Day: July 23, 2022

Goldman Sachs names 2 ASX shares as conviction buys

A group of business people face the camera clapping after investors voted to give Mirvac control of an AMP office fund which will likely move the AMP share price today

A group of business people face the camera clapping after investors voted to give Mirvac control of an AMP office fund which will likely move the AMP share price today

Looking for new ASX shares to buy? If you are, then you may want to check out the two listed below that are highly rated by the team at Goldman Sachs.

In fact, its analysts rate them so highly that they have them on their conviction list. Here’s what you need to know:

Iluka Resources Limited (ASX: ILU)

Goldman Sachs is a big fan of this mineral sands and rare earths company and has named it as an ASX share to buy.

Last week the broker retained its conviction buy rating and lifted its price target to $14.40. This implies potential upside of over 40% for investors over the next 12 months.

Goldman likes Iluka due to its attractive valuation and “compelling Mineral Sands and Rare Earth growth potential.” It commented:

Trading at ~0.6x NAV (A$15.04/sh). We think the market is ascribing only some value to ILU’s Wimmera and Eneabba RE projects and the high grade zircon Balranald development project. We think ILU is undervalued (on just c.3.5x EBITDA NTM) vs. key rare earth (c.13x) and mineral sands/pigment (c.5x) industry peers.

Compelling Mineral Sands and Rare Earth growth potential: We are positive on ILU’s project pipeline and forecast >40% production growth in mineral sands volumes, c.18ktpa of Rare Earths (~3.5-4ktpa of high value NdPr).

Lifestyle Communities Limited (ASX: LIC)

Another ASX share that Goldman rates highly is retirement communities company Lifestyle Communities.

Last week Goldman Sachs retained its conviction buy rating with a slightly trimmed price target of $24.30. This implies potential upside of over 50% for investors over the next 12 months.

Its analysts believe the company is well-placed to benefit from Australia’s ageing population and structural growth in demand for land lease. The broker commented:

LIC is well-placed to provide supply to a growing cohort of over 50’s with limited savings outside the family home seeking to free up equity. In the near term, we see potential modest house price declines offset by LIC’s favourable pipeline and inventory position, coupled with a strong value proposition for incoming home-owners, with the cost of an LIC home currently sitting at c.65% of the median house price (vs. company feasibility of up to 80%), thus providing pricing support.

The post Goldman Sachs names 2 ASX shares as conviction buys 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 July 7 2022

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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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3 steps you’ll regret not taking during this bear market

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

A child covering his eyes hiding from a toy bear representing a bear market for ASX shares

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

If your portfolio is teetering amid a turbulent bear market — as pretty much everyone’s is at the moment — you need a plan to come out ahead, and you need to act on it.

Fruitful investments made today could have the benefit of a very long run-up once the bear market subsides, and mistakes made out of fear could have consequences for a long time, too. 

With those consequences in mind, let’s look at three quick steps you can take to make the best out of the market as it is right now. 

1. Build on your high-confidence positions

The first thing to do when the market gets rough is to use it as an opportunity to gobble up shares of companies in your portfolio you think will continue to appreciate in value for a long time, even if their stock price is falling in the short term.

Think about a business like Pfizer (NYSE: PFE), which has seen its shares fall by 11% so far this year despite widespread successes with hit products like Comirnaty, its coronavirus vaccine, and Paxlovid, its antiviral pill for COVID.

If you have a position in it and the recent drop scares you off from adding more, you’re missing out on a sale — assuming that you actually believe it’ll eventually recover. 

So, especially for an investment like Pfizer, which is steadily growing its sales and net income, it makes more sense to be buying shares than sitting on the sidelines. The real trick is to keep investing even when high-confidence picks get rocked.

And as long as your investing thesis is still as valid as when you started buying the shares, you’ll be getting the biggest discounts when things look like they’re crashing the hardest. Just be aware that you might need to wait a few years before your spending starts to pay off with outsized returns.

2. Set up a dividend reinvestment plan

Another great action to take to weather the bear market is to enable a dividend reinvestment plan (DRIP) for your dividend-paying stocks. Take the returns from AbbVie (NYSE: ABBV) over the last 10 years, for example:

ABBV Chart

ABBV data by YCharts

As the chart shows, the price returns from AbbVie shares are nowhere near the total return that’s possible by retaining and reinvesting each of its quarterly dividend payments. When you reinvest your dividends instead of accepting them in cash and spending them elsewhere, your position compounds in value much faster.

And when share prices dip during a bear market, the stock’s dividend yield increases accordingly, meaning that if you aren’t reinvesting your dividends at that moment, you’re missing out on securing some higher-yield shares for the remaining years of your long hold. 

Plus, biopharma companies like AbbVie often have significant cash flows that are enough to keep hiking their dividend even when there’s a bear market, recession, or other economic issues.

That means if you don’t set your shares to reinvest their dividends now, then by the time the bear market is over, you might have missed out on quite a bit of compounding at a very attractive rate. And it would be a shame to lose out on this bonus that’s there for the taking. 

3. Talk yourself out of panic selling (or buying)

Perhaps the most important step to take during a bear market or market crash is to take a deep breath and talk yourself out of selling your shares in a panic. (It’s also helpful to avoid frantically buying the dip on stocks you aren’t fully confident in but seem priced like a bargain.)

Selling your shares locks in whatever losses you’ve sustained, regardless of whether there is a valid business reason for the underlying company to experience additional headwinds. 

In the current market, it’s true that there are quite a few economic headwinds making things difficult, but it’s also true that buying high and selling low is a losing strategy.

Eventually, the market will recover, and when it does, the stock you’re itching to sell could easily come back with a vengeance. Therefore, when you get tempted to pull the plug on some of your investments, you’ll regret not stepping back, especially if you don’t have a need for the money you invested anytime soon.

When I get tempted to sell due to market chaos, I find that it’s often helpful to simply close my browser tab displaying my portfolio and take a walk outside. 

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

The post 3 steps you’ll regret not taking during this bear market 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 July 7 2022

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Motley Fool contributor Alex Carchidi 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.

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



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Running out of cash in retirement? 4 better options than taking on debt

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

An older couple use a calculator to work out what money they have to spend.

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

Inflation is making life tough on everyone right now, but it’s especially hard for retirees who have to make their nest eggs last an indefinite amount of time without a job bringing in steady income.

When your financial accounts are dwindling, borrowing money to tide you over can feel like your only option. But it often leads to longer-term problems, especially if you wind up with high-interest debt.

You may have other choices available to you, though. Here are four options to consider before you apply for a loan or charge a bunch to your credit card.

1. Get a job

Yeah, I know. Retirement is supposed to mean not working, but if you’re in serious financial trouble, getting a job can be one of the surest ways to get out of it. You’ll have a steady paycheck again, and you may even be able to add to your retirement accounts over time.

Getting a job doesn’t have to mean going back to some corporate cubicle you hate, either. You can choose something that’s a little more laid-back or in line with your interests. You can even start your own business.

2. Sell items you no longer want

If you have a lot of unused possessions, consider selling them to make a quick buck. This might not help you out long-term, unless you own valuable artwork, antiques, or something similar. But it could help you make ends meet for a little while until you can work out a better long-term plan.

It’s pretty easy to sell most items these days. Just create a profile on a marketplace website or post the item on social media and await offers.

3. Look into government assistance programs

You might qualify for government assistance programs that can help you cover your essential costs. For example, blind, disabled, and low-income seniors may qualify for supplemental income from the federal government. If you’re not sure if you qualify, check out the government’s eligibility screening tools.

Explore the resources available to you at state and local levels as well. You may be able to get help paying for food, housing, medical care, and more.

4. Consider a reverse mortgage

A reverse mortgage is a kind of debt, but it might be a better choice for some than other types of debt, like credit card debt. Essentially, a reverse mortgage allows homeowners aged 62 or older to borrow against the equity they have in their homes. They can receive the cash as a lump sum, monthly payments, or a line of credit. And they don’t have to repay the loan as long as they’re alive and living in the home.

But there are a few catches. First, you need substantial equity in your home in order to be able to do a reverse mortgage. Also, when you die or permanently move out of your home, the balance of the loan comes due. This could make it impossible to pass your home on to your heirs if they’re not able to pay it off.

You will still face fees and interest with a reverse mortgage, but you don’t need an income or decent credit to get one. So it could be a good option if you don’t think you could affordably borrow money elsewhere.

Sometimes, borrowing money might actually be a smart option for you. But don’t rule out these other income sources without checking them out.

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

The post Running out of cash in retirement? 4 better options than taking on debt appeared first on The Motley Fool Australia.

Should you invest $1,000 in Asx:xjo right now?

Before you consider Asx:xjo, 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 Asx:xjo 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 July 7 2022

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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.

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



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How might China’s $6b Mineral Resources Group impact the iron ore price?

Three Argosy miners stand together at a mine site studying documents with equipment in the backgroundThree Argosy miners stand together at a mine site studying documents with equipment in the background

There’s a new global iron ore player on the circuit. Chinese authorities have officially established a new, nationalised iron-ore company called China Mineral Resources Group.

The group was established this week with a paid-up capital of $US4.3 billion ($6.2 billion), according to Bloomberg,

The new company is set to become China’s central purchaser of iron ore. Chinese steel mills would then source iron ore from the group.

The move could see China tighten its control on the global steel market – at least, that is the intention.

What does this mean for the iron ore price?

Well, apparently not much, although it’s early days.

The price of iron ore didn’t budge on the news and was trading sideways at US$100 per tonne at the time of writing, back at its December 2021 levels. It remains 51% down on the year.

Meanwhile, large Aussie miners don’t appear too fazed by the news either. For instance, BHP Group Ltd (ASX: BHP) CFO David Lamont said the mining giant isn’t too convinced the entity will influence price action.

Speaking at The Australian’s Strategic Business Forum, Lamont believes “markets will sort out where prices need to be based on supply and demand”.

“[O]bviously [we] will meet what overall prices the overall economy and the world puts forward, so we’re not worried about that,” he added.

Meanwhile, Fortescue Metals Group Limited (ASX: FMG) non-executive director Penny Bingham-Hall was more upbeat on the news.

Bingham-Hall said the industry “has got a new customer”.

“I’m a great believer that markets are defined by supply and demand and China is an incredibly important market for Australia,” she added.

A spokesman for Rio Tinted Limited (ASX: RIO) said the company looked forward to ­“engaging with the new China Mineral Resources Group, government and our customers to understand more”.

Looking forward, it will be interesting to see where the iron ore price heads from here.

The post How might China’s $6b Mineral Resources Group impact the iron ore price? 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 July 7 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 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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