Month: October 2022

Why is the Paradigm share price rocketing 19% today?
The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has returned from its trading halt in style.

In morning trade, the drug development company’s shares are up 19% to $1.50.

Why is the Paradigm share price rocketing higher?

Investors have been bidding the Paradigm share price higher today following the release of results from an osteoarthritis (OA) clinical study.

According to the release, the primary endpoint has been met for injectable PPS (iPPS) in the PARA_OA_008 phase 2 clinical trial.

The release explains that several OA biomarkers analysed were observed to favourably change over time in patients treated with iPPS compared to a placebo. Management notes that these biomarker changes provide insight into iPPS mechanisms of action as well as signals of disease modifying potential.

In addition, iPPS-treated subjects demonstrated statistically significant improvement in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain, function, and stiffness scores at day 56 for the twice-weekly group compared to placebo.

This could be very good news for Paradigm as there is a significant market opportunity for an OA treatment. Management highlights that there were 303.1 million cases of hip and knee OA worldwide in 2017.

But it doesn’t stop there. In a separate canine study, positive interim observations on the effects of iPPS treatment on dogs with naturally occurring OA were also reported. Seven of nine dogs treated with iPPS had a clinically meaningful functional improvement in the affected limb.

‘Very encouraged’

Paradigm’s chief medical officer, Dr Donna Skerrett, was pleased with the results. She said:

We are very encouraged by the synovial fluid biomarker signals we see in this study. The observed changes indicate mechanistic effects through pain, inflammation, and chondroprotective pathways. These changes are consistent with the clinical effects observed in this and prior studies of iPPS in osteoarthritis.

Evidence of multimodal effects supports our understanding of the actions of iPPS. These biomarker changes in the joint, following subcutaneous administration of iPPS, demonstrate local effects in the synovial fluid. These are meaningful signals that we will evaluate together with clinical and imaging outcomes in order to demonstrate disease modifying effects and to pursue regulatory authority guidance on a disease modifying pathway.

The post Why is the Paradigm share price rocketing 19% today? appeared first on The Motley Fool Australia.

.

More reading
- 3 ASX All Ords shares that marched higher on Friday
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.

from The Motley Fool Australia https://ift.tt/Co7z6i1
4 October 2022
Credit Suisse has the market on edge. What should you do?
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.

The big news out of the financial sector over the weekend concerned investment bank Credit Suisse (NYSE: CS) and its financial health. Shares of the bank dipped to a new all-time low Monday morning before rebounding slightly, but many investors and analysts are deeply concerned about the Switzerland-based bank’s future.

Here’s a rundown of what happened, why investors are so concerned, and whether Credit Suisse is a bargain stock to consider for your portfolio.

Is Credit Suisse in trouble?

The short answer is that we don’t know for sure. The Financial Times reported that Credit Suisse was in discussions with investors to reassure them of the bank’s financial health. It was also reported that CEO Ulrich Korner sent a memo indicating that the bank is looking to raise capital. And without getting too deep into a discussion of derivatives, the bank’s credit default swaps — basically insurance against the bank defaulting on its debt — saw costs rise sharply, essentially indicating that investor confidence in the bank’s financial health was eroding.

Now, the bank’s management denies any major problems. In a note to CNBC, Korner spoke of the bank’s strong capital base and liquidity position. And separately, he denied reports that the bank needs to raise capital but did confirm that Credit Suisse is completing a strategic review. In fact, in his memo to staff, Korner said the bank was at a “critical moment” and would present its strategy update plans on Oct. 27. Analysts have speculated that the bank could sell some of its assets, and could potentially exit some of its markets, including the United States.

Why is the market worried?

The 2007-2009 financial crisis still leaps to investors’ minds when markets get turbulent. And the collapse of a major financial institution would trigger a wave of panic in the markets that another crisis is beginning.

Credit Suisse is a massive investment bank, with about $1.5 trillion under management and operations all over the world. To put this into perspective, Lehman Brothers — whose 2008 bankruptcy was a key event in the financial crisis — had less than $250 billion in assets under management (AUM) at the time of its collapse.

Still, analysts generally don’t see a worst-case scenario playing out here. A report by Citigroup analysts called the situation “night and day from 2007.” JPMorgan Chase called Credit Suisse’s capital position “healthy.”

Is Credit Suisse stock cheap now?

Credit Suisse is down by roughly 60% over the past year, trading at an all-time low. Shares of the investment bank trade for just 21% of book value (that’s not a typo). So, it may seem like a good time to buy the stock at a bargain.

However, keep in mind that there are significant risks to doing so. As mentioned, some experts think there’s a serious chance that Credit Suisse could collapse. And even though many think there’s a very low probability of that happening, there are plenty of bank stocks trading cheaply that aren’t having financial problems. For example, if you’re looking for an investment bank, Goldman Sachs is trading for less than its book value for the first time since the initial 2020 COVID-19 crash and is in solid financial shape.

There are other examples for sure, but the point is that it’s important to be able to distinguish between stocks that are cheap and stocks that are cheap for a reason. While a full collapse seems unlikely, Credit Suisse is definitely in the latter category.

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

The post Credit Suisse has the market on edge. What should you do? appeared first on The Motley Fool Australia.

.

More reading
Matthew Frankel, CFP® has positions in Goldman Sachs. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs and 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.

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

from The Motley Fool Australia https://ift.tt/HCfy3pz
4 October 2022
These were the worst-performing ASX ETFs in September
The S&P/ASX 200 Index (ASX: XJO) put up another lousy performance in September. It slid by 7.3% across the month to finish at 6,474 points.

But this single-digit fall stacks up rather favourably to some ASX exchange-traded funds (ETFs) that turned in disappointing performances.

Using data from Google Finance, let’s check out the worst-performing ETFs on the ASX in September.

Global X Hydrogen ETF (ASX: HGEN)

The Global X Hydrogen ETF found itself at the back of the pack, drudging up an 18.4% loss in September.

The HGEN ETF aims to provide investors with exposure to companies that stand to benefit from the advancement of the global hydrogen industry.

Some of its top holdings include Plug Power (NASDAQ: PLUG), a provider of turnkey hydrogen and fuel cell solutions, and Bloom Energy (NYSE: BE), a manufacturer and marketer of solid oxide fuel cells.

The HGEN ETF was formerly managed by ETF Securities before the ETF provider was taken over by Global X.

HGEN was one of the ASX’s best ETF performers in August. It climbed 8.2% across the month as investors bid up hydrogen stocks in anticipation of the Inflation Reduction Act being passed in the US.

It appears momentum ran out of steam in September. Sentiment towards these hydrogen companies turned sour, sending the HGEN ETF down with it.

VanEck FTSE International Property (Hedged) ETF (ASX: REIT)

The VanEck REIT ETF took out unwanted second place, crumbling 14.5% in September to finish the month at $14.98.

The REIT ETF aims to provide investors with exposure to a portfolio of international property securities from developed markets, excluding Australia.

The REIT ETF comprises around 340 companies. Some of the top holdings include Prologis Inc (NYSE: PLD), a global leader in logistics real estate, Equinix Inc (NASDAQ: EQIX), a data centre company, and Public Storage (NYSE: PSA), the largest self-storage company in the US.

Real estate investment trusts (REITs) are thought to be rather resilient in an inflationary environment as property prices and rental income keep up with inflation.

However, REITs have been battered and bruised this year over concerns about rising interest rates. In a rising interest rate environment, the high yields on offer from REITs become less attractive compared to lower-risk, fixed income options.

What’s more, REITs are mainly funded through debt, which becomes more expensive as interest rates head north.

SPDR S&P/ASX 200 Listed Property Fund (ASX: SLF)

ASX REITs weren’t immune to this selling pressure in September. As a result, the SLF ETF sat in third place with a 13.9% monthly fall.

The SLF ETF seeks to track the S&P/ASX 200 A-REIT Index (ASX: XPJ), which comprises the 24 REITs in the ASX 200 index.

Nearly one-quarter of SLF’s portfolio is weighted to Goodman Group (ASX: GMG). Other top holdings include Scentre Group (ASX: SCG), Dexus Property Group (ASX: DXS), Stockland Corporation Ltd (ASX: SGP), and Mirvac Group (ASX: MGR).

The SLF ETF has tumbled around 33% in the year to date as ASX REITs have been sold off on the back of rising interest rates.

The post These were the worst-performing ASX ETFs in September appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor Cathryn Goh 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.

from The Motley Fool Australia https://ift.tt/XgaNTbe
4 October 2022
Does the BHP share price have a strong outlook in October?
The BHP Group Ltd (ASX: BHP) share price has seen plenty of volatility in recent times. Is it going to rise in October and beyond? Or has it seen the best of 2022 earlier this year?

As Australia’s biggest company, what happens with BHP is important for both the economy and the S&P/ASX 200 Index (ASX: XJO).

BHP is a massive commodity business. That means that profit and sentiment can be highly influenced by changes in resource prices.

Iron ore has been the key profit generator for BHP over the past few years. The fall of the iron ore price by more than a third since April has seen the BHP share price drop by more than 25% to its current price of $38.60.

How are things looking for the BHP share price and commodities?

I think BHP is in a reasonable situation. It’s true that China is not paying the same amount for iron ore per tonne that it was earlier this year. But, demand can be cyclical – it’s not going to be the same every single year.

China has been affected by COVID lockdowns, a weakening outlook for the global economy, and uncertainty about its own housing sector.

Despite those issues, the iron ore price is still above US$90 per tonne and in Australian dollar terms, the price has improved as the Aussie dollar weakened compared to the US dollar.

On the coal side of BHP’s business, it is making a lot more profit as coal prices soar. This is offsetting a large part of the decline in profit from the iron business.

Copper prices have reduced, however, the company expects copper demand in the long term to grow as the world increasingly goes through electrification and decarbonisation.

What do analysts think of the business?

It’s difficult to forecast where resource prices will go next. However, there are a number of opinions out there on BHP.

The broker Macquarie has a price target of $44 on the business, implying that it could rise by more than 10% over the next 12 months. Macquarie thinks BHP can benefit from the strong coal pricing.

With the 2023 financial year in mind, the broker thinks the BHP share price is valued at 11x FY23’s estimated earnings with a projected grossed-up dividend yield of 9.7%.

The broker Morgan Stanley rates BHP as equal-weight, which is kind of like a hold, but the price target is $43.20, implying a possible rise of more than 10%. It recently increased its long-term forecasts for commodities like copper and iron ore.

One broker that isn’t so optimistic is UBS. It has a price target of just $35.50 on the BHP share price, which implies a possible drop of almost 10%.

It thinks that key commodity prices will fall over the next year or two, which could then impact BHP’s profitability.

The post Does the BHP share price have a strong outlook in October? appeared first on The Motley Fool Australia.

.

More reading
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 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.

from The Motley Fool Australia https://ift.tt/IboBsqf
4 October 2022
The Zip share price had another horror month. How much did it fall?
The Zip Co Ltd (ASX: ZIP) share price dropped in September, but by how much?

Zip shares fell 28% between market close on 31 August and 30 September.

Let’s take a look at why September was another tough month for the Zip share price.

Why did the Zip share price fall?

The Zip share price may have fallen in September, but it was not alone among the ASX Buy Now, Pay Later (BNPL) sector. Block Inc CDI (ASX: SQ2) shares descended more than 17% in September, while Sezzle Inc (ASX: SZL) slumped 28%.

The Zip share price has descended nearly 93% from a high of $12.35 on 19 February 2021.

Zip shares struggled in September amid rising interest rates, BNPL investor sentiment and broker downgrades.

Zip started the month on a sour note when it was booted out of the ASX 200 Index. The S&P Down Jones announced a quarterly rebalance on 2 September that applied from 19 September. The downgrade means Zip is no longer one of ASX’s top 200 shares by market cap.

In mid-September, the Zip share price fell amid calls for tougher regulations on buy now pay later (BNPL) providers in the United States. The U.S. Consumer Financial Protection Bureau (CFPB) unveiled plans to oversight BNPL lenders in the same way as credit companies.

The bureau’s director Rohit Chopra said:

We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan.

In late September, Seneca Financial Solutions senior investment advisor Arthur Garipoli recommended investors sell Zip shares. Commenting on Zip in a post on The Bull, Garipoli said “The outlook presents challenges in a tough economic environment”.

On a positive note, earlier in the month Jarden analysts sought to dispel “myths” on Zip credit losses and cash burn. Analysts noted Zip’s “tightening measures across the whole cycle to help contain its credit losses”. On cash burn, analysts said:

The Rest of World (ROW) strategic review is underway with predictions the second half will see Zip neutralise ROW cash burn.

The Reserve Bank of Australia (RBA) is due to meet on interest rates today. Experts are widely tipping the RBA to lift rates by 50 basis points.

Share price recap

Zip shares have lost nearly 90% in the past year, while it has fallen nearly 85% in the year to date.

For perspective, the ASX 200 has shed more than 10% in the past year.

ZIP has a market capitalisation of nearly $461 million based on the current share price.

The post The Zip share price had another horror month. How much did it fall? appeared first on The Motley Fool Australia.

.

More reading
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 positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/V2MIHWK
4 October 2022
Dividends, dividends, dividends! 2 ASX ETFs to buy now
Wouldn’t it be great if you could build an income portfolio filled with quality dividend shares without any effort?

Well, I have good news for you. There are a number of exchange traded funds (ETFs) out there that have been designed to help income investors.

Two that could be worth considering are listed below. Here’s what you need to know about them:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The first ETF for income investors to consider right now is the BetaShares S&P 500 Yield Maximiser.

This ETF aims to generate attractive quarterly income for investors and reduce the volatility of portfolio returns at the same time.

In order to deliver on this objective, BetaShares has implemented an equity income investment strategy over a portfolio of shares comprising the S&P 500 Index. This index is home to 500 of the largest companies listed on Wall Street.

This means you’ll be investing in dividend-paying companies such as Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and United Health.

The BetaShares S&P 500 Yield Maximiser’s units are currently providing investors with a 6.4% distribution yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another ETF for income investors to look at is the Vanguard Australian Shares High Yield ETF.

This ETF provides investors with exposure to ASX-listed shares that have higher than average forecast dividends.

But rather than just loading up on banks and miners, the ETF restricts the proportion invested in any one industry to 40% and 10% for any one company. This ensures that income investors are holding a diverse collection of dividend shares.

Included in the fund are income investor favourites BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Telstra Corporation Ltd (ASX: TLS).

The Vanguard Australian Shares High Yield ETF currently trades with an estimated forward dividend yield of 5.8%.

The post Dividends, dividends, dividends! 2 ASX ETFs to buy now appeared first on The Motley Fool Australia.

.

More reading
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 positions in and has recommended BetaShares S&P500 Yield Maximiser. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield Etf. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/gEyz1x7
4 October 2022
Following a tumultuous month, what’s next for AGL shares in October?
AGL Energy Limited (ASX: AGL) shares struggled through September, tumbling 11% despite the company outlining some major future changes.

Sentiment on such changes has the potential to continue driving the stock in October and beyond. Particularly, as experts line up to herald the benefits and challenges the company could face on its crusade to dump coal.

The AGL share price is currently trading at $6.86.

Let’s take a look at what the S&P/ASX 200 Index (ASX: XJO) energy producer and retailer’s future could hold.

What could October hold for AGL shares?

AGL shares have been the talk of the town since the ASX 200 company revealed its $20 billion plan to exit coal-fired generation by financial year 2035, turning to new renewable and firming technology instead, on Thursday.

And the company’s spotlight has extended into October as the market digests the transformational goal. So far, experts have put forward both positive and negative takes.

Morgans dubbed AGL’s newly announced strategy “sound”, my Fool colleague James reports. The broker continued:

AGL has set itself an achievable timeframe to make the transition and, in our view, correctly identified that storage and firming assets will be the key investments needed to retain some form of competitive edge as the grid decarbonises.

Morgans slapped AGL shares with an outperform rating and an $8.20 price target – representing a potential 19.5% upside.

The broker isn’t alone in its bullishness. UBS analyst Tom Allen said, courtesy of The Australian, the company’s plan to invest in batteries “should unlock value”.

What about the challenges?

Not all experts were optimistic. Regal Funds Management analyst James Hood was quoted by Reuters as saying:

[F]or AGL you are effectively closing your cash generating assets early to fund lower [return on invested capital] assets with a questionable funding pathway to do so.

On that note, Macquarie analysts are hopeful AGL’s balance sheet will remain intact amid the planned spend, according to The Australian.

UBS also reportedly noted the company has around $2 billion of balance sheet capacity before it risks its Baa2 credit rating – which would make borrowing more expensive.

The company is expected to develop renewable energy generation projects off its own balance sheet, the Australian Financial Review reports. It could, perhaps, use its 20% stake in formerly ASX-listed Tilt Renewables to do so.

Meanwhile, its planned firming assets would ideally be developed on AGL’s balance sheet.

All in all, there are plenty of details yet to be ironed out by AGL, and expectations of such have the potential to shift sentiment in the company’s shares this month. However, most experts appear optimistic about the company’s longer-term future.

The post Following a tumultuous month, what’s next for AGL shares in October? appeared first on The Motley Fool Australia.

.

More reading
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 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.

from The Motley Fool Australia https://ift.tt/8qUvMaZ
4 October 2022
These were the best-performing ASX ETFs in September
September brought more pain to ASX investors as the benchmark S&P/ASX 200 Index (ASX: XJO) slid by 7.3%.

But amidst the broader market weakness, some ASX exchange-traded funds (ETFs) lit up green across the month.

Let’s take a look at the best-performing ETFs on the ASX in September. Before we dive in, it’s worth noting that this list is limited to the ~190 ASX ETFs tracked by Google Finance.

VanEck Australian Property ETF (ASX: MVA)

According to Google Finance, MVA topped the ETF tables in September with a 7.7% gain.

The MVA ETF invests in a basket of ASX real estate investment trusts (REITs), such as Scentre Group (ASX: SCG) and Goodman Group (ASX: GMG).

The S&P/ASX 200 A-REIT Index (ASX: XPJ) actually shed 13.7% in September, yet the MVA ETF bizarrely shot up in the other direction.

Upon closer inspection, the MVA ETF was sitting well and truly in the red for most of the month. Had the ASX closed at 3pm on Friday last week, MVA would have finished September at $18.86, down 11.7%.

But a few (possibly errant) trades at the 11th hour saw the MVA price suddenly rocket to $23.

Unsurprisingly, the MVA ETF fell back to earth yesterday, tumbling nearly 18% to close the day at $18.92, back in line with recent prices.

BetaShares US Dollar ETF (ASX: USD)

Had it not been for MVA’s unusual trading activity, the BetaShares US Dollar ETF would have taken out the top spot as the best-performing ASX ETF in September.

The USD ETF notched up a monthly rise of 5.8% as the greenback grew even stronger.

The USD ETF aims to track the performance of the US dollar against the Aussie dollar. If the greenback goes up 10% against AUD, the ETF is designed to go up by 10% as well, before fees and expenses.

Across the month, the USD/AUD exchange rate soared from $1.46 to $1.56, representing a rough 6.8% rise.

Swift interest rate rises from the US Federal Reserve and the relative health of the US economy have seen investors flood into the US dollar. This, in turn, has pushed up the value of the US dollar, particularly against currencies such as the British pound and Japanese yen.

VanEck Gold Miners ETF AUD (ASX: GDX)

Rounding out the top three is the VanEck Gold Miners ETF, which delivered a monthly gain of 4.5%.

The GDX ETF aims to provide investors with global exposure to a diversified portfolio of companies in the gold mining industry. Its top holdings include the likes of Newmont Corporation (NYSE: NEM), Barrick Gold Corp (NYSE: GOLD), and Newcrest Mining Ltd (ASX: NCM).

Gold is often seen as a safe haven for investors during times of market turmoil.

This rang true in September as gold shares held their ground while the market floundered.

This came despite the spot price of gold trending lower across the month, finishing at around US$1,672 an ounce. In fact, according to Reuters, the precious metal was headed towards its worst quarter since March 2021.

The post These were the best-performing ASX ETFs in September appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor Cathryn Goh 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.

from The Motley Fool Australia https://ift.tt/9idMYgm
4 October 2022
Here’s why the Fortescue share price was crushed in September
It was a tough month for the Fortescue Metals Group Limited (ASX: FMG) share price in September.

During the period, the mining giant’s shares lost almost 9% of their value.

This means the Fortescue share price is now down 22% over the last six months.

Why did the Fortescue share price sink in September?

There were a few catalysts for the weakness in the Fortescue share price last month.

The first was the company’s shares trading ex-dividend for its fully franked final dividend of $1.21 per share. This dividend was then paid at the end of last month on 29 September.

Another was the broad market weakness driven by global recession concerns.

Finally, also weighing on the Fortescue share price was the unveiling of the company’s decarbonisation plans.

Decarbonisation comes at a huge cost

Last month Fortescue announced that it intends to spend US$6.2 billion or A$9.2 million to decarbonise its Pilbara operations.

This investment includes the deployment of an additional 2-3 GW of renewable energy generation and battery storage and the estimated incremental costs associated with a green mining fleet and locomotives.

Fortescue expects net operating cost savings of US$818 million per annum from 2030 with a payback of capital by 2034.

However, a growing number of analysts believe that this will inevitably lead to sizeable dividend cuts from the mining giant in the coming years. And with Fortescue’s shares popular with income investors, some appear to have been dumping them because of this.

Goldman Sachs, for example, commented:

Today’s announcement and commitment underpins our view that FMG is at an inflection point on capital allocation, and to fund the ambitious decarb strategy, we assume the dividend payout ratio falls from the current 75% to 50% from FY24 onwards.

Goldman is now forecasting fully franked dividends per share of 81 US cents in FY 2023, 37 US cents in FY 2024, and then 31 US cents in FY 2025. Based on the current Fortescue share price and exchange rates, this will mean yields of 7.2%, 3.2%, and 2.7%, respectively.

The broker also sees plenty of downside risk for its shares. It has a sell rating and $12.10 price target on them.

The post Here’s why the Fortescue share price was crushed in September appeared first on The Motley Fool Australia.

.

More reading
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.

from The Motley Fool Australia https://ift.tt/vR0BYhj
4 October 2022
Should you really be buying ASX shares in this market?
The ASX share market has seen a lot of pain this year. As of this morning, the S&P/ASX 200 Index (ASX: XJO) has dropped 15% in the year to date.

Looking at some individual shares, the Xero Limited (ASX: XRO) share price has dropped 51%, the Wesfarmers Ltd (ASX: WES) share price has fallen 29% and the Goodman Group (ASX: GMG) share price has declined 41%. Those are some big declines for some of the ASX’s biggest businesses. This doesn’t happen often.

Today could be a solid day for the ASX share market after a strong performance by the US share market overnight. But, that will only erase a small portion of the decline we’ve seen this year.

Is this a good time to invest?

I think heavy market declines like we’ve seen this year are generally a great time to invest. That doesn’t mean I think every single share is going to do well from here. But, prices are now a lot lower and I believe that a big part of successful investing is buying at a good price.

Choosing the right investment is obviously another key factor.

For much of the COVID-19 pandemic, the share market was going through a very strong bull run. It was finally halted as inflation and interest rates shot higher.

I’d rather buy ASX shares when investors are cautious and things look uncertain. When things look rosy, share prices tend to go pretty high, as we saw in 2021. I’d prefer not to buy at a high price.

There’s a great Warren Buffett analogy about burgers when it comes to investing. In 2001, Buffett said:

To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.

Where are the opportunities?

For starters, the three ASX shares that I named at the beginning of this article look like attractive options to me.

There are a number of high-quality ASX shares that have been sold off that still have strong positions in their industry, such as REA Group Limited (ASX: REA), Sonic Healthcare Limited (ASX: SHL), Metcash Limited (ASX: MTS) and Temple & Webster Group Ltd (ASX: TPW).

I also believe there are several retailers that have been sold off which look interesting with a long-term view, including Premier Investments Limited (ASX: PMV), Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Universal Store Holdings Ltd (ASX: UNI), City Chic Collective Ltd (ASX: CCX) and Baby Bunting Group Ltd (ASX: BBN).

JPMorgan’s Mary Callahan Erdoes thinks opportunities (to outperform) are everywhere, according to reporting by CNBC. 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.

There were two areas that she picked out as opportunities: the UK banks and China. 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.

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’.

She also said that UK banks might be “the most interesting thing” that an investor could look at.

What are the options?

How can we access those ideas when they aren’t listed on the ASX? Well, there is a UK bank that’s listed as an ASX share — Virgin Money UK (ASX: VUK) — it’s down 37% in 2022.

To access the UK share market, investors could use an exchange-traded fund (ETF) like the Betashares Ftse 100 ETF (ASX: F100), given it features 100 of the biggest businesses listed in London.

In terms of Chinese shares, Betashares Asia Technology Tigers ETF (ASX: ASIA) is an option — it owns 50 of the biggest tech companies in Asia outside of Japan. Around 55% of the portfolio is allocated to mainland China shares.

The post Should you really be buying ASX shares in this market? appeared first on The Motley Fool Australia.

.

More reading
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 positions in and has recommended ADAIRS FPO, Temple & Webster Group Ltd, and Xero. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Wesfarmers Limited, and Xero. The Motley Fool Australia has recommended Baby Bunting, BetaShares Asia Technology Tigers ETF, Premier Investments Limited, REA Group Limited, Sonic Healthcare Limited, and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/SAPHpJ7
4 October 2022