Stock Pick

Month: October 2022

  • Does it matter what share class of Berkshire Hathaway stock you buy? Maybe

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

    Young boy with glasses in a suit sits at a chair and reads a newspaper.

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

    If you follow Warren Buffett and his conglomerate Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B), then what I’m about to tell you is probably obvious. But if you are new to this stock, it may surprise you to learn that there are two different types of Berkshire Hathaway stock: Class A and Class B.

    Class A shares refer to the original Berkshire stock, which has been publicly traded since 1965 and is much more expensive than Class B shares. Berkshire issued Class B shares in 1996 to make Berkshire’s stock more accessible to smaller investors. 

    Both classes of shares attract different shareholders for different reasons. But these days you can purchase either, given the power of technology and how it has made purchasing fractional shares much easier. Does it matter which Berkshire shares you purchase? Let’s take a look.

    Class A versus class B

    Class A shares widely outperformed the broader market between 1965 and 2021, generating a compound annual gain of 20.1% over that time compared to a compound annual gain of 10.5% for the S&P 500 (including dividends), which is a broader benchmark for the market.

    With such a long history of extraordinary performance, Class A shares now trade at more than $403,000 each. Meanwhile, Class B shares currently trade at roughly $266. Back in the day, it was a lot harder to get and trade fractional shares, which is why Buffett and Berkshire saw more of a need.

    One big difference between the two classes of shares today is that Class A shares have much more voting power. Class B shares only carry 1/10,000th of the voting rights of Class A.

    Furthermore, Buffett declared that Class A shareholders will never have to go through any kind of stock split. Meanwhile, Class B shareholders can endure stock splits and did a 50-for-1 stock split in 2010 to make the shares even cheaper. Another difference is that Class A shareholders can convert their shares into an equivalent amount of Class B shares. However, Class B shareholders cannot do the same and would need to sell their shares and then purchase Class A.

    In terms of performance, let’s go back to the introduction of Class B shares on May 6, 1996, and see how they stack up to Class A since that time. The calculation for Class A is fairly straightforward because there was no stock split and Class A shares made total gains of 1,090% since 1996.

    Class B shares of Berkshire opened at about $1,020 per share and rose to about $3,353 prior to the stock split, which dropped shares to about $70.

    But after accounting for the stock split and with shares at $266 now, Class B shares made total gains of about 1,050%, slightly underperforming Class A shares.

    Does it matter which class you own?

    While Class A shares outperformed, I do not see a huge difference in which class you decide to invest in — remember, you are investing in the same company with the same business model and fundamentals.

    Deciding between the two depends more on who you are as an investor and what you are looking for. Smaller investors who may be more passive or newer to investing will likely opt for the Class B shares, as it will generally make buying and selling the stock easier.

    Shareholders who follow Berkshire’s every move a bit more closely might be more interested in purchasing Class A shares for the enhanced voting power, as well as the visibility of knowing there will never be a stock split. Either way, I don’t really think you can go wrong when investing in as strong a company as Berkshire Hathaway.

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

    The post Does it matter what share class of Berkshire Hathaway stock you buy? Maybe appeared first on The Motley Fool Australia.

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    Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). 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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  • IGO share price in the green on high-grade lithium news

    A woman smiles holding her phone and a takeaway coffee in front of a wall of green ivy.A woman smiles holding her phone and a takeaway coffee in front of a wall of green ivy.

    The IGO Ltd (ASX: IGO) share price is edging higher on open, up 0.2%.

    The S&P/ASX 200 Index (ASX: XJO) lithium miner closed yesterday trading for $15.57 per share. It is currently trading for $15.60 per share.

    Here’s the latest lithium news ASX investors are mulling over today.

    What lithium news was reported?

    The IGO share price is in the green following a promising announcement from its joint venture (JV) partner St George Mining Ltd (ASX: SGQ) regarding the Mt Alexander Project, located in Western Australia.

    IGO has a 25% interest in the project area and St George holds the remaining 75%.

    According to the release, the first assays of visibly mineralised pegmatite rock chip samples confirmed high-grade lithium.

    The IGO share price could be getting some support from the miner’s assertion that the results indicate the potential for Mt Alexander to host “significant lithium mineralisation”. The company said the strong caesium, tantalum and rubidium values returned in the results are often associated with significant lithium deposits at depth.

    Commenting on the promising early results, St George Mining’s executive chairman, John Prineas, said:

    We are delighted that our visual interpretation of lithium-bearing pegmatites has been confirmed as accurate by the first batch of laboratory assays.

    The high-grade lithium assays are from pegmatite outcrops spread over a 1.7-kilometre zone at Jailbreak within a 15-kilometre-long interpreted lithium, caesium and tantalum corridor where numerous pegmatites at Mt Alexander have been mapped to date.

    The grades and scale we are seeing appears to confirm that we are exploring a highly prospective pegmatite hosted lithium mineral system in its early stage of evaluation… The fast-emerging lithium potential at Mt Alexander perfectly complements our continued search for more high-grade nickel-copper-PGE sulphide discoveries.

    Looking ahead, the miner expects assay results from more rock chip samples and soil samples over the coming weeks.

    Drilling is scheduled to kick off later this month or in early November.

    IGO share price snapshot

    The IGO share price has been a stellar performer over the past 12 months, gaining 76%.

    To put that in some context, the ASX 200 is down 9% over the full year.

    The post IGO share price in the green on high-grade lithium news 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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  • Pilbara Minerals shares: Buy, hold, or fold?

    Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price risesFemale miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises

    The Pilbara Minerals Ltd (ASX: PLS) share price has been rocketing higher as of late.

    It has gained a whopping 45% since the start of 2022. It’s also currently more than 160% higher than it was this time last year and nearly 600% higher than it was five years ago.

    Indeed, it hit a new record high of $5.61 last week. The Pilbara Minerals share price is trading at $5.12 on Wednesday.

    With all those gains under its belt, does the S&P/ASX 200 Index (ASX: XJO) lithium producer still offer an upside for investors?

    Well, that depends on who you ask. Here’s what brokers are expecting from the stock in the future.

    Is now a good time to buy Pilbara Minerals shares?

    The rapid rise of the Pilbara Minerals share price has stunned many market watchers and left brokers with mixed opinions on its future movements.

    In the bear corner is UBS. The broker has a sell rating and a $2.65 price target on the stock – representing a potential 48% downside, my Fool colleague Tristan reports. It’s said to be concerned about the company’s valuation.

    Such concerns are shared by Fairmont Equities’ Michael Gable, who said, courtesy of The Bull:

    I believe vertical share price moves higher are unsustainable, particularly when profit takers make their move.

    Medallion Financial Group’s Jean-Claude Perrottet also tips the stock as a hold, reports the masthead, saying:

    Despite higher-than-expected costs, [Pilbara Minerals] has upgraded production expectations for fiscal year 2023. The outlook is bright if prices remain elevated.

    Even more positive sentiments are coming from Macquarie. Its analysts responded well to the company’s latest battery material exchange auction, which brought in a record bid of US$6,988 per dry metric tonne.

    Macquarie has hit Pilbara Minerals shares with an outperform rating and a $5.60 price target, The Motley Fool Australia’s James reports. That represents a potential 9% upside on its current level.

    And surging lithium prices are expected to continue into the near future. The federal government expects prices to peak in the next year, with Australian lithium exports tipped to surge to $13.8 billion this financial year.

    The post Pilbara Minerals 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • NIB share price halted amid equity raise and NDIS expansion

    Three medical staffers sit at a table and chat happily wearing hospital scrubs

    Three medical staffers sit at a table and chat happily wearing hospital scrubsThe NIB Holdings Limited (ASX: NHF) share price won’t be going anywhere on Wednesday.

    That’s because this morning the private health insurer requested a trading halt.

    Why is the NIB share price halted?

    The NIB share price has been halted this morning so the company can undertake an equity raising to fund a new acquisition.

    According to the release, NIB is aiming to raise a total of $150 million via a fully underwritten ~$135 million institutional equity placement and a ~$15 million non-underwritten share purchase plan (SPP).

    The placement issue price will be determined via an institutional bookbuild with a floor price of $6.90. This is a discount of approximately 8% to the NIB share price prior to its halt.

    What are the funds for?

    The proceeds from the equity raising will be used to fund its entry into Australia’s National Disability Insurance Scheme (NDIS) sector as a Plan Manager.

    NIB’s first acquisition is Maple Plan, the seventh largest Plan Manager with ~7,000 participants and revenue of approximately $10.4 million in FY 2022.

    But NIB is unlikely to stop there. The company notes that other possible acquisitions are under active consideration. These could support NIB in achieving its goal of managing 50,000 participants by 2025.

    NIB’s Managing Director, Mark Fitzgibbon, commented:

    The NDIS has become a vitally important part of Australia’s social capital and a significant economic sector. Already it supports 530,000 participants with more than 800,000 expected by 2030. NDIS funding is expected to double from around $29 billion in 2022, to $59 billion by 2030.

    First quarter update

    NIB also released an update on its performance during the first quarter.

    The release reveals that its underlying operating profit was up 0.8% to $64.3 million during the period. And, after adjusting for the COVID-19 givebacks, revenue was up 6.5% on the previous corresponding period.

    One negative, though, was that volatile financial markets continued to impact investment returns in the first quarter. This has led to its net profit after tax falling 8.6% to $41.6 million.

    Fitzgibbon commented:

    Our flagship Australian residents health insurance (arhi) business continues to benefit from heightened demand, which appears to be driven by lingering COVID-19 concerns, and difficulties in public system waiting times. We don’t celebrate these difficulties. But they are a reality and point to a need for an even greater private sector role in healthcare.

    Our adjacent international students and workers, New Zealand and travel businesses are also doing well, with the student and travel businesses quickly recovering from the pandemic blow.

    The post NIB share price halted amid equity raise and NDIS expansion appeared first on The Motley Fool Australia.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings 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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  • 3 of the top-growing stocks on Earth

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

    The planet earth floats in light about an outstrecthed hand, indicating sustainability

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

    When it comes to fast-growing stocks, it’s best to seek out companies with consistent revenue gains over the long-term. Multiple growth stocks have been hit hard in 2022 as many are key players in the tech industry. 

    Companies such as Netflix, Inc. (NASDAQ: NFLX), Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), and Nvidia Corporation (NASDAQ: NVDA) have suffered significant declines in their share prices since January as inflation increases have led to reduced consumer spending and investors slowly backing away from the affected companies.

    However, each of these companies continues to be a dominating presence in its respective industry and has seen substantial growth in revenue over the last three years, as can be seen in the table below. 

    CompanyThree-Year Revenue GrowthIndustry
    Netflix47%Streaming entertainment
    Alphabet59%Digital advertising
    Nvidia146%Computer hardware

    Data source: YCHARTS.

    These three top-growing stocks have a history of growth over the years and are likely to provide significant gains for investors willing to wait. Let’s have a look. 

    Netflix

    This streaming titan has seen exponential growth since its online-video platform launched in 2007. Its annual revenue grew at an average growth rate of 28%.

    However, Netflix has had a rough 2022. Its stock has dipped 62% since January on the back of losing over 1 million subscribers in its first two quarters. However, the company projects a gain of 1 million new members in Q3 2022, which could end its subscriber declines.

    Moreover, Netflix will launch its ad-supported tier in November, providing a more budget-friendly subscription option that is likely to boost revenue. On Sept. 15, Evercore ISI analyst Mark Mahaney upgraded Netflix’s stock to buy. He also projected the ad tier will bring in about $2 billion in incremental revenue by 2024, with another $500 million to $1 million of incremental growth generated from crackdowns on password sharing. 

    With the addition of advertising revenue, restrictions on password sharing, and Netlfix’s recent venture into gaming, the company is likely to continue growing for years to come. 

    Alphabet

    As one of the fastest-growing companies in the world, Alphabet has revolutionized multiple aspects of the tech industry. The company is home to potent brands such as Android, Chrome, YouTube, and Google, which each have a substantial market share in their corresponding industries. Alphabet’s dominance in markets such as search engines, smartphone operating systems, online-video sharing, and internet browsers has helped it become a digital-advertising star. 

    The company has retained a leading position in digital advertising since at least 2016, with a 28% share in 2022. In fact, nearly 93% of the company’s $69.6 billion revenue came from ads in the second quarter of 2022, when combining Google and YouTube’s advertising earnings. 

    As a result, investors have grown concerned that if inflation keeps rising, companies might slash their advertising budgets, equally slashing Alphabet’s revenue. However, according to market research firm Insider Intelligence, U.S. digital ad spending is expected to rise 31% from $239.89 billion in 2022 to $315.52 billion in 2025.

    Additionally, companies like Netflix and Disney are increasingly turning to ads to reduce subscription fees for budget-conscious consumers. Other subscription-based businesses could turn to Alphabet’s Google Network to supplement a reduced membership price with ads. 

    Nvidia

    Nvidia has been one of the hardest-hit stocks in 2022, down almost 60% year to date. The company is a leader in graphic processing units (GPUs), responsible for 95% of the market. The company’s GPUs power gaming PCs around the world and played a crucial role in the crypto-mining market.

    As a result, this year has been a perfect storm for Nvidia as slumps in the PC market and changes to how the cryptocurrency Ethereum is produced decreased demand for GPUs. 

    Despite a rough year, the company’s outlook is positive. Nvidia has made a name for itself in the gaming community, and its expansion into artificial intelligence (AI) is very promising. The company’s chips are critical components in the machines responsible for handling more than 90% of all AI workloads in data centers worldwide. Furthermore, according to Grand View Research, the AI market is expected to expand at a compound annual rate of 38.1% from 2022 to 2030.

    The GPU market may be down this year, but the device remains a crucial component in millions of PCs worldwide. Demand won’t be down forever, with Nvidia’s data center business likely to continue expanding. Its data center business was responsible for 56% of Nvidia’s revenue in the latest quarter, with the segment seeing a 60% increase year over year. 

    Nvidia is a fast-growing company and an excellent buy for investors in it for the long haul. 

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

    The post 3 of the top-growing stocks on Earth 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. Dani Cook 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), Nvidia, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Nvidia, and Walt Disney. 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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  • Lake Resources share price jumps on lithium offtake and investment news

    a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.

    a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.

    The Lake Resources N.L. (ASX: LKE) share price is having a strong day.

    In morning trade, the lithium developer’s shares are up 6% to $1.05.

    Why is the Lake Resources share price charging higher?

    Investors have been bidding the Lake Resources share price higher on Wednesday after the release of a positive announcement.

    According to the release, the company has signed a conditional framework agreement (CFA) with lithium battery producer SK On for the offtake of up to 25,000 tonnes per annum (tpa) of lithium from the Kachi Project in Argentina.

    This represents 50% of its planned production and will run initially for five years with an option of extending for a further five years.

    The offtake will be priced on an agreed market price formula based upon the average quoted price in the quotation period.

    In addition, SK On has agreed to acquire a 10% stake in Lake Resources via the issue of new ordinary shares. These shares will be issued at the 20 trading-day volume weighed average price prior to today.

    As you would have noticed above, the agreement is conditional and will depend on the outcome of a number of conditions. This includes its definitive feasibility study, the Lilac demonstration plant results, financial due diligence, and product specifications.

    Management commentary

    Lake Resources’ executive chairman, Stu Crow, commented:

    The CFA delivers a long-term strategic agreement with SK On, one of the world’s pre-eminent lithium-ion battery producers with a major growing presence in the North American market.

    Crow also notes that it strengthens the company’s long term shareholder base and adds to the equity component required for the drawdown of debt facilities for project development.

    SK On’s vice president, Jinsuk Ryu, added:

    SK On is very pleased to execute this CFA with Lake, a clean lithium developer, which can allow SK On to secure a stable lithium supplier for its U.S. supply chain. Lake fits particularly well with SK On’s ESG policy as it utilises environment-friendly direct lithium extraction technology for production of lithium. With this CFA, both Parties will strengthen mutual partnership to advance opportunities to secure sustainable sources of raw materials in the future.

    The post Lake Resources share price jumps on lithium offtake and investment news 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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  • Why this ASX ETF might help investors sleep better at night

    A man wakes up happy with a smile on his face and arms outstretched.A man wakes up happy with a smile on his face and arms outstretched.

    There are a few ASX exchange-traded funds (ETFs) that could help investors feel better about their portfolio while providing long-term protection, and hopefully growth.

    It’s hard to know what’s going to happen next with the ASX share market or global share markets.

    But, the answer to the uncertainty could be to own businesses that can continue to perform and excel during difficult times.

    It’s interesting that during downturns, it can be businesses that are the best in their sector that become even stronger. Sometimes weaker competitors will go out of business, or be acquired by the stronger players. This means the best become even more entrenched in their market position.

    The VanEck Morningstar Wide Moat ETF (ASX: MOAT) could be a way to invest in some of the best businesses listed in the United States.

    What is this ETF?

    The idea is that it owns a “diversified portfolio of attractively priced US companies with sustainable competitive advantages,” according to Morningstar’s equity research team.

    It’s the ‘sustainable competitive advantage’ part that could make it a more relaxing investment. An economic moat is a “sustainable competitive advantage that allows a company to generate positive economic profits for the benefits of its owners over an extended period”.

    For the Morningstar analysts, the “durability of economic profits is far more important than magnitude”. There must also be clear evidence that the company benefits from at least one of five moat sources. Those five moat sources are: intangible assets, cost advantage, switching costs, network effects and efficient scale.

    The only businesses considered for inclusion in this ASX ETF’s portfolio are ones where excess normalised returns must, with near certainty, be positive 10 years from now. Also, excess normalised returns must, more likely than not, be positive 20 years from now.

    The competitive advantages I refer to above can be things like economies of scale, unique assets, patents, brand power or a monopoly.

    So, the businesses in this portfolio are expected to generate strong profits for many years. And they have strong competitive advantages to help them achieve that.

    Good value

    I like to think this ETF’s holdings are nearly always good value. That’s because Morningstar analysts only add a business to the portfolio if they think the company is trading at an attractive price relative to Morningstar’s estimate of fair value.

    But, it is possible for a good value share to fall just as much (if not more) than an expensive one.

    However, I think the MOAT ETF has shown by its relatively small decline that it can do well. This ASX ETF has only dropped by 9.4% this year. The Betashares Nasdaq 100 ETF (ASX: NDQ) has dropped 26%. While the Vanguard Australian Shares Index ETF (ASX: VAS) has fallen 15%.

    What are some of the holdings right now?

    The latest holdings update from the portfolio shows that these were the largest positions: Biogen, Etsy, MercadoLibre, Gilead Sciences, Tyler Technologies, Zimmer Biomet, Wells Fargo, Workday, Masco, Amazon.com, Emerson Electric and Salesforce.

    Long-term returns

    Past returns shouldn’t be used as a predictor of future returns. However, the VanEck Morningstar Wide Moat ETF has returned an average of 14% per annum over the past five years. That’s almost 1% better per year than the S&P 500 Index (SP: .INX).

    The post Why this ASX ETF might help investors sleep better at night 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 Amazon, Etsy, Gilead Sciences, MercadoLibre, Tyler Technologies, and Workday. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Biogen. The Motley Fool Australia has recommended Amazon, VanEck Vectors Morningstar Wide Moat ETF, and Workday. 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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  • If I’d invested $1,000 in Fortescue shares at the start of 2022, here’s how much I’d have now

    A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfallA happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall

    The Fortescue Metals Group Limited (ASX: FMG) share price appears to have turned things around this month, gaining 2.5% since the end of September.

    Though, that hasn’t been enough to negate the S&P/ASX 200 Index (ASX: XJO) stock’s prior falls. Sadly, the Fortescue share price is still in the year-to-date red.

    But, when considering the company’s dividends, would an investor who bought into the stock at the start of the year be recognising a loss? Let’s take a look.

    Fall from grace

    Assuming I’d invested $1,000 in Fortescue shares on the first trading day of 2022, I probably would have walked away with 50 stocks at $19.85 apiece and $15 to spare.

    And that would have been a positive buy for a time. The iron ore giant’s stock reached a high of $22.99 in February, leaving my figurative parcel with a value of $1,150.

    But its gains soon turned into losses. The Fortescue share price closed Tuesday’s session at $17.24. That means my initial investment would now be worth $862.

    Fortunately, the company has been paying out dividends in that time. Fortescue paid investors an 86 cent per share interim dividend in March and a $1.21 per share final dividend in September.

    Thus, after buying 50 Fortescue shares at the start of 2022, I would have received $103.50 in dividends.

    That would mean I would be around $20 worse off for the year so far, before considering any potential benefits from franking credits. That’s not too shabby.

    Though, a $1,000 investment in BHP Group Ltd (ASX: BHP) shares would have represented a better buy so far.

    Are Fortescue shares a buy right now?

    Unfortunately, while Fortescue shares have left an investor roughly even this year, brokers aren’t so hopeful on the company’s future.

    Morgans is worried about its future free cash flows, saying they could bottom out in seven to eight years’ time, my Fool colleague James reports. That’s because the company is forking out for its renewable energy ventures.

    The broker has a reduce rating and a $14.50 price target on Fortescue shares.

    Goldman Sachs is also concerned about the impact that the company’s green efforts could have on its bottom line, slapping the stock with a sell rating and a $12.10 price target.

    The post If I’d invested $1,000 in Fortescue shares at the start of 2022, here’s how much I’d have now 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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  • 2 reasons Amazon is a Warren Buffett stock

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

    Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett

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

    As of June 2022, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) portfolio controls 10.67 million shares of Amazon.com,Inc. (NASDAQ: AMZN) — a position worth $1.29 billion. Buffett has long been a fan of the company, praising its management skill and dominance of the e-commerce and cloud computing industries.

    Let’s explore why it could also make a top investment for your portfolio. 

    An undeniably quality business 

    Warren Buffett’s investment strategy focuses on quality businesses instead of struggling “cigar butts” that are past their prime. With unquestionable dominance of U.S. e-commerce and global cloud computing (boasting market shares of 38% and 34%, respectively), Amazon is as quality as they come. And despite near-term challenges, the company’s long-term trajectory remains intact. 

    Second-quarter results were a mixed bag. Net sales grew 7% to $121.2 billion. But challenges like inflation and the end of the COVID-19-related online shopping boom put pressure on the company’s margins leading to a net loss of $2 billion, down from a net profit of $7.8 billion in the prior-year period. That said, both headwinds look likely to normalize over the long term (for example, the Federal Reserve is raising rates to tame inflation) and are related to macroeconomic challenges, not company-specific failures. 

    Amazon has plenty of options to drive continued growth. According to Insider, it plans to roll out its online marketplace in five new countries, mainly in Africa and Latin America, next year. Cloud computing is also an exciting opportunity. Management believes the economy is at the early stages of cloud adoption, leaving plenty of room for expansion as Amazon Web Services (AWS) leverages its economic moat in the industry. 

    A rock-solid economic moat 

    What exactly is an “economic moat”? Coined by Warren Buffett, the term refers to a company’s ability to sustain a long-term competitive advantage over rivals. For Amazon’s e-commerce operations, this largely comes down to its scale and network effects. Because more consumers buy on Amazon, more merchants sell on Amazon — leading to more competition and product variety, which becomes a positive feedback loop. Scale also benefits Amazon’s cloud business, AWS, in terms of brand recognition and high switching costs for clients who might consider its competitors.

    Over the long term, Amazon is likely to use its natural advantage to expand into new synergistic industries like advertising. According to Insider, Amazon is now the third-biggest digital advertising company in the world — behind Google and Facebook — generating $31 billion in 2021. The company’s massive user base of shopping-motivated customers gives it a natural advantage in this competitive industry. 

    Be greedy when others are fearful

    With the S&P 500 down 21% year to date, we are now in a bear market. And the Fed’s rate hikes and other tightening policies could make the downside worse before it gets better. That said, bear markets are a great time to bet on quality companies trading at a discount to their historic highs. And Amazon’s resilient operations and rock-solid economic moat could make it a great way to bet on a rebound. It isn’t hard to see why Buffett backs the company. 

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

    The post 2 reasons Amazon is a Warren Buffett stock 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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Will Ebiefung 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, and Meta Platforms, Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. 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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  • Down 47% so far in 2022, expert says this ASX tech share is a potential 10-bagger buy

    A mother and her young son are lying on the floor of their lounge sharing a tech device.A mother and her young son are lying on the floor of their lounge sharing a tech device.

    There are plenty of ASX tech shares that have taken a beating in 2022. But within the carnage, there could be a few names that are too good to ignore. One of those opportunities could be the Life360 Inc (ASX: 360) share price.

    Firstly, some readers may be wondering what this business, with a $1 billion market capitalisation, actually does.

    In the company’s own words, it operates a platform for families. Its core offering, the Life360 mobile app, is a market leader according to the company. The app has a number of features including “driving safety and location sharing”.

    Life360 had 42 million monthly active users in June 2022, spread across 150 countries.

    What’s going on with the Life360 share price?

    Life360 shares have taken a beating amid the changing economic environment where inflation is elevated and interest rates are rising.

    In theory, higher interest rates are meant to hurt asset prices. Lower interest rates, like we saw during the COVID years of 2020 and 2021, pushed up asset prices. That change from ultra-low rates to higher rates is really disrupting financial markets.

    Plenty of other ASX tech shares have been punished. For example, the Xero Limited (ASX: XRO) share price is down around 50% in 2022.

    However, it’s not as though the business has stopped growing.

    When Life360 announced its 2022 second quarter and half-year update, it said that monthly active users had increased by 29%. Half-year subscription revenue was up 90%, with 60% growth for core Life360 subscriptions.

    The company said that it’s seeing resilience from its subscribers and users despite the challenging macroeconomic circumstances. This could be supportive of the Life360 share price.

    Management said that a platform had been established for a bundled hardware launch, with an initial rollout matching “very encouraging” earlier test results. There was a 35% uplift in subscriptions compared to the control group.

    There is a continued expectation for sustainable positive cash flow in late 2023, with the first full year of positive cash flow in 2024. The company said that the 2022 first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) and its cash burn were on track.

    The average revenue per subscription increased by 13% year over year to $75.45.

    Expert view on the ASX tech share

    On a Livewire webinar, Chris Prunty and Josh Clark from QVG Capital talked about some of the positions in the portfolio. They like to focus on small and medium businesses.

    When asked about the ASX tech share, Prunty suggested that the Life360 share price could soar over the long term:

    It’s rapidly moving to free cash flow break even and positive, it’s a business that’s growing rapidly with recurring earnings, we think it has enormous latent pricing power and a significant addressable market.

    Of all the companies we own, if we look back in five to ten years’ time and it’s gone up five to ten times, that’s the one where I’d be least surprised. We are super bulls on Life360.

    The post Down 47% so far in 2022, expert says this ASX tech share is a potential 10-bagger 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 positions in and has recommended Life360, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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