FY28’s estimated earnings. I think it’s an appealing price to invest in for the long-term.

The post A rare buying opportunity in 1 of Australia’s top shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Guzman Y Gomez. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A new report from VanEck has highlighted that the share markets’ forgotten middle child – ASX mid-caps – could be poised for growth. 

Cameron McCormack, Senior Portfolio Manager at VanEck, said large caps like BHP Group (ASX: BHP) and Commonwealth Bank Of Australia (ASX: CBA) dominate headlines and exert the greatest influence on the returns of the whole Australian share market. 

Small caps, meanwhile, often attract attention for their higher-risk, higher-reward potential. Many of these companies are in their growth phase, still finding their feet.

Mid-cap companies rarely command the same attention when investors are focused on a small group of market heavyweights. But with developed-market bond yields at their highest levels in more than two decades, earnings expectations for some large-cap companies are becoming harder to sustain, and with mid-caps continuing to trade at a discount to the ASX 50, investors now have reason to take a closer look.

Why a broader market is emerging 

According to the report, markets do not tend to stay this concentrated for long. 

While mega-cap companies have dominated the ASX 200’s returns in recent years, history suggests periods where only a small number of stocks are driving the market tend to be the exception rather than the rule.

VanEck suggests that shifts have often emerged during periods of higher interest rates and slower economic growth, when investors become more selective about where earnings growth is likely to come from. 

In these environments, companies able to keep growing earnings even as conditions become more difficult tend to attract greater attention from investors focused on consistency rather than simply market size.

While sector performance has varied, periods of rising rates have often coincided with stronger returns from materials and strategies that spread investments more evenly across the market.

There are already signs that a shift may be emerging again. In the United States, a record share of S&P 500 companies has outperformed the index this year, reversing the unusually narrow leadership that defined much of the past two years.

What about in Australia?

VanEck reinforced that signs of that shift are already beginning to emerge in Australia. 

While large caps have outperformed since February reporting season, smaller companies delivered some of the market’s strongest earnings surprises and most positive analyst target revisions. That suggests investors and analysts alike are beginning to see more room for earnings growth and share price improvement.

Importantly, many companies outside the largest stocks are still trading at cheaper valuations than the S&P/ASX 50, even though their earnings outlook has improved.

This matters because markets that rely too heavily on a small group of large companies can become more vulnerable, especially amid rising inflation, higher bond yields and geopolitical uncertainty.

As a result, ASX mid-cap companies may become increasingly important. They often offer a balance of stability and growth potential, while giving investors broader exposure beyond just the market’s biggest names.

How to target ASX mid-caps 

For investors looking to target ASX mid-cap companies, one option to consider is the VanEck S&P/ASX MidCap ETF (ASX: MVE). 

It offers exposure to 50 established ASX-listed mid-cap companies across sectors, including industrials, healthcare, technology, resources and consumer businesses. 

According to VanEck, it provides investors with a diversified exposure to a segment of the market that has historically sat between the defensiveness of large caps and the growth potential of smaller companies.

The post Why ASX mid-cap shares are finally about to have their moment: Expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Commonwealth Bank of Australia (ASX: CBA) and Macquarie Group Ltd (ASX: MQG) are two of the highest-quality financial shares on the ASX.

I would happily own both.

That is what makes this comparison interesting. I do not see this as a case of one good investment and one bad investment. I see it as a choice between two very different ways to invest in financial services.

CBA offers stability, scale, fully franked dividends, and a dominant position in Australian banking. Macquarie offers a more global, more varied, and potentially more flexible long-term growth story.

So, which one would I buy today?

The case for CBA shares

CBA is the easier business to understand.

It is Australia’s largest bank, with a huge base of household, business, and deposit customers. It has one of the strongest banking franchises in the country and, in my view, deserves its reputation as the highest-quality major bank.

CBA has scale, a trusted brand, strong digital banking capabilities, and deep customer relationships. Those advantages can help it defend margins, attract deposits, and keep customers engaged across home loans, transaction accounts, credit cards, business banking, and wealth-related services.

I also think CBA’s dividend profile remains a major attraction. Fully franked dividends can be very useful for Australian income investors, and CBA has long been one of the market’s most popular income shares.

However, the valuation is the key issue.

CBA shares often trade at a premium to the other major banks, and that premium can be justified when the business keeps executing well. But it also means investors are paying a lot for quality.

That does not make CBA a sell in my eyes. I still rate it as a buy for investors who want a dependable blue-chip financial share with income and resilience. I just think the upside case may be more measured from here.

The case for Macquarie shares

Macquarie is a very different financial stock.

It is not simply a bank. It is a global financial group with exposure to asset management, infrastructure, commodities, markets, advisory, capital flows, private markets, and the energy transition.

That makes the earnings profile lumpier than CBA’s. Some divisions can have strong years while others slow. Market conditions matter. Deal activity matters. Investor appetite matters.

But I think that flexibility is one of Macquarie’s greatest strengths.

Macquarie has shown over many years that it can move capital, people, and expertise into areas where it sees opportunity. It has built strong positions in infrastructure, green energy, commodities, and global asset management. These are not small themes. They are areas where large pools of capital may continue to move over the next decade.

That gives Macquarie a broader growth canvas than a domestic bank.

There is risk in that. Macquarie’s results can be harder to forecast, and investors need to accept more moving parts. But I like businesses that can adapt as the world changes, and Macquarie has a long record of doing exactly that.

Which would I buy?

If I could only buy one today, I would choose Macquarie shares.

But this is a close call because I think CBA remains a high-quality buy. But Macquarie offers the more interesting long-term opportunity in my view.

CBA is a brilliant domestic banking franchise, but it is still heavily tied to Australian credit growth, margins, deposits, housing, and the local economy.

Macquarie gives investors exposure to a wider set of global profit pools. Infrastructure investment, energy transition funding, commodities markets, private capital, and asset management all give it ways to grow that are not available to a traditional bank in the same way.

I also think Macquarie’s lumpiness can create opportunities. When conditions are softer, investors can become impatient. But for long-term shareholders, those quieter periods can sometimes be the price of owning a more adaptable business.

Foolish takeaway

I would not frame this as CBA losing. I think CBA remains one of the best blue-chip shares on the ASX and a stock I would be comfortable buying for income and quality.

But Macquarie is the one I would choose if I had to pick just one today.

The reason is not that it is safer or more predictable. It is that I think it has more ways to win over the next decade. For investors who can tolerate a less even earnings path, that global reach and adaptability could make it the more rewarding financial stock to own.

The post CBA shares vs Macquarie shares: Which ASX financial stock would I buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Xero Ltd (ASX: XRO) shares have been smashed over the past year, with the share price crashing around 62% from an all-time high of $196.52 recorded in June last year.

The ASX tech stock has faced several major headwinds over the past 12 months. 

The falling share price is mostly the result of a sector-side sell off of technology stocks. This followed rising concerns that AI could disrupt traditional software models. 

In late-2025 and early-2026 many investors were spooked by the idea that smarter, cheaper tools could reduce the need for subscription platforms like Xero. Sentiment for tech shares quickly turned south. 

At the same time, a sharp increase in the value of some ASX tech shares in 2025, including Xero, also sparked concerns that tech companies were overvalued and overdue a price correction. 

Where are Xero shares trading now?

At the time of writing, Xero shares are trading at $74.16 a piece.

For the year to date, the shares are now around 34% lower and they’re 60% below the trading value in late May last year.

Are Xero shares now too cheap to pass up?

Analysts are incredibly bullish on Xero shares, with widespread anticipation that we’ll see some significant upside over the next 12 months.  

Market Index shows brokers have a strong buy rating on the shares. They tip a 87% upside to $141.56 over the next 12 months.

TradingView data shows something similar. Out of 15 analysts, 14 have a buy or strong buy rating and one has a hold rating. They tip a potential average upside of up to 76% to $130.81 a piece over the next 12 months.

However, some analysts think the increase could be far steeper. The maximum $236.45 target price implies that Xero shares have the potential to soar 218% higher. It’s also an increase from a maximum $229.49 target price the analysts had a month ago.

What is expected to drive the tech shares higher?

I see Xero as an attractive long-term investment.

The company has a sticky subscription revenue, which means its customers are likely to keep paying for its services and products over a long time. Switching to an alternative accounting, invoicing, and payroll system would be time-consuming for businesses, so many customers could easily stay subscribed for years. 

This makes Xero’s revenue more predictable. 

At the same time, the company is still a relatively small market player. This means there is a huge amount of potential future growth globally. 

These growth opportunities include expansion in the UK and US, as well as payroll and workflow automation offerings. Xero is also actively expanding its presence and its product suite. 

The company’s latest FY26 result shows the company is growing, too. It posted a 31% hike in operating revenue in mid-May, and its adjusted EBITDA is up 18%.

The post Is it time to get greedy with Xero shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX shares that I think could make some of the best returns are ones that look like they could compound earnings at a strong pace over an extended period of time.

That’s why I think it’s a good idea for investors to look at businesses that have a long and impressive growth runway.

In my view, two of the ASX shares that could outperform the S&P/ASX 200 Index (ASX: XJO) over the next decade are the ones below.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a fast-growing affordable jewellery retailer that focuses on younger shoppers with appealing products.

The ASX retail share‘s main growth tactic is to add more stores to its global network. In the FY26 half-year result, the company reported that between the end of FY25 and the end of the FY26 half-year period, it added 65 more stores, a rise of 6.3%.

Of those 65 locations, some of the highlights included four more stores in Australia, four in South Africa, 14 more in the UK, nine more in Germany, eight more in the US and nine more in Canada.

In my view, those core markets offer significant growth potential for Lovisa over the next decade.

I’m optimistic about how many more global stores the company can add in the next decade, particularly in countries where it has a small presence at this stage for the population size of the market, such as China, Vietnam, Spain, Poland, Canada and even the US.

In the HY26 report, the company reported more than 20% growth for its core revenue and net profit, which is an excellent rate of progress. I’m also hopeful its new business (initially in the UK) called Jewells can become a meaningful contributor in future years.

According to the forecast on CMC Invest, the business is projected to generate earnings per share (EPS) of $1.23 in FY28. That puts the ASX share’s valuation at the time of writing at less than 19x FY28’s estimated earnings.

Global X S&P World Ex Australia GARP ETF (ASX: GARP)

This exchange-traded fund (ETF) offers number of positives for investors.

For example, it invests in 250 global companies that have ‘growth at a reasonable price’ (GARP) characteristics.

The businesses in the portfolio need to have good growth with both strong sales and earnings growth.

They need to be good value, with an attractive price/earnings (P/E) ratio.

Finally, these businesses need to display quality, which is measured by the financial leverage and the return on equity (ROE).

By putting these elements together, that’s a powerful combination for potential returns.

Offering great businesses at appealing value could lead to market-beating returns in the long-term and outperform many other ASX shares.

The post 2 top ASX shares to buy and hold for the next decade appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’d wager that most Australians would be quite familiar with most of the companies that make up the ‘Magnificent 7’, even though their home is half a world away.

Even if you have never invested in the likes of Microsoft Corporation (NASDAQ: MSFT) or Amazon.com Inc (NASDAQ: AMZN), chances are you have used their products or services, probably recently. Ditto with Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: META) and Apple Inc (NASDAQ: AAPL). Tesla Inc (NASDAQ: TSLA) and NVIDIA Corporation (NASDAQ: NVDA) are a little more niche. Even so, these last two of the seven are still household names, and possibly household presences.

Despite the ubiquity of the Magnificent 7 in Australian daily life, far fewer Australians would own shares of them directly. Saying that, international stock market investing has never been more popular in Australia. If an investor does own international stocks, there is a high chance that at least one of them will be a Mag 7 stock.

Personally, I directly own shares in five of the Magnificent 7. In fact, I have owned all seven of these ocmpaneis at various points (although never simultaneously).

Until quite recently, I thought of these positions as a small, although valuable portion of my overall portfolio. However, after a recent audit, I have discovered that I am far more invested in these seven stocks than I previously supposed.

The dominance of the Magnificent 7 stocks

It starts with an exchange-traded fund (ETF) that I own. As I have previously discussed, I recently sold my holdings in the BetaShares Nasdaq 100 ETF (AS:X NDQ) to buy a similar, but far cheaper ETF in the Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG).

All seven of the Magnificent 7 are core holdings of this fund. As they are in almost every major US-based ETF listed on the ASX. That includes the iShares S&P 500 ETF (ASX: IVV) and the Vanguard MSCI Index International Shares ETF (ASX: VGS). Not to mention NDQ. Magnificent 7 stocks also sometimes pop up in the Schwab U.S. Dividend Equity ETF (NYSE: SCHD) and the iShares Core Dividend Growth ETF (NYSE: DGRO), which are also in my portfolio.

So that’s three.

Next, one of my largest investments is the listed investment company (LIC) MFF Capital Investments Ltd (ASX: MFF). This Buffett-esque LIC is a long-term holding of mine, and a favourite investment. As it happens, Alphabet, Amazon, Microsoft and Meta Platforms are all large positions in MFF’s portfolio. That’s four.

These components routinely pop up in yet another of my favourite, long-term holdings. That would be the VanEck Morningstar Wide Moat ETF (ASX: MOAT). That’s five major personal investments that are exposed to at least one Mag 7 stock. Outside my direct ownership of five of the Magnificent 7 stocks.

Don’t forget about your superannuation

The cherry on the cake comes in the form of my superannuation fund. Like most Australians, my super is partially invested in US stocks. And the Magnificent 7 are at the top of that list, too.

As it turns out, these seven US tech titans are far heavier in my portfolio and my overall wealth than I had previously thought.

I do view most of the Magnificent 7 as companies of the highest calibre. You don’t get to where they are now without being truly exceptional. As such, this high exposure doesn’t bother me.

However, there’s a big chance that other ASX investors out there are in the same boat. Thus, it may be worth checking out your own investments and seeing just how deep the Mag 7 goes. My exposure tolerance to these seven stocks may be higher than yours.

The post ASX investors: Are you overinvested in the Magnificent 7 without knowing it? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Some ASX growth shares are built around broad trends that sound exciting but are hard to turn into revenue.

DroneShield Ltd (ASX: DRO) is different.

The company is focused on a specific and growing problem: how governments, militaries, and organisations protect themselves from drones.

That makes it a higher-risk share, but I think the long-term opportunity is worth watching.

Drones are changing defence

The case for DroneShield starts with the way drones are changing security.

They are cheap, mobile, flexible, and increasingly capable. That makes them useful, but it also makes them a threat.

Recent conflicts have shown how important drones can be in military planning. They can be used for surveillance, targeting, disruption, and direct attacks. Outside the battlefield, drones can also create problems around airports, prisons, stadiums, critical infrastructure, public events, and borders.

This is why counter-drone systems are becoming more important.

DroneShield sells technology designed to detect and respond to these threats. I think that gives it exposure to a market that could remain a priority for years, especially as defence budgets adjust to new realities.

Hardware plus software

One thing I like about DroneShield is that it is not just a hardware story.

Hardware can win contracts and build presence in the field. But software can make the installed base more valuable over time.

Drone threats are constantly changing. New drone models, tactics, frequencies, and operating methods can emerge quickly. That means customers may need regular upgrades and software improvements to keep systems effective.

DroneShield has been investing heavily in hardware and artificial intelligence (AI)-enabled software to respond to these evolving threats.

That could be important for the quality of the business over time. If the company can grow recurring software revenue alongside hardware sales, the market may eventually view DroneShield as more than a defence equipment supplier.

A stronger platform to chase growth

DroneShield’s recent quarterly update shows the business is entering this growth phase with more resources than it had in the past.

It reported a strong cash balance, positive operating cash flow, and a large potential sales pipeline. It also has staff across multiple countries and a distributor network in key allied markets.

That is important for a company trying to win defence and government work globally.

These customers often need trust, support, local relationships, and the confidence that a supplier can deliver at scale. Having cash on the balance sheet also gives DroneShield more room to invest in people, technology, production capacity, and potential strategic opportunities.

But investors still need to be careful. A pipeline is not the same as revenue. Defence sales can be slow, uneven, and unpredictable. The company still needs to keep converting interest into firm orders and cash.

Foolish takeaway

DroneShield is not a traditional defensive investment, even though it operates in the defence sector.

It is a fast-growing technology company in a market that is still developing. That means the share price can move sharply in both directions.

But I think the long-term setup is compelling. Drones are becoming a bigger security challenge, and organisations will need better tools to deal with them.

If DroneShield can keep converting its technology, customer relationships, and pipeline into durable revenue, it could become a much larger business over time. 

I would treat it as higher risk, but it is the kind of ASX growth share I would want in my portfolio.

The post Why I think DroneShield could be an ASX growth share to buy and hold appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX dividend share Shaver Shop Group Ltd (ASX: SSG) may not be one of the most famous passive income stocks. But, in my view, it offers investors a significant number of positives.

Shaver Shop is one of the leading shaving product retailers in Australia and New Zealand, with its physical store network of well over 100 locations, its website and a presence on third-party marketplaces.

You may not think of a retailer as a strong ASX dividend share candidate for passive income, but I’m about to outline why it’s a compelling option.

Dividend yield

The first thing I want to highlight is, of course, the huge dividend yield of the business.

We can’t know what the FY26 annual dividend per share will be – that’s up to the Shaver Shop board of directors to decide in the coming weeks.

However, I do expect the annual dividend will be very similar – perhaps exactly the same – compared to the FY25 payout. The FY25 payout was 10.3 cents per share.

Therefore, at the time of writing, the business has a trailing grossed-up dividend yield of 11.1%, including franking credits. I believe the FY26 dividend will be very close to that level.

Payout stability

One of the main reasons why I’m confident that the business will deliver a stable (or higher) payout for investors is because the business has already demonstrated a track record of providing stability to investors.

Shaver Shop has not given shareholders a dividend payout reduction. The ASX dividend share started paying a dividend in 2017, increased its annual payout each year to FY23, maintained the payout in FY24 and hiked the dividend again in FY25.

We’ll see what happens in FY26, but there is breathing room with the dividend payout ratio. In FY25 it generated 11.5 cents of earnings per share (EPS) and cash EPS of 12.1 cents.

Earnings growth potential

The business is trading at a low price/earnings (P/E) ratio, even before taking into account the fact that it can grow earnings from its FY25 level.

According to the projection on CMC Invest, the business could generate EPS of 11.6 in FY26, 12.8 cents in FY27 and 14.1 cents in FY28.

Therefore, the ASX dividend share is trading at under 12x FY26’s estimated earnings and it’s projected to grow EPS by 21% between FY26 to FY28.

I think the business can grow its earnings through initiatives like store network expansion, gross profit margin improvement, online sales growth, more exclusive products from brands, expansion of its own brand Transform-U and potential product range growth in areas like oral health, hair care and beauty categories.

The post Is this ASX dividend share a buy for its 11% dividend yield? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Shaver Shop Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.