Day: 2 August 2022

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.

Despite the rampant inflation we’re all feeling today, $1 million is still a lot of money. Indeed, it’s nearly four times the median household net worth of people around retirement age. As a result, even today, a million-dollar nest egg, when combined with Social Security and Medicare, should be enough for a reasonably comfortable retirement in most parts of the country.

That makes a $1 million nest egg a great goal to shoot for. Of course, since it’s so far ahead of where the median household sits, it’s obviously easier said than done. There are no guarantees when it comes to investing, but there is a straightforward, three-step approach that can help you all but clinch that millionaire retirement.

Step 1: Start early

The sooner you get started building your retirement nest egg, the easier it is to reach that $1 million balance. This is because compounding tends to have a bigger base to work from the longer you let it work its magic. The following chart shows the potential growth of a single $10,000 investment over time, based on the rate of return you earn and the number of years you let it compound.

Years Compounding	10% Annual Returns	8% Annual Returns	6% Annual Returns	4% Annual Returns
45	$728,904.84	$319,204.49	$137,646.11	$58,411.76
40	$452,592.56	$217,245.21	$102,857.18	$48,010.21
30	$174,494.02	$100,626.57	$57,434.91	$32,433.98
20	$67,275.00	$46,609.57	$32,071.35	$21,911.23
10	$25,937.42	$21,589.25	$17,908.48	$14,802.44
5	$16,105.10	$14,693.28	$13,382.26	$12,166.53

Data source: author.

That early money can really make a difference to your net worth by the time you retire. Just look at that top row that shows how much larger your single investment can grow if you sock it away and leave it alone for pretty much your entire career.

Step 2: Invest consistently

Of course, if you’re well past the point where you’ve got four-plus decades to wait until retirement, the chance to put that super-early money to work may be behind you. The good news on that front is that you might still have a decent shot of clinching that millionaire retirement by investing consistently.

By making regular investments each payday, each investment has the opportunity to compound between the time you make it and the time you need to tap it for retirement. The following chart shows how much you need to invest each month to reach $1 million by retirement, based on the number of years you have to invest and the rate of return you earn.

Years to Go	10% Annual Returns	8% Annual Returns	6% Annual Returns	4% Annual Returns
45	$95.40	$189.59	$362.85	$662.48
40	$158.13	$286.45	$502.14	$846.05
30	$442.38	$670.98	$995.51	$1,440.82
20	$1,316.88	$1,697.73	$2,164.31	$2,726.47
10	$4,881.74	$5,466.09	$6,102.05	$6,791.18
5	$12,913.71	$13,609.73	$14,332.80	$15,083.19

Data source: author.

While there’s still a huge advantage to starting early, the good news here is that mid-career professionals still have a decent shot of clinching that millionaire retirement. Be forewarned, though, that time can quickly start to work against you.

Look at how much you need to sock away each month if you start saving with ten or fewer years left before you retire. If you thought socking away a few hundred a month early in your career was tough, try going from $0 to a few thousand later in your career. So even though investing consistently is key, starting as soon as possible makes it much more likely to reach your goal.

Step 3: Buy stocks for the long haul

Although the first half of 2022 reminded us that stocks can go down as well as up, over the long haul, there’s still good reason to believe stocks can be a great wealth-building tool. That 10% returns column on the left-hand side of both those tables is there for a reason. That’s about in line with the stock market’s overall historical long-term returns. Stock returns are never guaranteed, but it’s certainly nice to know that these numbers are all in line with what history suggests is in the realm of the possible.

No matter what the market’s future holds, one great approach to buying stocks is to buy a low-cost, broad-based index fund. Those types of investments are widely available in brokerages and in many employer-sponsored 401(k) type plans. They offer market-like returns with almost no overhead costs, and best of all, they tend to beat most actively managed mutual funds over time.

That means that one of the easiest ways to buy stocks is also one of the best. Over time, consistently investing in broad-market index funds gives you a great shot to all but clinch that millionaire retirement.

Get started now

When it comes to saving for retirement, no matter what your personal target is, the sooner you get started, the more time you have on your side. So make today the day to put your plan in place, and boost your shot of reaching that million-dollar nest egg by the time you retire.

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

The post How to all but clinch a millionaire retirement appeared first on The Motley Fool Australia.

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More reading

• Appen share price sinks 25% as earnings tank amid uncertain outlook
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• Warren Buffett has 10% of Berkshire Hathaway’s portfolio in this recession-resistant sector

Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

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The Appen Ltd (ASX: APX) share price is tumbling on Tuesday after the company updated the market on an anticipated dint in its first-half earnings.

And while the artificial intelligence and machine learning data provider believes the second half of 2022 will be brighter, a lack of improvement in July means uncertainty remains.

The Appen share price opened 21% lower at $4.49 before tumbling to trade at $4.25 – representing a 25.57% fall. At the time of writing, Appen shares are trading at $4.37 each.

Let’s take a closer look at the news driving the ASX tech favourite into the red.

Appen share price plunges 25% on Tuesday

The Appen share price is plummeting after the company announced it expects to post a loss for the six months ended 30 June.

It said weaker demand for digital advertising caused some of its major customers to slow spending, bringing the company’s unaudited revenue for the first half to US$182.9 million. That marks a 7% drop on the first half of 2021, mainly driven by Appen’s global division.

Lower revenue, foreign exchange impacts, and investments in the company’s transformation activities caused its earnings to nosedive in turn.

Appen expects to post US$8.5 million of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – a 69% fall on that of the prior corresponding period.

It also expects the first half to have brought an after-tax loss of US$9.5 million. That’s down from a US$6.7 million profit in the first half of 2021.

In late May, Appen told the market its EBITDA would be “materially lower” in the first half.

Looking to the future, the company expects volumes to increase in the second half on the back of seasonal projects and a ramp-up of existing projects.

However, a failure to improve in July means uncertainty remains about a continued slowdown in its global customers’ spending and their exposure to weaker digital advertising demand.

As such, the conversion of forward orders to sales is less certain than it has been in previous years.

What did management say?

Commenting on the news dragging the company’s share price lower, Appen CEO Mark Brayan said:

The first half of the financial year has been characterised by challenging external operating and macro conditions.

[C]osts in this half are higher primarily due to transformation costs, and investment in product and technology … Together with lower-than-expected revenue, this has impacted earnings and margins.

The fundamentals of our business remain strong and our operational performance and the quality of our service we provide customers continues to improve … we remain committed to our longer-term growth strategy and confident of our prospects in the high growth AI market.

The post Appen share price sinks 25% as earnings tank amid uncertain outlook appeared first on The Motley Fool Australia.

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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 positions in and has recommended Appen Ltd. 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 Newcrest Mining Ltd (ASX: NCM) share price had a tough month in July.

The gold miner’s share price fell 7.61% between market close on 30 June and 29 July. For perspective, the S&P/ASX 200 Index (ASX: XJO) lifted nearly 6% over the same time.

Let’s take a look at how the month of July played out for Newcrest mining.

How did the month go?

Newcrest is a global gold and copper producer with assets in Australia, Canada, and Papua New Guinea.

The Newcrest share price slid 11.3% between market close on 30 June and 19 July before recovering slightly.

The spot gold price has fallen 2.5% from US$1807.30 an ounce at close on 30 June to US$1762.90 at close on 29 July, CNBC data shows. Gold plunged to a monthly low of US$1700 an ounce on 20 July before recovering.

The copper price also dropped 3.5% in July, according to Trading Economics data.

On 21 July, Newcrest released its quarterly exploration report for the three months ending 30 June.

The company achieved its gold production guidance for the 2022 financial year while copper production was 3% lower than its guidance. However, gold production was 31% higher than in the March quarter.

Commenting on the results, Newcrest CEO Sandeep Biswas said:

Newcrest delivered a strong fourth quarter to achieve our group gold production for the year. Over the last four quarters we have steadily increased our gold and copper production, driving lower group All-In Sustaining Costs and delivering a record breaking annual cost performance at Cadia.

We were particularly pleased to record a fourth consecutive quarter of lower group costs during this challenging inflationary environment.

Share price snapshot

The Newcrest share price has lost nearly 28% in a year and 21% year to date.

For perspective, the S&P/ASX 200 Index has lost more than 7% in a year.

Newcrest has a market capitalisation of about $17 billion based on the current share price.

The post The Newcrest share price tumbled 8% in July. What went wrong? appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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 Credit Corp Group Ltd (ASX: CCP) share price is falling sharply in morning trade, down 15%.

Credit Corp shares closed yesterday trading for $24.32 and are currently trading for $20.68.

This comes following the release of the debt-focused financial services company’s results for the 2022 financial year (FY2022).

What happened in FY2022?

• Net profit after tax (NPAT) of $96.2 million, up 9% from FY2021
• United States segment NPAT increased by 16%
• Record annual investment, with US purchased debt ledger (PDL) outlays 80% above previous highs reached in FY2020 and gross lending volume 24% above previous record from FY2019
• Record gross lending volume of $267 million for the year
• Declared a final dividend of 36 cents per share, fully franked, bringing the full FY22 payout ratio to 52%

What else happened during the 2022 financial year?

The Credit Corp share price could be taking a hit today after the company noted that while its US PDL investment accelerated in the last quarter of the financial year, the company faced headwinds from a tight labour market in the US.

To address the labour shortfall the company has begun hiring remote workers outside of the US and reported that 100 experienced collectors out of the Philippines have commenced contacting its US customers.

Despite the tight labour conditions, Credit Corp sees significant potential for growth in the US markets.

FY22 also saw the company relaunch its auto loan offering, with that component of its gross loan book doubling over the year to $34 million. It also launched pilot programs into buy now, pay later (BNPL) and US lending.

The company said PDL supply in its core AUS/NZ debt buying market did not recover, which could also be dragging on the Credit Corp share price today.

What did management say?

Commenting on the growth potential in the US markets, Thomas Beregi, Credit Corp CEO said:

Market volumes have stepped up in recent months and further increases are expected during FY2023. As resource constraints are addressed, this segment will support consistent annual investment of more than AU$200 million and be capable of producing medium-term earnings similar to those of the AUS/NZ operation

Addressing the company’s pilots in BNPL and US lending, Beregi added, “While the successful Wallet Wizard branded cash loan product has achieved significant share of its segment other products target alternative segments and points of distribution.”

What’s next?

The Credit Corp share price is likely sliding today in part from the company’s outlook.

Looking ahead, it stated:

Leading indicators do not suggest a significant recovery in AUS/NZ regular direct-from-issuer PDL sale volumes and US resourcing constraints will not be overcome immediately. In FY2023 growth in US segment earnings is not expected to offset the impact of run-off in the AUS/NZ debt buying business.

Credit Corp also stated it expects its regular investment to moderate from the record levels reached in FY2022.

The company offered the following guidance for FY2023:

• PDL acquisitions $220 million to $260 million
• Net lending volumes $50 million to $60 million
• NPAT $90 million to $97 million
• Earnings per share (EPS) 133 cents to 143 cents per share (cps)

Credit Corp share price snapshot

With today’s big fall factored in, the Credit Corp share price is down 28% over the past 12 months. That compares to a full year loss of 7% posted by the S&P/ASX 200 Index (ASX: XJO).

The post Credit Corp share price drops 15% as core debt buying market flounders appeared first on The Motley Fool Australia.

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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 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 CSL Ltd (ASX: CSL) share price is edging lower in early trading amid the company’s latest update on its Vifor acquisition.

At the time of writing, shares in the global biotech are down slightly by 0.27% to $294.10.

Meantime, the S&P/ASX 200 Index (ASX: XJO) is also hovering 0.36% lower to 6,967.6 points.

What did CSL announce to the ASX?

In its announcement, CSL advised it has received all regulatory clearances to finalise the acquisition of Vifor Pharma, effective today.

This comes after the lengthy delay earlier this year regarding the foreign direct investment and regulatory filings.

Nonetheless, with all conditions now met, the takeover of the global specialty pharmaceuticals company will take place by 9 August.

CSL expects to hold more than 97% of Vifor shares upon completion and will seek to cancel the remaining 3%. This will be in accordance with Swiss takeover rules, with CSL also applying for the delisting of these shares on the Swiss Exchange (SIX).

CSL CEO and managing director Paul Perreault commented:

We are excited to complete the acquisition of Vifor Pharma — enhancing CSL’s well-established patient focus and ability to protect the health of those facing a range of rare and serious medical conditions.

Perreault went on to add:

Joining CSL, the Vifor business adds near-term value along with a clear path to long-term sustainable growth. It also adds an outstanding management team, along with a high-value and complementary portfolio of products and market leading position in the nephrology and iron deficiency spaces.

Investors may want to keep an eye out on 17 October as CSL will hold a dedicated Vifor market briefing. Management will discuss Vifor’s growth strategy and insights into its product portfolio and financials.

CSL appoints general manager for Vifor

In other news, CSL has appointed Hervé Gisserot as general manager for the Vifor business once the acquisition is finalised.

Reporting directly to Perreault, the appointment of Gisserot should be a smooth transition given his credentials and current position.

Since January 2022, Gisserot has been the chief commercial officer for Vifor Pharma.

Previously, he spent 13 years at GlaxoSmithKline fulfilling multiple senior vice president (SVP) titles. This includes the most recent, SVP & Head of Pharmaceuticals & Vaccines for Greater China & Intercontinental.

CSL share price snapshot

Despite the recent market volatility, the CSL share price has outperformed the market to surge almost 10% in a month.

For context, the benchmark ASX 200 index has lifted around 7% over the same time frame.

CSL is the third largest company on the ASX with a market capitalisation of roughly $142 billion.

The post What’s going on with the CSL share price on Tuesday? appeared first on The Motley Fool Australia.

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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 CSL Ltd. 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.

To repurpose an old television commercial: When Warren Buffett talks, people listen. Buffett is one of the world’s richest billionaires and most successful investors. Much of the investment community follows his every move, looking to bring some of the Buffett magic into their own portfolios.

Buffett’s moves are particularly interesting as the U.S. faces inflation plus fears of recession. Investors generally want safety in uncertain times. And Buffett, who’s seen many flavors of recession, could shed light on where to find that safety.

But Buffett doesn’t buy and sell stocks based on what’s happening with the economy. He’s an all-weather investor — choosing stocks that can survive all economic climates. That may be why he has 10% of Berkshire Hathaway‘s portfolio invested in consumer staples, a sector that’s known for being recession-resistant.

Consumer staples defined

Consumer staples are essential food, beverage, household, and personal products. Examples are soda, eggs, milk, toothpaste, and detergents.

Consumer staples companies include retailers and manufacturers of these products. On the retail side, you have Dollar General (NYSE: DG), Walmart (NYSE: WMT), Costco (NASDAQ: COST), and their competitors. Consumer staples manufacturers include Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and Kimberly Clark (NYSE: KMB).

Why consumer staples stocks are recession-resistant

A look at your own buying habits can demonstrate why consumer staples stocks don’t tank in recessions. With inflation running hot, where have you cut back to make ends meet? You’re probably spending less on things like electronics and designer clothes. You may have even canceled a streaming service or two.

But you are still buying toilet paper, deodorant, and bread, even as the prices on these goods rise. On top of that, you may have shifted some shopping to discount retailers like Walmart, in lieu of your more expensive local market.

Here’s what it comes down to. People keep buying their staples. Demand for these essential goods doesn’t drop off when the economy goes sideways.

Buffett’s consumer staples stocks

Berkshire Hathaway owns five consumer staples stocks:

1. Coca-Cola
2. Kraft Heinz (NASDAQ: KHC)
3. Kroger (NYSE: KR)
4. Mondelez International (NASDAQ: MDLZ)
5. Procter & Gamble

Where to find consumer staples stocks for your portfolio

Buffett’s consumer staples portfolio is interesting, but you don’t want to run out and copy it. Even Buffett himself would tell you: A better approach is to invest in what you know — specifically, the products, brands, and retailers that are essential to you.

This is easy to figure out, too. Look at your last grocery receipt. Cross off everything that’s nonessential and see what’s left. Or peek into your pantry and bathroom cabinets. Note the brands you buy repeatedly. It could be Colgate or Charmin, for example. If you see mostly generic goods, then where are you buying them?

You could also think back to the products that kept selling out during the Great Lockdown of 2020. (In my community, it was toilet paper, disinfectants, and chicken.) People stockpile the stuff they can’t live without. And many of these staples are made or sold by public companies.

Spend a few minutes on this exercise, and it could reveal six or more recession-resistant stocks to consider for your own portfolio.

Recession defense, the Buffett way

Many investors use consumer staples stocks as a defensive strategy against recession. To follow Buffett’s approach, though, you’d invest in defensive stocks you’re willing to hold for decades. That’s different from owning shares of Coke or Walmart temporarily because financial pundits are predicting recession.

In other words, play defense consistently. Manage to a risk level you can handle in all investing climates. Buffett has 10% exposure to consumer staples, for example, but you might prefer 5% or 15%. Whatever your number is, stick with it. That way, you won’t be scrambling to adjust to every market shift. 

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

The post Warren Buffett has 10% of Berkshire Hathaway’s portfolio in this recession-resistant sector appeared first on The Motley Fool Australia.

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Catherine Brock has positions in Coca-Cola, Dollar General, and Procter & Gamble. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares), Costco Wholesale, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Kraft Heinz and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Several items of news came out of the Chinese electric vehicle (EV) sector today. The result has been a jump in the shares of stocks with a stake there. That has Tesla (NASDAQ: TSLA) shares up 1.9% as of 11:40 a.m. ET. And the stocks of Nio (NYSE: NIO) and Li Auto (NASDAQ: LI) were higher by 3.5% and 5.1%, respectively, at that time. 

So what

Many recent updates from China’s EV sector have been associated with COVID-19-related lockdowns and supply chain issues that have negatively impacted vehicle production. Today, however, there were some signs of a turnaround on that front. Tesla’s company-specific news was of battery-material supply deals the company has inked, as reported by Barron’s. At the same time, July delivery data out of domestic producers Nio, Li, and XPeng (NYSE: XPEV) indicate the market is rebounding there. That’s also good news for Tesla, as its Shanghai plant is a major factor in its growth plans. 

Now what

Nio, Li, and XPeng reported a combined 31,998 for July vehicle deliveries. While it represented a drop from June, that was expected after the companies pushed out vehicles in June that had been delayed in April and May. July deliveries for Nio and Li rose a respective 26.7% and 21.3% year over year, however. And Xpeng notched a 43% year-over-year increase. That’s good news for Tesla, too, which lags these domestic names when it comes to monthly delivery data. 

Tesla appears to be setting itself up for further increases in production. That’s not surprising since the company expects overall annual production growth of about 50% for several more years. But investors weren’t sure how it could achieve that in an environment of supply challenges. Tesla seems to have answered some of those concerns from the deals being reported with two Chinese suppliers of battery materials.

This includes a deal with a processor of cobalt and other metals, and another that supplies lithium cathode material to battery makers. Both deals reportedly run through 2025. Tesla recently boosted production capacity at its Shanghai facility, and the company also needs to supply its two new facilities in Germany and Texas once they have ramped production to capacity. 

While Nio, Li Auto, and XPeng are all competitors, solid delivery numbers from them bode well for what Tesla will report as well. But Tesla also can’t sleep on the competition. Nio plans to open its first overseas plant this fall, according to Reuters. The plant in Hungary will focus on power products such as battery-swapping stations for the European market. Nio has plans to expand sales throughout Europe this year and beyond. 

Investors are seeing all of today’s news as beneficial to the industry as a whole in the short term. That’s helping these names pop today. The overall EV sector is still in very early stages of growth. That should lead to more than just one winner over the long haul. 

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

The post Why the Tesla share price jumped on Monday appeared first on The Motley Fool Australia.

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Howard Smith has positions in Nio Inc. and XPeng Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nio Inc. and 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 Scott Phillips. 

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

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It might be counterintuitive, but sometimes investors might be best served to ignore an earnings downgrade.

That’s because if the business is still in a position to take off in the long run, a one-off downgrade may not matter that much.

In fact, it might even present a juicy buying opportunity as skittish shareholders sell off their holdings and bring the price down.

Fortunately for us, Red Leaf Securities chief executive John Athanasiou reckons he’s found an ASX share that’s just in that situation.

‘A dominant position in an industry with high barriers to entry’

The share price for Cleanaway Waste Management Ltd (ASX: CWY) has dropped almost 17% since 21 April.

The movement down wasn’t helped by an update to the market in May.

“The company downgraded earnings due to floods and higher fuel and labour costs,” Athanasiou told The Bull.

But this is a temporary hiccup, and the analyst feels like the structural advantages for Cleanaway are still in play.

“The waste management company has a dominant position in an industry with high barriers to entry,” said Athanasiou.

“The bulk of the company’s revenues are generated from recurring multi-year contracts.”

Athanasiou would buy the stock now for holding over an extended period.

“Despite a lag in cost recoveries, Cleanaway’s longer term outlook is bright.”

Cleanaway is scheduled to report its preliminary numbers on 19 August.

Recurring revenues with pricing power to fight inflation

Back in June, Wilsons head of investment strategy David Cassidy also spruiked Cleanaway’s long-term potential, calling it a “quality” ASX share with inflation protection.

“The majority of Cleanaway’s revenue is contracted and therefore recurring,” he said at the time.

“Multi-year contracts provide steady volumes and recurring revenues and include appropriate price adjustment mechanisms.”

The wider analyst community is somewhat divided over the waste management provider.

According to CMC Markets, seven out of 14 analysts currently recommend Cleanaway shares as a buy, with five rating it as a hold.

The post ‘Outlook is bright’: Expert names ASX share to buy for long-term fortunes appeared first on The Motley Fool Australia.

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More reading

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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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The Telstra Corporation Ltd (ASX: TLS) share price has experienced quite a bit of volatility in 2022, just like many ASX shares in the S&P/ASX 200 Index (ASX: XJO).

In the year to date, the Telstra share price has fallen 5.9%. It closed yesterday’s session at $3.97.

However, there are signs that Telstra could start to generate earnings growth in the next few years. And that could do good things for the share price.

What’s next for the Telstra share price?

For starters, the telco has itself provided guidance that it’s expecting to deliver profit growth in the next couple of years.

But, one interesting line of thought relates to the NBN. There is also potential opportunity when it comes to home broadband.

Let’s look at what one expert, David Cassidy from Wilsons, has said about the situation in an article on Livewire.

NBN difficulties

Cassidy noted Telstra’s net profit after tax (NPAT) has been “plagued” by headwinds created by the NBN over the past decade.

He pointed out that the Telstra share price started hurting in 2015. This was mainly because of the impact of the Federal Government’s NBN rollout, which damaged revenue.

Telstra is not the dominant provider of wholesale fixed-line networks in Australia anymore. The NBN has steadily replaced Telstra’s legacy fixed-line copper wire network. Telstra’s earnings lost out as customers transitioned to NBN broadband services.

Telstra is now just a retail provider that re-sells NBN access. Cassidy said that Telstra has to compete with other service providers on a “level playing field”.

There has also been a “significant increase” in costs in providing fixed broadband services for Telstra and competitors, hurting margins. Intense competition and aggressive price cutting have hurt operator margins.

The expert noted that these impacts can be seen in the heavy decline in Telstra’s earnings before interest, tax, depreciation, and amortisation (EBITDA) from FY17 to FY21.

In parallel, the Telstra share price has fallen by 2.5% over the past five years to date.

Turning point?

The NBN rollout is “effectively complete”, meaning that there aren’t really any more customers to lose. In other words, “the ongoing drag from the migration of its legacy network is all but over”.

While the hole of the lost home broadband revenue/earnings is still there, Cassidy suggested that earnings “will likely” have bottomed in FY22, establishing a new base to grow from.

Telstra is “entering into an earnings per share (EPS) upgrade cycle, with analysts increasing their earnings forecasts in a sustained manner for the first time in years.”

The Telstra 5G network could be a key driver of the business. Not only can it continue its leadership in the sector, but a strong 5G network could allow Telstra to offer wireless broadband, meaning 5G-powered home broadband. This would enable a significant increase in the margin for each household connection.

Telstra’s T25 strategy also focuses on a further reduction of costs. Revenue could also increase for its mobile division as it raises prices in line with CPI inflation.

Foolish takeaway

Cassidy said that the Telstra share price is attractive when looking at cash earnings rather than statutory earnings because of how capital expenditure spending is structured.

At the time of publication, he said that Telstra was valued at a price-to-equity free cash flow multiple of 16.4 times.

The post Is the Telstra share price on the way back up? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Appen Ltd (ASX: APX) share price is on watch after the company provided insight on its performance over the first half ahead of its earnings’ release later this month.

The artificial intelligence and machine learning data provider outlined a disappointing six months that saw demand for digital advertising wane and some of its major customers’ spending slow while it continued to invest in transformation activities.

The Appen share price is $5.71 as of Monday’s close.

Let’s take a closer look at today’s news from the tech favourite.

Appen share price in focus amid earnings update

The Appen share price is in focus on Tuesday amid news the company’s earnings took a hit in the first half of 2022 and didn’t recover much in July.

The company expects to post revenue of US$182.9 million for the six months ended 30 June – a 7% drop on that of the same period of 2021. That’s expected to dint its earnings before interest, tax, depreciation, and amortisation (EBITDA).

Appen assumes it will post underlying EBITDA (after foreign exchange impacts) of US$8.5 million – a 69% drop.

The company also expects to suffer a statutory loss of US$9.4 million and an underlying loss of US$3.8 million. That’s compared to the prior corresponding period’s respective profits of US$6.7 million and US$12.5 million.

But it wasn’t all bad. The company’s business in China grew while its enterprise business showed momentum.

Appen CEO Mark Brayan commented on the news likely to move the company’s share price today, saying:

The first half … has been characterised by challenging external operating and macro conditions.

This has especially impacted our global division, particularly those customers with a high exposure to digital advertising. While only 26% of our first half global revenue supports digital advertising, we are seeing a flow on effect to non-ad-related projects and some of our core programs, as our customers reduce their overall spend.

Looking to the future…

Appen expects seasonal projects and a ramp up in existing projects to drive volumes in the current half.

Though, it noted a lack of improvement in July means there’s still uncertainty surrounding its global customers’ spending and their exposure to weaker digital advertising demand.

That means the conversion of forward orders to sales is less certain than it has been in previous years.

The company does expect its earnings to pick up in the second half, however. It also noted that while its customers’ spending has slowed, its AI product development is expected to increase.

Appen is set to release its audited half year earnings on 25 August.

Appen share price snapshot

This year has been particularly rough on the Appen share price.

The stock has tumbled 49% year to date. For comparison, the S&P/ASX All Technology Index(ASX: XTX) has slumped 28% and the S&P/ASX 300 Index (ASX: XKO) has fallen 8% so far this year.

The company’s stock is also 52% lower than it was this time last year. That leaves it having underperformed the All Tech Index by 26% and the ASX 300 by 45%.

The post Appen share price on watch as ‘challenging’ first half dints earnings appeared first on The Motley Fool Australia.

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• Why is the Appen share price sinking 15% today?
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• Why the upcoming first-half result could be pivotal for Appen shares

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 positions in and has recommended Appen Ltd. 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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