Day: September 29, 2022

Are these beaten down ASX 200 shares going cheap?

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.

With the market going through a very turbulent time, a number of ASX 200 shares have been hit hard.

Two that have been beaten down in 2022 and could be great value now are listed below. Here’s what analysts are saying about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator’s shares have been sold off this year. This has been driven by weakness in Japan and concerns over inflationary pressures.

Nevertheless, the team at Morgans remains positive on the company and appears to see the recent share price weakness as a buying opportunity.

Morgans likes the company due to its very positive long term growth outlook.  It said:

DMP is the largest Domino’s franchisee outside the US and one of the largest quick-service restaurant companies in the world. It is an affordable option that has performed well historically even in times of inflation or slower economic growth.

The engine of DMP’s growth is its ability to roll out new stores all over the world. It added 438 stores to its global network in the year to June 2022, a pace of expansion that we forecast to accelerate to nearly 600 in FY23. This will take the total to almost 4,000 stores, up fourfold over a ten-year period. Over the next ten years, DMP expects to grow organically to 7,250 stores in the 13 countries in which it currently operates. This means DMP expects to more than double in size again by 2033, not including any future acquisitions.

Morgans has an add rating and $90.00 price target on the company’s shares. This compares favourably to the latest Domino’s share price of $54.15.

Goodman Group (ASX: GMG)

Another ASX 200 share that has fallen hard this year is Goodman. It is an integrated commercial property company with a focus on industrial assets.

Goldman Sachs believes the weakness in the Goodman share price is a bit of a gift to investors. Particularly given the quality of the company and its positive growth outlook.

Its analysts thought the company’s shares were great value last month when they were down 22% year to date. Goodman’s shares have fallen even further since then, which is likely to have the broker licking its lips now. It previously commented:

Year to date, GMG shares are down ~22% [now 39%!], underperforming the ASX200 by ~17% and the ASX200 REIT index by ~5%. We estimate that GMG currently trades on a P/E to growth ratio of ~2.2x (vs. 5-yr historical average of ~2.7x). GMG offers an estimated FY22-24e earnings CAGR of ~14%, screening relatively attractively on a growth adjusted basis relative to our REIT coverage average of ~4%.

Goldman has a buy rating and $25.40 price target on the company’s shares. This compares nicely to the latest Goodman share price of $16.23.

The post Are these beaten down ASX 200 shares going cheap? appeared first on The Motley Fool Australia.

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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 recommended Dominos Pizza Enterprises 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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Experts say these small cap ASX shares are buys

a man sits at his computer screen scrolling with his fingers with a satisfied smile on his face as though he is very content with the news he is receiving.

a man sits at his computer screen scrolling with his fingers with a satisfied smile on his face as though he is very content with the news he is receiving.

If you’re wanting to invest in small cap shares, then you may want to check out the two listed below.

Here’s why experts think these ASX shares could be top options for investors right now:

Nitro Software Ltd (ASX: NTO)

The first small cap that experts rate highly is Nitro Software.

It is a document productivity software company that is aiming to drive digital transformation in organisations around the world. Nitro is doing this with its Nitro Productivity Suite, which provides businesses of all sizes with integrated PDF productivity and electronic signature tools.

And while the company has been growing at a rapid rate in recent years, it is still only scratching the surface of its enormous market opportunity. Management commented:

With a strong balance sheet and zero debt, we are well placed to cement and expand our position in the fast-growing US$28 billion eSigning and PDF productivity market as customers increasingly demand the suite of high-security high-trust products we offer.

Goldman Sachs is very positive on the company and currently has a buy rating and $2.05 price target on its shares.

PlaySide Studios Limited (ASX: PLY)

Another small cap ASX share that experts are tipping as a buy is PlaySide Studios.

It is one of the largest video game developers in the ANZ region. It provides titles in a range of categories, including self-published games based on original intellectual property and game development services in collaboration with studios such as Take-Two Interactive, Activision Blizzard, Meta, Disney, Pixar, Warner Bros, and Nickelodeon.

The company also has a growing interest in NFTs and generated $9 million in sales from them during the first half.

Ord Minnett is a fan of the company. It currently has a speculative buy rating and 85 cents price target on its shares.

The post Experts say these small cap ASX shares are buys appeared first on The Motley Fool Australia.

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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 recommended Nitro Software 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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Expert reveals ‘one of the most important things’ to do in the share market right now

A businessman keeps calm in the face of inflationA businessman keeps calm in the face of inflation

The S&P/ASX 200 Index (ASX: XJO) finished up 1.4% on Thursday at 6,555 points.

In the year to date, the benchmark index has dropped almost 14% as the market grapples with the challenges of rising inflation and interest rates. This means only one thing: Volatility.

As reported by CNBC, staying invested during volatility is difficult but crucial for share investors, according to Mary Callahan Erdoes, the CEO of JPMorgan Asset & Wealth Management.

At CNBC’s Delivering Alpha investor summit in New York, Erdoes said:

While the world is focused on all the black swan events, there will be white swans that emerge.

Keeping your eye out for those white swans and … staying invested in these markets is one of the most important things and one of the most difficult things.

Stand by for some industry lingo

Before we go any further with Erdoes’ comments, here’s a quick reminder on the following fin-speak.

  • The term ‘black swan’ describes a market-moving event that no one saw coming. Case in point: COVID-19
  • The term ‘white swan’ is a predictable crisis that can be addressed
  • The term ‘alpha’ means returns that beat the general market (we’ll talk about alpha in a sec)

Got that? Okay, here’s some more from Erdoes.

There’s ‘alpha everywhere’

Erdoes says investors should search the market for opportunities. She said:

There is alpha everywhere. It’s in stocks. It’s in bonds. It’s in currencies. It’s in real estate. It’s in private markets. It’s in public markets. It’s everywhere, because we are in such a state of change.

Erdoes is an expert, so she’s going to look far beyond her home market for opportunities. Some ASX share investors do the same, so let’s check out her views on international stocks.

Erdoes said:

Don’t fight investing in China. It’s a country that is going to emerge from COVID. It’s a country that is going to put its 22% youth employment back to work. It’s an economy that is going to continue to invest in EVs, semis, et cetera.

She also likes United Kingdom banking stocks, adopting a Buffett-esque view of being ‘greedy only when others are fearful‘.

She said:

Last week people said don’t invest in a single thing in the UK. That is exactly when people like us, and people in the room, think, ’Let’s go look right there’.

Let history be your guide

The following table published by CBNC demonstrates how staying in the market has worked at various historical points. What it does is ensure you are in the market on its best days of recovery.

While this data represents the S&P 500 in the US, the same principle applies to ASX shares, too.

Source: cnbc.com

The post Expert reveals ‘one of the most important things’ to do in the share market right now appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen 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 JPMorgan Chase. 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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Could fear of inflation mean ‘missing out on periods of strong share market returns’?

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.

The latest Australian inflation data shows the ‘new’ consumer price index (CPI) fell by 20 basis points to 6.8% from July to August.

Nevertheless, markets are still wagering that the Reserve Bank of Australia (RBA) will deliver a 50 basis point increase to the cash rate when it meets for its policy meeting next week.

Should it complete the full 50 basis points this would bring its policy rate to a near-decade high of 2.85%.

Surprisingly, while still an enormously high CPI print for July–August, markets have taken the small decrease in inflation reasonably well. The S&P/ASX 200 Index (ASX: XJO) closed 1.44% higher on Thursday.

Inflation must go: RBA

The stimulus for the RBA’s hiking cycle is the abnormally high inflation and central banks around the world have made a commitment to stamp it out.

Empirical data shows that inflation is a unique and nasty occurrence for investor portfolios as it hurts both stocks and bonds – thus breaking down traditional rules of diversification.

As a result, the downside seen on the charts this year has been deep and widely felt.

However, those opting to sit on the sidelines for too long might be missing out on some ample opportunities to invest, so says Pengana Capital.

“[H]istoric data suggests that waiting for certainty that markets have bottomed, and interest rates are again falling, may mean missing out on periods of strong share market returns,” the firm recently wrote on its website.

Pengana notes that markets are forward-looking and are constantly seeking to price in all of the ‘negative’ news – be it surrounding an event, a particular company, or the economy at large.

This is important, as by the time the worst of any economic fallout is felt, investors will already be looking at what is coming next.

In the event of a recession, say, the market would be looking to when the next upswing in the economic cycle will be, versus the current situation.

Market positioning is very important

How the market perceives the future has implications on what ‘factors’ are set to perform as well, namely growth or value stocks.

Pengana notes that growth, while overly sensitive to the business cycle, often makes a comeback earlier than most originally predict.

Oftentimes, the firm says, this comeback performance begins to stage itself before there is a full market bottom – as was seen in 2002 and 2009, following those two market crashes.

Thinking about Pengana’s arguments a little more, there’s actually weight behind them. Markets do move in cycles, and there is always a winning and losing side to every trade.

In particular, waiting on the sidelines for too long in this economic climate also prohibits the investor from participating in large shifts in investor sentiment.

Right now, for example, the Great British Pound (GBP) is taking a beating on the foreign exchanges, and this has forward-reaching implications for companies who are domiciled here, and export to the country.

Further, there’s also been an enormous rally in commodity prices in a cause-effect pattern throughout the past 12 months, and this has set ASX mining giants up to pay large dividends for years to come.

The point is, being a prudent investor means continuously weighing up a large data set and then synthesising that data into quick, actionable insights to make decisions.

Often that means thinking beyond the current situation, keeping a long-term view in mind always.

That also means trying to pick a top or bottom in the cycle is a risk not worth taking, a point that’s backed up by years of historical data. Instead, remaining true to the tried and tested ‘tenements’ of investing are paramount.

As the saying goes, it’s time in the market, not timing the market, that matters.

The post Could fear of inflation mean ‘missing out on periods of strong share market returns’? appeared first on The Motley Fool Australia.

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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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