Month: October 2022

This year has been defined by a lot of volatility, mostly declines. I think this is a great time to go investing in top ASX shares.

Interestingly, the rising interest rates have hit some of the highest-quality businesses the hardest. Some companies may be better at handling economic downturns, but higher interest rates have had a widespread effect on valuations, even if the business’ operations haven’t been affected much (yet).

I think we can see how hard quality businesses have been hit by looking at the return of the Betashares Global Quality Leaders ETF (ASX: QLTY). This is a globally-focused exchange-traded fund (ETF) that looks for businesses that rank well on return on equity, debt-to-capital, cash flow generation ability and earnings stability.

Despite that focus on quality, resilient businesses, the ETF is down 21% since the start of 2022, while the Vanguard MSCI Index International Shares ETF (ASX: VGS) is only down around 13%. However, from the current levels, I think it’s the quality (ASX) shares that are going to do better from here, particularly on the revenue and/or profit.

How I’d build a portfolio in top ASX shares

Over the long term, I think that ‘better’ businesses are likely to outperform ones that don’t have attractive features.

There are plenty of different factors that investors can look for, such as good management, a solid balance sheet, a good growth record, a compelling business model, attractive plans and so on.

For me, one of the things that can make a business really stand out as a potential opportunity is international growth.

Australia is a great place to do business in. It’s a huge country with a lot of land for resources and agriculture. However, the population is small, relatively speaking. So, the growth ceiling is pretty low in most industries compared to markets like the US, Asia, Europe or essentially most of the world.

This gives an ASX share a much larger potential growth runway. But, just because it’s targeting overseas growth doesn’t automatically mean it will be successful.

For me, some of the businesses that tick many quality boxes, including international growth, include Xero Limited (ASX: XRO), Breville Group Ltd (ASX: BRG), Premier Investments Limited (ASX: PMV), REA Group Limited (ASX: REA), Reece Ltd (ASX: REH), Idp Education Ltd (ASX: IEL), Lovisa Holdings Ltd (ASX: LOV), and Altium Limited (ASX: ALU).

I’m also very interested in the retail ASX share sector at the moment, due to the market’s pessimism. After recent declines, I think names like Wesfarmers Ltd (ASX: WES), Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), and Universal Store Holdings Ltd (ASX: UNI) are interesting.

I also like the VanEck Morningstar Wide Moat ETF (ASX: MOAT), which gives Aussie investors exposure to US shares with strong competitive advantages that are expected to endure for many years.

Foolish takeaway

A big part of investing is choosing a good investment and then being patient. The prices that the ASX share market is presenting look too good to ignore — I believe it’s a good time to go hunting businesses at cheaper prices.

The post How I’d build a portfolio by investing in top ASX shares now appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares that turned $5,000 into $2.5 million (or more)
• Goldman Sachs says these are the ASX dividend shares to buy
• 3 ASX shares to buy no matter what the market’s doing: Auscap
• 3 excellent ASX 200 growth shares experts rate as buys
• 22 high-yield ASX dividend shares Wilsons is targeting

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, Altium, Idp Education Pty Ltd, Lovisa Holdings Ltd, Vanguard MSCI Index International Shares ETF, and Xero. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Wesfarmers Limited, and Xero. The Motley Fool Australia has recommended Lovisa Holdings Ltd, Premier Investments Limited, REA Group Limited, VanEck Vectors Morningstar Wide Moat ETF, and Vanguard MSCI Index International Shares ETF. 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 Sayona Mining Ltd (ASX: SYA) share price is trading higher on Thursday morning.

At the time of writing, the lithium developer’s shares are up 1% to 26 cents.

Why is the Sayona Mining share price rising?

Investors have been bidding the Sayona Mining share price higher following the release of an update on the company’s 75% owned North American Lithium (NAL) operation in Quebec, Canada.

According to the release, the company has further advanced the restart of production at NAL, with construction, procurement, recruitment and other activities progressing amid growing demand for lithium.

Management highlights that NAL’s restart is on track for the first quarter of 2023, with permitting applications and procurement both 96% complete as at the end of September.

Construction activities are also continuing, with the installation of the HP300 and HP400 Cone Crushers almost complete and the Wet High Intensity Magnetic Separator (WHIMS) now fully assembled.

The company has also been busy bolstering the management team of NAL with the recent appointment of Yves Desrosiers as interim general manager. In addition, Guy Belleau has been appointed in a president role and Sylvain Collard as chief operating officer for Sayona Quebec.

‘The first North American local producer’

Sayona’s managing director, Brett Lynch, was pleased with the progress the company is making at NAL. Particularly given how demand for lithium is growing in North America. He commented:

It is pleasing to see the continued progress at NAL as we advance towards the restart of production in the first quarter of 2023. Lithium demand from North America and globally continues to increase and Québec is well placed to deliver, with NAL set to become the first North American local producer next year and with further value‐ adding planned as we move into downstream processing.

The post Sayona Mining share price higher on lithium project update appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why is the Sayona Mining share price booming 10% on Tuesday?
• Guess which ASX lithium company is the biggest holder of Sayona Mining shares?

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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The Newcrest Mining Ltd (ASX: NCM) share price is charging higher on Thursday morning.

At the time of writing, the gold miner’s shares are up 5% to $18.25.

Why is the Newcrest share price charging higher?

The catalyst for the rise in the Newcrest share price has been the release of the gold miner’s quarterly update this morning.

For the three months ended 30 September, Newcrest reported gold production of 527koz and copper production of 32kt. While this was down on the prior corresponding period, this was due partly to planned maintenance.

Importantly, the company remains on track to achieve its annual guidance following the quarter. Particularly given its expectation for gold and copper production to increase in the December quarter.

FY 2023 gold production guidance remains 2,100koz to 2,400koz and copper production guidance is steady at 135kt to 155kt.

One negative, though, was that Newcrest’s production was achieved at an all-in sustaining cost (AISC) of $1,098 per ounce, delivering an AISC margin of $579 per ounce.

This AISC was 23% higher than the prior period, driven by lower gold and copper sales volumes with lower production following planned maintenance, and a lower realised copper price. This was partly offset by the benefit of a weakening Australian and Canadian dollar on operating costs.

Management notes that with a significant proportion of operating costs exposed to the Australian and Canadian dollars, continued weakness of these currencies against the US dollar will favourably impact its AISC.

Management commentary

Newcrest’s managing director and CEO, Sandeep Biswas, commented:

While overshadowed by the upsetting news from Brucejack, Newcrest delivered a solid performance during the September quarter which reflected our normal cadence for planned major maintenance shutdowns across our operations during this period.

Our group gold and copper production has increased substantially from a year ago, reflecting maintenance and productivity improvements at Cadia and Lihir, and additional ounces from Brucejack. Following this strong start to the year we expect gold and copper production to be higher in the December quarter on lower planned maintenance and remain on track to meet FY23 guidance.

The post Newcrest share price up 5% on strong Q1 update appeared first on The Motley Fool Australia.

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More reading

• Why did ASX 200 gold shares have such a top run today?
• 5 things to watch on the ASX 200 on Monday
• Demolished ASX 200 materials shares: Why this fundie is buying the 30% dip
• Can ASX 200 gold shares bank on a higher gold price in 2023?
• 5 things to watch on the ASX 200 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.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price will be on watch this morning.

This follows the release of the banking giant’s eagerly anticipated full year results.

ANZ share price on watch amid strong earnings

• Statutory profit after tax up 16% to $7,119 million
• Cash earnings from continuing operations up 5% to $6,515 million
• Dividends per share up 3% to $1.46
• CET1 ratio 12.3%
• Second half net interest margin (NIM) of 1.68%
• Exit NIM of 1.8%

What happened during FY 2022?

For the 12 months ended 30 September, ANZ reported a 16% increase in statutory profit after tax to $7,119 million and a 5% lift in cash profit from continuing operations to $6,515 million.

The latter follows a strong second half which saw ANZ’s cash profit rise 9% to $3,402 million thanks to improvements in its NIM. ANZ’s second half NIM improved to 1.68% for the quarter, with an exit margin of 1.8%.

However, while management believes that the current environment is “supportive for margins in the first half” of FY 2023, it believes any “change from the exit margin is likely to be more modest.”

This strong finish to the year allowed the ANZ board to declare a fully franked final dividend of 74 cents per share, bringing its full year dividend to 146 cents per share. This is up from 142 cents per share in FY 2021.

How does this compare to expectations?

The good news for the ANZ share price today is that the company’s profits and dividend appear to have been a touch ahead of expectations.

For example, Goldman Sachs was forecasting a second half cash profit of $3,309 million and a full year dividend of 143.4 cents per share.

How did ANZ’s businesses perform?

During the second half, the Australia Retail business reported a 6% increase in profit over the first half. Management notes that the company closed the year with positive home loan momentum and approval times back in line with major peers. There was also strong customer up-take of ANZ Plus, with deposits reaching $1.2 billion, growing at a faster pace than any new digital bank in Australia.

The Australia Commercial business reported a 10% increase in revenue for the year and an 11% increase in profit thanks to good volume growth and disciplined margin management. The business grew net loans and advances by 6% over the year with solid lending growth in specialist segments including agribusiness and health.

Elsewhere, the Institutional business ended the year strongly with a 10% half on half increase in revenue thanks to strong demand and the New Zealand business reported a 5% half on half profit. The latter reflects its continued market share lead in key products including retail and funds management.

Management commentary

ANZ’s CEO, Shayne Elliott, was pleased with the bank’s performance. He said:

This was a strong financial result with all divisions making a material contribution and demonstrating the benefits of a diversified portfolio.

We restored momentum in Australian home loans with application approval times back in line with industry peers. We continued the re-platforming of Australia Retail onto ANZ Plus, which is our new digital bank, with deposits already exceeding $1.2 billion and growing at a rate faster than any new digital bank in Australia.

We continued the systematic de-risking of the bank, highlighted by the sale of our margin lending business to Bendigo & Adelaide bank and just last month we completed the formal separation of our Wealth business to Insignia and Zurich. Combined with the exit of Financial Planning & Advice, as well as the associated remediation being at the very final stage, we are the only major bank in Australia to have removed the risks associated with wealth management for shareholders.

Outlook

No real guidance was given for FY 2023, but Elliott appears cautiously optimistic on the next 12 months.

He commented:

There is uncertainty ahead, however we have the business in good shape to withstand volatility. We also have a highly engaged workforce with a high-performance culture and I’m confident in our ability to continue to deliver for customers and shareholders.

The post ANZ share price on watch after reporting $6.5b cash earnings for FY22 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s how ASX 200 banks stand to benefit from the budget
• Own ANZ shares? Here’s why the bank just copped a $25 million fine
• 22 high-yield ASX dividend shares Wilsons is targeting
• ASX 200 bank shares have had a stellar month. Here’s why this expert is now worried

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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Pilbara Minerals Ltd (ASX: PLS) shares have certainly garnered plenty of investor attention this year.

And for good reason.

As the global transition towards green energy and EVs has accelerated, the price for lithium reached all-time highs in 2022. And the lightweight, battery critical metal continues to trade near those highs, offering some strong support to ASX lithium stocks.

Pilbara Minerals owns the Pilgangoora lithium-tantalum project, located in Western Australia. The project is recognised as one of the largest hard-rock lithium-tantalum deposits in the world.

Despite Pilbara Minerals shares falling 7.09% yesterday, the company’s large exposure to lithium and the green transformation has helped propel the ASX lithium miner’s share price to a gain of more than 120% over the past 12 months.

But there may be more to come, thanks to the latest Australian federal budget.

Labor doubles down on combatting climate change

If you followed along with the budget Treasurer Jim Chalmers delivered to parliament, you likely weren’t overly surprised. The Labor government budget is largely in line with the party’s election promises.

However, that doesn’t mean there aren’t some key takeaways regarding which ASX shares may benefit and which might not.

One of the cornerstone commitments outlined in the budget is combatting climate change. And with $20 billion to back that commitment, Pilbara Minerals shares could be in for some additional tailwinds ahead.

According to Saxo Markets strategist Jessica Amir:

The government outlined a large fund to mitigate climate change risk and support the transformation to net zero. The funding is going toward recently commenced projects on windfarms in Victoria and the Marinus Link project [linking Tasmania and Victoria], while also delivering cheaper infrastructure loans for investment into renewable energy, in order to lower energy costs and achieve net zero over the coming years.

Amir said, “Focus will be on lithium, rare earths, and hydrogen”, adding that Pilbara Minerals shares will be among the companies “on watch”.

How have Pilbara Minerals shares performed longer-term?

As long-term investors, it’s worth taking a step back and looking at the five-year horizon.

With that in mind, Pilbara Minerals shares have gained a whopping 583% over the past five years. For some context, the S&P/ASX 200 Index (ASX: XJO) is up 15% over that same period.

The post Why Pilbara Minerals shares are in the spotlight post-budget appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares to weather a bear market: fund manager
• Top brokers name 3 ASX shares to buy today
• Why Codan, Coles, Medibank, and Pilbara Minerals shares are sinking
• ‘Too far, too fast’: Pilbara Minerals share price falls on broker downgrade
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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 most satisfying stock picking outcomes are ones where you manage to buy it before it became popular with everyone else.

They’re the shares that you would have picked up as a bargain, then sat back to watch the rise as the rest of the market realises the quality of the company.

The team at Firetrail recently profiled two ASX shares that fit exactly that mould. 

They’re not yet massive household names, but already have enough mass and momentum to really rocket ahead:

Australia conquered, now for overseas expansion

Technology company PEXA Group Ltd (ASX: PXA) debuted on the ASX middle of last year.

Founded in 2010 by the Council of Australian Governments, the outfit is responsible for facilitating digital transfers of real estate ownership. It has been described as the ASX equivalent for property transactions.

With Australia now conquered, the growth prospects for the now-publicly listed company seem to lay overseas.

According to a report from the Firetrail Small Companies Fund team, PEXA is due to launch in the UK next year. 

“The Bank of England expects to revolutionise the UK property market by partnering with PEXA to implement its settlement technology,” read the report.

“The UK presents an estimated $700m addressable market opportunity.”

The first revenues from Britain are expected to be received late this financial year. 

“PEXA will then launch a transfer settlement product in FY24, which is expected to materially boost earnings,” read Firetrail’s memo.

“We believe PEXA [has] a high probability of success in the UK and an opportunity to expand into other countries globally.”

The PEXA share price is down 30% year to date.

“PEXA’s share price today is reflecting downside risk from interest rates and housing turnover headwinds,” read the Firetrail report.

“However, we expect a recovery in the property market, market penetration gains and higher near-term refinancing volumes to drive earnings through the cycle.”

Resilient earnings well-suited to the current uncertain times

Meanwhile Firetrail’s Australian High Conviction Fund team explained their high conviction in Lottery Corporation Ltd (ASX: TLC).

“Australian lottery revenues have grown at an average [annual] rate of 3.8% over the past three decades.”

Due to the arbitrary nature of jackpots, there is some variability in revenue growth from year to year. But, according to Firetrail analysts, it has never gone backwards over any rolling three-year period.

“More importantly, revenues have shown resilience through periods of softer economic growth,” read the report.

“During the GFC, revenues grew 7% in the year to June 2008, and another 8% in the year to June 2009.”

A great boon for its future prospects is the online sale of lottery tickets, which accelerated through the COVID-19 pandemic and has increased engagement from younger customers.

“The Lottery Corporation has found that, on average, existing retail customers increase spend by 52% after they join the digital platform,” read the Firetrail report.

“Given less commission is paid away to channel partners when customers use the digital platform, increased digital penetration is also accretive to gross margins.”

The Lottery Corporation share price is down about 10% since its listing in May.

For Firetrail analysts, The Lottery Corporation provides stable returns akin to an infrastructure asset.

“Current cyclical softness creates an opportunity for us to increase exposure to businesses like The Lottery Corporation at more attractive valuations in order to maximise returns for our investors.”

The post 2 under-the-radar ASX shares Firetrail loves right now appeared first on The Motley Fool Australia.

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More reading

• Which ASX All Ords shares could perform well in a recession?

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 positions in and has recommended PEXA Group Limited. 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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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part three of this edition, we’re rejoined by Kristiaan Rehder, portfolio manager of the Bennelong Kardinia Absolute Return Fund.

The Motley Fool: With the changing economic dynamics in 2022, are there any sectors you’re likely to avoid over the coming months?

Kristiaan Rehder: If you go back in history, whenever you go through an economic recession or serious slowdown, the one subclass that always does poorly is zero earnings stocks. That’s without exception.

So, for most of this year, we’ve avoided this class as well as the high-multiple, expensive names. We’ve also avoided consumer discretionary names because we believe the pressure that the central banks are putting the consumer under is going to have an effect on spending.

An obvious sector that is on the front line of those thematics is the high-multiple tech sectors. Early in the year, we were heavily short the tech sector. But given how dramatic the falls have been, we’ve been taking profits from the tech sector shorts.

MF: Which sectors look promising in the coming quarter?

KR: We’re remaining alert to acquiring quality businesses at cheaper prices in this market selloff. That’s what we’ve been doing in this past week.

We’re looking to add some exposure to the high cash flow energy sector. And also looking to selectively add resource names to the portfolio in the event of a more comprehensive stimulus program out of China. But we’ll do that cautiously and selectively.

We’re staying away from the developers and the explorers and looking at the producers, which are trading cheaply and are generating a lot of cash at the moment.

MF: Which S&P/ASX 200 Index (ASX: XJO) shares are you most confidently long on at the moment?

KR: We’ve got a decent position in National Australia Bank Ltd (ASX: NAB).

We think banking margins will be stronger than expected. Given the larger-than-expected rate hikes by central banks, it wouldn’t surprise any of your readers’ that the banks have been slow to lift deposit rates but have been quick to pass on lending rates. In that situation, you see an expansion of margins.

So far, the sector has been benefiting from a benign outlook for bad debts, given their liquid balance sheets and their strong capital positions.

The large caveat over all of this is whether the Australian economy can skate around an economic recession. I think that will be clear in the next three months.

Another large position of ours is ResMed Inc (ASX: RMD). It’s a sleep apnoea device manufacturer. A clear leader in an attractive market with long-term, realisable penetration upside.

Its major competitor, Philips (Respironics), is suffering a material product recall at the moment. So, we’re expecting ResMed to continue to gain market share in that space.

And Pilbara Minerals Ltd (ASX: PLS) has been a longstanding favourite of ours. I think we spoke about this one last year.

It’s performed very strongly since then. The stock is up 50% this calendar year, after a 270% rise in 2021. So, maybe some of the best returns are behind it. But it continues to offer high-quality exposure to that green energy thematic, via its long-life, low-cost lithium mines in WA.

MF: What do you see as the biggest threat for ASX investors in the year ahead?

KR: Earnings downgrades, given the risk of recession, remains the biggest threat to markets by far.

I think history would suggest that the soft landings, which currently central banks are quick to point out have occurred in the past, are actually very hard to do. If you listen to central banks, they constantly refer to soft landing from the past, such as 1965, 1984 and 1994. But in those years, inflation was far lower than what we’re experiencing today.

A better comparison, in our minds, is periods of high inflation and low unemployment, which are the two factors that we’re seeing today.

If you go back through history, there are four periods in the post-war era where those characteristics occurred. The most recent was in the mid-2000s, just before the GFC. Inflation was above 4% due to higher energy prices, with low unemployment. In all four instances, the economy ended in recession. And that suggests that this latest inflation period could end in some sort of recession too.

There’s an argument the US is already in a recession. But I think it will all become clear in the next three months.

MF: And what’s the biggest opportunity for investors over the coming months?

KR: As far as this year is concerned, we’re not sure this is the year to be taking enormous risks. It’s more about protecting capital. It’s still very risky out there, so not losing capital is really the name of the game.

That doesn’t mean we aren’t looking at companies from the long side. We’ve got an extensive list of companies we like that exhibit the kind of winning attributes we look at. Such as a robust balance sheet, strong management team, growing market, and growing market share.

But we’ve held off purchasing a number of these names because we just couldn’t get comfortable with valuations. Now valuations are coming back into that buy zone with the recent market fall. So we’re starting to add a number of these names to the portfolio.

That’s certainly where the opportunities sit. Quality names which have been marked down with the broader market selloff. Which have resilient earnings that will do well over the next two to three years.

***

If you missed part one of our interview with Kristiaan Rehder, you can find that here, and part two right here.

The post 3 ASX 200 shares to weather a bear market: fund manager appeared first on The Motley Fool Australia.

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More reading

• Here’s how ASX 200 banks stand to benefit from the budget
• Top brokers name 3 ASX shares to buy today
• Why Codan, Coles, Medibank, and Pilbara Minerals shares are sinking
• ‘Too far, too fast’: Pilbara Minerals share price falls on broker downgrade
• Could the best be yet to come for the NAB share price?

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 positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) fought hard to record a modest gain. The benchmark index rose 0.2% to 6,810.9 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to push higher again on Thursday despite a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 31 points or 0.45% higher this morning. In late trade in the United States, the Dow Jones is up 0.1%, the S&P 500 is down 0.65% and the NASDAQ has dropped 1.9%.

Oil prices jump

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a great day after oil prices jumped on Wednesday night. According to Bloomberg, the WTI crude oil price is up 3.25% to US$88.10 a barrel and the Brent crude oil price is up 2.6% to US$95.92 a barrel. Record high US crude exports and strong refining demand boosted prices.

ANZ full year results

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price will be on watch today when the banking giant releases its full year results. According to a note out of Goldman Sachs, its analysts expect ANZ to report cash earnings of $3,309 million for the second half and $6,422 million for FY 2022. The latter will be a 3.6% increase over the prior corresponding period. This is expected to result in a 143.4 cents per share full year dividend being paid.

Mineral Resources named as a buy

The Mineral Resources Limited (ASX: MIN) share price could keep rising according to analysts at Goldman Sachs. In response to the mining and mining services company’s quarterly update, the broker has retained its buy rating with an improved price target of $80.00.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.65% to US$1,669 an ounce. The gold price hit a two-week high after the US dollar and treasury yields softened.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• Here’s how ASX 200 banks stand to benefit from the budget
• Here are the top 10 ASX 200 shares today
• Why is the Whitehaven share price getting beaten up today?
• Is the Lynas share price a buy ahead of tomorrow’s update?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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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In today’s volatile and uncertain environment, it can be reassuring that there are certain characteristics of shares that perform well over the long term.

In investing lingo, these types of shares are known as compounders because they can offer compounding returns to their holders during both boom and bust cycles of the economy.

Specifically, compounders share the following characteristics:

• Solid balance sheets with little to no long-term debt
• High earnings margin, and
• Consistent earnings growth over the past decade

The total debt/equity percentage on the balance sheet is one helpful ratio in uncovering a company’s fundamentals. We also consider net income margin percentage for earnings and the 10-year compound annual growth rate (CAGR) of diluted earnings per share (EPS) percentage to gauge earnings growth.

We’ve researched some compounders that share these fundamentals below.

Whitehaven Coal Ltd (ASX: WHC)

Whitehaven has low debt with a total debt/equity percentage of 5.81%. Its earnings margin is also strong at 39.6% while its earnings growth stands at 33.4%.

Recent positive developments also support the coal producer’s fundamentals. In the company’s most recent quarterly report, the average price of coal lept from $514 a tonne in Q2 2022 to $581 a tonne in Q3 2022.

A macro factor working in Whitehaven’s favour is that demand for coal is beating supply, putting upwards price pressure on the commodity.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is another compounder that has strong fundamentals. Its total debt/equity percentage is 1.22% while its earnings margin beats others on this list by a huge amount at 69.6%. Its earnings growth rate is also a healthy 37.6%.

The troubled fund has ambitious plans in the future for turning its fortunes around. Last Thursday, the company announced at its annual general meeting that it intends growing its funds under management to more than $100 billion over the next five years.

Some tactics Magellan will use to reach this target include the creation of an incentive plan that unifies employee and shareholder interests.

Pro Medicus Limited (ASX: PME)

Pro Medicus has a total debt/equity percentage of 2.24% and an earnings margin of 47.2%. Its earnings growth rate is the highest on the list at 49.7%.

Although the medical imaging IT company has an unusually high price-to-earnings (P/E) ratio of 129.51, some experts agree with the claim it deserves to be considered a compounder.

Hayborough Investment Partners’ Ben Rundle believes it ticks all the boxes of a great share investment. This includes its earnings, product, and management team. Meantime, Medallion Financial’s Michael Wayne says that these fundamentals are “trending in the right direction”.

The bullish sentiment surrounding the stock may be vindicated when it holds its annual general meeting on 21 November.

The post How to find wealth compounders inside the ASX 200 right now appeared first on The Motley Fool Australia.

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More reading

• Why is the Whitehaven share price getting beaten up today?
• Have ASX 200 high-yield dividend shares been a blessing or a curse in 2022?
• Why did the South32 share price take a beating on Tuesday?
• This ASX 200 share turned $10k into $1 million in just 10 years
• Why did ASX 200 coal shares have such a cracking Friday?

Motley Fool contributor Matthew Farley 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 Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus 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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S&P/ASX 200 Index (ASX: XJO) banks have all outperformed the benchmark index over the past month.

Since the opening bell on 26 September, the ASX 200 is up a welcome 5.28%.

As for the ASX 200 banks:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares have gained 12.15%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 8.96%
• Westpac Banking Corp (ASX: WBC) shares are up 13.36%
• National Australia Bank Ltd (ASX: NAB) shares have gained 9.27%

And that doesn’t include dividends. All of the big four banks pay fully franked dividends, offering investors some tax friendly income alongside potential share price gains.

While the past month has been a good one for ASX 200 banks, they could be in for some more tailwinds ahead, thanks to the latest Australian Federal budget.

One million new homes shine spotlight on ASX 200 banks

The budget Treasurer Jim Chalmers unveiled to parliament largely met with expectations from the election promises that helped propel Labor to victory.

Among the keystones was the introduction of the National Housing Accord with state governments and industry to build one million new homes over a period of five years, commencing in 2024.

Saxo Markets strategist, Jessica Amir, noted this could offer some support to the ASX 200 banks.

According to Amir:

The government will establish a $10 billion housing Australia future fund, with an aim of providing 20,000 new social housing dwellings. $350m will be spent over 5 years in delivering 10,000 affordable dwellings, with state governments to provide another 10,000 homes. The government also committed to its pre-election promise of a shared equity scheme, allowing eligible people to buy a house with a smaller deposit.

Atop major infrastructure and construction companies that stand to benefit, Amir pointed to the ASX 200 banks. “Eyes will also be on banks that could benefit from housing policies, so CBA, ANZ Bank, NAB, as well as Westpac,” among the other big financial institutions, she said.

The post Here’s how ASX 200 banks stand to benefit from the budget appeared first on The Motley Fool Australia.

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More reading

• Why this expert is loading up on CBA shares in case of a recession
• Top brokers name 3 ASX shares to buy today
• Own ANZ shares? Here’s why the bank just copped a $25 million fine
• CommSec penalised $20 million for rorting customers
• Could the best be yet to come for the NAB share price?

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 recommended Westpac Banking Corporation. 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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