Day: 18 November 2022

The All Ordinaries Index (ASX: XAO) made a modest gain on Friday, closing 0.21% higher at 7,354.7 points.

Most of the sector indices finished in the green today, although the S&P/ASX 200 Energy Index (ASX: XEJ) was the worst performer, closing 0.39% lower.

The top indices were the S&P/ASX 200 Telecommunication Services Index (ASX: XTJ), which gained 0.81%, and the S&P/ASX 200 Industrials Index (ASX: XNJ), closing 88% higher.

Let’s discover which ASX All Ords thrashed these mediocre results by the market on Friday.

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura share price closed 13.58% higher to 46 cents apiece.

There’s no fresh news to explain why Arafura’s share price rallied strongly today.

However, its shares have been on a bull run since Wednesday, when they gained 17.14% in a single trading session. The momentum from this massive green candle may have carried over into the price action today.

Arafura’s rally this week follows the mineral explorer‘s announcement on Tuesday that it had received approval for its mining management plan to get its Nolans project off the ground in the Northern Territory.

The agreement authorises Arafura to legally operate its Nolans project with the end goal of producing rare earth elements (REE) neodymium and praseodymium (NdPr).

Audio Pixels Holdings Ltd (ASX: AKP)

The Audio Pixels share price also had a great run, surging 9.65% to close at $12.50 on Friday.

Like Arafura, Audio Pixels also had no announcements to report on today.

In fact, its most recent update came on 28 October when it posted its quarterly activities and cash flow report.

The digital speaker developer advised it used $1.23 million in operating activities for the reported period and $3.69 million over the last nine months.

Taking into account its cash balance and cash burn rate, Audio Pixels has an estimated 1.6 quarters of funding available.

One highlight of Audio Pixel’s operations is that it’s working towards making its product suitable for mass production.

BCI Minerals Ltd (ASX: BCI)

And finally, the BCI Minerals share price rocketed on Friday. It gained a hefty 10.6% to 26 cents per share.

Again, like the other shares on this list, the company had no news to report today, despite its share price surging into the green.

BCI Mineral’s most recent announcement was posted on 28 October in the form of its September 2022 quarterly report.

The company reported its Iron Valley mine contributed $3.5 million in earnings before interest, taxes, depreciation, and amortisation (EBITDA) during the reported period.

It also finished the quarter with a strong balance sheet. BCI Minerals said it has no debt on its books but has $188 million in cash.

This balance sheet, alongside $100 million in convertible notes, will mean BCI Minerals will not need to take on additional debt to fund its construction projects for its Iron Valley mine.

The post 3 ASX All Ords shares that had a cracking run on Friday appeared first on The Motley Fool Australia.

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More reading

• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• Why is the Arafura Rare Earths share price rocketing 16% on Wednesday?
• Why Arafura, Nufarm, Pilbara Minerals, and Whitehaven Coal are charging higher
• What’s going on with the Arafura share price today?
• Why did the Arafura share price surge over 7% higher on Friday?

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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ASX 200 gold shares had a tough run on the market today.

Gold shares include Newcrest Mining Ltd (ASX: NCM), Northern Star Resources Ltd (ASX: NST) and Evolution Mining Ltd (ASX: EVN).

Let’s take a look at what may have impacted ASX 200 gold shares today.

What happened?

The Newcrest Mining share price fell 0.99% today, while Northern Star Resources shares dropped 0.6%. Meanwhile, the Evolution Mining share price was flat today. In contrast, the S&P/ASX 200 Index (ASX: XJO) climbed 0.23% today.

This follows the gold price falling overnight. Spot gold fell 0.65% to US$1,764 an ounce.

Newcrest, Northern Star and Evolution are all major gold producers.

Gold prices fell amid a stronger US dollar and treasury yields rising. Fear of interest rate rises impacted the US dollar.

Commenting on the gold price in a research note today, ANZ senior economist Adelaide Timbrell said:

Gold edge lower amid further hawkish comments from the Fed. James Bullard called for the Fed to raise rates to at least 5.00–5.25%, calling it a minimum level of ‘sufficiently restrictive’.

St Louis Federal Reserve president and CEO James Bullard, speaking at an economic event in Louisville Kentucky, indicated rates could rise by up to 7%.

Commenting further on Bullard’s remarks, ANZ’s Timbrell added:

The USD climbed following his comments, and bond yields rose. This weighed in investor demand, with spot gold declining nearly 1%.

Meanwhile, Northern Star provided an exploration update to the market this week. The company said it has spent $48 million on FY23 exploration to date. Ongoing exploration has highlighted significant “life of mine” extension potential.

Managing director Stuart Tonkin said:

Our exploration team has made a strong start to FY23, advancing some exciting early-stage prospects across our global tier-1 portfolio as well as expanding beyond known areas of mineralisation.

Newcrest announced this week that the Brucejack mine in Canada has resumed operations. The mine shut in October following a fatality at the mine. The FY23 production guidance for the mine remains unchanged.

Share price snapshot

The Newcrest Mining share price has fallen 24% in the past year, while Northern Star Resources shares have descended nearly 5% in the last 52 weeks.

Evolution Mining shares have descended nearly 42% in the last year.

For perspective, the ASX 200 has fallen 3% in the last year.

The post Why did ASX 200 gold shares lag the index today? appeared first on The Motley Fool Australia.

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More reading

• Is a weak US dollar good for ASX 200 mining shares?
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday

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

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The Woodside Energy Group Ltd (ASX: WDS) share price finished today slightly in the red.

Woodside shares fell 0.81% to $37.89. For perspective, the S&P/ASX 200 Index (ASX: XJO) lifted 0.23% today.

Let’s take a look at what may have weighed on the Woodside share price.

What happened?

Woodside shares may have struggled today after the oil price fell overnight.

Brent crude oil fell 3.3% to US$89.78 a barrel, while US WTI oil dropped 4.6% to US $81.64 a barrel overnight.

Oil prices fell amid interest rate hike fears in the United States and higher COVID-19 cases impacting demand in China, Reuters reported.

Commenting on the oil price BOK Financial senior vice president of trading Dennis Kissler told the publication:

It’s kind of a triple whammy. We’ve got COVID-19 cases rising in China, interest rates are continuing to rise here in the U.S. and now we’ve got technical weakness in the market.

However, oil prices have since recovered some of their losses. WTI Crude Oil is up 0.92% on the previous session to US $82.39 a barrel, while Brent Crude Oil is climbing 0.7% to US$90.41 a barrel at last look.

Meanwhile, the US government is preparing to issue guidance on a Russian oil price cap, according to another report on Reuters.

This aims to stop Russia from profiting from higher oil prices. The cap would be applied by the United States, Group of Seven allies and Australia.

Woodside produced a record total production of 51.2 MMboe in the third quarter of the 2022 calendar year.

The company achieved an average realised price of $102 per barrel of oil equivalent. Woodside is also a major gas producer. The natural gas price is currently down 0.3% to US$6.35 per MMBtu.

Woodside share price snapshot

The Woodside share price has exploded 73% in the year to date, while it has surged 72% in the past year.

For perspective, the ASX 200 has fallen 3% in the last year.

Woodside has a market capitalisation of nearly $72 billion based on the current share price.

The post Why did the Woodside share price lag the ASX 200 today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?
• How to have your ASX 200 dividend cake and eat it too
• 5 things to watch on the ASX 200 on Wednesday
• Up 80% in 2022, is the Woodside share price ‘nearing its peak’?

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

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The S&P/ASX 200 Index (ASX: XJO) ended the week in the green. The index closed Friday’s session 0.23% higher at 7,151.8 points. That marks a week-on-week fall of 0.09%.

That was despite a weak performance from the S&P/ASX 200 Energy Index (ASX: XEJ). It slumped 0.4% amid tumbling oil prices.

The Brent crude oil price fell 3.3% to US$89.78 a barrel overnight and the US Nymex crude oil price dumped 4.6% to trade at US$81.64 a barrel.

Fortunately, the energy sector’s suffering was offset by gains across the S&P/ASX 200 Industrials Index (ASX: XNJ), the S&P/ASX 200 Communications Index (ASX: XTJ), and the S&P/ASX 200 Utilities Index (ASX: XUJ). They lifted 0.9%, 0.8%, and 0.7% respectively

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) traded flat amid news OZ Minerals Limited (ASX: OZL) will likely accept BHP Group Ltd (ASX: BHP)’s increased takeover bid.

All in all, seven of the ASX 200’s 11 sectors closed in the green. But which share outperformed all others to close the week on a high? Keep reading to find out.

Top 10 ASX 200 shares countdown

It might come as no surprise that the stock topping the lot on Friday was OZ Minerals.

It returned to trade this morning after a two-day trading halt on news BHP upped its bid for the company to $28.25.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
OZ Minerals Limited (ASX: OZL)	$27.34	3.95%
NIB Holdings Limited (ASX: NHF)	$7.12	3.19%
Seven Group Holdings Ltd (ASX: SVW)	$20.27	3.05%
Ampol Ltd (ASX: ALD)	$28.82	2.89%
De Grey Mining Limited (ASX: DEG)	$1.265	2.85%
Grancorp Ltd (ASX: GNC)	$8.05	2.81%
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)	$18.91	2.72%
United Malt Group Ltd (ASX: UMG)	$3.14	2.61%
ASX Limited (ASX: ASX)	$72.80	2.54%
Fortescue Metals Group Limited (ASX: FMG)	$19.96	2.36%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Are BHP shares in the buy zone following the latest OZ Minerals news?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• NIB share price surges ahead as profits soar 31%
• Considering CSL shares? Broker says this other ASX 200 healthcare share has 30% upside

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 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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Investors are being treated to a tonne of stock ideas from some of the biggest names in funds management today. One of those ideas is an ASX 200 share that has dragged 13% lower this year despite accelerating its earnings.

Auscap Asset Management’s portfolio manager, Tim Carleton, named his pick from the field today at the Sohn Hearts and Minds 2022 conference in Hobart.

Unlike some of the other guest speakers, Carleton looked locally for his prized pitch for outperformance. The astute fund manager drew the crowd’s attention to a highly profitable ASX-listed company that could be set to put the pedal to the metal on future growth.

Which ASX 200 share is this expert’s top pick?

Before I ‘exhaust’ the automotive puns — the Auscap fundie revealed Carsales.com Ltd (ASX: CAR) as his number one selection. Rather than being deterred by the underperformance compared to the S&P/ASX 200 Index (ASX: XJO) year-to-date, Carleton was emboldened by it.

Speaking to the value opportunity present in Carsales, the Auscap manager said:

We’ve seen a lower share price as a result of broad market movements. These are the sorts of opportunities that we love and it offers a compound earnings growth story with an attractive valuation.

Carleton admitted it might seem odd to describe the automotive online marketplace as a value play. After all, the current price-to-earnings (P/E) ratio hovers around 47 times.

This might seem almost extortionist compared to a peer average P/E of approximately 35 times earnings. Yet, the experienced fund manager explained that the company’s broad geographic exposure to areas outside of Australia represented a “massive opportunity”.

Not cruising alone on this one

It seems Carleton is in good company with his attraction to this ASX 200 share. Both Wilsons and Alphinity — two prominent Australian fund managers — have sung the praises of Carsales recently.

Furthermore, the Auscap portfolio manager pointed out Carsales’ history of growing earnings per share (EPS). Looking at how the company’s EPS has performed since 2019 (below), it’s hard to argue with the statement.

Further fuelling the bull case, Carsales is one company that hasn’t reduced its dividends since making its first payment. Since 2010, the company’s dividends have grown at a compound annual growth rate (CAGR) of 10.6%.

This ASX 200 share currently trades at $21.66 apiece — gaining 13.2% in the last month.

The post The ASX 200 share that offers a ‘massive opportunity’ right now: expert appeared first on The Motley Fool Australia.

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More reading

• This falling ASX 200 share could catch an inflationary tailwind: fundie
• Planes, rains and automobiles: Fund names 3 ASX shares to back right now
• 3 ASX 200 dividend shares you may have overlooked: Wilsons
• 22 high-yield ASX dividend shares Wilsons is targeting
• 3 ASX shares that are the top buys right now: expert

Motley Fool contributor Mitchell Lawler 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 carsales.com 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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If you’re wanting to pick up some ASX growth shares, then you may want to consider the two listed below.

Both of these growth shares have been tipped as buys with meaningful upside potential. Here’s what you need to know about them:

Corporate Travel Management Ltd (ASX: CTD)

Morgans is feeling very bullish on this ASX growth share right now.

In fact, the broker has named it as its top pick in the travel sector and tipped it as a great buy and hold option.

This is due to Morgans’ belief that the company is well-placed for growth over the medium term thanks to acquisitions, its lower cost base, and technology development.

Its analysts explained:

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.

Morgans has an add rating and $25.65 price target on its shares.

TechnologyOne Ltd (ASX: TNE)

Another ASX growth share that brokers are bullish on is TechnologyOne.

It is a leading enterprise software company serving government, local government, and private sector customers.

TechnologyOne appears well-placed for growth over the next decade thanks to its shift to a software as a service (SaaS) business model. This is underpinning higher quality and higher margin revenues, which Bell Potter expects to support strong earnings growth.

The broker explained:

The key competitive advantage of the company is it has developed a fully integrated SaaS solution of its software and is now switching customers to this solution. The migration is now around threequarters complete and Technology One is starting to reap the benefits of greater recurring revenue and a higher margin. This combination will in our view drive double digit earnings growth for years to come and, as the migration of customers approaches 100%, we expect the multiple to rerate to that of a pure SaaS company.

Bell Potter currently has a buy rating and $14.25 price target on TechnologyOne’s shares.

The post Brokers say these are the best ASX growth shares to buy now appeared first on The Motley Fool Australia.

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More reading

• These ASX shares turned $20,000 into $100,000 in 10 years
• Which are the best ASX 200 shares to buy now for 2023?
• Analysts name 2 excellent ASX 200 shares to buy now
• 3 ASX 200 directors buying up their company shares in the past week
• Goldman Sachs says these ASX travel shares are buys

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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There’s a big jump between this $6 S&P/ASX 200 Index (ASX: XJO) mining share and industry giant Fortescue Metals Group Limited (ASX: FMG) – a $58 billion one in fact.

But one fundie has reportedly tipped Champion Iron Ltd (ASX: CIA) to trade at valuations like those of mining goliaths Rio Tinto Limited (ASX: RIO) and Fortescue.

Right now, stock in the far smaller, $3.2 billion iron ore miner is trading for $6.17. And that could be just the tip of the iceberg.

Regal Funds portfolio manager and head of mining investments Tim Elliot believes it could double.

Let’s take a look at what the fundie likes about the comparatively tiny ASX 200 iron ore mining share.

Could this ASX 200 mining share be gearing up to double?

This year’s Sohn Hearts & Minds Investment Leaders Conference has officially kicked off, folks. And that means plenty of investment advice from some of the industry’s top investment gurus.

Joining the voices today is Elliot and his apparent favourite ASX 200 mining share, Champion Iron.

Champion Iron operates in Canada. It works to produce high-grade iron ore capable of creating green steel.

The fundie told the conference, via the Australian Financial Review, “it’s rare to find a multibillion-dollar miner and such tremendous value upside”, noting it trades at 3.9 times EBITDA based on 12-month forward consensus earnings. Elliot continues:  

It can double and that’s without assuming it rises 43% to trading in line with Fortescue and Rio which it absolutely should.

[Champion Iron is] the most under-appreciated and exciting play on decarbonisation that’s completely under the radar.

He is also said to have commended the company’s “visionary” management and flagged a positive outlook for iron ore and steel.

Elliot isn’t alone in expecting big things from the ASX 200 miner.

Goldman Sachs believes Champion Iron shares are a buy, slapping the stock with a $6.90 price target late last month. While not quite double, that does represent a potential 11% upside.

The post The $6 ASX 200 mining share that ‘absolutely should’ trade in line with Fortescue: fundie appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• 4 ASX 200 shares trading ex-dividend next week
• Here are the top 10 ASX 200 shares today
• Which ASX 200 mining shares managed to dig up gains in October?
• Could ASX 200 iron ore shares be heading for more pain?

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

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The NextDC Ltd (ASX: NXT) share price is ending the week on a positive note.

In afternoon trade, the data centre operator’s shares are up 3% to $9.59.

This compares favourably to the ASX 200 index, which is up 0.25% in late trade.

Why is the NextDC share price pushing higher?

Investors have been bidding the NextDC share price higher today after the company reiterated its guidance at its annual general meeting.

According to the release, FY 2023 has started positively and management continues to expect data centre services revenue of $340 million to $355 million. This will be a 17% to 22% increase year over year.

Management notes that its revenue growth has been assisted by current economic factors, with price escalation as well as power cost protection built into contracts and the majority of power costs being passed through.

In respect to earnings, the company has reiterated its guidance for underlying EBITDA of $190 million to $198 million. This will be a 12% to 17% increase from FY 2022.

Broker reaction

Goldman Sachs has responded well to the update and highlights that management spoke positively about its sales outlook. It commented:

NXT provided a tangible comment on the sales pipeline, noting that it is of a record size, and is expected to convert into material new contractual commitments into the next 6-12 months. We see this as clear positive statement, noting it is the first time NXT has been specific on the timing of material new contracts.

And while Goldman was confident that NextDC would achieve its guidance this year, it was pleased given recent commentary from other providers. It said:

NXT noted continued strong growth in enterprise, network and partner pipelines driving healthy margin, with revenue growth assisted through price escalation & power pass-through. Although we had seen limited risk to NXT guidance in FY23, we still view this as a positive, particularly given Infratil recently reduced CDC forward guidance on delayed customer ramp.

Goldman Sachs currently has a conviction buy rating and $14.30 price target on its shares.

The post Here’s why this ASX 200 tech share is smashing the market today appeared first on The Motley Fool Australia.

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More reading

• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• 5 things to watch on the ASX 200 on Friday
• Analysts say these quality ASX growth shares can rise ~40%
• 2 big name ASX companies ready for a ‘share price recovery’: experts
• ‘Close to bottom’: Expert names 3 bargain ASX shares to buy right now

Motley Fool contributor James Mickleboro has positions in NEXTDC 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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Commonwealth Bank of Australia (ASX: CBA) shares have outperformed the S&P/ASX 200 Index (ASX: XJO) over the week.

In afternoon trade on Friday, CBA shares are up 1.3% over the five trading days, while the ASX 200 is down 0.2%.

Here’s what’s been putting the ASX bank share in our spotlight this week.

Profits up 2% in first quarter

Tuesday saw CBA shares post their biggest gains of the week, closing up 1.3%.

That came as investors digested the bank’s first-quarter update for the three months ending 30 September.

Highlights included income of approximately $6.6 billion. That was up 9% compared to the second-half average.

CBA’s shares likely also got a boost from the 2% increase in cash net profit after tax, which reached $2.5 billion over the quarter.

CommBank has been one of the ASX 200 stocks to receive some tailwinds from rising interest rates. This helped the bank increase its margins and saw a 16% lift in net interest income growth.

On the other side of the ledger, expenses, excluding remediation, were up 4.5% as well.

CBA’s CEO Matt Comyn pointed to the strength of the bank’s balance sheet and had a fairly bullish take on the outlook for the Aussie economy.

“The economy has shown resilience in the face of growing cost of living and interest-rate pressures, and despite these near-term challenges, we remain optimistic on the medium to long-term outlook,” Comyn said.

Are CBA shares overvalued?

CommBank also hit The Motley Fool headlines over the week as analysts debated whether CBA shares are worth their premium to the other big bank stocks.

CBA trades on a trailing price-to-earnings (P/E) ratio of just over 19 times. That’s significantly higher than its peers.

While not all analysts agree, those at Perennial Value Australian Shares Trust said the fund is underweight on CBA shares due to the bank’s “unjustifiable valuation premium”.

Goldman Sachs is also uncomfortable with CommBank’s current valuation based on its forward P/E ratio. The broker cited that Australia’s biggest bank, while a strong business, faces stiff competition and some trying economic times ahead.

Goldman said it does “not believe its fundamentals justify the 51% 12-mo fwd PER premium it is currently trading on versus peers, compared to the 20% historic average”.

Following Tuesday’s first-quarter update, Goldman has a moderately improved target price of $90.98 for CBA shares. That’s some 14% below the current price of $105.91 per share.

The post What’s happening with CBA shares this week? appeared first on The Motley Fool Australia.

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More reading

• I’d use the Warren Buffett method to create a ‘best ASX shares to buy now’ list
• 3 key things I look for when buying ASX dividend shares
• 5 of the craziest things making news on the ASX this week
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?
• Why Aristocrat, CBA, Core Lithium, and GrainCorp shares are dropping today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is rising after the ASX mining share revealed that a higher (and final) offer to buy OZ Minerals Limited (ASX: OZL) had been accepted at a price of $28.25 per share.

This higher offer represented a 13% increase to the original offer price of $25 per share. It was a 49.3% premium to the closing price on 5 August 2022, the day before the first takeover bid was announced.

BHP will now carry out due diligence and negotiate a binding takeover offer. But, the OZ Minerals board has already said it is likely to unanimously recommend the deal.

The BHP share price is currently up 0.46% to $44, while the OZ Minerals share price is soaring 3.99% to $27.35.

Benefits of the deal

BHP noted three key benefits for the ASX mining share.

The acquisition will add copper and nickel resources that are “essential to support the global megatrends of decarbonisation and electrification”.

This aligns with BHP’s strategy to “deliver long-term value and returns through owning a portfolio of world-class assets with exposure to highly attractive commodities that benefit from global mega-trends”.

Another benefit is the “attractive synergies” that can be created because some of OZ Minerals’ projects are close to BHP’s. This can create “operational synergies”.

BHP also pointed to “growth options”. The company noted:

OZ Minerals brings attractive brownfield copper expansion projects at Prominent Hill and Carrapateena in South Australia. The West Musgrave project will add a large greenfield nickel option to BHP’s Nickel West premier nickel sulphide resource position in Western Australia.

My opinion on the prospects for the BHP share price

Assuming BHP has made the numbers stack up, it seems like a smart deal to pursue. Copper and nickel are likely to be needed in large quantities in the future as electrification occurs throughout society in vehicles, power distribution, and energy generation.

The BHP share price has been volatile in recent months. It’s down 6% in the past six months, yet it’s up 11% over the last month.

I think things are looking promising for a number of its commodities.

I’ve already mentioned nickel and copper. Coal continues to generate good earnings for the company. The iron ore price could get a boost if China continues to ease its COVID-19 restrictions and keeps supporting the real estate sector. Potash, a supposedly green form of fertiliser, could be another strong earnings pillar for the business in future years.

In the short term, earnings and the BHP share price will be heavily influenced by which way resource prices are going.

But, I like the moves the business is making, and I think it’s setting up ongoing long-term success in terms of cash flow generation, though volatility should be expected.

According to the estimates on Commsec, BHP is expected to pay a grossed-up dividend yield of 8.6% in FY24 and 10% in FY23 (the current financial year).

I believe the ASX mining share is at good enough value to want to buy shares for the long term.

The post Are BHP shares in the buy zone following the latest OZ Minerals news? appeared first on The Motley Fool Australia.

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More reading

• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• Why is the OZ Minerals share price racing higher on Friday?
• OZ Minerals share price on watch after accepting BHP’s $28.25 per share takeover offer
• Is a weak US dollar good for ASX 200 mining shares?
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?

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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