Stock Pick

Month: October 2022

  • Has the Qantas share price finally left COVID in its contrail?

    A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.

    A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.

    The Qantas Airways Limited (ASX: QAN) share price was amongst the most battered during the initial COVID-19 fuelled panic selling.

    Not that many stocks escaped the early carnage. But with international and Aussie state borders slamming closed in early 2020, the flying kangaroo found most of its fleet suddenly grounded.

    As investors panicked, the Qantas share price crashed 63.8% from 21 February through to 20 March 2020.

    From there it’s been a turbulent flight higher. Though higher it has gone.

    After gaining 11.4% in last week’s trading, Qantas shares are up 146.6% from that low as of Friday’s close at $5.80 per share. The stock is now only down 11% from the $6.51 it was trading at before the pandemic panic selling commenced in February 2020.

    Which begs the questions, has the Qantas share price finally left COVID in its contrail? And what can investors expect from the airline’s share performance next

    Can the Qantas share price keep flying higher?

    The Qantas share price finished 8.7% higher last Thursday following a much stronger than expected market update.

    Among the highlights, the company forecast underlying profit before tax for the first half of the 2023 financial year to fall between $1.2 billion and $1.3 billion.

    Net debt also came down faster than expectations, with net debt forecast to fall to a range of $3.2 billion to $3.4 billion by the close of 2022. That’s well below the low end of Qantas’ net debt target range of $3.9 billion.

    And both domestic and international capacity is climbing fast.

    The strong results saw Barrenjoey increase its target for the Qantas share price from $6.60 to $7.40.

    According to the broker (courtesy of The Australian Financial Review):

    The Qantas market cap increased less than the improvement in the net debt position ($1bn). This, along with feedback from our investor conversations, suggests that the market remains concerned about the impact of a slowdown in consumer spending in 2H23.

    We have capacity at 80% of pre-COVID levels in FY23 while demand is closer to 100%. Time will tell but, in our view, this should give Qantas some leverage to absorb a potential slowdown and given the lead time coming into a slowdown, the company is better placed to deal with this slowdown than in prior periods.

    If Barrenjoey has it right, the Qantas share price could be up for a further 27.6% upside from Friday’s close.

    The post Has the Qantas share price finally left COVID in its contrail? appeared first on The Motley Fool Australia.

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    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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  • Whitehaven Coal shares: Buy, hold, or fold?

    A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.

    The Whitehaven Coal Ltd (ASX: WHC) share price has been on the up and up lately, driven by soaring coal prices.

    A near-direct line can be drawn between the commodity’s value and the company’s bottom line. Whitehaven posted a record $1.95 billion profit and a realised average coal price of $325 a tonne in financial year 2022. Most of its revenue came from thermal coal sales.

    Meanwhile, the coal producer’s stock has jumped a blistering 292% since the start of 2022. The Whitehaven share price closed Friday’s session at $10.82.

    For context, the S&P/ASX 200 Index (ASX: XJO) has posted an 11% fall in that time.

    Does that mean the stock is nearing its ceiling? Let’s take a look at what experts think could be in store for the ASX 200 coal favourite.

    Can the Whitehaven share price continue its surge?

    The Whitehaven share price has been beyond energised this year, and some experts think it could go even higher.

    Though, not all are bullish.

    Medallion Financial managing director Michael Wayne recently said, courtesy of Livewire, that he wouldn’t be surprised if the stock offers short-term upside. However, looking further ahead, he tips it as a sell due to its cyclical nature and the risk a recession could bring to coal prices, saying “the long-term outlook for coal still remains clouded”.

    That sentiment echoes a similar warning from Australia and New Zealand Banking Group Ltd (ASX: ANZ) analysts.

    ANZ senior commodity strategist Daniel Hynes recently warned that, while European demand has put upwards pressure on coal prices, increasing production in China could weigh on the commodity ahead of winter’s peak.

    But Hayborough Investment Partners’ partner and portfolio manager Ben Rundle doesn’t appear worried. He said, via Livewire:

    The company is just absolutely making so much cash flow [and] … there’s no supply-side response coming in the coal market. So, I think that price stays a lot higher for a lot longer. 

    The expert also noted the buyback currently underway at Whitehaven, saying it will likely support the company’s share price.

    Additionally, the federal government expects this financial year to be a record one for coal exports. They’re expected to reach $120 billion, with thermal coal making up the majority.  

    Brokers’ outlook

    Turning to brokers, Macquarie expects big things from Whitehaven shares, slapping them with an outperform rating and a $12 price target, as my Fool colleague James reports. That represents a potential 10.9% upside.

    The broker also believes the company could more than double its dividends this financial year, tipping it to offer $1.07 per share. That’s expected to rise once again to $1.25 per share in financial year 2024.

    Though, Goldman Sachs placed a neutral rating and a $9.60 price target on the stock back in August. The broker said it believes its Whitehaven shares are fairly valued and expects coal prices to fall in 2023.

    The post Whitehaven Coal shares: Buy, hold, or fold? 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 positions in and has recommended Goldman Sachs. 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.

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  • How does Tesla make money?

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

    Blue Model Y Tesla vehicle

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

    Tesla (NASDAQ: TSLA) stock is one of the most followed stocks in the market. That’s not surprising given shares of the electric-vehicle (EV) pioneer have performed phenomenally over the longer term. 

    Shares have rocketed from their initial public offering (IPO) split-adjusted price of about $1.13 in June 2010 to $204.99 on Oct. 14, 2022. This performance has transformed an initial investment of $1,000 into about $181,407. By comparison, the S&P 500 index has turned a $1,000 investment into $4,250 over this period.

    Before considering investing in Tesla, you should make sure you have a good handle on how it makes its money.  

    Where is Tesla’s revenue coming from? 

    The two charts that follow are derived from the company’s second-quarter results. In the quarter, total revenue jumped 42% year over year to $16.9 billion and adjusted net income surged 62% to $2.62 billion, which translated to earnings per share increasing 57% to $2.27.

    Segment Q2 2022 Revenue Percentage of Total Q2 2022 Revenue*
    Automotive $14.60 billion 86%
    Energy generation and storage $866 million 5%
    Services and other $1.47 billion 9%
    Total $16.93 billion 100%

    Data source: Tesla. *Calculated by author.

    The auto category includes sales and leasing of new models of the company’s four EVs, the Model S sedan, the Model X SUV, the Model 3 sedan, and the Model Y crossover. These EVs are equipped with Tesla’s advanced driver-assistance system, Autopilot, whose capabilities are increased via over-the-air software updates. 

    Tesla recently released its vehicle production numbers for the third quarter. In Q3, it produced 365,923 vehicles and delivered 343,830 vehicles. These numbers were up 54% and 42%, respectively, from the year-ago period.

    The energy generation and storage business sells solar panels and solar roof tiles for homes, and energy-storage products for residential, commercial, and electric utility grid use. 

    Tesla’s services and other segment includes a variety of items, the most notable being non-warranty after-sales vehicle services and sales of used vehicles.

    Where is Tesla’s gross profit coming from?  

    Segment/Category Q2 2022 Gross Profit Q2 2022 Gross Margin Percentage of Total Q2 2022 Gross Profit*
    Automotive $4.08 billion 27.9% 96.4%
    Energy generation and storage $97 million 11.2%* 2.3%
    Services and other $56 million 3.8%* 1.3%
    Total $4.23 billion 25% 100%

    Data source: Tesla. *Calculated by author. Gross margin = gross profit divided by revenue. Numbers based on generally accepted accounting principles (GAAP).

    In the second quarter, Tesla’s auto segment accounted for 85% of its total revenue and an outsized 96% of its total gross profit. So, at this point, investors following the stock just need to pay attention to the auto business.

    The energy generation and storage business has huge potential, thought its current contribution to the company’s profit is close to insignificant. 

    What’s going on with services and other? Don’t be concerned about this seemingly laggard of a category. Tesla doesn’t aim to make money on some of the larger components of this category, notably on vehicle servicing. So, this category can be thought of as supporting the auto segment.

    Tesla still has a long runway for growth

    Tesla’s core electric car business still has massive growth potential. Consider that at the end of 2021, the percentage of the world’s light-duty vehicles on the road that are all-electric or plug-in hybrids was less than 2%.

    Beyond its existing electric car and energy generation/storage businesses, Tesla has other avenues for growth. On the immediate horizon is the launch of its Semi Truck. On Oct. 6, CEO Elon Musk tweeted that Tesla is starting production of this electric Class 8 truck, which reportedly has a range of 500 miles. He said that PepsiCo will get its initial deliveries (quantity not specified) on Dec. 1. 

    Investors will get material news soon: Tesla is slated to report its Q3 results after the market close on Wednesday, Oct. 19. An analyst conference call is scheduled for the same day at 5:30 p.m. ET. 

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

    The post How does Tesla make money? appeared first on The Motley Fool Australia.

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    Beth McKenna 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 Tesla. 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.

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  • The AUD is sinking, so is this a good time to buy Vanguard International Shares (VGS) ETF?

    A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.

    A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.

    With the volatility that the global share market has seen in 2022, I think it’s a good time to go looking for ASX opportunities. However, the Australian dollar has been falling. Does this mean it’s a good time to be looking at the Vanguard MSCI Index International Shares ETF (ASX: VGS)?

    For readers who don’t know, this exchange-traded fund (ETF) looks to give investors exposure to the global share market, mostly to western markets such as the US, the UK, Canada, France, and Switzerland. It also has investments in Japan, Hong Kong, and Singapore.

    What’s going on with the Vanguard MSCI Index International Shares ETF?

    Since the beginning of the year, the fund’s unit price has dropped around 15%.

    The performance of an ETF is dictated by its underlying holdings.

    In this ETF, there are approximately 1,470 holdings offering plenty of diversification across countries and sectors.

    I won’t write out a huge list of the holdings, but I’ll mention the fund’s largest holdings at 30 September 2022. They were Apple, Microsoft, Amazon.com, Tesla, Alphabet, UnitedHealth, Johnson & Johnson, Exxon Mobil, and Berkshire Hathaway.

    Many share prices have dropped in value over 2022 as investors factor in higher interest rates when thinking about valuations. Why do interest rates have an effect on asset prices? Legendary investor Warren Buffett once said:

    The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

    What about the Australian dollar?

    The Vanguard MSCI Index International Shares ETF has a weighting of around 70% to the US share market. That means the performance of the ETF’s US shares has a significant impact on the overall portfolio.

    But the reduction of the Australian dollar against the US dollar has had the effect of cushioning the decline of the unit price.

    I think this can be illustrated by comparing the S&P 500 Index (INDEXSP: .INX) to the iShares S&P 500 ETF (ASX: IVV), which is an ETF that aims to track the same index for Aussies.

    In 2022, the S&P 500 Index dropped by 25%. This compares to the ASX-listed iShares S&P 500 ETF return of a drop of just 12.4%. This happened because, at the start of the year, the Australian dollar was worth US 72 cents but has now dropped to US 62 cents.

    So, in Australian dollar terms, Aussies have seen less of a drop in their portfolio value.

    Is it a good time to buy?

    While a weaker Australian dollar has cushioned Aussie from bad returns, it now means that we’re not able to buy as many international shares, particularly US shares, as before.

    If, or when, the Australian dollar strengthens against the US dollar, this would also be a headwind for returns for Aussies in Australian dollar terms. So, in that sense, the significantly-weaker Australian dollar has made it a bit more expensive to go shopping for overseas shares.

    However, at the same time, it’s worth noting that US shares have dropped. Even with the weaker Aussie dollar, the Vanguard MSCI Index International Shares ETF has still dropped by 15%. As such, I think it’s materially better value than it was at the start of the year.

    The post The AUD is sinking, so is this a good time to buy Vanguard International Shares (VGS) ETF? appeared first on The Motley Fool Australia.

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    Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Vanguard MSCI Index International Shares ETF, and iShares Trust – iShares Core S&P 500 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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  • Which ASX All Ords shares could perform well in a recession?

    A senior investor wearing glasses sits at his desk and works on his ASX shares portfolio on his laptop

    A senior investor wearing glasses sits at his desk and works on his ASX shares portfolio on his laptop

    There has been widespread volatility with All Ordinaries Index (ASX: XAO), or All Ords, shares since the beginning of 2022 amid concerns about inflation and higher interest rates. Indeed, there are fears that ongoing negative economic effects could lead to a recession.

    Perhaps it was inevitable that some retailers weren’t going to keep posting record profits. And maybe demand for buying cars will reduce.

    But, while share prices are hard to predict, is it possible to find businesses that could see their profits barely affected by a recession – perhaps even grow?

    I think there are a few places we can look to.

    Food

    We all need to eat. I believe that businesses that sell food to consumers could continue to see decent results. Certainly, I think the demand will still be there.

    In my opinion, food is one of those areas where people will keep spending, even if they have to change to cheaper alternatives. Supermarkets are an obvious suggestion here, such as Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).

    But, I also think that KFC and Taco Bell operator Collins Foods Ltd (ASX: CKF) could be another defensive idea.

    Farmland real estate investment trust (REIT) Rural Funds Group (ASX: RFF) could be another defensive All Ords ASX share idea, thanks to its long-term rental contracts and the ongoing tenancy by leading farming businesses.

    Energy

    There doesn’t seem to be an end in sight to the Ukraine conflict and energy prices remain high. The world needs energy, even if demand were to drop a little. I think that Woodside Energy Group Ltd (ASX: WDS) could keep generating good earnings, particularly with the All Ord ASX share’s LNG division as Europe looks for alternative sources of energy away from Russia.

    APA Group (ASX: APA), the owner of various energy assets including a large gas pipeline network, could also keep generating good cash flow as it transports half of Australia’s natural gas.

    Telecommunications

    People’s phones and home internet are very important bills to pay. Indeed, my work depends on it. Communication is vitally important. And so on. Nearly every business needs the internet for some reason.

    I think Telstra Corporation Ltd (ASX: TLS), TPG Telecom Ltd (ASX: TPG), and Aussie Broadband Ltd (ASX: ABB) all could offer defensive earnings, particularly with the NBN transition now over.

    Telstra is expecting to grow its earnings per share (EPS) over the next few years.

    Healthcare

    People don’t choose when to get sick, but I do think people (and the government) would keep paying to access healthcare services. All Ords ASX share names like CSL Limited (ASX: CSL) and Sonic Healthcare Ltd (ASX: SHL) (excluding COVID-19 testing) are two names that I think won’t see much change in demand.

    Gambling

    There is research that shows that “when people are experiencing financial difficulties during economic recessions, the possibility to improve their financial situation by winning large jackpots with low initial stakes becomes more enticing”.

    The Lottery Corporation Ltd (ASX: TLC) is the business that operates Australia’s lotteries through The Lott.

    Funerals

    There are only two things certain in life – death and taxes, as the saying goes.

    While it’s a bit morbid to think about owning All Ords ASX shares that are funeral operators, they could provide defensive earnings. Demand is based on deaths rather than economic factors.

    Within this sector are names like InvoCare Limited (ASX: IVC) and Propel Funeral Partners Ltd (ASX: PFP).

    Auto parts

    Finally, Bapcor Ltd (ASX: BAP) is an interesting one in my opinion. It’s the biggest auto parts business in Australia and New Zealand with a number of brands like Burson and Autobarn.

    I think that people are more likely to delay a new car purchase in leaner times. This means trying to make their current car last longer, which could mean buying replacement parts when needed. This, in turn, could be good for Bapcor’s earnings.

    The post Which ASX All Ords shares could perform well in a recession? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tristan Harrison has positions in RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited, CSL Ltd., and Collins Foods Limited. The Motley Fool Australia has positions in and has recommended APA Group, COLESGROUP DEF SET, RURALFUNDS STAPLED, and Telstra Corporation Limited. The Motley Fool Australia has recommended Aussie Broadband Limited, Bapcor, Collins Foods Limited, Propel Funeral Partners Ltd, Sonic Healthcare Limited, and TPG Telecom 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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  • Opportunities across the mining sector: Expert names ASX 200 shares to buy

    Three satisfied miners with their arms crossed looking at the camera proudly

    Three satisfied miners with their arms crossed looking at the camera proudly

    The fund manager Wilson Asset Management (WAM) has recently identified some S&P/ASX 200 Index (ASX: XJO) mining shares that it owns (or owned) in one of its main portfolios.

    WAM operates several listed investment companies (LICs). These include WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

    There’s also one called WAM Leaders Ltd (ASX: WLE) that looks at the larger businesses on the ASX, often referred to as ASX blue-chip shares.

    WAM says WAM Leaders actively invests in the highest quality Australian companies. So does WAM have a good reputation for picking stocks?

    The WAM Leaders portfolio has delivered gross returns (before fees, expenses, and taxes) of 13.6% per annum since its inception in May 2016. This compares to the S&P/ASX 200 Accumulation Index average return of 7.2%.

    With that in mind, here are some of WAM’s ASX 200 mining share thoughts outlined in a recent monthly update.

    Copper, aluminium and iron ore

    During September, the WAM Leaders investment team visited Perth to meet with various mining company management teams and undertake site tours in the Pilbara region.

    The team concluded that earnings outlooks “vary dramatically by commodity”. It noted that gold, aluminium, and iron ore producers were “relatively downbeat” on pricing, given price declines over the last few months.

    However, price aside, WAM said these ASX 200 mining shares “are performing well” operationally, labour challenges have “eased”, diesel costs are down from recent highs, and balance sheets are “strong”.

    The fund manager “see opportunities” across the mining sector when considering relative valuations.

    WAM sees upside “to both the fundamentals and valuations of base metals” like copper, aluminium, and iron ore for the rest of 2022.

    Its largest positions in the sector are BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), South32 Ltd (ASX: S32), OZ Minerals Limited (ASX: OZL) and Newcrest Mining Ltd (ASX: NCM).

    What about lithium?

    At the same time, WAM Leaders said that ASX lithium shares expect pricing “to hold at elevated levels given the demand profile continues to accelerate beyond expectation while impending additional supply continues to be delayed.”

    The fund manager revealed anecdotal feedback that “supply is so tight that car manufacturers may soon be paying lump sums for the right to have offtake agreements”.

    So does that mean that ASX 200 lithium shares are opportunities? WAM said:

    While fundamentals for lithium stocks are undoubtedly strong, valuations appear full.

    The post Opportunities across the mining sector: Expert names ASX 200 shares to buy appeared first on The Motley Fool Australia.

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    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 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 CSL shares capitalise on the next pandemic?

    woman getting the Covid 19 vaccine

    woman getting the Covid 19 vaccine

    CSL Limited (ASX: CSL) shares weren’t immune to the initial stock market panic that unfolded in the face of the COVID-19 pandemic.

    In the month-long sell-off from late February 2020 through to late March 2020, the S&P/ASX 200 Index (ASX: XJO) global biotech company fell by some 20%.

    Over the following month, CSL shares quickly recouped those losses.

    While CSL didn’t see its share price explode like some vaccine makers, the company was hard at work to combat the coronavirus.

    In an agreement with AstraZeneca, CSL committed to manufacturing around 50 million doses of vaccines in Australia for domestic supply. The first doses were delivered in March 2021.

    Which begs the question, could CSL shares capitalise on the next pandemic?

    What’s this about the avian flu?

    Before ploughing ahead, our apologies for even throwing out the words ‘next pandemic’. There’s no need to go hoarding toilet paper and long-life milk just yet. Or hopefully ever again!

    But that doesn’t mean governments and biotech firms aren’t working to get ahead of any potential future outbreaks.

    As Fierce Pharma reports, CSL Seqirus – a subsidiary of CSL – inked a $30.1 million agreement with the Biomedical Advanced Research and Development Authority (BARDA), a branch of the United States Department of Health and Human Services.

    The agreement will see CSL deliver an avian flu vaccine candidate for a clinical study.

    There have only been a few reported cases of the avian flu being transmitted from a bird to a person. And no reported cases of human-to-human transmission yet.

    However, Lorna Meldrum, VP of commercial operations, international and pandemic response at CSL Seqirus, said BARDA is concerned enough about the potential dangers of the avian flu to fund the research.

    “The next pandemic is probably going to be an influenza pandemic,” Meldrum said. She noted that CSL Seqirus has partnerships with BARDA and other government health agencies across the globe.

    Meldrum said that if there was another pandemic outbreak, CSL’s seasonal flu shot production at its Holly Springs plant in North Carolina would “immediately switch” over to producing the pandemic influenza vaccine. She said the plant would be prepared to make 150 million doses within the first six months.

    Addressing the company’s readiness at its Holly Springs facility, Meldrum said (quoted by Fierce Pharma):

    We have all the ingredients that you need to make a flu vaccine. We have a trained workforce. We have all our [standard operating procedures] in line; we have all our regulatory documents. So, we’re like a machine that you just flick the switch, and then we’re up and running.

    How have CSL shares been performing?

    The CSL share price has slipped 6.3% in 2022. That compares to a year-to-date loss of 12.4% posted by the ASX 200.

    Longer-term, CSL shares are up 101% over five years.

    The post Could CSL shares capitalise on the next pandemic? appeared first on The Motley Fool Australia.

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    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 CSL Ltd. 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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  • Dividend beasts: Experts name 3 ASX dividend shares that could deliver 50% returns next year

    A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.

    A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.

    A number of ASX dividend shares have seen their share prices hit by volatility in 2022. But, an exciting part of the declines we’re seeing is that potential dividend yields are getting pushed higher for prospective investors.

    Businesses that are both undervalued and could pay a good dividend may be able to give investors an attractive total return, with a mix of both income and capital growth.

    Keep in mind that just because an expert thinks a share price will rise doesn’t mean the market will push it higher over the next 12 months. But I think it’s interesting to look at businesses that are seen as significantly cheaper than their fair value.

    With that in mind, let’s look at some of the dividend opportunities that brokers think are attractive.

    Baby Bunting Group Ltd (ASX: BBN)

    The Baby Bunting share price recently got walloped. It’s down around 35% since 6 October 2022. While the baby product retailing business reported total sales growth of 12% to 7 October 2022, it said the first quarter gross profit margin was down 230 basis points year over year. At the same time, pro forma net profit after tax (NPAT) in the first quarter was down $3 million year over year.

    After seeing the update, the brokers at Macquarie still rate the company as an outperform, with a price target of $4.95. That implies a possible rise of around 80% over the next year. It thinks the gross profit margin can somewhat recover during the year.

    The ASX dividend share plans to open eight new stores in FY23, with six in Australia and the other two in New Zealand.

    Macquarie puts the Baby Bunting share price valuation at 15 times FY23’s estimated earnings with a projected grossed-up dividend yield of 6.1%.

    Nine Entertainment Co Holdings Ltd (ASX: NEC)

    Nine is the business behind a number of media names including the Nine free-to-air television network, digital streaming business Stan, and newspapers like the Australian Financial Review, The Age, and the Sydney Morning Herald.

    Since the beginning of the year, the Nine share price has dropped around 33%. That’s despite the business achieving a strong level of growth in FY22. The last financial year saw revenue growth of 15% to $2.69 billion and NPAT growth of 35% to $373.5 million.

    The company also said the new financial year had “started on a positive note in terms of audiences” across all of its platforms. The advertising market, to August, had also “remained resilient”, Nine said. It’s also expecting its advertising revenue to grow more strongly than the markets where it operates in FY23.

    The ASX dividend share is currently rated as a buy by the broker Credit Suisse, with a price target of $3.30. That implies a possible rise of more than 60%. The broker predicts the FY23 grossed-up dividend yield to be 10.1%.

    PeopleIn Ltd (ASX: PPE)

    The business provides staff, business services, and operational services, including workforce management, recruiting, onboarding, contracting, rostering, timesheet management, payroll, and workplace health and safety management.

    The PeopleIn share price is another that has suffered heavily in 2022. It is down by 33% year to date.

    Broker Morgans thinks that FY23 looks good for the company, rating it as add. It has a price target of $4.90, implying a possible rise of more than 60% over the next year. The potential grossed-up dividend yield for the 2023 financial year is 7.2%.

    In FY22, the ASX dividend share generated $47.2 million of normalised earnings before interest, tax, depreciation, and amortisation (EBITDA). In FY23, it guided that it could generate normalised EBITDA of between $62 million to $66 million. However, management said at the time this was “based on the continuation of current economic conditions”.

    However, management also said the core business is “resilient even in the event of economic uncertainty”. It plans to focus on growing in sectors that are defensive and have long-term demand for talent.

    The post Dividend beasts: Experts name 3 ASX dividend shares that could deliver 50% returns next year appeared first on The Motley Fool Australia.

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    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 Peoplein. The Motley Fool Australia has recommended Baby Bunting and Peoplein. 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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  • 5 things to watch on the ASX 200 on Monday

    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.

    On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a stunning gain. The benchmark index jumped 1.75% to 6,758.8 points.

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

    ASX 200 expected to sink

    The Australian share market looks set to give back most of Friday’s gains this morning after a terrible end to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 102 points or 1.5% lower this morning. On Wall Street, the Dow Jones was down 1.3%, the S&P 500 dropped 2.4%, and the NASDAQ tumbled 3.1%.

    Oil prices tumble

    Energy producers including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a tough start to the week after oil prices tumbled on Friday night. According to Bloomberg, the WTI crude oil price was down 3.9% to US$85.61 a barrel and the Brent crude oil price fell 3.1% to US$91.63 a barrel. Global recession fears weighed heavily on oil prices again.

    Woolworths’ hack

    The Woolworths Group Ltd (ASX: WOW) share price will be in focus today after the retail giant became the latest company to be hit by hackers. According to the release, a compromised user credential was used to gain unauthorised access to the customer relationship management systems of the recently acquired MyDeal business. An estimated 2.2 million customers have been affected.

    Fortescue rated as a sell

    The Fortescue Metals Group Limited (ASX: FMG) share price is significantly overvalued according to analysts at Goldman Sachs. This morning the broker has retained its sell rating and $13.40 price target on the mining giant’s shares. This implies over 20% downside over the next 12 months. Goldman said: “The stock is trading at a premium to BHP & RIO; c. 1.5x NAV vs. RIO & BHP at c. 0.8x & 1x NAV, c. 6x EBITDA (vs. RIO & BHP on c. 3-5x), and c. 5% FCF vs. BHP & RIO on c. 5-10%.”

    Gold price falls heavily

    Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a poor start to the week after the gold price fell heavily on Friday. According to CNBC, the spot gold price was down 1.7% to US$1,648.9 an ounce during the session. A strong US dollar put pressure on the precious metal.

    The post 5 things to watch on the ASX 200 on Monday 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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  • Here are 2 blue chip ASX 200 shares to add to your portfolio: brokers

    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.

    The Australian share market certainly is not short of blue chip options. But which ones should you buy?

    To help narrow things down, listed below are two top blue chip ASX 200 shares that are rated as buys by experts. Here’s what you need to know about them:

    CSL Limited (ASX: CSL)

    The first blue chip ASX 200 share to consider is CSL. It is one of the world’s leading biotechnology companies and the name behind the CSL Behring, CSL Vifor, and Seqirus businesses.

    The CSL Vifor business is a recent addition following a blockbuster acquisition earlier this year. As a global specialty pharmaceutical leader, it adds iron deficiency, nephrology (kidney care), and cardio-renal therapies to CSL’s world class product portfolio.

    And thanks to the company’s investment of around 10% of sales into research and development activities each year, CSL has a pipeline of potentially lucrative and lifesaving therapies coming to market in the next few years if approved by regulators.

    Citi is positive on CSL and currently has a buy rating and $340.00 price target on its shares.

    National Australia Bank Ltd (ASX: NAB)

    Another blue chip ASX 200 share that could be a good option right now for investors is this banking giant.

    NAB appears well-placed to profit in the current environment with rates rising and its overweight exposure to commercial lending.

    It is because of the latter that Goldman Sachs is positive on the bank. It sees “volume momentum over the next 12 months as favouring commercial volumes over housing volumes and NAB provides the best exposure to this thematic.”

    The broker currently has a buy rating and $35.15 price target on the bank’s shares. It also expects a ~5% fully franked dividend yield in FY 2023.

    The post Here are 2 blue chip ASX 200 shares to add to your portfolio: brokers 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 positions in and has recommended CSL Ltd. 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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