Day: November 21, 2021

Why has the Rio Tinto (ASX:RIO) share price fallen in a hole over the past month?

An arrow crashes through the ground as a businessman watches on.

The Rio Tinto Limited (ASX: RIO) share price has drifted lower in recent times. This comes following tough trading conditions for the mining giant, particularly with the plunge in iron ore prices.

At Friday’s closing bell, Rio Tinto shares finished the day 0.83% higher at $90.25. Despite the uplift, its shares have sunk close to 10% since this time last month.

What’s dragging Rio Tinto shares through the mud?

Investors have been selling off Rio Tinto shares following the mining giant’s third-quarter results released in mid-October.

Rio Tinto advised it had another difficult 3-month period as it struggled to deal with COVID-19 challenges.

Operationally, Pilbara iron ore shipments grew just 2% to 83.4 million tonnes over the prior corresponding period (Q3 FY20). Other commodities such as bauxite, aluminium, mined copper, titanium dioxide slag, and iron ore pellets and concentrate all dropped production targets.

Most notably, iron ore – the primary force fuelling Rio Tinto’s growth — saw its price recede in the second half of 2021.

In May, the steel-making ingredient reached an all-time high of US$229.50 per tonne. The Rio Tinto share price accelerated on the back of bumper revenues over the period.

However, a slowdown in Chinese demand amid political pressure has led iron ore prices to tumble. Currently, iron ore is fetching US$92.01, a drop of 43% since the start of the calendar year.

Chinese lawmakers introduced new rules for its steel producers in an effort to curb reliance on Australian iron ore. Steel mills were instructed to limit 2021 output to no more than 2020 levels, or face penalties. This is seen as an effort to curb reliance on Australian iron ore, and boost domestic supply and demand.

China wants its steel industry to halt iron ore production at roughly 1 billion tonnes for 2021. Consequently, Chinese crude steel production has dropped 13% in August, 12% in September, and 21% in October – the biggest amount since March 2018.

China has also increased its efforts to close down some domestic factories to achieve carbon reduction targets. In addition, the country is seeking alternative resources to maintain production.

What do the brokers think?

A number of brokers weighed in on the Rio Tinto share price after the release of its latest performance report.

Analysts at Goldman Sachs cut its price target by 1.1% to $121.00. UBS had a more bearish tone, reducing its outlook by a sizeable 6% to $79.00.

International investment firm Credit Suisse dropped its rating by 3.6% to $106.00. Based on the current share price, this implies an upside of around 17%.

Rio Tinto share price snapshot

A challenging 12 months has led the Rio Tinto share price to fall almost 10% and this year to date it’s down by more than 20%. Its shares have steeply declined since the release of its FY21 half-year results in late July

On valuation grounds, Rio Tinto commands a market capitalisation of roughly $33.50 billion, and has approximately 371.22 million shares outstanding.

The post Why has the Rio Tinto (ASX:RIO) share price fallen in a hole over the past month? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Rio Tinto right now?

Before you consider Rio Tinto, 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 Rio Tinto 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 Aaron Teboneras 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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Why all eyes will be on the Webjet (ASX:WEB) share price next week

A woman wearing a mask at the airport gets ready to travel again with Qantas

Next week will be a big week for the Webjet Limited (ASX: WEB) share price.

The online travel agent is scheduled to hand in its highly anticipated half year results on Wednesday 24 November.

Ahead of the release, I thought I would look to see what the market is expecting from Webjet.

What should you expect from Webjet’s results?

Webjet is widely expected to release a much-improved result for the six months ended 30 September. However, it is likely to be far too soon for a return to profit.

For example, Goldman Sachs is forecasting a 611% increase in total transaction value (TTV) to $668.6 million, revenue of $52.5 million, an EBITDA loss of $13.4 million, and a net loss after tax of $35.5 million.

The broker, which has a buy rating and $7.00 price target on Webjet’s shares, also expects the company to finish the period in a strong financial position despite its loss. Goldman expects the company’s net cash position to be at $117 million.

What else is being said?

The team at Citi are a little more cautious and have warned investors that Webjet’s costs could negatively surprise.

Citi commented: “Webjet reports 1H22 results on the 24th of November. The key areas of interest for us in the result are: Near term costs — We estimate the market is underestimating B2B costs in 1H22. The market is implying ~$40 million for the half which implies zero growth in cost base from FY21 despite the elevated activity.”

Its analysts have a neutral (high risk) rating and $6.35 price target on the Webjet share price.

Is the Webjet share price a buy?

Opinion remains extremely divided. While Goldman clearly sees a lot of value in the Webjet share price, Citi continues to sit on the fence with its neutral rating.

It is also worth noting that Webjet is one of the most heavily shorted shares on the Australian share market. This appears to be an indication that there is a group of investors out there that are convinced the company’s result will disappoint. Though, it is worth acknowledging that if they are wrong and Webjet impresses, they could quite easily get caught up in a short squeeze.

Time will tell what happens, but it certainly will be worth watching Webjet’s shares very closely next week.

The post Why all eyes will be on the Webjet (ASX:WEB) share price next week appeared first on The Motley Fool Australia.

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

Before you consider Webjet, 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 Webjet 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

More reading

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 Webjet Ltd. 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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Top brokers name 3 ASX shares to buy next week

ASX 200 shares to buy A clockface with the word 'Time to Buy'

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Lovisa Holdings Ltd (ASX: LOV)

According to a note out of Macquarie, its analysts have upgraded this fashion jewellery retailer’s shares to an outperform rating with an improved price target of $25.00. The broker notes that Lovisa has appointed a very experienced CEO. Macquarie feels this will help with its expansion into China and India, where it sees potential for a significant store network. The Lovisa share price ended the week at $22.82.

Rio Tinto Limited (ASX: RIO)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $133.00 price target on this mining giant’s shares. The broker notes that Rio Tinto has taken a number of steps that improve its ESG credentials. This includes a new start-up called Resolve and low-carbon aluminium production in Canada. Outside this, the broker believes the miner is generating strong free cash flows despite the weakness in iron ore prices. The Rio Tinto share price was fetching $90.25 at Friday’s close.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Morgans have retained their add rating and lifted their price target on this wine giant’s shares to $14.06. This follows news that the company is acquiring Frank Family Vineyards for $432 million. Morgans notes that this acquisition will fill a key cap in its portfolio. The broker also expects the deal to support Treasury Wine’s margin expansion plans. The Treasury Wine share price ended the week at $12.01.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

Should you invest $1,000 in Rio Tinto right now?

Before you consider Rio Tinto, 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 Rio Tinto 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

More reading

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 Treasury Wine Estates 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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Is there still hope for the AMP (ASX:AMP) share price?

A woman nervously crosses her fingers, indicating hope for positive share price movement

Shares in financial services giant AMP Ltd (ASX: AMP) edged 1.73% lower today to finish trading in the red at $1.14.

That continues an extended run into the red for AMP, having lost 3% this past week, and a further 27% this year to date.

The question on everyone’s mind is whether or not AMP shares can recover to their 2018 highs of over $5 a share. So – is there still hope for the AMP share price?

What are the experts saying?

Analysts at investment bank JP Morgan reckon the funds from the sale of AMP’s 19% stake in Resolution Life may be actually needed to separate AMP from AMP Capital.

Whilst it acknowledges this isn’t a poor use of the funds, the firm is worried there may be leakages and inefficient use of capital, especially given AMP’s current legal troubles.

The firm says that “[its] concern is some capital may disappear to service other needs, for example class actions”.

It also states that the prospects for AMP rest in “being able to stabilise AMP AWM, successfully split Private markets without too many dis-synergies, grow the bank and resolve class actions / regulatory issues without much additional cost”.

Jarden Securities agrees with its fellow broker and also cautions investors about betting on AMP’s return to glory in the short term.

The broker also acknowledges that the sale of Resolution will beef up AMP’s balance sheet. In fact, it will probably boost its liquidity to $911 million, according to Jarden.

However, “with the transaction not due to settle until next year at least”, plus “an AMP capital demerger still ahead and strategic growth plans under its new CEO to be unveiled”, the firm says, “we believe capital management is unlikely to feature before August 2022, resulting in an FY22 EPS drag ahead of potential outer year offsets”.

Both Jarden and JP Morgan retain a neutral rating and $1.20 price target on the AMP share price. This is hardly inspiring, considering it implies an upside potential of just 6 cents per share.

Macquarie recently upped its valuation on AMP to $1.12 per share after restarting coverage on the company back in October at $1.10. The average price target on the group of analysts covering AMP is $1.26.

AMP Share price history

It’s been a long-winded roll downwards for AMP investors and their shareholdings since 2018. In that time, the company has lost over $5 per share or 77% in value.

AMP’s implication in the Royal Commission into Financial Services, where it admitted to reprehensible conduct, first started the steady decline in its share price.

In the Royal Commission, AMP was scolded for a number issues, including its poor financial advice practices. APRA imposed various conditions on the company from 2019 in response to the findings. However, AMP have also self-reported a number of issues since the hearing as well.

Since then it has also been embroiled in a number of follow-up and separate investigations which have only added more pressure from the top.

Most recently it settled $40 million in rectification and remediation costs after finalising a set of matters with APRA in regards to its superannuation business.

Over the past 12 months, the AMP share price is down 35%. However, it has regained some steam this past month and is slightly ahead of the S&P/ASX 200 Index (ASX: XJO), up 0.89% in comparison to the benchmark’s 0.21%.

The post Is there still hope for the AMP (ASX:AMP) share price? appeared first on The Motley Fool Australia.

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

Before you consider AMP, 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 AMP 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

More reading

The author Zach Bristow has no positions 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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