Month: October 2022

If I’d invested $1,000 in Whitehaven Coal shares at the start of 2022, here’s what I’d have now
There’s no getting away from the fact that it has been a difficult year for investors.

Since the start of the year, the S&P/ASX 200 Index (ASX: XJO) has lost almost 15% of its value.

This means that if you had invested $1,000 at the start of the year and earned the market return, you’d have $850 now.

But what about if you had invested these funds into Whitehaven Coal Ltd (ASX: WHC) shares?

How has a $1,000 investment fared in Whitehaven Coal shares?

If you were lucky enough to have bought Whitehaven Coal shares at the turn of the year, congratulations, you’ve smashed the market!

Thanks to booming coal prices, this coal miner’s shares have risen an astonishing 225% since the start of 2022.

This means that your $1,000 investment would now be worth $3,250 today.

But the returns don’t stop there. Whitehaven Coal has rewarded its shareholders with dividends totalling 48 cents per share in 2022.

Based on the Whitehaven Coal share price at the start of the year of $2.61, this would mean a yield on cost of 18.4%.

This adds an extra $184 to your return, bringing the total investment to almost $3,450.

What can you learn from this?

A key takeaway from this is the importance of diversification. Having a balanced portfolio with exposure to different sides of the market can help you avoid the worst of a market selloff.

For example, let’s say you had a $10,000 portfolio at the start of the year across 10 different shares.

Even if 9 of the 10 shares in your portfolio earned the market return and were now collectively worth $7,650 instead of $9,000, your Whitehaven Coal shares would bump the value of your portfolio to approximately $11,000.

That’s a 10% return despite the majority of your portfolio sinking deep into the red for the year.

The post If I’d invested $1,000 in Whitehaven Coal shares at the start of 2022, here’s what I’d have now 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 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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1 October 2022
Top ASX shares to buy in October 2022
Feeling spooked by September’s share market tricks?

As Halloween draws near, we asked our Foolish contributors to compile a list of some of the ASX shares they reckon are not so scary in October. Here’s what they came up with.

5 best ASX shares for October 2022 (smallest to largest)
- Objective Corporation Limited (ASX: OCL), $1.25 billion
- Johns Lyng Group Ltd (ASX: JLG), $1.66 billion
- Paladin Energy Ltd (ASX: PDN), $2.23 billion
- New Hope Corp Ltd (ASX: NHC), $5.24 billion
- Wesfarmers Ltd (ASX: WES), $48.44 billion
(Market capitalisations as of 30 September 2022)

Why our Foolish writers love these ASX shares

Objective Corporation Limited

What it does: Objective Corp may not be a household name, but the company is well established with customers across local government, the public sector, regulators, and other significant institutions. It offers a suite of software solutions, including enterprise content management, information governance, file collaboration, and regulation management.

By Mitchell Lawler: I previously wrote about Objective Corp last month, where I compared the software company to its larger peer, Technology One Ltd (ASX: TNE). Both companies are similar in what they offer. However, Objective Corp is roughly one-third the size – in terms of market capitalisation and revenue.

At first glance, this minnow of the ASX tech sector appears to be richly valued. The company currently trades on a price-to-earnings (P/E) ratio of approximately 64 times. Yet, I believe the premium is warranted given the profitability, growth potential, and impeccable balance sheet on offer.

The Objective share price is down nearly 35% in 2022. This pullback in valuation means this ASX share is now on my radar.

Motley Fool contributor Mitchell Lawler does not own shares of Objective Corporation Limited.

Johns Lyng Group Ltd

What it does: Johns Lyng Group is an Aussie building services company with a focus on insurance and restoration work, as well as commercial building and construction.

By Brooke Cooper. Johns Lyng Group has been on a roll. It was added to the S&P/ASX 200 Index (ASX: XJO) just weeks after it posted a 40% increase in net profit after tax (NPAT) for the financial year 2022, coming in at $38.5 million.

And it doesn’t expect to slow down. The company forecasts its earnings will grow as much as 26% in financial year 2023.

Despite such positive momentum, the stock has tumbled 31% year to date to trade at $6.28 at the close of trade on Friday. Fortunately, Goldman Sachs has tipped that to change.

The broker has slapped Johns Lyngs shares with a $10.20 price target and a buy rating, noting the company’s guidance appears conservative.

Motley Fool contributor Brooke Cooper does not own shares in Johns Lyng Group Ltd.

Paladin Energy Ltd

What it does: Paladin Energy is a uranium miner and exploration company with operations in Australia and Africa.

By Matthew Farley. I believe that we’re in the very early stages of witnessing a revival of nuclear energy and that the potential of these shares hasn’t yet been priced in by the market.

The energy crisis in Europe and the rising urgency to reduce emissions have catalysed change, along with the development of miniaturised nuclear reactors. Countries such as Japan, China, France, India, and the United States all have ambitions to harness more nuclear energy in the future.

Paladin also grew its revenues substantially last financial year and reduced its statutory net loss after tax by 39%. The demand for uranium is set to increase exponentially, too, with a mean price of the commodity expected to reach US$65/LBS in 2023, up from US$51.04/LBS at the time of writing, according to Trading Economics.

Motley Fool contributor Matthew Farley does not own shares in Paladin Energy Ltd.

New Hope Corporation Limited

What it does: New Hope is a diversified company that generates the lion’s share of its income from thermal coal exploration and production. Most of that production is sold into the seaborne thermal coal export markets.

By Bernd Struben. New Hope shares have benefited from rocketing energy prices. In early January, thermal coal was trading for US$160 per tonne. Prices reached record highs of US$460 per tonne earlier in September and are currently around US$438 per tonne.

This helped New Hope deliver $2.6 billion in revenue in FY22, up 144% year on year. NPAT rocketed 1,139% from FY21 to $983 million. And shareholders were rewarded with a 700% increase in the final dividend payout.

While that’s water under the bridge, I believe the world is nowhere near the end of the energy crisis, as witnessed by the recent explosions on the Nord Stream gas pipeline. With Europe weaning itself off Russian oil and gas, demand for thermal coal is likely to keep prices high in the months ahead.

Motley Fool contributor Bernd Struben does not own shares in New Hope Corporation Limited.

Wesfarmers Ltd

What it does: Wesfarmers is a major retail conglomerate with businesses across a number of different sectors. These include national brand names Bunnings, Kmart, Officeworks, Target, Catch and Priceline, as well as operations in chemicals, energy and fertilisers (WesCEF).

By Tristan Harrison. In this volatile environment, plenty of ASX shares have been sold down, including Wesfarmers. Shares in the company were swapping hands for $42.72 at Friday’s close. That’s down almost 28% in 2022.

I think this lower price for Wesfarmers is attractive. It’s now valued at around 20x FY23’s estimated earnings, according to CMC Markets.

Bunnings continues to earn a high return on capital for Wesfarmers, which I like a lot. The company’s new health division also has a compelling long-term future, and the WesCEF division is doing really well in the current economic climate.

I appreciate the dividends Wesfarmers pays its shareholders and I like that it can add diversification by investing in other sectors, like lithium.

Motley Fool contributor Tristan Harrison does not own shares of Wesfarmers Ltd.

The post Top ASX shares to buy in October 2022 appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited and Objective Corporation Limited. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Johns Lyng Group 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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1 October 2022
Why did the AGL share price trail the ASX 200 in September?
September is generally a rough month for markets, and it was no different in 2022. The S&P/ASX 200 Index (ASX: XJO) slumped 7% last month and the AGL Energy Limited (ASX: AGL) share price put on an even worse performance.

There was plenty of news from the energy producer and retailer in that time. And it all came to a head on Thursday when the company announced its $20 billion plan to ditch coal by 2035.

The AGL share price closed the final session of September at $6.84, 10.9% lower than it finished August.

The ASX 200 dumped 7% in that time while the S&P/ASX 200 Utilities Index (ASX: XUJ) slumped 15%.

So, what went wrong for the AGL share price last month? Let’s take a look.

What weighed on AGL’s stock in September?

This year has been a rough one so far for ASX 200 energy provider AGL.

The company’s planned demerger was binned in May after a brutal campaign led by major shareholder Mike Cannon-Brookes. That saw a number of the company’s upper management vow to step down.

Additionally, its Loy Yang A coal-fired power station was dealt a blow in April when one of its generators was taken out of action after an electrical fault.

But why are we delving back into the company’s prior suffering? It’s because the market heard updates on both happenings last month.

First, AGL revealed the generator would not return to service in September as planned. Its restart date was pushed back to mid-October after a fault was found during testing.

Then, AGL updated the market on its new leadership team.

Former chair Peter Botten stepped down on 19 September as Patricia McKenzie stepped up to the plate. Director Diane Smith-Gander also took her leave.

The company also announced CEO Graeme Hunt planned to exit his role at the end of September. It will be temporarily filled by former chief financial officer Damien Nicks.

But the big news was still to come.

The company released the outcome of its major strategic review on Thursday, vowing to close its Loy Yang power station by financial year 2035. To do so, it will fork out $20 billion to decarbonise its portfolio.

The company also provided earnings guidance.

It predicts it will bring in between $1.25 billion and $1.45 billon of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) and between $200 million and $320 million of underlying profit after tax in financial year 2023.

AGL share price snapshot

Each of the three announcements released by AGL in September saw its share price trade either flat or lower. However, most of the stock’s major falls came on days in which the company was silent.

Instead, the stock seemingly tracked the utilities sector’s performance, with only one day in which it went against its peers. On Friday, the AGL share price gained 3.6%, while the utilities sector slumped 1.6%.

But one poor month doesn’t make a long-term loss. The AGL share price has gained 8% since the start of 2022. It’s also trading 18% higher than it was this time last year.

For comparison, the ASX 200 has fallen 15% year to date and 10% over the last 12 months.

The post Why did the AGL share price trail the ASX 200 in September? 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 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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1 October 2022
Experts name 2 ASX 200 dividend shares to buy next week
If you’re looking for dividend shares to lift your income, then you may want to check out the two listed below.

Here’s why these ASX 200 dividend shares have been rated as buys:

BHP Group Ltd (ASX: BHP)

The first ASX 200 dividend share to look at is mining giant BHP.

In August, the Big Australian released its full year results and revealed record operating profits and free cash flow. This allowed the company to reward its shareholders with a bumper US$3.25 per share fully franked dividend in FY 2022.

The good news is that the big dividend payments are expected to continue in FY 2023. For example, the team at Morgans is forecasting a fully franked dividend of ~A$3.95 per share. Based on the current BHP share price of $38.52, this will mean a yield of 10.25%.

And while Morgans expects FY 2024’s dividend to reduce to approximately A$3.00 per share, this will still be a generous fully franked yield of 7.8%.

Another positive is that Morgans sees plenty of upside in the BHP share price with its add rating and $48.40 price target.

Centuria Industrial REIT (ASX: CIP)

Another ASX 200 dividend share that has been tipped as a buy is Centuria Industrial. It is the largest domestic pure play industrial REIT on the Australian share market.

Much like BHP, it delivered a strong result in August. Centuria Industrial reported a 22% increase in funds from operations to $111.7 million thanks to strong demand for its properties. This strong demand also underpinned a 99% occupancy rate, which bodes well for the future.

Macquarie is positive on the company’s outlook and is expecting dividends per share of approximately 16 cents in FY 2023 and FY 2024. Based on the current Centuria Industrial share price of $2.59, this will mean yields of 6.2% for investors.

The broker also sees plenty of upside for the company’s shares. It currently has an outperform rating and $3.69 price target on them.

The post Experts name 2 ASX 200 dividend shares to buy next week 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 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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1 October 2022