Day: July 6, 2022

Why ‘superior operations’ puts Woolworths shares in this broker’s buy basket

A customer and shopper at the checkout of a supermarket.A customer and shopper at the checkout of a supermarket.

Investors enjoyed a solid day for the Woolworths Group Ltd (ASX: WOW) share price this Wednesday. At market close, Woolworths shares rose by a healthy 2.51% to $36.80. This move higher comes as the S&P/ASX 200 Index (ASX: XJO) recorded a day in the red. The ASX 200 finished Wednesday down by 0.53% at just under 6,600 points.

But despite the boost today, it has still been a tough time for Woolworths shares of late. The supermarket giant remains down by 3.18% in 2022 thus far, as well as by 1% over the past 12 months. Today, Woolies remains around the same share price it was back in the pre-COVID highs of February 2020.

So with such a sluggish performance in recent months and years, could it be a good time to consider buying Woolworths shares today?

Is the Woolworths share price a buy today?

One broker who thinks so is investment bank Goldman Sachs. As my Fool colleague James Mickleboro covered last week, Goldman is currently rating Woolworths shares as a buy with a 12-month share price target of $41.70. That would result in a potential upside of close to 13% on current pricing.

Goldman stated it was “encouraged by the resilience and superior operations” of Woolworths, and is anticipating higher sales and earnings between now and FY2024.

But Goldman isn’t the only broker with an opinion on Woolies today.

As reported in The Australian, fellow broker UBS has just upgraded its rating on Woolworths from sell to neutral. Here’s what UBS had to say:

The removal of our bearish stance on supermarkets, increased earnings per share estimates across COL [Coles Group Ltd (ASX: COL)] and WOW, and greater confidence on Woolworths growing sales and expanding gross & EBIT margins, support the WOW rating upgrade.

UBS has also raised its own 12-month share price target to $37.

So we’ll have to see if Woolies shares are indeed heading higher over the next 12 months, as Goldman predicts, or will stay at a similar level to today, as estimated by UBS.

At the current Woolworths share price, this ASX 200 grocer has a market capitalisation of $44.67 billion, with a dividend yield of 2.55%.

The post Why ‘superior operations’ puts Woolworths shares in this broker’s buy basket appeared first on The Motley Fool Australia.

Should you invest $1,000 in Woolworths Group Ltd right now?

Before you consider Woolworths Group Ltd, 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 Woolworths Group Ltd wasn’t one of them.

The online investing service he’s run for over 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.

See The 5 Stocks
*Returns as of June 1 2022

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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 Goldman Sachs. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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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How many global mega deals involved ASX 200 shares in the first half of 2022?

Two hands being shaken symbolising a deal.Two hands being shaken symbolising a deal.

S&P/ASX 200 Index (ASX: XJO) shares feature rather prominently on the list of global mega deals in the first half of 2022.

That’s according to the latest report by financial market data provider Refinitiv, detailing global mergers and acquisitions (M&A) activities year-to-date.

The report noted that there were 58 mega deals – defined as being worth at least US$5 billion (AU$7.3 billion) – in the fist half the 2022. While that’s 23 fewer than this time last year, it’s the fourth highest level ever since Refinitiv began recording this data in 1980.

In total, global M&A activity has already reached US$2.1 trillion year-to-date. While that’s down 21% from last year worldwide, deal making among ASX 200 shares has helped drive a 25.4% increase in M&A activity in Australia so far this year. 

In fact, with US$103.5 billion of deals in the first half, this marks the highest H1 period for Aussie companies since 1980.

Which brings us to…

Which ASX 200 shares made the mega deal list?

There are seven Aussie companies with completed or pending M&A deals worth at least US$1.8 billion in H1.

But only two ASX 200 shares top the US$5 billion mega deal marker.

First, and largest, is Ramsay Health Care Ltd (ASX: RHC). In a still pending deal, the $20 billion takeover offer for the global healthcare company is the biggest healthcare deal ever in Australia.

News of the deal was confirmed on 20 April, sending the Ramsay Health Care share price rocketing.

The conditional, non-binding, indicative proposal was pitched by a consortium led by private equity giant KKR. The consortium offered $88 per share to acquire Ramsay, which was trading for $64.29 on the day that news broke.

The proposed takeover is still undergoing due diligence. Should it proceed, it will then be put up for a shareholder vote.

Moving on… 

Formed from a demerger

The second ASX 200 share making it onto the H1 US$5 billion-plus mega deal list is The Lottery Corp Ltd (ASX: TLC).

On 24 May, Lottery Corp commenced trading on the ASX for the first time after a demerger from Tabcorp Holdings Limited (ASX: TAH).

The completed transaction sees Lottery Corp take over Tabcorp’s Lotteries and Keno businesses. Management pressed ahead with the demerger with the intention of maximising shareholder value.

The newly minted ASX 200 share is down 2% since listing.

The post How many global mega deals involved ASX 200 shares in the first half of 2022? appeared first on The Motley Fool Australia.

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

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of June 1 2022

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Motley Fool contributor Bernd Struben 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 Ramsay Health Care 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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Why Macquarie shares could be a ‘quality cyclical at a discounted price’: expert

A woman sits at her computer with hand to mouth and a contemplative smile on her face although she is considering or thinking about information she is seeing on the screen.A woman sits at her computer with hand to mouth and a contemplative smile on her face although she is considering or thinking about information she is seeing on the screen.

ASX 200 bank shares strengthened on Wednesday, outperforming the benchmark S&P/ASX 200 Index (ASX: XJO).

The Index closed 0.52% lower today while the ASX 200 Banks Index (ASX: XBK) finished 1.03% in the green.

The Macquarie Group Ltd (ASX: MQG) share price followed the trend, closing up 0.58% at $169.66.

The investment bank has posted a series of gains and losses these past 12 months but is currently trading down 17% this year to date, as illustrated below.

TradingView Chart

Macquarie looks attractive at current prices

The investment debate on ASX bank shares has been a contentious one in 2022. On the one hand, rising interest rates look to boost bank profits.

On the other, the industry is heavily tied to the mortgage sector, with higher interest rates increasing the risk of systemic default.

However, one expert likes what Macquarie shares have to offer. Equity strategist at Wilsons Rob Crookston said Macquarie now presents an “opportunity to buy a quality cyclical at a discounted price”.

He wrote on Livewire:

MQG is a quality business with the proven ability to position itself to take advantage of structural growth opportunities, resulting in compound earnings growth over the long-term.

Management’s ability to deploy capital into opportunities has the potential to underpin future years of growth. We think investors will continue to support this approach, given MQG’s track record.

Crookston said Macquarie can sustainably grow earnings given its focus on annuity income, its capital light model, and exposure to alternative investment classes.

He said that Macquarie manages 153 infrastructure assets across the world across all infrastructure asset classes. These range from roads to airports to digital infrastructure.

Macquarie’s current valuation is also attractive, he says, trading at a price-to-earnings ratio (P/E) of 13.6 times. This is “lower than it has been trading on post-2020 and close to its 5-year historical average”, according to Crookston.

“We think this valuation looks reasonable due to the strong long-term earnings growth potential for MQG and unique leverage to the energy transition.”

The post Why Macquarie shares could be a ‘quality cyclical at a discounted price’: expert appeared first on The Motley Fool Australia.

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

Before you consider Macquarie Group Ltd, 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 Macquarie Group Ltd wasn’t one of them.

The online investing service he’s run for over 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.

See The 5 Stocks
*Returns as of June 1 2022

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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 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 Woolworths share price outperformed the ASX 200 in FY22. Here’s why

a man inspects a capsicum while holding an eco-friendly green string bag in a supermarket produce aisle.a man inspects a capsicum while holding an eco-friendly green string bag in a supermarket produce aisle.

The Woolworths Group Ltd (ASX: WOW) share price was arguably one of the S&P/ASX 200 Index (ASX: XJO)’s top value shares in financial year 2022 (FY22).

And what a year it was. The supermarket giant battled through COVID-19 outbreaks, supply chain issues, and numerous acquisition challenges.

As of the final close of FY22, the Woolworths share price was $35.60, 0.6% lower than it was at the end of FY21. For context, the ASX 200 fell around 10% last financial year.

So, what went on with the ASX 200 staple over the period? Let’s take a look.

The Woolworths share price outperformed in FY22

Let’s cast ourselves back to the start of FY21. Sydney was in the first few weeks of its multi-month COVID-19 lockdown, Australia’s vaccine rollout was underway, and Woolworths had only just split from Endeavour Group Ltd (ASX: EDV).

Here are all the major happenings that have impacted the Woolworths share price since then.

Woolworths’ earnings

Woolworths’ FY21 earnings, released in August 2021, detailed a strong year’s performance.

The company’s sales increased 5.7% to around $67.3 billion in FY21 while its earnings before interest, and tax rose 13.7% to around $3.7 billion. Finally, its after tax profits lifted 22.9% to $1.9 billion in FY21.

It also announced a $2 billion off-market buyback.

Sadly, the first half of FY22 wasn’t so favourable for the supermarket giant.

Its after-tax profit slipped 6.5% from that of the prior consecutive period, mostly due to costs associated with the spread of COVID-19.

COVID-19 impacts take toll on Woolworths share price

The Woolworths share price dived 7.6% in mid-December when the company updated the market on the expected impact of COVID-19 outbreaks.

Woolworths Group CEO Brad Banducci commented on the struggles facing the company during the first half, saying:

The first half of FY22 has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm.

The supermarket later thanked customers for their patience as the ongoing COVID-19-related challenges saw some shelves empty in early January.

One acquisition, two acquisition

And finally, Woolworths was on the hunt for acquisitions in FY22.  

It entered a multi-horse race for formerly-ASX listed Australian Pharmaceutical Industries in early December. It ultimately gave up the chase, allowing ASX 200 conglomerate Wesfarmers Ltd (ASX: WES) to snap up API in March.

But that wasn’t the last of it. The supermarket operator put forward a $1.05 per share bid for an 80.2% stake in online marketplace MyDeal.com.au Ltd (ASX: MYD) in May.

The deal would see MyDeal taken off the ASX, with the remaining 19.8% stake held by its management.

The bid represented a 62.8% premium on MyDeal’s previous close and hasn’t yet been finalised.

The post The Woolworths share price outperformed the ASX 200 in FY22. Here’s why appeared first on The Motley Fool Australia.

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

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of June 1 2022

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended 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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