Day: September 12, 2021

Macquarie (ASX:MQG) share price struggles amid broker sell rating

shadow bear with woman terrified and a falling share price

The Macquarie Group Ltd (ASX: MQG) share price is edging lower on Monday afternoon.

At the time of writing, the investment bank’s shares are down 0.1% to $174.06.

This compares to a gain of 0.2% by the S&P/ASX 200 Index (ASX: XJO) today.

Why is the Macquarie share price underperforming?

The weakness in the Macquarie share price on Monday could have been driven partly by a broker note out of Citi last week.

According to the note, in response to its trading update, the broker has retained its sell rating but lifted its price target on the company’s shares to $153.00.

Based on the current Macquarie share price, this implies potential downside of 12% over the next 12 months.

What did the broker say?

Citi was pleased with the investment bank’s trading update, which revealed that Macquarie expects its first half profit in FY 2022 to be “slightly down” over the second half of FY 2021.

The broker believes this implies a first half net profit in the range of $1.8 billion to $2 billion. This was materially ahead of the consensus estimate of $1.55 billion.

Citi has upgraded its estimates and is now expecting a net profit of $1.9 billion for the half. However, this isn’t enough for a more positive rating. This is due to its belief that the Macquarie share price is expensive at the current level.

It commented: “We now forecast $1.9bn for 1H22, with commodities and MacCap gains tracking better than our expectations, despite the negative timing of storage & transport revenue. We see a moderation in earnings in 2H22 as MQG cycles the UK meters gain on sale; and buoyant capital markets activities starts to cycle.”

“The stock has reacted positively to the guidance upgrade (+5%), but consensus is largely upgrading on the back of one-time MIC wind-down revenues. At 22x FY23 earnings the stock remains expensive in our view,” the broker concluded.

The post Macquarie (ASX:MQG) share price struggles amid broker sell rating appeared first on The Motley Fool Australia.

Should you invest $1,000 in Macquarie right now?

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*Returns as of August 16th 2021

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Motley Fool contributor James Mickleboro 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 owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX 200 energy and materials shares are leading the market on Monday

A happy construction worker leap-frogs over another as a third looks on

The S&P/ASX 200 Index (ASX: XJO) is in the green today, bolstered by the energy and material sectors.

At the time of writing, the ASX 200 is 0.38% higher than it was at Friday’s close. It has gained 28.9 points today.  

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) has gained 1.26%, while the S&P/ASX 200 Energy Index (ASX: XEJ) is up by 1.32%.

Let’s take a look at what’s been driving the materials and energy sector to lead today.

ASX 200 supported by energy and materials sectors

It’s a good day to be an energy or materials share, with each index housing a sea of green.

The energy sector might be being boosted by the rising price of oil today.

According to CNBC, the price of West Texas Intermediate oil has surpassed US$70 a barrel today. It’s currently trading at $70.04 per barrel. At the same time, the Brent Crude oil price is 0.44% higher today at $73.24 a barrel.

The Worley Ltd (ASX: WOR) share price is leading the energy sector, with a 2.9% gain. The Santos Ltd (ASX: STO) share price is following Worley’s closely, with that of Woodside Petroleum Limited (ASX: WPL) bringing up third place.

ASX 200 materials shares are also having a great day’s trade.

The Pilbara Minerals Ltd (ASX: PLS) share price is heading the materials sector, with a 6.5% increase. The share prices of Oz Minerals Limited (ASX: OZL) and Lynas Rare Earths Ltd (ASX: LYC) are also boosting higher, gaining 5.4% and 4.7% respectively.

Though, it’s not all positive on the materials front. The Resolute Mining Limited (ASX: RSG) share price is sliding 3.4% at the time of writing.

All in all, it’s a lucky thing the material and energy sectors are in the green, as the S&P/ASX 200 Information Technology (ASX: XIJ) is currently down 0.7%.

The post ASX 200 energy and materials shares are leading the market on Monday appeared first on The Motley Fool Australia.

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Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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Motley Fool contributor Brooke Cooper 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 Bruce Jackson.

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Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why.

share price gaining

The Paladin Energy Ltd (ASX: PDN) share price has been on a relentless rally this month, up 90% to an 8-year high of 97 cents.

The sudden re-rate in Paladin Energy shares has largely been driven by an uplift in uranium spot prices, running to an 8-year high of ~US$40/lb.

Uranium prices explode out of nowhere

Uranium prices have emerged out of a prolonged bear market where prices plunged from ~US$140/lb in 2007 to mid-US$20/lb between 2016 and early 2020.

This is why the Paladin Energy share price is still down ~90% from its 2007 highs.

The 2011 nuclear disaster at Fukushima Daiichi in Japan was arguably one of the major catalysts for a fallout in uranium demand.

After grinding around mid-US$20/lb, uranium prices pushed above US$30/lb in April this year. And jumped from US$30/lb to US$40/lb since mid-September.

Uranium prices have been propped up by a Canadian investment fund, Sprott Inc and its Physical Uranium Trust (SPUT).

S&P Global reported that “The spot uranium price for deliveries this month leapt 30.8% over 30 days to $39.75/lb as of 1 p.m. on Sept. 7 — a steep rise for a commodity market that previously saw years of sagging prices, according to data from S&P Global Platts.”

“Market analysts credited Sprott Asset Management LP, a uranium trust formed in July to buy up low-cost uranium on the spot market and hold it for the long-term, for jolting the market with a wave of purchases,” it added.

The fund has been aggressively buying uranium off the spot markets, acquiring more than 3 million pounds of uranium between 2 and 7 September, according to S&P Global.

Why the Paladin Energy share price is surging

Paladin Energy was once a major player in the uranium space, producing 119,586 pounds of uranium oxide in 2007 with plans to ramp production to over 3.7 million pounds by 2010.

The decline in uranium market conditions led Paladin Energy in May 2018 to place its Langer Heinrich project into care and maintenance.

It wasn’t until June 2020 that the company announced plans to restart the project followed by a $192.5 million capital raising in March 2021 to prop up its balance sheet.

Paladin Energy estimates that the project will require US$81 million of pre-production capital expenditure with a peak production of 5.9 million pounds of uranium oxide for 7 years.

The company believes it’s in a “competitive cost position” where life of mine production cash costs come in at US$27/lb in addition to freight and logistics of US$0.95/lb and sustaining capex of US$2.9/lb.

From an operational perspective, Paladin Energy is still in its early days of bringing the Langer Heinrich Mine back to life.

However, accommodative uranium prices have helped drive the Paladin Energy share price to fresh multi-year highs.

The post Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why. appeared first on The Motley Fool Australia.

Should you invest $1,000 in Paladin Energy right now?

Before you consider Paladin Energy, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Paladin Energy wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

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Motley Fool contributor Kerry Sun 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 Bruce Jackson.

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Online share trading platform Stake offers $3 ASX trades

A smiling woman compares broker fees on her laptop and mobile phone.

Brokerage platform Stake is the latest broker to hop on the ‘cheap shares’ train. The previously US-only broker is expanding into ASX shares, offering a market-leading $3 brokerage fee as a start.

Stake announced its new expansion plans this morning. It will be opening up to ASX trading for a select number of Beta users starting today, with investors who miss out on the initial Beta permitted to join a waiting list.

So why now for ASX trading on Stake? “It was led by customer demand,” Stake CEO Matt Leibowitz tells The Motley Fool. “It was something our customers have been clamouring for, so we were happy to provide it”.

Stake reckons that its $3 brokerage will make it “the lowest cost CHESS-sponsored offering bar none”. By ‘CHESS-sponsored offering’ Stake is referring to how it will keep a conventional CHESS-sponsored model, which allows investors to use an individual HIN (Holder Identification Number).

This allows investors to hold their shares under one HIN via the CHESS system. This is similar to the model offered by existing brokers like CommSec and NABtrade.

However, it does draw a point of difference with the rival broker Superhero. 

To HIN or not to HIN…

Superhero made quite the splash when it launched its own ASX trading last year, complete with a $5 brokerage fee and free ETF trading. However, Superhero doesn’t assign individual HINs to investors, instead using a custodian model. This means customers’ assets are held under one broad HIN, rather than each investor having an individual HIN.

Stake is clearly seeking some differentiation with its new product, so will offer $3 brokerage for all trades, including ETFs.

Aside from Superhero’s $5 brokerage, other ‘cheap’ options for ASX investors are currently the $9.50 brokerage being offered by SelfWealth Ltd (ASX: SWF). The largest brokers in the country such as Commonwealth Bank of Australia‘s (ASX: CBA) CommSec or National Australia Bank Ltd‘s (ASX: NAB) NABtrade, typically charge users between $10 and $20 per trade, depending on position size.

US and ASX markets now open for Stake users

When asked if the company could turn a profit on such a low flat fee, Leibowitz was unequivocal. “Absolutely,” he told the Fool. “With our scale, this is something that we can see generating a positive return for Stake”.

“We just saw an opportunity,” says Leibowitz. “Lower brokerage benefits the users at the end of the day. Paying brokerage fees from the 1990s has always been normal for Aussie investors… but we don’t see why [other brokers] should enjoy such high margins.”

So until now, Stake only offered ASX users access to the US markets. For US shares, users are charged zero brokerage, with the company only taking a 0.8% foreign exchange currency fee for cash transfers. Stake’s ASX site will also have a wallet for cash transfers, albeit with no fees.

Stake does currently offer fractional shares for US trading, but Leibowitz confirmed that this won’t be available for ASX shares. “It just doesn’t work with the ASX,” he said. “The systems don’t really allow it, so it’s not something we can really offer.”

What’s next for Leibowitz?

But since the ASX lacks the kinds of high-cost shares that are present on the US markets (think Amazon.com Inc (NASDAQ: AMZN) at US$3,470 or Warren Buffett’s Berkshire Hathaway Class A (NYSE: BRK.A) at US$418,000), Leibowitz doesn’t think too many ASX investors will find it useful anyway. “You’ve got plenty of ASX shares under a dollar,” he says.

As for future plans, Leibowitz says the company is just focused on getting the rollout of ASX trading right before it considers other avenues. When pressed though, Leibowitz did admit the team “has talked” about offering cryptocurrency trading.

Stake says it is now the fourth-largest broker on the ASX, boasting 360,000 customers across Australia, New Zealand, Brazil and the United Kingdom.

The post Online share trading platform Stake offers $3 ASX trades appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2022 $1,940 calls on Amazon, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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