Month: October 2022

2 of the best ASX growth shares to buy now according to Morgans
If you’re a fan of investing in growth shares, then you may want to look at the ASX shares named below that have been tipped as buys by analysts at Morgans.

Here’s why the broker thinks these are some of the best growth shares on the Australian share market right now:

Corporate Travel Management Ltd (ASX: CTD)

One growth share that Morgans is bullish on right now is corporate travel specialist Corporate Travel Management. The broker feels it is a great option in the travel sector. This is due to its belief that the company is well-placed for growth over the medium term thanks to acquisitions, its lower cost base, and technology development. Morgans commented:

CTD is our key pick of the travel sector. For investors that can take a medium-term view, we see substantial upside in its share price as the company recovers from the COVID-affected travel downturn. In fact, CTD should be a materially larger business post COVID given it has made two highly accretive acquisitions during the downturn. The company has also won a lot of new business, implemented structural cost-out opportunities and continued to develop its market-leading technology offering which means it will require less staff in the future. CTD is well managed and has a strong balance sheet (no debt).

Morgans currently has an add rating and $25.65 price target on the company’s shares.

TechnologyOne Ltd (ASX: TNE)

This enterprise software company could also be a growth share to buy according to Morgans. It is one of the broker’s favourite options in the tech sector right now. This is thanks to its pricing power, defensive earnings, strong cash balance, and long track record of solid earnings growth. The broker explained:

The technology sector is under pressure due to inflation and interest rate concerns which remain a key risk. However, for those looking for a technology play, TNE is our preferred exposure. It has pricing power (CPI passthrough on contracts), has ~$170m of net cash, is highly cash generative, has very defensive earnings, pays a dividend, and a has a decade plus track record of 10-15% pa EPS growth.

Morgans has an add rating and $11.53 price target on TechnologyOne’s shares.

The post 2 of the best ASX growth shares to buy now according to Morgans 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 Corporate Travel Management Limited and TechnologyOne 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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7 October 2022
Is the October outlook brightening for the Fortescue share price?
The Fortescue Metals Group Limited (ASX: FMG) share price has risen in the first week of October. Since the start of the month, it has climbed by almost 5%.

It’s not the only one that has seen a positive start to the month. The S&P/ASX 200 Index (ASX: XJO) as a whole has risen by more than 5% after the surprise interest rate increase by the Reserve Bank of Australia (RBA) on Tuesday. It was only a 25 basis point rise this month, less than many experts predicted.

What’s the outlook for iron?

For at least the next few years, the performance of iron ore could be key for Fortescue.

The current profit and cash flow generation from Fortescue is dependent on its iron ore mining. Higher revenue for the iron ore it produces largely turns into more net profit after tax (NPAT) and cash flow for the company.

But, the opposite is true when the resource price goes down. Iron ore has been drifting lower since June. The iron ore price is currently sitting at around US$95 per tonne, according to CommSec.

Some experts think the iron ore price is headed lower over the next couple of years. This could put pressure on the Fortescue share price.

The resources and energy quarterly report from the chief economist from the Department of Industry, Science and Resources notes that the iron ore price fell around 20% in the three months to September 2022.

The decline was attributed to growing global recessionary fears, new COVID-19 outbreaks and weakness in China’s housing sector. These have dampened world steel and iron ore demand in recent months.

The chief economist’s report projects the benchmark iron ore price to average US$90 per tonne in 2023 and around US$70 per tonne in 2024. This is expected to lead to a redintion of earnings from iron ore miners.

Latest on Fortescue’s green efforts

Fortescue has a plan to become a decarbonised materials and green energy powerhouse. Producing green hydrogen and green ammonia is a key focus for the company.

It recently announced its plan for US$6.2 billion of capital investment by 2030 to eliminate fossil fuel risk and reduce operating costs by US$818 million per year.

The cumulative operating cost savings are US$3 billion by 2030, with a payback of capital by 2034 at current market prices.

Fortescue Future Industries will also establish a “significant new green growth opportunity by producing carbon-free iron ore product and through the commercialisation of decarbonisation technologies”.

Success with these efforts could be an important driver of the Fortescue share price in the future.

Management commentary

Fortescue founder and executive chair Andrew Forrest said:

Fortescue, FFI [Fortescue Future Industries] and FMG, is moving at speed to transition into a global green metals, minerals, energy and technology company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition.

FFI is partnering with Tree Energy Solutions (TES) to develop a green hydrogen import facility in Germany. A US$127 million investment will be funded by FFI’s unutilised capital commitment and provides FFI with a pathway for access to “critical infrastructure to execute its strategy”.

TES is developing a portfolio of terminals globally that will enable the transportation of green energy.

The first phase of the partnership is to develop and invest in the supply of 300,000 tonnes of green hydrogen. The first delivery into the TES terminal in Germany is expected to take place in 2026. This could help get green hydrogen into energy networks and therefore help the Fortescue share price.

Forrest said:

The United Kingdom and Europe urgently need green solutions to replace fossil fuels and this investment will enable Europe to do exactly that. Not in 2050, but in four years from now.

The post Is the October outlook brightening for the Fortescue share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. 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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7 October 2022
Can the Pilbara Minerals share price keep charging higher in October
The Pilbara Minerals Ltd (ASX: PLS) share price has been a top performer in the last few months. Can the ASX lithium share keep going?

Since the start of October, it’s up by 18%. Over the past month it’s up more than 35%. From the middle of June, it has gone up by over 160%.

It has outperformed the S&P/ASX 200 Index (ASX: XJO) significantly over each of those time periods. For example, the ASX 200 is close to flat over the past month.

What could drive the Pilbara Minerals share price higher?

One of the most important elements that can affect investor sentiment about the business is the resource price.

A commodity business is heavily reliant on the price of its resource for how well its profit margins perform. It’s a price taker.

It essentially costs Pilbara Minerals the same to produce one tonne of production. So, higher revenue for that tonne can translate largely into more profit and higher cash flow, after paying more to the government in taxes.

I like how the company has been using the digital Battery Material Exchange (BMX) platform to sell off small, but regular, parts of its production.

The latest auction was its ninth BMX auction. It presented a cargo of 5,000 dry metric tonnes (dmt) for sale with a target grade of around 5.5% lithia.

Pilbara acknowledged that there was strong interest in both participation and bidding by a broad range of quality buyers with a total of 22 bids received online during the 30-minute auction window.

The ASX lithium share said that it intends to accept the highest bid of US$6,988 per dmt, on a pro rata basis for lithia content (and adjusted to be inclusive of freight costs), it equates to a price of around US$7,708 per dmt.

In the first BMX auction it carried out, in July 2021, the highest bid was US$1,250 per dmt.

Lithium demand grows with electric vehicle growth

The quarterly resources and energy report from the chief economist of the Department of Industry, Science and Resources referred to the growing global demand for lithium as electric sales “take off”. I think it’s worth including most of the section about world demand because it explains some of the positive support for ASX lithium shares and the Pilbara Minerals share price:

Global lithium demand continued to grow strongly in the June quarter 2022, driven by rising demand for electric vehicle batteries. Despite faltering global economic growth in the June quarter, sales and production of electric vehicles (EVs) continued their rapid growth trend.

Global sales of all types of EVs increased 36% in the year to June 2022 compared with the same period in 2021 — with Chinese sales up 110%, European sales up 6%, and North American sales up 27%.

In China, total EV sales have averaged almost half a million vehicles a month so far in 2022, reaching a peak of 650 thousand vehicles in June. Overall, auto production and supply chains in China have now largely recovered from the COVID lockdowns, when EV sales fell to just over 300 thousand vehicles in April 2022.

In May, the Chinese Government cut purchase taxes on some low-emission passenger vehicles by 50%, while some municipal governments have also provided subsidies and incentives to encourage EV purchases. Global passenger EV sales are expected to continue to grow strongly, albeit at a slower rate than in 2021 — when passenger EV sales more than doubled to an estimated 6.8 million vehicles. Passenger EV sales are expected to hit 11.2 million in 2022 and 14.5 million in 2023.

Key global automakers continue to accelerate plans to transition to EVs by developing new product lines and converting existing manufacturing capacity. The global market share for passenger EVs has quadrupled since 2019, with EV sales representing about 9% of the car market in 2021.

Broker ratings on the Pilbara Minerals share price

The broker UBS rates it as a sell, with a price target of $2.65. That implies a possible drop of 50% over the next year because of its valuation.

Even Macquarie’s bullish price target of $5.60 has almost been met. The broker thinks that the ASX lithium share will sell more through the platform when Ngungaju increases production.

The post Can the Pilbara Minerals share price keep charging higher in October 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 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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7 October 2022
The Lake Resources share price was never far from the headlines in Q1, but has it paid off?
The Lake Resources N.L. (ASX: LKE) share price was the talk of the town over the first quarter of financial year 2022. And for good reason.

Stock in the lithium developer rocketed a whopping 100% over the first seven weeks of the period. Sadly, it handed much of that gain back before the quarter was out.

The Lake Resources share price was trading at 79 cents at the end of the last financial year. At its August peak, stock in the company was swapping hands for $1.595.

Come the final close of September, however, Lake Resources shares were worth 90 cents – marking a 13.9% quarterly gain.

For comparison, the S&P/ASX 200 Index (ASX: XJO) dumped 1.4% over the three months ended 30 September.

So, what went so right, and then so wrong, for the Lake Resources share price in the first quarter? Let’s take a look.

What drove the Lake Resources share price in Q1?

Cast your mind back to early July.

Then, Lake Resources was down a managing director after Steve Promnitz suddenly stormed off the job. He then appeared to sell his entire 10.2 million share holding in the company the following day, as my Fool colleague James reported at the time.

Additionally, it had only been a month since Goldman Sachs’ bearish outlook for lithium seemingly inspired a major sell-off among ASX lithium shares.

And if the company was hoping for less drama in the new financial year, it was likely disappointed.

A short drop and a sudden stop

The Lake Resources share price was halted in mid-July following the release of a scathing report by activist short seller J Capital.

Among other things, the short seller slammed the company’s plan to produce lithium using direct lithium extraction (DLE) technology – owned by partner Lilac Solutions.

Incredibly, when the company responded to the claims, it said J Capital had criticised the wrong process, calling the report “incorrect” and “inaccurate”.

Remarkably, the attack didn’t outwardly harm the Lake Resources share price. However, it likely helped bolster the company’s short position.

It increased from 7.9% in late June to 10.2% at the end of September, making Lake Resources one of ASX’s most shorted shares.

Perhaps the staunch performance of the stock was due to increasing warnings the world could soon experience a lithium shortage. Or perhaps the revelation of its new CEO and managing director David Dickson played a part.

Whatever the reason, it wasn’t long before the lithium favourite faced yet another challenge.

A bone to pick with Lilac

The Lake Resources share price tumbled 16.5% in mid-September after the company acknowledged a dispute between it and Lilac Solutions.

The pair previously agreed Lilac could earn a 25% stake in the Kachi Project by achieving certain milestones by an agreed upon date. However, it seems the agreed upon date was far from agreed upon.

Lake Resources believes the deadline was 30 September, while Lilac thought it had until 30 November. The market still hasn’t heard news of an outcome of the dispute.

Though, the pair are continuing to work on the Kachi Project. Onsite processing of Kachi brines was expected to begin this week.

Lake Resources share price snapshot

Sadly, the Lake Resources share price’s September tumble sees it trading in the longer-term red.

The stock has fallen 6% since the start of 2022. Though, it has gained a whopping 80% since this time last year.

Meanwhile, the ASX 200 has dumped 10% year to date and 6% over the last 12 months.

The post The Lake Resources share price was never far from the headlines in Q1, but has it paid off? 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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7 October 2022
Brokers say these are the ASX 200 mining shares to buy
If you’re wanting to diversify your portfolio by investing in the mining sector, then you may want to check out the ASX 200 mining shares listed below.

Both have recently been tipped as buys in the sector by leading brokers. Here’s what you need to know about these mining shares:

Iluka Resources Limited (ASX: ILU)

The first ASX 200 mining share for investors to look at is Iluka.

It is the mineral sands and rare earths miner behind a number of quality projects across South Australia and Western Australia. This includes the Eneabba project, where Iluka is developing a fully integrated rare earths refinery, which will be only the third of its kind outside the China market.

This is a big positive given how demand for rare earths is expected to remain strong long into the future.

Analysts at Goldman Sachs are bullish on Iluka. They commented:

We are positive on ILU’s project pipeline and forecast >40% production growth in mineral sands volumes, c.18ktpa of Rare Earths (~3.5-4ktpa of high value NdPr). We think ILU’s Eneabba RE refinery is a strategic asset considering it will be only the third western world RE refinery.

The Zircon and TiO2 feedstock markets entered a supply side driven deficit in 2021, and we think prices will remain supported in 2H22 & 2023.

Goldman Sachs currently has a conviction buy rating and $13.30 price target on Iluka’s shares.

South32 Ltd (ASX: S32)

Another ASX 200 mining share that has been tipped as a buy is South32.

It is a diversified mining mining and metals company producing alumina, aluminium, bauxite, coal, copper, lead, manganese, nickel, silver, and zinc at operations in Australia, Southern Africa and South America.

Morgans is very positive on the miner due to its portfolio optimisation and exposure to metals that will be important to the decarbonisation megatrend.

It explained:

S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32’s risk and ESG profile. Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

Morgans has an add rating and $5.50 price target on South32’s shares.

The post Brokers say these are the ASX 200 mining shares to buy 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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7 October 2022
3 ASX shares I’d buy with $500
I think ASX shares are a great way to build wealth over the long term. For beginner investors, it might be the case that $500 is how much money they have to start.

In my opinion, investing is the type of thing that people can learn best by getting stuck into it and getting experience. People don’t need a ton of money to get started.

Many brokers have a minimum investment size of $500. For example, that’s how much CommSec requires investors to have.

I think it’s a good idea for beginner investors to consider investments that could make sense for the long term and that they might want to buy more of in the future. A $500 investment could just be the start.

With that in mind, here are three I’d start buying:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is an exchange-traded fund (ETF) that owns a number of businesses that we see and probably use in our everyday lives. An ETF is an investment that owns a bunch of different shares inside it.

I think it can be a useful teaching tool to be invested in shares that we use the products or services of.

Some of the recognisable names in this portfolio are: Apple, Microsoft, Amazon.com, Alphabet, Tesla, Meta Platforms, Nvidia, Costco, Adobe, Intel, Netflix, PayPal, Starbucks, Monster Beverage, Moderna, Airbnb, Kraft Heinz and Lululemon.

It could be a good time to consider this ASX share with $500 because the Betashares Nasdaq 100 ETF has dropped around 25% this year. In other words, these shares are on a big discount at the moment.

Australian Ethical Investment Ltd (ASX: AEF)

Australian Ethical is an interesting funds management business.

It looks to provide investors with investment funds that match their ethics. For example, it avoids fossil fuel businesses and invests in companies that are making a positive difference to the world.

The ASX share has a growing number of customers, as more people look for ethical investments.

A key segment of the business is that it offers superannuation money. It had $6.2 billion of funds under management (FUM) at 30 June 2022 – over FY22, it achieved record super net flows of $0.8 billion. It’s benefiting from the regular superannuation contributions made by employees and other people.

After falling around 60% in 2022, I think the Australian Ethical share price looks compelling for the long term.

Wesfarmers Ltd (ASX: WES)

I think Wesfarmers is one of the most attractive long-term ideas around.

It has been around for many decades, and I think it could continue to be one of the longest-running companies.

Several businesses are in the portfolio, including Bunnings, Priceline, Kmart, and Officeworks.

One of the most attractive things about this ASX share is that management is unafraid to change what names are in the portfolio. For example, it has divested coal, Kmart Tyre & Auto and Coles Group Ltd (ASX: COL) in recent times. It has acquired Catch, Priceline and a stake in a lithium project in recent years. I like that it’s focused on the future.

With a good dividend, a growing portfolio of good businesses, and a long-term focus, I think Wesfarmers is one of the most solid ASX shares around.

The Wesfarmers share price has fallen around 25% in 2022.

The post 3 ASX shares I’d buy with $500 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. 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 Adobe Inc., Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Australian Ethical Investment Ltd., BETANASDAQ ETF UNITS, Costco Wholesale, Intel, Lululemon Athletica, Meta Platforms, Inc., Microsoft, Monster Beverage, Netflix, Nvidia, PayPal Holdings, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna Inc. and has recommended the following options: long January 2023 $57.50 calls on Intel, long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, short January 2024 $430 calls on Adobe Inc., short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS, COLESGROUP DEF SET, and Wesfarmers Limited. The Motley Fool Australia has recommended Adobe Inc., Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Australian Ethical Investment Ltd., Meta Platforms, Inc., Netflix, Nvidia, PayPal Holdings, and Starbucks. 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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7 October 2022
How did the A2 Milk share price manage to beat the ASX 200 in September?
The a2 Milk Co Ltd (ASX: A2M) share price outperformed the S&P/ASX 200 Index (ASX: XJO) in September.

A2 Milk shares fell 2.7% between market close on 31 August and 30 September. In this same time frame, the ASX 200 plunged 7.3%.

Let’s take a look at how the company’s shares performed last month.

How did September pan out for the A2 Milk share price?

The A2 Milk share price lifted 5% between 31 August and 2 September before pulling back.

The infant formula company’s share price appeared to lift on momentum from its FY22 results released on August 29. Net profit after tax (NPAT) lifted 42.3% to NZ$114.7 million, while revenue jumped 19.8%,

Bell Potter analysts upgraded the company’s shares to a buy rating with a $6.35 price target following these results.

Analysts at Bell Potter said:

We upgrade our rating from Hold to Buy. If A2M can execute on its strategy to achieve ~NZ$2Bn in FY26e revenues and EBITDA margins in the teens, then it would imply compound double digit EPS growth through to FY26e.

A2 Milk was the fourth-best performer on the ASX200 on September 2, as my Foolish colleague Brooke reported at the time.

However, on 9 September, A2 Milk shares fell slightly following a bearish broker note from Goldman Sachs. Goldman warned it would be hard for A2 Milk to replicate its strong FY22 results in FY23. Goldman placed a sell rating on A2 Milk shares with a $5.80 price target.

On 12 September, A2 Milk shares climbed nearly 3% on the back of good news out of China. The China Government renewed the registration of A2 Milk’s dairy process partner, Synlait Milk Ltd (ASX: SM1) .

In mid-September, Bell Potter released another note maintaining a buy rating on the company’s share price with a $6.60 price target.

Perpetual Equity Investment Company Ltd (ASX: PIC) also expressed confidence in A2 Milk in a release on 14 September, revealing it continues to see “material upside” to the A2 Milk share price. Analyst Sean Roger said:

The most pleasing aspect of the result was the strong growth of the China Label infant formula business.

Meanwhile, later in the month, Wilson Asset Management equity analyst Shaun Weick also expressed confidence in the A2 Milk share price. He said:

A2 Milk is always a very topical one. Yeah, we actually have bought some shares coming out of the FY22 result.

Share price snapshot

The A2 Milk share price has fallen 7% in the past year, but it has climbed 8% in the past six months and 2% this week.

For perspective, the ASX 200 has shed more than 5% in the past year.

A2 Milk has a market capitalisation of more than $4 billion.

The post How did the A2 Milk share price manage to beat the ASX 200 in September? appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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7 October 2022
After a smashing first quarter, what’s the outlook for ASX coal shares in Q2?
ASX coal shares were on fire in the first quarter of the 2022 financial year (Q1 FY22).

The miners were buoyed by soaring thermal coal prices and resurgent metallurgical coal prices.

If you’re not familiar, metallurgical coal (also called coking coal) is primarily used in steel manufacturing. Thermal coal is mostly used to generate electricity.

Just how well did ASX coal shares do in Q1?

From the closing bell on 30 June through to market close on 30 September the All Ordinaries Index (ASX: XAO) lost 1.0%.

As for the ASX coal shares:
- The Whitehaven Coal Ltd (ASX: WHC) share price leapt 86.2% higher
- Yancoal Australia Ltd (ASX: YAL) shares gained 5.4%
- And the New Hope Corp Ltd (ASX: NHC) share price rocketed 81.8%
Before moving on to the Q2 outlook, we should note that Yancoal’s share price also reflects an interim dividend payout of 52.7 cents per share, paid on 5 September. Yancoal currently trades on a whopping 16.7% trailing dividend yield.

New Hope didn’t make a dividend payout in Q1. Meantime, Whitehaven paid a 40-cent per share dividend and currently trades on a 4.9% trailing yield.

Now, what can investors expect from ASX coal shares in the three months ahead?

What’s the outlook for ASX coal shares in Q2?

As you’d expect, atop company-specific metrics, the coal miners’ fortunes are tied closely to the price of coal.

For some insight into where coal prices look to be tracking in Q2, we turn to the federal Industry, Science & Resources Department’s latest quarterly Resources and Energy Report, released earlier this week.

The report divides the outlook into coking coal and thermal coal.

On the coking coal front, the department notes that while “prices have eased back from historic highs in the September quarter, the Australian premium hard coking coal price is forecast to average almost US$400 a tonne in 2022″.

In the quarter ahead, ASX coal share investors should pay attention to conflicting forces impacting coking coal prices.

Weakening steel markets, particularly lower demand from China, are putting downward pressure on prices. However, wet conditions in Australia “are expected to add to supply pressures and place upward pressure on prices”.

And sanctions on Russian coal exports will also see supplies reduced, supporting coal prices.

The EU sanctions on Russian coal exports were meant to take full effect last month.

According to the report:

It is expected that around a third to a half of Russian exports will be stranded in the immediate future. Ultimately, around 5 million tonnes annually is expected to be stranded from global markets.

Turning to thermal coal

ASX coal shares combined have seen Australia become the world’s second-largest thermal coal exporter.

Thermal coal prices topped out at US$450 per tonne in September. That same tonne is currently fetching US$396.

According to the federal government report, “Thermal coal prices remain extremely high, driven by weather and COVID-19 disruptions, as well as market uncertainties linked to the Russian invasion of Ukraine.”

The report continues:

It is not clear how long the Russian invasion of Ukraine and subsequent sanctions against Russia will affect coal markets. The exclusion of large quantities of Russian coal from markets in the Northern Hemisphere could inflate coal prices for years to come.

Australian thermal coal prices remain extremely high, as European nations look to build stockpiles ahead of the Northern Hemisphere winter.

The department expects prices to ease in 2023 and 2024 “as trade flows reorganise and supply recovers”.

But for Q2, the outlook for ASX coal shares remains healthy.

The post After a smashing first quarter, what’s the outlook for ASX coal shares in Q2? 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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7 October 2022
Experts say these ASX dividend shares with 7% yields are buys
Looking for dividend shares to buy? Listed below are two ASX dividend shares that experts rate as buys.

Here’s why they are bullish on these dividend shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to consider buying is Adairs. It is the furniture and homewares retailer behind the Adairs, Mocka, and Focus on Furniture brands.

Goldman Sachs is a fan of the company and recently put a buy rating and $3.05 price target on its shares.

Its analysts believe the company is well-placed for growth thanks to its highly loyal and engaged customer base (1 million+ Linen Lover members), strong social media presence, and ongoing store roll-out opportunity. The broker also highlights Adairs’ strong presence on social media, which it believes the company can leverage to drive ongoing sales growth.

In respect to dividends, Goldman is forecasting fully franked dividends per share of 18 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.07, this will mean yields of 8.7% and 9.7%, respectively.

Charter Hall Long WALE REIT (ASX: CLW)

Another ASX dividend share that has been tipped as a buy is the Charter Hall Long Wale REIT.

It is a leading property company with a focus on high quality real estate assets that are leased to corporate and government tenants on long term leases. In respect to the latter, at the end of FY 2022, the Charter Hall Long Wale REIT had a weighted average lease expiry (WALE) of 12 years. Management highlights that this provides income security.

Citi is a fan of the company. The broker recently upgraded its shares to a buy rating with a $4.70 price target.

It believes its shares are great value after recent weakness. This is particularly the case given its “low risk income stream with c. 12 year WALE and 99.9% occupancy.”

As for dividends, the broker is forecasting dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT share price of $4.14, this will mean yields of 6.8% and 7%, respectively.

The post Experts say these ASX dividend shares with 7% yields are buys 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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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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7 October 2022
‘Attractively priced’: Experts name 2 ASX shares to pounce on right now
In distressed markets like now, there are plenty of ASX shares that seem to be cheap.

But before you buy indiscriminately, Auscap Asset Management portfolio manager Tim Carleton warned investors to avoid value traps.

“You just think that the business is far too cheap for its earnings profile,” he told The Motley Fool last week.

“The problem is often that you have a business that doesn’t necessarily have significant earnings growth.”

With that in mind, a couple of other experts named two ASX shares that are heavily discounted right now that they believe have a bright future:

These pants are on sale right now

Baker Young managed portfolio analyst Toby Grimm describes GPT Group (ASX: GPT) as “a relatively defensive player within the Australian real estate sector”.

“It manages a diversified portfolio of high quality commercial, retail, office and industrial assets in key locations across Australia.”

In the face of steeply rising interest rates, the GPT share price has sunk more than 27% since the start of the year.

Grimm told The Bull this dip now provides a tempting entry point.

“Following asset disposals, investment mandate wins, and a better-than-expected first half-year result, we believe GPT is attractively priced on an earnings multiples basis and discount to net tangible asset backing.”

The reduced share price also means the dividend yield is now up to a handy 5.6%.

Macquarie Australian equity strategist Matthew Brooks this week named GPT as a stock that’s trading at one of the biggest discounts to the long-term trend.

“We think these stocks are more likely to outperform in a bear market rally.”

Would you rather be a Qantas customer or shareholder at the moment?

All the recent bad publicity that Qantas Airways Limited (ASX: QAN) has copped for its poor service levels may have investors wondering why they would bother to buy.

But many analysts, including Ord Minnett senior advisor Tony Paterno, feel it’s far better to be a shareholder than a customer of the flying kangaroo right now.

After all, the airline does operate in a near-duopoly in the domestic market.

“Our positive view of Qantas is supported by a favourable Australian industry structure that should lead to market share gains,” he said.

“Given its superior domestic market structure and share, a restructured and more variable cost base, a strong balance sheet and potential upside from the loyalty program, we believe a premium for Qantas is warranted.”

Qantas shares are up just 3.5% year to date but have impressively climbed 17.6% since reporting season.

The post ‘Attractively priced’: Experts name 2 ASX shares to pounce on right now appeared first on The Motley Fool Australia.

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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 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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7 October 2022