Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Corporate Travel Management Ltd (ASX: CTD)

According to a note out of Macquarie, its analysts have retained their outperform rating but trimmed their price target on this corporate travel specialist’s shares to $19.95. Macquarie notes that industry data shows that corporate travel activity softened in the United States in November. While the broker suspects that this could mean the company falls short of its expectations during the first half, it retains its buy rating due to its attractive valuation. The Corporate Travel Management share price ended the week at $14.09.

Maas Group Holdings Ltd (ASX: MGH)

A note out of Goldman Sachs reveals that its analysts have initiated coverage on this property, construction, and infrastructure solutions provider’s shares with a buy rating and $4.20 price target. Goldman believes that Maas is in a transition phase and will see higher quality real estate income become the largest source of earnings in the next three years. And with its shares trading at 10x forward earnings, it believes there’s a lot of value on offer here. The Maas share price was fetching $2.51 at Friday’s close.

Telstra Group Ltd (ASX: TLS)

Analysts at Morgan Stanley have retained their overweight rating on this telco giant’s shares with an improved price target of $4.75. According to the note, the broker believes Telstra’s outlook is positive thanks to the recent shareholder approval of a restructure. The broker highlights that this means the company has the opportunity to unlock value by selling some of its infrastructure assets. If this happens, Morgan Stanley suspects that a major share buyback could be undertaken. The Telstra share price ended the week at $4.00.

The post Top brokers name 3 ASX shares to buy next week 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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Corporate Travel Management. 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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Both the Vanguard Australian Shares Index ETF (ASX: VAS) unit price and BHP Group Ltd (ASX: BHP) share price look well-placed to end 2022 with a bang.

Since the end of September 2022, the Vanguard Australia shares Index ETF has lifted around 10%. Over the same time period, BHP shares have surged more than 20%.

It has been a strong period of time for Australia’s biggest business, which has a commodity portfolio across iron ore, copper, nickel, coal and potash.

It’s an interesting question to consider whether the exchange-traded fund (ETF) or the resources giant will do better. Keep in mind that BHP holds the biggest position in the Vanguard Australian Shares Index ETF portfolio – at the end of October 2022, it comprised 9% of the portfolio.

The case for the BHP share price

It’s important to note that 2022 hasn’t finished yet, so if BHP shares keep rising from here, it could be harder for the company to outperform the ASX share market in 2023.

The company’s success is heavily linked to commodity prices. Whether the price of iron ore is US$50 per tonne or US$150 per tonne, BHP still needs to pay for the people, machinery, trucks, trains and boats needed to get the resources out of the ground and to its industrial customers.

When the iron ore price goes up, it largely adds straight onto the company’s cash flow and net profit after tax (NPAT), after paying more to the government. Of course, a lower resource price can wipe off the profit.

According to reporting by the Australian Financial Review, the broker Citi has suggested that the iron ore price could go as high as US$150 per tonne by June 2023 as China relaxes its COVID-19 restrictions.

This means people in Shanghai, for example, no longer need a negative COVID test to enter “most public places”. And a negative test is no longer required for people to enter a Beijing-based supermarket or commercial building.

There is also work being done by Chinese officials to help Chinese property developers that are in financial trouble, according to the AFR.

The broker Morgans thinks that the BHP share price has already priced in much of the China recovery potential, which is why it only rates it as a hold, with a price target of $44.80. That implies a drop of around 5%.

On Morgans numbers, the BHP share price is valued at under 10x FY23’s estimated earnings with a potential grossed-up dividend yield of 8.8%.

The case for the Vanguard Australian Shares Index ETF

There are some major iron ore miners within the S&P/ASX 300 Index (ASX: XKO) – the index that the ETF tracks – like BHP, Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).

The big question for the non-iron ore miners is how the Australian economy performs in 2023.

A big part of the weighting of the ASX 300 is to banks like Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC), Bank of Queensland Limited (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN).

Interest rates have jumped. In some ways, this can help banking profitability because loan rates are rising quickly, faster than savings rates. But there’s also the problem of potentially higher arrears if borrowers can’t handle the higher repayments.

Some banks are now saying that a big improvement in lending margins has already occurred. Higher interest rates may not lead to much of an improvement in lending margins from here.

There’s also the question of how retailers like Wesfarmers Ltd (ASX: WES) will perform if consumers have less money to spend because of inflation and higher interest rates.

My verdict

From here, I think the capital growth performance could be quite similar between the two by the end of 2023. If the interest rate is only increased by 25 basis points in 2023, I think the Vanguard Australian Shares Index ETF will outperform because the underlying businesses may see fewer negative headwinds, such as higher borrower arrears.

But, in terms of total returns, I think BHP could produce stronger returns because of the large dividend yield that it pays. This could provide a useful boost for shareholders.

The post Could the VAS ETF outperform the BHP share price in 2023? appeared first on The Motley Fool Australia.

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More reading

• Look out below! Broker tips Fortescue share price to fall 32%
• I’d buy 6 shares a week of this ASX stock for $1800 a year in passive income
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• Earn passive income with these strong ASX 200 dividend shares: brokers
• Why did ASX 200 iron ore shares like BHP have such a cracking Friday

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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 positions in and has recommended Bendigo And Adelaide Bank and Wesfarmers. The Motley Fool Australia has recommended Westpac Banking. 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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Approaching retirement can be a scary time. There’s a lack of active income to worry about for one thing. But there’s also the pressure of choosing the shares that will provide the passive income to fund said retirement. So who better to turn to for advice for this transition than the legendary investor Warren Buffett?

Not that Warren Buffett knows too much about retirement. Although the man is now 92 years old, he is still very much not retired and remains chair and CEO of the company he has run for more than six decades, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).

Some Buffett wisdom for a pending retirement

And Buffett knows a thing or two about obtaining a growing passive income. He bought shares in Coca-Cola Co (NYSE: KO) back in 1988. Coca-Cola is a well-known dividend share over in the United States.

But, as our Fool colleagues over in the US point out, such was Buffett’s prowess in finding the right price, he now enjoys a yield on cost of 54% every year.

So this tells us that Buffett only invests in shares that he feels comfortable holding for a generation or longer. Why Coca-Cola? Buffett’s love of what he calls an economic moat is probably why. And Coke arguably has more than one. There’d be few people on the planet who wouldn’t know what a Coke is for one. But, as usual, Buffett puts it best:

If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done.

But Buffett also tells us that it’s ok not to go chasing individual shares for an investment portfolio, even a retirement one.

He once said this on index investing:

If you invest in a very low cost index find – where you don’t put the money in at once, but average in over 10 years – you’ll do better than 90% of the people who started investing at the same time.

So that’s the two takeaways we can take from Buffett for a healthy retirement. Buy the best companies at the right price. And if you don’t know how, stick with a low-cost index fund.

The post Almost ready to retire? I’d follow Warren Buffett’s tips to enjoy a growing passive income from ASX dividend shares appeared first on The Motley Fool Australia.

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• Is the iShares S&P 500 ETF (IVV) really down 95% today?
• One Warren Buffett-style stock I’m ‘never’ selling
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Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway and Coca-Cola. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, long January 2024 $47.50 calls on Coca-Cola, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. 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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Shares in the spray-on skin company Avita Medical Inc (ASX: AVH) closed 2.6% higher on Friday at $1.96.

The ASX healthcare share may be down 42% over the year to date, but it appears to be making a comeback.

The Avita share price is up almost 20% over the past six months.

CEO confident about new skin treatment

According to reporting in the Australian Financial Review (AFR), new CEO James Corbett says there is a “pot of gold at the end of the rainbow” with Avita’s expansion into vitiligo.

In market terms, treatment for the autoimmune disease that causes a loss of skin pigmentation has an estimated value of $US5.2 billion (A$7.8 billion).

It would be a welcome turnaround. To say Avita shareholders have been suffering of late is an understatement. Just ask those investors who bought in when the ASX healthcare share was trading above $16 in early 2020.

Corbett said:

I think the sell-off was a combination of us not executing adequately and us not communicating adequately.

Those sound like my problems. It’s not a market problem. I always tell the management team, the stock market will take care of itself, but execution is up to us.

I think shareholders will benefit from more transparency from Avita management, and they’ll get it.

What’s the latest news from Avita?

The company’s flagship product is Recell, which uses a patient’s own cells to treat skin defects. The company intends to expand Recell into a treatment for vitiligo.

According to the AFR, Avita is working with the United States Food and Drug Administration to gain approval for the use of Recell in various soft tissue repair treatments.

It plans to submit applications for Recell’s use in the US$1 billion soft tissue repair market this month. It expects approval in June 2023 and hopes to launch the treatment in July.

Recell as a treatment for vitiligo will take a while longer.

Corbett said:

Vitiligo on the other hand will get approval, but its anticipated primary treatment will occur in the physician office setting, so what we’ll be doing between the expected approval in June 2023, and January 2025… is collect in-office reimbursement approval data, work with government payers, conduct physician initiated studies and work to identify the best patients [those who will benefit most from treatment].

Broker tips $3 target for ASX healthcare share

Bell Potter has a 12-month share price target of $3 on this ASX healthcare share.  

Bell Direct market analyst Grady Wulff last week told my colleague, Tony, he rates Avita a speculative buy.

He tips the ASX healthcare share “really takes off” when those approvals come through in mid-2023.

Wulff said:

They are well capitalised while expecting to release major clinical trial results in the near future.

The company is making waves and they’ve got really strong revenues up 29% year on year to US$9.1 million for the commercial product sales, but they are burning a lot of cash.

The revenues were 7% above what Bell Potter expected for the September quarter.

The post Is there an $8 billion ‘pot of gold at the end of the rainbow’ for investors in this ASX healthcare share? appeared first on The Motley Fool Australia.

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• 2 absolute bargain ASX shares to buy right now: analyst

Motley Fool contributor Bronwyn Allen 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 Avita Medical. The Motley Fool Australia has recommended Avita Medical. 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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