Day: August 4, 2022

Experts name 2 ASX growth shares to buy

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If you have room for some new portfolio additions this week, then it could be worth considering the two ASX growth shares listed below.

Here’s what you need to know about these buy-rated shares:

Lovisa Holdings Limited (ASX: LOV)

The first ASX growth share to look at is fast-fashion jewellery retailer Lovisa.

Analysts at Morgans have tipped the company as a buy due to its strong long term growth potential. This is being underpinned by its global expansion plans, which will be overseen by its highly experienced CEO, Victor Herrero.

Commenting on its expansion opportunity, the broker said:

Lovisa’s global footprint now spans 22 countries. In our opinion, investors can expect this number to increase steadily while, at the same time, Lovisa builds out its presence in its existing markets. We do not think there is any lack of opportunity. In the US, for example, Lovisa now has 81 stores, representing 0.25 stores for every million people), compared to Australia with 158 stores, 6.15 stores for every million people.

Morgans has an add rating and $21.50 price target on its shares.

Readytech Holdings Ltd (ASX: RDY)

Another ASX growth share to look at this month is Readytech. It owns a portfolio of enterprise software businesses across several market verticals such as higher education and local government.

Goldman Sachs is very positive on the company. This is due to the company operating in market niches that are under-served by both large and small enterprise software competitors. It highlights that this has underpinned high (and growing) levels of recurring revenue and ultra low churn levels. It commented:

RDY serves defensive end markets (e.g. higher education, local government) and has high recurring revenue (>85%) which should protect the company’s earnings profile in an economic downturn. In our view, RDY will continue to grow mid-teens organically while making accretive acquisitions (such as IT Vision), with profitability underpinned by solid software metrics including low churn at ~3% and high LTV/CAC.

Goldman has a buy rating and $4.60 price target.

The post Experts name 2 ASX growth shares to buy 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

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

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‘We are in for the long haul’: Rio Tinto CEO defends future spending in the face of recession fears

A mining worker wearing a white hardhat stands on a platform overlooking a huge mine as brokers predict what's next for the South32 share priceA mining worker wearing a white hardhat stands on a platform overlooking a huge mine as brokers predict what's next for the South32 share price

The Rio Tinto Ltd (ASX: RIO) share price has fallen 29% in the past year, but what’s ahead?

Rio shares dropped 1.55% on the market on Thursday, closing at $95.30 a share. For perspective, the BHP Ltd (ASX: BHP) share price also fell 1.14% while Fortescue Metals Group (ASX: FMG) shares closed 2% lower.

So what are the Rio CEO’s thoughts on future spending?

Rio CEO defends spending

Rio Tinto presented half-year results last week, but the company’s CEO Jakob Stausholm shared more insight into the company’s future strategy today.

In a quarter two earnings call, Stausholm was questioned on Rio’s strategy of increasing capital expenditure (capex) in the future.

In response to questions from analysts about the company’s plan to increase capex, he said:

This is actually really fundamental. If we start adjusting our capex programme because we think there’s a recession in the next six months, we’ve lost. We are in for the long haul here.

If you really think about it, the best thing is to invest when you have a recession, because that’s where you can buy services cheap.

Rio reported revenue had fallen 10% to US$29,775 million in its half-year earnings. The mining giant declared a dividend of 276 cents per share.

However, Stausholm touted investing in a recession, highlighting:

We are absolutely convinced that we have the right investment profile going forward.

Obviously, sometimes things becomes a little bit more expensive when you get inflation and we need to manage that very carefully. We fundamentally want to carry out the activities that we have planned to do.

Rio highlighted it is intent on delivering its long-term strategy. In its half-year results, Rio reported its earnings before interest, tax, depreciation and amortisation (EBITDA) slumped 26% to US$15,597 million. Free cash flow also fell 30%.

Share price snapshot

The Rio share price has dived 29% in the past year and nearly 5% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has lost nearly 6% in the past year.

Rio has a market capitalisation of more than $35 billion based on the current share price.

The post ‘We are in for the long haul’: Rio Tinto CEO defends future spending in the face of recession fears 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 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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2 ASX 200 dividend shares analysts rate as buys

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop in front of them

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop in front of them

There are a lot of dividend shares for investors to choose from on the ASX 200 index. Two that have recently been rated as buys are listed below.

Here’s why analysts rate them highly right now:

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman could be an ASX 200 dividend share to buy according to analysts at Goldman Sachs.

They like the retail giant due to its strong market position and favourable customer demographics. In respect to the latter, the broke notes that Harvey Norman “has a greater preference within the boomer generation and a higher exposure to regional Australia.” Goldman expects this to protect the company from online disruption.

Goldman currently has a buy rating and $4.50 price target on the retail giant’s shares.

As for dividends, the broker is forecasting fully franked dividends of 45.9 cents per share in FY 2022 and 36.3 cents per share in FY 2023. Based on the current Harvey Norman share price of $4.21, this will mean yields of 10.9% and 8.6%, respectively.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share that could be in the buy zone is Wesfarmers. It is the conglomerate behind a range of businesses including Bunnings, Catch, Covalent Lithium, Kmart, Officeworks, and Priceline.

Analysts at Morgans are very positive on Wesfarmers and believe it has “one of the highest quality retail portfolios in Australia” with “a highly regarded management team” leading the business.

Morgans has an add rating and $58.40 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends per share of $1.65 in FY 2022 and $1.81 in FY 2023. Based on the current Wesfarmers share price of $47.00, this will mean yields of 3.5% and 3.85%, respectively.

The post 2 ASX 200 dividend shares analysts rate as 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 positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings 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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Why did the Lake Resources share price lag the ASX 200 in July

The Lake Resources N.L. (ASX: LKE) share price went down a slippery slope in early July and then was catapulted to post a 3% gain for the month. 

However, the ASX lithium share, Lake Resources, and its share price underperformed the S&P/ASX 200 Index (ASX: XJO), which lifted 5.73% last month.

What made the Lake Resources share price flounder and spurt in July?

The Lake Resources share price started the month at 78.5 cents and closed at 81 cents on 29 July. In between, a scathing report by short-seller J Capital pushed down the Lake Resources shares as low as 60.5 cents each on 14 July. 

J Capital peppered the company with some major allegations. These included a claim that its Kachi Project would not reach production in 2024 as planned. It also alleged the processes used at the site would cause environmental damage. 

The latter allegation is particularly damaging given Lake Resource’s brand is centred on supplying lithium in a responsibly-sourced and environmentally friendly manner. 

Such concerns resulted in the Lake Resources share price dropping to as low as 61 cents in July. 

Lake Resources share price rebounds on management response

The market’s embrace of optimism for Lake Resources shares returned upon management’s response to J Capital’s allegations on 14 July 2022. 

Concerns were further allayed by positive news contained in the company’s quarterly results for the three months ended 30 June 2022.

Some key highlights included the advancement of its Definitive Feasibility Study, the progress with assembling its demonstration plant in Argentina, and a positive cash balance of $173 million on the balance sheet. 

I believe the recent share price rally is likely linked to the potential for further lithium exploration. In the quarterly results, Lake Resources announced it secured a second drilling rig. This is for its lithium brine projects at Olaroz, Cauchari and Paso in Argentina. 

Further, recent discussions with US-based Ford Motor Company (NYSE: F) and Japan’s Hanwa Co Ltd is fuelling the prospect of significant offtake contracts. 

My take on Lake

Lithium explorers like Lake Resources are experiencing a long industry tailwind because of the structural adoption of electric vehicles (EVs). The lithium explorers that manage to secure the most supply early on will reap the benefits thanks to a first-mover and scale advantage. 

The key advantage for such explorers is ensuring they strike ‘“gold’” – or – lithium – early on. This provides significant commercial contracts with the largest lithium users, being the big EV manufacturers. Once these contracts are locked in, this enables them to consistently reinvest into discovering new lithium sites. 

However, over the long term, more competitors will likely erode the early returns on capital because the number of suppliers could outweigh demand. 

An investor with technical knowledge in this space could reap significant rewards if they can spot whether Lake Resources possesses an emerging first-mover and scale advantage. 

The post Why did the Lake Resources share price lag the ASX 200 in July 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 Raymond Jang 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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