Month: May 2022

The S&P/ASX 200 Index (ASX: XJO) is having a pretty dire day so far this Monday. At the time of writing, the ASX 200 is down by a depressing 1.24% at just under 7,350 points. So it’s perhaps no surprise that the Pilbara Minerals Ltd (ASX: PLS) share price is also suffering.

Pilbara Minerals shares are currently down by a nasty 6.14%, sitting at $2.68. What a way to start the week.

This latest fall means that the Pilbara share price is now down by a tad over 22% over the past month. so with this latest plunge, some investors, and perhaps lithium enthusiasts, will no doubt be wondering if the Pilbara share price is in the buy zone.

Is the Pilbara Minerals share price in the buy zone today?

So let’s see if some ASX expert investors reckon it’s time to pounce on Pilbara. Stephane Andre from Alphinity and Mike Murray from Australian Ethical Investment Limited (ASX: AEF) recently spoke to Livewire Markets. Here’s what Murray had to say on Pilbara:

It’s a hold for us. We were buyers of Pilbara at around 70 cents and it’s been a wild ride. I think it fell to 15 cents and then up above $3 and now around that $2.50 level. There’s a lot to like about the position of their resource. It’s positioned reasonably well on the cost curve.

Lithium demand is growing probably in excess of 20% per annum due to EV uptake and the market in deficit. When I look at spodumene, the price is currently around that US$5,000 per tonne level. In the long run, we think that will settle somewhere between US$800 and US$1,000 per tonne. So it’s just moved a bit hard on the upside for us.

Buy, hold or sell?

So lukewarm on Pilbara shares right now from Murray and Australian Ethical. But let’s hear what Andre had to say:

[Pilbara is] a buy for me. I still really like the dynamic of lithium. I completely agree with Mike. The growth and demand are going to be significant. Some forecast six times growth between 2020 and 2030. Supply is there, but it’s going to take time to ramp up the supply. So I think there’s going to be a deficit in lithium for quite a few years. So that means elevated prices of lithium for longer.

The company is aiming to triple its production between now and the next five years. So that’s also a strong growth. We think earning surprise and there’s going to be a lot of cash flows. Capital management is also going to be featured here on this stock. So for us, earning surprise on price, volume, and capital management, it’s a buy.

So far more optimism from Andre and Alphinity. It just goes to show that even expert investors don’t always see eye to eye. But one thing’s for sure. Pilbara will be an interesting company to watch over the next 12 months.

At the current Pilbara Minerals share price, this ASX 200 lithium stock has a market capitalisation of $7.96 billion.

The post The Pilbara Minerals share price just dropped 6%. Time to pounce? appeared first on The Motley Fool Australia.

More reading

• Why is the Pro Medicus share price sinking on Monday?
• What’s the outlook for ASX 200 mining shares in May?
• Up 80% in 2022, are Coronado shares heading for the ASX 200?
• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off
• Why did the Wesfarmers share price lag the ASX 200 in April?

Motley Fool contributor Sebastian Bowen 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 Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Xero Limited (ASX: XRO) share price is heading south today despite the company not releasing any new announcements.

At the time of writing, the cloud accounting platform provider’s shares are trading down 5.93% at $90.66.

What’s happened to Xero shares?

An impressive growth story stretching back from 2012, Xero shares have tumbled since the beginning of 2022.

The company share price has fallen a whopping 35% since the beginning of the year. In contrast, the S&P/ASX 200 Index (ASX: XJO) has edged around 1.3% lower.

While the question arises of when Xero will finally bottom out, the company has remained relatively quiet on the news front. Its last financial update came in November 2021, when Xero delivered its half-year results to the market.

Despite the company posting a net loss for the period, most key metrics lifted by double digits.

Nonetheless, the S&P/ASX All Technology Index (ASX: XTX) has been pounded this year, which could be one reason why Xero shares are in the red.

The tech sector is currently down 25% year to date.

Investors will be keeping a close eye as Xero gears up to release its full-year results on 12 May.

Is the Xero share price a buy?

A couple of brokers weighed in on the company’s share price with varying price points earlier this year.

The team at Citi lowered its 12-month price target for Xero shares by 17% to $132.60 in March. While this represents a hefty premium of 46%, investors are taking the investment advice cautiously.

However, analysts at Macquarie had a more bearish tone, cutting Xero’s rating by 23% to $100 per share. This is almost in line with Macquarie’s estimates based on the current Xero share price.

Xero has a market capitalisation of roughly $13.45 billion, making it the 35th largest company on the ASX.

The post Why is the Xero share price sinking 6% today? appeared first on The Motley Fool Australia.

More reading

• Here’s why ASX 200 tech shares are having such a stellar end to the week
• Why the Xero share price is a buy right now: experts
• 2 ASX tech shares to buy for dirt cheap right now: experts
• 2 ASX 200 blue chip shares to buy in May: Analysts
• Top brokers name 3 ASX shares to buy next week

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 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.

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The South32 Ltd (ASX: S32) share price is trading lower with the market on Monday afternoon.

At the time of writing, the mining giant’s shares are down almost 1% to $4.72.

Is the South32 share price weakness a buying opportunity?

One broker that is likely to see the weakness in the South32 share price as a buying opportunity is Citi.

In response to the company’s recent quarterly update, the broker retained its buy rating and $5.50 price target on the mining giant’s shares.

Based on the current South32 share price, this implies a potential return of 16.5% for investors over the next 12 months before dividends.

As for dividends, Citi is forecasting fully franked dividends per share of 38 cents in FY 2022 and then 39 cents in FY 2023. This means that if you include the next 12 month’s forecast dividends, the total potential return stretches to almost 25%.

What did the broker say?

While Citi wasn’t blown away with South32’s quarterly update, it saw enough in it to remain bullish.

Particularly given favourable commodity prices and the valuation of the South32 share price compared to other large cap miners. It feels this makes it the “cheapest” in the group at current levels.

The broker explained: “MarQ was reasonable albeit marginally weaker than Citi expectations. While FY22 prodn guidance was essentially unchanged, cost guidance was raised and FY22 earnings trimmed. However, FY23/24 estimates benefit from raised commodity price assumptions and we stay Buy rated. On nearer term multiples, S32 remains the cheapest of the large cap Aus mining stocks.”

All in all, this could make South32 shares one to consider if you’re looking for exposure to the resources sector during the current commodity boom.

The post Broker says the South32 share price is cheap at current levels appeared first on The Motley Fool Australia.

More reading

• Why City Chic, Coronado, South32, and Syrah shares are charging higher
• Top brokers name 3 ASX shares to buy today
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Goldman Sachs names 3 reasons why the South32 share price is a bargain buy
• 5 things to watch on the ASX 200 on Wednesday

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 Scott Phillips.

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The Australian share market is having a pretty horrible start to the trading week so far this Monday.

At the time of writing, the All Ordinaries Index (ASX: XAO) is down by a significant 1.65% and is back under 7,600 points. But even though most ASX shares are suffering today, there are a few notable exceptions.

In fact, two ASX shares have exploded by more than 100% in value today. Let’s check out what’s going on here.

2 ASX shares going gangbusters today

East 33 Ltd (ASX: E33)

Our first ASX share to check out is East 33, a Sydney-based producer and supplier of rock oysters. No doubt shareholders will feel like the world is their oyster today, seeing as East 33 shares are up an astounding 110% in trading so far. Yes, this company closed at 4 cents per share last week, but is today fetching 8.4 cents a share at the time of writing.

The catalyst for this eye-popping move appears to be a trading update that the company released this morning.

In this update, East 33 informed investors that its results for April came in ahead of expectations. The company reported a harvest volume of “499k”, along with group revenue of $2.43 million, for the month.

Here’s some of what the company had to say about these numbers:

East 33 is a resilient business and its geographic diversification enabled harvest despite enormous disruptions due to continued rain, further its diversified sales and distribution operations continue to grow year on year.

April generated $344k of the $1.6m low season contribution being 21.5% of entire outlook to the end of September 2022. This result put East 33 significantly ahead of expectation.

So investors are evidently extremely pleased with what East 33 came up with today.

Adrabbit Ltd (ASX: RAB)

Adrabbit is our second ASX share that has exploded in value today. This software-as-a-service (SaaS) provider for businesses was priced at 2.3 cents per share at the end of last week.

But today, the company has rocketed a whopping 221% so far and is currently going for 7.4 cents per share. This seems to have been sparked by a quarterly update. This morning, Adrabbit announced some results for the quarter ending 31 March 2022.

Over this period, the company reported invoiced revenues of $67,398. It also announced the successful completion of its dual-listing on the Toronto Stock Exchange (TSX) and the completion of a US$3.25 million funding round.

So again, investors seem very happy with what the company presented today. Having said that, Adrabbit is still proceeding with its delisting from the ASX, so this company won’t be around for too much longer on our sharemarket.

The post 2 ASX shares exploding more than 100% on Monday appeared first on The Motley Fool Australia.

More reading

• 3 lessons from what Buffett didn’t say at Berkshire Hathaway’s shareholder meeting
• Why is the Pro Medicus share price sinking on Monday?
• What’s the outlook for ASX 200 mining shares in May?
• Here’s why the Aussie Broadband share price is crashing 25% today
• Own Macquarie shares? Here’s what to watch when the bank reports this week

Motley Fool contributor Sebastian Bowen 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.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Saturday was the second day of the 2022 New Orleans Jazz and Heritage Festival — an event of music and celebration that attracts people from all over the country. Yet there was a different and more reflective jazz festival taking place about a thousand miles northwest, at Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) annual shareholder meeting in Omaha.

Miles Davis said that “it’s not the notes you play, it’s the notes you don’t play”. And that feeling rang true at Berkshire’s meeting.

Despite Berkshire being up 8% on the year compared to a 13% loss for the S&P 500 and an over 20% loss for the Nasdaq Composite, there was little to no showboating from Chairman Warren Buffett or Vice Chairman Charlie Munger. Instead of bragging about the outperformance of value stocks over growth stocks, their attention was on protecting shareholder capital paired with a deep sense of responsibility to keep cash on the balance sheet and exhibit discipline during an uncertain time of high inflation and rising interest rates.

Here’s what Buffett and Munger didn’t say that spoke volumes at the 2022 Berkshire shareholder meeting.

Invest in yourself

Buffett said that the best vehicle you can invest in is yourself. “Nobody can take away from you the talent you have,” he said. “The truth is, the world will always need to do something and some people will not have skills and they will get less of the product of the society than somebody who has other skills. Sometimes that has something to do with education, but a good bit of the time it doesn’t have anything to do with education.”

It’s a theme Buffett returned to frequently, especially in his comment that “you ought to be a better person in the second half of your life than the first”. Compounding wealth isn’t just financial — Buffett seemed to imply that the best defense against inflation on the personal level is to make lifelong contributions to the world.

Speaking of which…

Invest in companies with wide moats

Buffett also may have been indicating that the best companies to own are the ones that are also exceptionally good at something and do whatever they do better than their competitors. This doesn’t always mean their stocks will go up or even outperform the market. But it does mean that over the long run, these companies are developing the kind of foundation that outlasts economic cycles and delivers long-term growth.

If we look at Berkshire’s top 10 list of public equities, it’s very clear that every single one of them, from Apple to Chevron, is a leader in their respective industry.

Can Berkshire last forever?

A writer named Charles Michael Palahniuk famously said, “We all die. The goal isn’t to live forever, the goal is to create something that will.” That seems to be the feeling that Buffett, who will turn 92 on 30 August, has right now.

Although Buffett is still sharp as a tack, no one knows when the last Buffett-led Berkshire meeting will be. When asked about his succession, Buffett didn’t focus on the inner workings of the board of directors, or the voting power of the shareholders, or even the strategy of the investment team. Rather, he talked extensively about the Berkshire culture almost as an embodiment of his values that will carry on even after he and Munger are gone.

“Berkshire is built forever. There is no finish point. We have no one thinking about if their options are vested,” Buffett said.

It could be that Buffett believes the superiority of the Berkshire culture is hidden right now because all the spotlight is on him, and that when he’s no longer in charge, folks will begin to realise why people like to work for Berkshire and why it’s a business that is so much more than just Buffett and Munger.

Life-changing wealth

The individual investor can take away the importance of building an everlasting portfolio that will continue to grow even after we pass. Buffett is big on the power of compound interest and routine saving. In fact, by starting with $0 and investing $10,000 per year into a retirement account for 50 years at a compound annual growth rate of 10%, an investor would end up with $11.64 million. This long-term mindset can lead to generational wealth using a relatively attainable savings plan.

As for Berkshire Hathaway, it’s likely that Buffett’s leadership and investing philosophies have the staying power to transcend his lifetime too. For that reason, Buffett seems less concerned with the performance of Berkshire versus the S&P 500 into the future, and much more focused on ensuring his company culture remains intact.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 lessons from what Buffett didn’t say at Berkshire Hathaway’s shareholder meeting appeared first on The Motley Fool Australia.

More reading

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Daniel Foelber 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 Apple and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Pro Medicus Ltd (ASX: PME) share price is plummeting today despite no new announcements from the company.

At the time of writing, the health imaging company’s shares are down a sizeable 7.2% to $44.06 after recovering from an intraday low of $43.05. That’s 9.3% lower.

What’s dragging Pro Medicus shares lower?

A catalyst for the Pro Medicus share price falling deep in the red today has come from broader market weakness.

The S&P/ASX 200 Index (ASX: XJO) is tumbling 1.31% lower to 7,337 points following Wall Street’s heavy losses last week.

In particular, the tech-focused Nasdaq fell 4.2% on Friday, registering its lowest closing levels in more than 12 months.

The selling pressure led to the index sinking 13.26% in April, its worst month since October 2008. This was brought on by an underwhelming performance from the tech titans such as Amazon, Netflix, and Meta Platforms.

While Pro Medicus is not directly related to the above companies, it does operate in the United States.

Furthermore, with an extremely high price-to-earnings (P/E) ratio of 118.95, this is bound to cause a jerk reaction.

Investors clearly are putting a lot of hope on Pro Medicus further expanding in North America. However, with the current market volatility, the company’s shares are the first to be hit hard.

About the Pro Medicus share price

Over the last 12 months, the Pro Medicus share price has lost around 7% with year to date down 30%.

The company’s shares reached a 2022 high of $63.12 on 4 January, before plunging 30% in the weeks following.

Since then, the company’s shares have moved in circles.

Based on valuation grounds, Pro Medicus commands a market capitalisation of around $4.6 billion.

The post Why is the Pro Medicus share price sinking on Monday? appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 mining shares in May?
• Up 80% in 2022, are Coronado shares heading for the ASX 200?
• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off
• Why did the Wesfarmers share price lag the ASX 200 in April?
• Why did the Bank of Queensland share price tank 7% in April?

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 positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We’re already in May 2022. What is the outlook for S&P/ASX 200 Index (ASX: XJO) mining shares this month and beyond?

Mining businesses can have an important influence on both the ASX 200 and the Australian economy because of how big they are.

The ASX 200 has plenty of large miners including BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

It can be almost impossible to know what a share price will do in any given week, month or even year. But, analysts and brokers can make predictions about things like commodity prices and potential profit generation.

Analyst thoughts on ASX 200 mining shares

The analysts at Macquarie think that worries about the Chinese economy because of COVID-19 impacts could be an opportunity for investors to buy resource companies that have suffered a sell-off, according to reporting by The Australian.

Experts from Macquarie also believe that the Russian invasion of Ukraine will lead to bigger investments in ‘deglobalisation’, decarbonisation and defence. The experts believe that this should help commodity demand. Russian resources may be disrupted for some time after the actual war is over.

The positive outlook for commodities could bring institutional investors to the ASX looking for commodity opportunities, such as Capital Group.

The Australian quoted Bell Potter’s head of institutional sales and trading, Richard Coppleson, who said:

I suspect there is a wall of buyers of resource stocks on any pullbacks. Local institutions were I think looking to buy – most have held back and were waiting for more, just waiting until the dust settled – while Capital Group pounced hard just when it all looked dire and have done well.

Macquarie is expecting that China will expand its stimulus as the lockdowns end, with this giving support to commodities and ASX 200 mining shares.

The expert thinks that if it’s right about the outlook for resources, then the respective miners should “outperform” even in an economic slowdown, with support from China helping that.

The Australian also noted that outperformance by resource shares could also happen as interest rates rise, hurting valuations in other sectors like the technology industry.

Macquarie ratings on ASX 200 mining shares

Macquarie has an ‘outperform’ rating on the BHP share price, with a price target of $60.

The broker has an ‘outperform’ rating on the Rio Tinto share price, with a price target of $140.

The rating on Fortescue’s share price is ‘neutral’, with a price target of $20.

The Mineral Resources Limited (ASX: MIN) share price rating is ‘outperform’, with a price target of $85.

The post What’s the outlook for ASX 200 mining shares in May? appeared first on The Motley Fool Australia.

More reading

• Why is the Pro Medicus share price sinking on Monday?
• Up 80% in 2022, are Coronado shares heading for the ASX 200?
• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off
• Why did the Wesfarmers share price lag the ASX 200 in April?
• Why did the Bank of Queensland share price tank 7% in April?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group 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 has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Aussie Broadband Ltd (ASX: ABB) share price is having a very disappointing start to the week.

In afternoon trade, the growing telco’s shares are down 25% to $4.17.

Though, it is worth highlighting that even after this huge decline, the Aussie Broadband share price is still up 38% over the last 12 months.

Why is the Aussie Broadband share price crashing today?

Investors have been selling down the Aussie Broadband share price today amid a market selloff and the release of an update out of the telco.

In respect to the latter, the company provided investors with an update on its performance during the third quarter. This revealed that Aussie Broadband has continued its solid growth during the period.

For example, total broadband services increased 11% quarter on quarter or 47% year on year to 548,911 services. Combined with voice, mobile, Fetch, and managed services, this took its total services to 697,083. This represents a 10% quarter on quarter increase and a 42% lift year on year.

Aussie Broadband’s Managing Director, Phillip Britt, commented: “The company has delivered consistent broadband services growth over the last three quarters, and this financial year is on track to be our largest ever for net broadband service additions. This growth is extremely pleasing in a market which is no longer growing and is reliant on customers choosing Aussie and switching from other providers to win market share.”

“The third quarter remained strong for new white label services, assisted by the largely complete migration for our white label customer. We expect to see continued organic growth in this segment as our white label customer secures ongoing sales driven by industry leading customer service,” he added.

Why the selloff?

There are a few potential reasons, outside the market selloff, for the weakness in the Aussie Broadband share price today.

In the Residential broadband segment, management advised that media buyers have warned that marketing efficiency will be materially impacted during the Federal Election. As a result, the company is stepping back its marketing activities, which is expected to reduce new sales.

Management also advised that it has been struggling to recruit for its call centre during a period of strong growth, white label migration, and recent network outages. This led to a jump in call volume and wait times for customers, which resulted in increased customer churn late in the third quarter.

Another headwind the company has been facing is in the mobile business. It notes that gaining mobile-only customers is proving challenging due to supply chain issues impacting the availability of mobile handsets.

Any else?

Also potentially weighing on the Aussie Broadband share price today is its Connectivity Virtual Circuit (CVC) expense.

With customer usage remaining high, third quarter CVC expense more than doubled quarter on quarter to $4.9 million from $1.8 million. And while the company was forecasting a rise, this was still 18% greater than its estimates. Management blamed the rise on increased peak time customer usage.

Finally, Aussie Broadband has downgraded the top end of its earnings and active broadband connections guidance ranges for FY 2022.

Instead of full year earnings before interest, tax, depreciation and amortisation (EBITDA) of $27 million to $30 million, it now expects EBITDA to be in the range of $27 million to $28 million. This guidance excludes transaction costs and any contribution from the Over the Wire acquisition.

Whereas total active broadband connections are expected to be in the range of 580,000 to 585,000. Once again, the top end of its range has been trimmed from 580,000 to 590,000 previously.

The post Here’s why the Aussie Broadband share price is crashing 25% today appeared first on The Motley Fool Australia.

More reading

• Best ASX shares to buy in May 2022
• 3 ASX All Ordinaries shares rocking all-time highs today

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 positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Macquarie Group Ltd (ASX: MQG) share price is falling in sympathy with the market today, but the sentiment could turn this Friday when it hands in its earnings report.

Shares in the investment bank tumbled 2.3% to $202.33 during lunchtime trade when the S&P/ASX 200 Index (ASX: XJO) shed 1.7%.

The market is under pressure following large falls on Wall Street on Friday, although JPMorgan is tipping a good profit result from Macquarie on 6 May.

What to expect from Macquarie’s profit results

That is when the bank is scheduled to report its full-year result. The broker is highlighting a few key areas to watch.

“While [Macquarie] hasn’t provided full-year guidance, divisional outlook commentary implies very strong earnings growth,” said JPMorgan.

“We forecast FY22 NPAT of $4.496b (in line with consensus), +49% y/y, with a final div of 360cps (56% payout).”

Earnings growth drivers

The final dividend estimate represents a 7.5% increase over this time last year when management paid $3.35 a share.

The strong result is driven by a few factors. The group’s Commodities and Global Markets (CGM) division is tipped to benefit from very high commodity prices and price volatility.

The broker reckons this business will deliver a 27% uplift in income in FY22. That’s above the implied growth rate of 15% to 25%.

Macquarie’s revenue will also be boosted by the Macquarie Capital division. This business is set to benefit from higher asset sale gains, especially in green energy assets.

Additionally, the group’s Banking and Financial Services (BFS) arm is also forecast to deliver ongoing growth, according to JPMorgan.

Key risk areas with Macquarie’s earnings report

But it isn’t all good news. Uncertainty and weakness in the Macquarie Asset Management (MAM) business could weigh.

“The only division where we see lower earnings hoh [half-on-half] is MAM, due to non-recurrence of one-off income,” said the broker.

“Given macro uncertainty, we think it is unlikely MQG will give FY23 guidance at this result (a repeat of last year).”

What is the Macquarie share price worth?

The broker pencilled in a 6% drop in Macquarie’s FY23 net profit to $4.2 billion, which is close to consensus estimates.

Despite this, JPMorgan recommends the Macquarie share price as “overweight”. Its 12-month price target is $227 a share.  

The post Own Macquarie shares? Here’s what to watch when the bank reports this week appeared first on The Motley Fool Australia.

More reading

• Why is the Macquarie share price getting hammered today?
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Why this broker tips the Macquarie share price to clip $227 this year
• How ASX dividend shares can provide support through periods of uncertainty
• These are the 2 best ASX dividend shares to buy right now: fund manager

Motley Fool contributor Brendon Lau has positions in Macquarie Group 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 has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There aren’t a whole lot of S&P/ASX 200 Index (ASX: XJO) shares directly involved in helping to decarbonise the world.

But for investors keen on environmental, social and governance (ESG) issues, there are a few. And the top ones have delivered some outsized gains over the past year.

The ASX 200 share ‘at the sweet spot of decarbonisation’

One ASX 200 share with exposure to the global decarbonisation push with the potential to become a future decarbonisation leader is Lynas Rare Earths Ltd (ASX: LYC).

That’s according to Stephane Andre, principal of Alphinity Investment Management.

“In Australia, for the moment, most of the opportunities are really happening on the whole metals and mining side, where basically you have the extraction of the minerals, which facilitate EVs, batteries and so on,” Andre told Livewire.

Narrowing that down to a specific ASX 200 share, Andre continued:

Lynas is the one I’m proposing, which is a buy for me. It is really at the sweet spot of decarbonisation and geopolitical diversification. So when you think about decarbonisation, rare earth is really critical for wind turbines, electric vehicles and so on.

In terms of the geographical side, most rare earths, around 80%, are produced and treated in China. Lynas is the only large manufacturer or producer of rare earths outside of China. And that has value geopolitically from a more geographic diversification perspective.

Andre said Alphinity liked the ASX 200 share firstly “in terms of the outlook on rare earth, we think that the price is going to stay higher for longer. Demand is very, very strong here.”

Alphinity is also bullish on the outlook for Lynas Rare Earths production.

According to Andre:

Production-wise, we think that actually, Lynas will come out with some surprise announcements of how they can really beef up the production volume that they will be aiming for in the next five years.

How has Lynas been performing?

Lynas offers a good example of how ESG investors looking for ASX 200 shares don’t need to sacrifice returns for ethics.

While the Lynas share price has come under pressure in recent months, shares remain up 61% since this time last year. By comparison the ASX 200 has gained 4% over the 12 months.

At the current share price, Lynas has a market cap of some $8.3 billion.

The post The ASX 200 share ‘at the sweet spot of decarbonisation’: expert appeared first on The Motley Fool Australia.

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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.

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