Day: 3 June 2022

The Telstra Corporation Ltd (ASX: TLS) share price has edged higher this week despite the market weakness.

This appears to have been driven by the telco giant announcing price increases to its mobile plans.

What are the changes?

Telstra has announced the introduction of inflation linked pricing. This will see the company index its mobile plans by CPI on an annual basis.

According to a note out of Goldman Sachs, its analysts see this “as a positive development” and “could be meaningful for supporting industry rationality.” This is based on what the broker has seen globally in the industry.

Its analysts highlight that that in July Telstra’s advertised postpaid plans will increase by $3 to $4. This will see its Basic/Essential/Premium plans now at $58/$68/$89 per month.

And while no changes were made to its Belong or MVNO pricing, the broker suspects that the introduction of 5G to these brands will be a “potential catalyst for updated pricing.”

Overall, the broker appeared pleased with the changes, though they may have fallen a touch short of its expectations. Goldman commented:

While the Jul-22 pricing increase was within our range of expectations for Telstra (headline +$3-6 increases), it appears the impact from these plans will be lower than our +$2.50 prior growth expectations for FY23 (adjusting for GST, share of in-market plans, and impacts from spin downs / Belong dilution). Looking forward, we believe Optus’ pricing strategy will now be in focus following recent comments at its FY22 result, and noting TPG is awaiting the outcome of its Mobile Network sharing proposal with Telstra.

Is the Telstra share price good value?

Goldman Sachs currently has a neutral rating on the company’s shares.

However, with its price target of $4.30, based on the current Telstra share price of $3.98, this still implies potential upside of 8% for investors over the next 12 months.

Goldman is also forecasting 16 cents per share dividends in FY 2022 and FY 2023. This equates to a 4% annual yield, which stretches its total potential 12-month return to 12%.

The post Is the Telstra share price in the buy zone after the telco giant’s mobile plan increases? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• 3 ASX 200 shares smashing the market today
• Why Bailador, Fortescue, Nufarm, and Telstra shares are rising
• Why is the Telstra share price dialling higher today?
• Why did the Telstra share price backtrack in May?

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 positions in 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 Scott Phillips.

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The Zip Co Ltd (ASX: Z1P) share price hit a fresh multi-year low of 79 cents yesterday.

The buy now, pay later (BNPL) company’s shares continue to be volatile, with investors probably questioning where the bottom is.

Unfortunately, not even legendary investor Warren Buffett can accurately predict where falling shares will stop.

Over the past month alone, the Zip share price has hit seven multi-year lows.

At Thursday’s market close, Zip shares finished at 80 cents, down 4.79%.

What’s dragging Zip shares down?

Investors have continued to sell off Zip shares due to negative sentiment across the financial industry.

The word “recession” has been a major talking point for economists in recent times following debates on whether or not one is around the corner. This is being driven by high inflation, a tightening monetary policy, and concerns about a global economic slowdown.

The S&P/ASX 200 Financials (ASX: XFJ) sector ended yesterday in the red, down 1.21% to 6,545 points. When looking at the past month, the index is down 2.4%.

Consumer confidence is being weighed down as the United States experiences the biggest rise in consumer prices in 40 years.

Australian consumer prices have surged at the fastest annual pace in 20 years.

The Reserve Bank of Australia updated its statistics to show inflation climbed by 5.1% in the March quarter.

Key contributors included record fuel prices, and the rising costs of construction due to high demand but low supply of building materials and labour.

However, in an effort to slow down the rising price of goods, the RBA has intervened.

Last month, Australia’s central bank decided to lift its official cash rate to 0.35%, the first rise since 2010.

In essence, this means that consumers are less likely to spend money on discretionary items when interest rates are picking up and increasing the cost of their debt.

We will have to wait until next Tuesday to see if the RBA will again increase interest rates.

Zip share price summary

It has been a whirlwind 18 months for Zip investors.

The company’s shares rocketed to an all-time high of $14.53 in February 2021 but have plummeted ever since.

In the past 12 months, the Zip share price has fallen by almost 90%. This means it would need to increase nine-fold to break even.

Based on today’s price, Zip presides a market capitalisation of approximately $574 million.

The post The carnage continues: Why the Zip share price has hit 7 multi-year lows in a month appeared first on The Motley Fool Australia.

More reading

• Why Nanosonics, REA, Sayona Mining, and Zip shares are dropping
• Why is the Zip share price sinking yet again on Thursday?
• Is this a ‘fundamental flaw’ with ASX BNPL shares like Zip
• Why Allkem, Origin, PointsBet, and Zip shares are sinking today
• Why Bubs, PolyNovo, Suncorp, and Zip shares are dropping

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 Scott Phillips.

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After a turbulent few months, there are plenty of ASX shares out there going for far cheaper now than when the year started.

But which ones have the best chance for future returns, as opposed to the stocks that are now value traps?

Morgans analyst Andrew Tang had a couple of examples in his monthly Best Ideas memo:

Demand that’s ‘resilient to economic cycles’

Gambling games provider Aristocrat Leisure Limited (ASX: ALL) is a recent addition to the Morgans Best Ideas list.

The company has enjoyed revenue growth of 17% per annum over the past five years, stated the Morgans memo. In the 2021 financial year, 80% of that revenue was recurring.

Rising interest rates and a slowdown in consumer spending will not worry it, according to Tang.

“Demand for its gaming machines and digital games is resilient to economic cycles,” he said.

“We expect Aristocrat to continue to take market share in all its product segments.”

The Aristocrat share price has plunged more than 25% year-to-date.

“The recent underperformance of the shares may have been a function of concern about Aristocrat’s exposure to Ukraine, although it has recently stated that 75% of its staff there have relocated to safer locations and there is no material impact on earnings.”

For Tang, the weakness in stock price merely presents an attractive buying opportunity.

“Aristocrat’s one-year forward P/E [price-to-earnings ratio] has derated to less than 20x from a high of 30x last September.”

He also loves the $3.3 billion of capital it has to fuel future growth.

“It has a stated ambition to build a meaningful presence in the rapidly growing online real money gaming segment, which we believe may be achieved both through organic investment and inorganic acquisitions.”

Plenty of Australians looking for better day jobs

Among the online classifieds players, Tang favours Seek Limited (ASX: SEK) as the best buy this month.

“We continue to see Seek as the one with the most relative upside, a view that’s based on the sustained listings growth we’ve seen over the period.”

Seek shares have dropped more than 29.3% so far this year, presenting a far cheaper entry point now.

According to Tang, the tailwinds that have seen job advertisements grow 35% and earnings before interest, tax, depreciation, and amortisation (EBITDA) head 16% north still remain.

“Subdued migration, candidate scarcity and the drive for greater employee flexibility,” he said.

“With businesses looking to grow headcount in the coming months and job mobility at historically high levels according to the RBA, we see these favourable operating conditions driving increased reliance on Seek’s products.”

The post Buy these 2 ASX shares going for a 25% discount: Morgans appeared first on The Motley Fool Australia.

More reading

• Experts pick 2 ASX shares to buy that move wealth around
• Analysts name 3 ASX 200 shares that could generate strong returns
• Analysts name 2 ASX growth shares to buy with major upside potential
• Looking to secure the Aristocrat biggest-ever dividend? Here’s what you need to do
• 3 ‘disruptive’ ASX companies Aussies now can’t live without

Motley Fool contributor Tony Yoo 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 SEEK 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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One ASX shares expert has warned investors that there is a golden opportunity now to buy a stock that’ll cash in from rising interest rates.

The Reserve Bank of Australia elevated the cash rate by 25 basis points last month, to take it to 0.35%.

More hikes are expected to come, to suppress inflation.

According to the ASX, on 1 June the local market had a 75% expectation that the RBA will push its rate up to 0.75% at its next board meeting on Tuesday.

In the longer term, experts are forecasting the rate may hit 2% by the end of this year, or 3% by the end of 2023.

Why Computershare loves higher interest rates

So considering all this, it’s critical now to buy ASX shares that will tolerate interest rate rises.

A stock that multiple experts have named as one that will not just put up with, but thrive with, higher rates is Computershare Limited (ASX: CPU).

The idea is that the share registry business holds a significant amount of funds in the form of dividends and distributions that are yet to be paid out to shareholders.

Computershare earns interest on that capital, which goes straight to the bottom line.

“At the 1H22 results release, the company disclosed that a 100 basis points increase in interest rates on the exposed average balances as at 31 December 2021 would generate an annualised EPS [earnings per share] increase of 26 US cents per share,” Fairmont Equities managing director Michael Gable said on his blog.

“This is significant given that EPS guidance for FY22 is for 57 US cents per share.”

This margin income will more than compensate for the inflation in wage expenses for Computershare, he added.

“We do not expect that the potential for higher-than-expected inflation presents a risk for either FY22 guidance or FY23 earnings, especially given the strengthening outlook for margin income.”

Why now is the time to buy Computershare shares

So that’s all well and good, but it’s not a massive secret that Computershare is about to enjoy increased earnings from higher rates.

That’s why the stock price has risen a stunning 46% over the past 12 months, during a time when most ASX shares outside mining and financials have suffered.

But Gable is convinced now is a nice dip to buy Computershare.

“The recent pullback from the April high has been fairly orderly and the share price is back at support,” he said.

“As long as the broader market can hold up here, we would view current levels as a buying opportunity.”

Indeed, the Computershare share price has cooled down 10.5% since 19 April.

Despite the spectacular rise in valuation over the past year, Gable believes there is still plenty of demand from investors looking for increasingly rare returns.

“We expect the shares to eventually be supported by Investors seeking such an exposure as a portfolio hedge… [and] the potential for higher-than-expected margin income to offset cost pressures,” he said.

“[There’s] potential for M&A/capital returns as a result of a lower forward gearing profile.”

The post Big chance to buy ASX share that benefits from rising interest rates: expert appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares (not banks!) to boom from rising interest rates: experts
• These 2 ASX tech shares have escaped obliteration so far this year
• Macquarie picks ASX 200 shares to buy in this volatile environment
• Here’s why ASX 200 tech shares are having such a disastrous run on Friday

Motley Fool contributor Tony Yoo 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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Looking for dividend shares to buy in June? Then have a look at the two listed below that have been given buy ratings and tipped to pay big dividends.

Here’s what you need to know about these dividend shares:

Australia and New Zealand Banking Group (ASX: ANZ)

The first ASX 200 dividend share to look at is banking giant, ANZ.

It could be a dividend share to buy given the positive outlook for interest rates in Australia and its solid performance so far in FY 2022. The latter saw ANZ recently reveal its half-year cash earnings from continuing operations of $3,113 million. This was a 4% increase over the prior corresponding period.

The team at Citi was pleased with its results and is expecting this positive earnings growth to continue in the coming years. As a result, it has put a buy rating and $30.75 price target on the bank’s shares.

As for dividends, the broker is forecasting fully franked dividends per share of 147 cents in FY 2022 and then 170 cents in FY 2023. Based on the current ANZ share price of $24.97, this implies yields of 5.9% and 6.8%, respectively.

South32 Ltd (ASX: S32)

Another high yielding ASX 200 dividend share to look at is mining giant, South32.

Thanks to its diverse mining operations and exposure to in demand green metals, South32 has been tipped to generate bumper free cash flows in the coming years.

It is for this reason that the team at Morgans currently has an add rating on South32’s shares with a $6.10 price target.

Morgans also expects the company’s bumper free cash flow to underpin very big dividends in the coming years. It has pencilled in fully franked dividends per share of ~26 cents in FY 2022 and ~35 cents in FY 2023. Based on the current South32 share price of $4.98, this will mean yields of 5.2% and 7%, respectively.

The post Experts name 200 ASX dividend shares to buy with big fully franked yields appeared first on The Motley Fool Australia.

More reading

• What’s dragging on ASX 200 bank shares like NAB on Thursday?
• May wasn’t kind to the ANZ share price. Here’s what happened
• UBS warns of more downgrades for ASX 200 shares… but not all
• How might ‘green premiums’ impact the value of ASX mining shares?
• Why is the South32 share price falling 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 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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form and tumbled notably lower. The benchmark index dropped 0.8% to 7,175.9 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to end the week on a positive following a strong night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 80 points or 1.1% higher this morning. In the US, the Dow Jones was up 1.3%, the S&P 500 rose 1.8%, and the Nasdaq stormed 2.7% higher.

Wesfarmers remains a sell

The Wesfarmers Ltd (ASX: WES) share price is overvalued according to analysts at Goldman Sachs. In response to the company’s strategy update, the broker has retained its sell rating with a $40.00 price target. It said: “At its current trading FY23 P/E of 23.1 and GSe FY22-24e EPS CAGR of 2.6%, we see better value elsewhere, reiterate Sell.”

Oil prices push higher

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a solid finish to the week after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 2.1% to US$117.67 a barrel and the Brent crude oil price is up 1.75% to US$118.36 a barrel. This was despite OPEC increasing its production faster than expected.

Pro Medicus rated as a buy

The Pro Medicus Limited (ASX: PME) share price could be good value according to analysts at Bell Potter. This morning the broker retained its buy rating and $55.00 price target on the health imaging technology company. Following another contract win, the broker believes Pro Medicus’ Visage product could be “the emerging standard for the viewing of radiology images in the US.”

Gold price climbs

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price stormed higher overnight. According to CNBC, the spot gold price is up 1.4% to US$1,874.9 an ounce. The gold price rose following weakness in the US dollar.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

More reading

• 3 ASX energy shares rocking new 52-week highs on Thursday
• Why Bubs, IGO, Strike Energy, and Woodside shares are pushing higher
• Here’s why JPMorgan is bullish on the Newcrest share price
• Why is the ‘new’ Woodside share price leaping 6% today?
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update

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 Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. and Wesfarmers 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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