Day: 2 March 2022

It is an exciting day for the Core Lithium Ltd (ASX: CXO) share price after announcing an agreement with Tesla Inc (NASDAQ: TSLA).

Jumping out of the chutes, shares in the lithium-focused minerals explorer are trading 11% higher at 92 cents apiece. The move follows a bumpy past month for the Core Lithium share price, bouncing between 75 cents and 87 cents per share.

Supplying the world’s largest EV company

Investors are flocking to Core Lithium on the ASX today after revealing it has entered into an agreement with US-based electric vehicle manufacturer, Tesla.

According to the release, the two companies executed a legally binding term sheet for the supply of lithium spodumene concentrate. Additionally, the supply agreement is for 110,000 tonnes of concentrate across a four-year period.

In terms of pricing, the announcement notes that the ‘market price’ will be referenced. However, the term sheet also includes a price floor and ceiling.

Core Lithium will source this supply from its Finniss Lithium Project, which is located near Darwin Port. In September 2021, the company made its final investment decision on the project and has since commenced construction.

Subsequently, this term sheet will be subject to the execution of a definitive product purchase agreement by 27 August 2022. Currently, this additional agreement is for Core Lithium to kick off its supply to Tesla before 31 July 2023.

At this stage, the Aussie lithium producer is expecting production to be rolling in Q4 2022. An extension to the supply deadline can be made through mutual agreement if delays were to occur.

Managing director of Core Lithium, Stephen Biggins, commented on the milestone. He said:

Core Lithium is thrilled to have reached this agreement with Tesla and look forward to further growing this relationship in the years to come. Tesla is a world leader in electric vehicles and its investment in offtake and interest in our expansion plans for downstream processing are very encouraging.

What else is moving the Core Lithium share price?

Another facet of today’s announcement could be drumming up support for the Core Lithium share price. While it is also subject to a definitive agreement, Tesla has agreed to assist with the ASX-listed company’s potential stage 3 expansion.

In short, Core Lithium has longer-term plans to develop downstream lithium chemical processing within the Northern Territory.

Tesla would then incorporate Core’s lithium chemical product into its supply chain.

The post Giddy up: Core Lithium (ASX:CXO) share price races 11% higher on Tesla deal appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock popped today
• Tesla, Coinbase help the Nasdaq hold its ground Monday
• Why Core Lithium, Dicker Data, GrainCorp, and InvoCare shares are rising
• Why Core Lithium, Humm, Magellan, and Smartgroup shares are storming higher
• ‘World-class’ deposits: Why the Core Lithium (ASX:CXO) share price is rocketing 8% today

Motley Fool contributor Mitchell Lawler owns Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. 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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The Medical Developments International Ltd (ASX: MVP) share price has returned from its trading halt with a bang.

In morning trade, the medical device company’s shares are up a massive 32% to $4.50.

Why is the Medical Developments International share price shooting higher?

The Medical Developments International share price returned to trade this morning following the release of an announcement relating to its US aspirations for the Penthrox (aka the green whistle) product.

According to the release, the US Food and Drug Administration (FDA) has unconditionally lifted the agency’s clinical hold on Penthrox.

As a result, this means that Medical Developments International can immediately begin preparing for its Phase III US clinical trial.

The release explains that the trial will be conducted on a targeted trauma and associated pain patient group and is expected to run for two years. The company intends to commence recruitment for the trial in late 2022. This means a long-awaited US launch is now a possibility in the coming years.

Management commentary

Medical Developments International’s CEO, Brent MacGregor, was delighted with the news.

He said: “We are thrilled with this news which allows us to move forward quickly with preparations for our clinical trial. After years of hard work, our team is buoyed by the prospect of bringing the many benefits of Penthrox to the US market. This will strongly complement our growing Penthrox success in Europe, and fully supports our further investment in the product.”

This sentiment was echoed by the company’s Chair, Gordon Naylor.

He commented: “This news is important as it brings Penthrox a step closer to licensure in the US market and because the FDA is seen as a global regulatory leader. Our renewed focus on the core business continues to yield results.”

The post Why the Medical Developments International (ASX:MVP) share price is rocketing 32% higher appeared first on The Motley Fool Australia.

More reading

• Medical Developments International (ASX:MVP) share price on watch as losses widen

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. owns and has recommended Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International 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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A message from our CIO, Scott Phillips:“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”

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The Bitcoin (CRYPTO: BTC) price has rallied hard over the past 36 hours.

The world’s first crypto is currently trading for US$44,063 (AU$60,851). That’s up more than 15% since trading for US$38,065 early morning Tuesday, according to data from CoinMarketCap.

Bitcoin price rally will surprise many

The Bitcoin price rally will come as a surprise to some crypto analysts. Many had written the token off as behaving similarly to risk assets in recent months.

Indeed, during Russia’s military build-up on the Ukrainian border and the early days of its invasion, the Bitcoin price rose and fell in line with share markets. Its correlation to tech shares was particularly strong.

But yesterday something different happened.

Most all of the major global indices sold off yesterday (overnight Aussie time), with the tech-heavy Nasdaq falling 1.6%.

But not Bitcoin.

Cryptos buck the risk-off trend

With the Bitcoin price rally, the token’s market cap currently stands at US$836 billion. 

As reported by The Australian, that means the digital asset has surpassed Russia’s rouble in terms of total value.  

Commenting on the big bounce back, eToro analyst Josh Gilbert said:

The political instability will once again highlight Bitcoin’s main goal of being a transparent, opensource, peer-to-peer network not controlled by a single administrator or central bank. This means that even if banks are closed and local currencies fall in value during times of instability, citizens will still have access to capital through crypto.

Walid Koudmani, an analyst at XTB Market, pointed to the impact of the Russian invasion on the Bitcoin price. 

Koudmani said (quoted by Bloomberg), “Bitcoin saw a significant upward move today as it appears to have slightly regained its safe haven status while the Russia-Ukraine conflict continues to intensify.”

Stéphane Ouellette, CEO of FRNT Financial also weighed in on the rebounding Bitcoin price. 

According to Ouellette:

[Bitcoin] has gold-like properties in that if you hold it, you directly control the assets as opposed to governments and banks being in between. In a period where banking is destabilised in a region, which is obviously happening in Europe right now, it would make sense to see some flows into BTC as people diversify away from the banking system.

The moves in Ukraine and Russia are unlikely to have a large impact on the Bitcoin price. However, Ouellette noted that crypto speculators “can get in front of such trends”. 

And this can see prices move higher. 

The post More valuable than the rouble: How the Ukraine crisis is now boosting the Bitcoin price appeared first on The Motley Fool Australia.

More reading

• Is Bitcoin or gold a better buy for these uncertain times?
• How might the Ukraine crisis impact the Ethereum price?
• Why these 2 cryptos are booming in 2022 as the Bitcoin price wallows
• Did Putin just hammer the Bitcoin price?
• Sanctions are a good thing? Why Bitcoin, Ethereum, and Dogecoin are recovering nicely today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. 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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Last month was a good one for the Flight Centre Travel Group Ltd (ASX: FLT) share price.

It was also a good period for the travel sector that saw Australia’s borders opened for the first time since March 2020.

After ending January at $16.54, the Flight Centre share price gained 6.17% to close the final session of February $17.56.

For context, the S&P/ASX 200 Index (ASX: XJO) grew just 1.1% in that time.

Let’s take a look at what helped boost the travel stock last month.

Here’s what boosted the Flight Centre share price last month

Let’s take a trip down memory lane. In late January, Prime Minister Scott Morrison visited Cairns where he announced Australia’s borders would be open “well before Easter”.

It was the first glimmer of a timeline that could see the nation welcoming tourists back to its shores.

Of course, it wasn’t long before Morrison told Australia its international borders would reopen on 21 February.

The Flight Centre share price surged 7.8% on 7 February – the day the landmark announcement dropped. It gained another 6.7% the following day.

February also saw the travel agent’s stock partaking in less explainable gains.

On 16 February, the company’s share price took off, gaining 5.7% over a particularly good session for many ASX travel shares.

Though, it handed back much of its growth when the company released its earnings for the first half of financial year 2022.

The first six months of the financial year saw Flight Centre’s total transaction value soar 112.9% as its revenue surged 98.1%.

However, the company also reported a $188 million underlying loss after tax. Meanwhile, its underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) slumped to a loss of $184 million.  

The Flight Centre share price nose-dived 10.1% on the back of its first-half results.

Additionally, the company’s stock’s short-selling position surged at the end of February.

As The Motley Fool Australia’s James Mickleboro reported on Monday, Flight Centre has a short interest of 14.9%.

That means more and more market participants are now betting against the stock’s future performance.

The post The Flight Centre (ASX:FLT) share price managed to gain some altitude in February. Here’s how appeared first on The Motley Fool Australia.

More reading

• Why is the Webjet (ASX:WEB) share price having such a lousy start to the week?
• These are the 10 most shorted ASX shares
• How might the Ukraine crisis impact the Flight Centre (ASX:FLT) share price?
• 5 things to watch on the ASX 200 on Friday
• ASX wipes out $73 billion as Russia invades Ukraine

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 recommended Flight Centre Travel 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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Shares in CSR Limited (ASX: CSR) are tanking from the open today to now trade 2% lower at $5.61 apiece. Aside from that, it’s been a difficult year for CSR shares, having slipped into the red during that time.

Not all are as downbeat on the company, however. Analysts at JP Morgan rate CSR as a buy and reckon there is plenty more legs for the stock to run higher in 2022. CSR’s single-year price return is charted below against the benchmark index.

What’s got this broker bullish on CSR shares?

Analyst at JP Morgan are overweight on CSR with a $6.15 price target, noting that, while “sentiment around the cycle is expected to slow, volumes are supported for at least the next 18 months given lags to activity”.

This could bode in well for the company’s earning cycle, the broker says, particularly given its track record in meeting earnings expectations.

In fact, the firm reckons this is a key factor in the investment debate here, a point that instils confidence in its conviction on CSR.

“While earnings expectations are running high for CSR”, the broker said, “strong execution in past cycles gives us confidence in CSR’s ability to meet this demand”.

And with the recent sale of land at Badgerys Creek, analysts have updated their modelling and the results indicate more bullish outcomes.

“We are updating our model to reflect the sale of 4.6 hectares of land at Badgerys Creek for $20.77 million ($450 per sqm)”, it said.

“CSR now expects Property EBIT of $46 million for FY22e…Our FY22e EBIT forecasts are now $288 million, up 4% from $277 million previously”.

That’s not all that’s got the broker urging its clients to allocate to CSR. Analysts at the firm also note the potential for a surprise in the company’s building products segment, and, with $130 million in cash on the balance sheet, could be ripe for more acquisitions.

“With the earnings leverage to remain below past cycles, despite a record level of construction activity, we could see Building Products earnings upside in FY23”, the analyst remarked.

“We also see potential for both property potential to be unlocked and the balance sheet to be deployed via capital returns or accretive [mergers and acquisitions] M&A”.

A quick summary on CSR shares snapshot

In the last 12 months, CSR shares have held gains – unlike most of its peers – and are currently up 1% in that time.

This year to date however, they have faltered 4% and are further in the red during the past month of trading.

The post We see potential: Top broker sees more upside in (ASX:CSR) shares appeared first on The Motley Fool Australia.

More reading

• Here’s what is moving the CSR (ASX:CSR) share price today

Motley Fool contributor Zach Bristow 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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The National Australia Bank Ltd (ASX: NAB) share price is tracking higher in 2022, having set new 52-week highs and gaining 7% in February alone.

It was a month of fundamental momentum and positive sentiment for the Australian banking giant. An earnings release, analyst commentary and market sentiment are all in favour of NAB right now. Let’s take a look.

What tailwinds are behind the NAB share price?

Both analysts and investors alike have been positive on NAB shares throughout February, after the bank released its first-quarter update.

It was a strong period for NAB marked by high cash earnings and better-than-expected margins. Specifically, the bank grew revenue 8% year on year versus the average for 2HFY21 resulting in a 12% gain to cash earnings.

In fact, the results were a positive surprise and analysts were straight on the wires, updating clients with buy calls.

JP Morgan, Goldman Sachs and Citi each instructed clients to pay close attention to the NAB share price. But analysts at Bell Potter agreed with the general sentiment.

The latter holds a $32.50 price target for the bank and notes the strong quarter is a good indication of what’s in store come half-year and full-year earnings time.

Curiously, the number of analysts urging clients to buy NAB shares has crept downwards compared to this time last year. At the highest point, 86% of firms advocated it as a buy back in May to July of 2021, according to Bloomberg Intelligence.

As of now, just 65% of analysts rate NAB a buy, whereas the remaining 35% are weighted towards a hold. There are no sell ratings from this list.

Not only that, but market sentiment has been positive lately as well. The NAB share price touched a four-year high in February. And the four-week average trading volume is now approximately 6.9 million shares.

Aside from that, NAB’s share price closely tracks the S&P/ASX 200 Financials Index (XFJ) and this benchmark also thrust higher in February, indicating strength in the broad sector (shown below).

NAB wasn’t necessarily a standout from the pack, either. Several of the other banking majors joined the ride with NAB in February.

NAB share price summary

In the last 12 months the NAB share price has climbed 14% and is up 0.3% this year to date.

During the past month of trading, NAB shares are up around 4%, meaning NAB is outpacing the broad index this year.

In early trade on Wednesday, the NAB share price is tipping downwards 1.53% at $28.92.

The post Why did the NAB (ASX:NAB) share price leap 7% in February? appeared first on The Motley Fool Australia.

More reading

• ‘A lot of headroom to grow’: Is 2022 the year ASX investors turn to ESG shares?
• Own NAB (ASX:NAB) shares? Here’s why the bank has been ruffling some customer feathers
• Should you be buying ASX 200 bank shares in February?
• Why NAB (ASX:NAB) has been losing market share, but its shares are set to soar
• Rate rise coming? 2 finance ASX shares to buy right now

Motley Fool contributor Zach Bristow 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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The Zip Co Ltd (ASX: Z1P) share price is falling again on Wednesday.

In morning trade, the buy now pay later (BNPL) provider’s shares are down 3% to $2.00.

Why is the Zip share price falling?

The Zip share price has come under pressure today amid broad weakness in the tech sector following a poor night of trade on the Nasdaq index.

In addition, there has been a few question markets raised over its decision to acquire rival Sezzle Inc (ASX: SZL).

Analysts at both Citi and Macquarie have given the deal a lukewarm response, with Citi highlighting that it is an expensive way to acquire customers.

Not everyone is negative on the deal, though. One leading broker that is largely positive on the idea of a Zip-Sezzle tie up is Morgans.

‘Strategic sense.’

Morgans believes the acquisition of Sezzle makes “strategic sense” and will put Zip in a “materially stronger position in the key US market.”

Its analysts explained: “Clearly, the Sezzle deal makes strategic sense for Z1P. The deal increases both Z1P’s global transaction levels (currently A$7.9bn) and customer base (currently 9.9m) by around ~30-35% respectively. It gives Z1P a materially stronger position in the key US market, with Z1P/Sezzle customer overlap being relatively contained (25%). A stronger product mix and enhance distribution channel mix are other benefits.”

And while it suspects that the market will remain sceptical on the synergies that Zip is suggesting it will unlock with the deal, Morgans doesn’t feel they are unreasonable.

The broker said: “We expect the market to remain sceptical on the revenue synergies in this deal, however, they do seem to have a logical basis, in our view, e.g. the potential to win more merchants with a larger combined customer base, and the ability of Sezzle customers to shop anywhere with Z1P’s app driving higher spend in new categories, etc.”

Morgans retains its add rating.

Morgans continues to believe that the Zip share price offers a lot of value for investors and has retained its add rating. And while it has slashed its price target down to $3.94, this is still almost double where its shares currently trade.

Its analysts said: “Clearly the global environment has changed for BNPL operators and for investors it’s now not a space for the faint hearted. We do, however, think the global growth opportunity remains large for companies that can execute in the BNPL space. The scale provided by the acquisition of Sezzle and a more considered growth agenda, could see Z1P be one of those winners, and with Z1P now trading on 2x revenue, we maintain our ADD recommendation.”

The post ‘Strategic sense’: What brokers are saying about the Zip (ASX:Z1P)-Sezzle deal appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Tuesday
• Why Dubber, Evolution, Sandfire, and Zip shares are dropping
• Leading brokers name 3 ASX shares to sell today
• Why is the Sezzle (ASX:SZL) share price falling following Zip’s takeover offer?
• ASX 200 (ASX:XJO) midday update: Zip shares tumble, AUSTRAC takes aim at Crown

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. owns and has recommended ZIPCOLTD FPO. 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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Telstra Corp Ltd (ASX: TLS) shareholders might be wondering why the share price has fallen 2.02% to $3.88 today.

The telco provider released its half-year results on 17 February, reporting mixed numbers across key financial metrics.

Nonetheless, the board opted to maintain its upcoming interim dividend to eligible investors.

Let’s take a look below at why Telstra shares are falling during early morning trade.

Shareholders set eyes on Telstra’s interim dividend

The Telstra share price is in reverse following the company’s shares trading ex-dividend today.

Typically, one business day before the record date, the ex-dividend date, is when investors must have purchased the company’s shares. If the investor does not buy shares before this date, the dividend will go to the seller.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out. This is because investors tend to sell off the company’s shares after securing the dividend.

When can shareholders expect to be paid?

For those eligible for Telstra’s interim dividend, shareholders will receive a payment of 8 cents per share on 1 April. The dividend is fully-franked, which means investors can expect to receive tax credits from this.

Investors who elect for the dividend reinvestment plan (DRP) will see a number of shares added to their portfolio. This will be based on a volume-weighted average price from 7 March to 11 March.

There is no DRP discount rate and the last election date for shareholders to opt in is on 4 March.

In total, the company will be paying out 67% of its free cash flow, which is 4 percentage points higher than H1 FY21.

Telstra share price summary

Since the beginning of 2022, Telstra shares have lost 5% on the back of weakened investor sentiment. The S&P/ASX 200 Index (ASX: XJO) is also down around 5% over the same timeframe.

Telstra shares reached an all-time high of $4.31 last month, before backtracking on inflationary movements and geopolitical tensions.

Based on today’s price, Telstra commands a market capitalisation of roughly $46.52 billion and has a trailing dividend yield of 4.04%.

The post What’s with the Telstra (ASX:TLS) share price today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Analysts name 2 ASX 200 dividend shares to buy in March
• These 3 ASX 200 shares are topping the volume charts on Monday
• 2 top ASX dividend shares with 4%+ yields
• 2 buy-rated ASX dividend shares for income: experts

Motley Fool contributor Aaron Teboneras owns Telstra Corporation Limited. 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 and has recommended Telstra Corporation 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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The Wesfarmers Ltd (ASX: WES) share price suffered last month, slipping 8.58% lower.

At the end of February, the Wesfarmers share price was $48.19. For comparison, it ended January trading at $52.71 apiece.

It wasn’t such a challenging period for the broader market. The S&P/ASX 200 Index (ASX: XJO) gained 1.1% over February, while the All Ordinaries Index (ASX: XAO) ended it 0.7% higher.

Let’s take a look at what put pressure on the ASX blue chip last month.

What weighed on the Wesfarmers share price last month?

The major catalyst for the Wesfarmers share price last month was the release of the conglomerate’s half-year results.

The first six months of financial year 2022 saw the company’s retail brands suffer through COVID-induced lockdowns and trading restrictions.

Wesfarmers managing director Rob Scott said it was the “most disrupted period for our businesses since the onset of COVID-19.”

The first half saw the company’s net profit after tax (NPAT) tumble 14% to $1.2 billion. Meanwhile, its revenue fell 0.1% as its earnings before interest and tax (EBIT) slumped 12%.

Around 20% of the company’s retailers’ trading days were hit with restrictions or closures, while supply chains and staff availability suffered due to the spread of the virus.

Even Wesfarmers’ usual darling – Bunnings – struggled last half. Its earnings fell 1.2% to $1.2 billion.

Perhaps unsurprisingly, the Wesfarmers share price tumbled 7.4% on the release of the company’s half-year results.

The only other news from Wesfarmers last month was regarding its acquisition of Australian Pharmaceutical Industries Ltd (ASX: API).  

Its $1.55 per share bid for API – which implies an equity value of $773.9 million and an enterprise value of around $1.05 billion – officially won’t be opposed by the Australian Competition and Consumer Commission (ACCC).

The watchdog found the acquisition wouldn’t have an impact on competition in the pharmaceutical sphere.

Wesfarmers’ takeover of API is expected to be completed later this month.

The post The Wesfarmers (ASX:WES) share price dumped 9% in February. What happened? appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in March 2022
• Top broker tips over 20% upside for Wesfarmers (ASX:WES) share price
• Analysts name 2 ASX dividend giants to buy
• 5 ASX 200 shares tumbling to 52-week lows today
• Opportunity? 5 ASX 200 shares that traded at 52-week lows today

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 owns and has recommended Wesfarmers 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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The South32 Ltd (ASX: S32) share price has been a strong performer in 2022.

Since the start of the year, the mining giant’s shares have gained 17%.

This compares favourably to a ~5% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Can the South32 share price rise further?

The good news for investors is that one leading broker still sees plenty of room for the South32 share price to push higher from current levels.

According to a note out of Goldman Sachs this morning, the broker has retained its conviction buy rating and lifted its price target to $5.60.

Based on the current South32 share price of $4.75, this implies potential upside of 18% for investors over the next 12 months.

But the returns don’t stop there! Goldman estimates that South32’s shares currently offer a fully franked 7% FY 2022 dividend yield. The broker then expects a 13% dividend yield in both FY 2023 and FY 2024.

Why is Goldman bullish?

Goldman has updated its earnings estimates to reflect the completion of the company’s acquisition of a 45% stake in the ~200ktpa Sierra Gorda copper mine in Chile from Sumitomo Corporation.

In addition, the broker continues to believe that the South32 share price trades at a very attractive level, particularly given the company’s strong free cash flow generation. The latter is why Goldman is forecasting such big yields in the coming years.

Goldman explained: “The stock is trading at c. 0.9x NAV (A$5.18/sh) including the completion of the acquisition of a 45% stake in the Sierra Gorda copper mine in Chile.”

“We forecast a FCF yield of c. 20% in FY23 (over 25% at spot), driven mostly by exposure to base metal price momentum (aluminium & alumina c. 55% of FY23 EBITDA, zinc/nickel c. 20%, copper c. 10%), met coal (c. 10% of EBITDA), a c. 30% or c. 280ktpa increase in aluminium production over the next 18 months from the Alumar restart & c. 17% increase in Mozal stake, creep in nickel from Cerro Matoso and lead/zinc/silver from Cannington, and uplift from the Sierra Gorda acquisition,” it added.

The post This broker tips South32 (ASX:S32) as one of the best ASX 200 mining shares to buy appeared first on The Motley Fool Australia.

More reading

• 3 ASX mining shares smashing 52-week highs today
• These 3 ASX 200 shares are topping the volume charts this Friday
• Brokers name 2 ASX 200 mining shares to buy
• South32 (ASX:S32) share price up following completion of ‘major milestone’ copper acquisition
• These 3 ASX 200 shares are topping the volume charts on Tuesday

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 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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