Day: 23 January 2023

It’s a good day so far for some ASX buy now, pay later (BNPL) shares. Many are charging well ahead of the 0.1% morning gains posted by the All Ordinaries Index (ASX: XAO) today.

But one ASX BNPL company is leading the pack, with its shares opening a whopping 24% higher and currently up 17% in morning trade.

Any guesses which one?

If you said Sezzle Inc (ASX: SZL), go to the front of the class.

What did the ASX BNPL share report?

The Sezzle share price is rocketing following the release of the company’s December business update.

The company reported that revenue grew strongly over the month, which helped it deliver its second consecutive month of profitability. That will certainly come as welcome news to investors after Sezzle struggled with hefty losses for most of 2022.

Sezzle reported a 15.7% year-on-year boost (and a 1.7% month-on-month lift) in revenue, which reached $19.9 million in December.

With two months of profitability, net income in 4Q 2022 was positive, at US$500,000. That compares to a net loss of US$25.9 million in 4Q 2021.

As for the balance sheet, the ASX BNPL share reported capital and liquidity of US$69.7 million cash on hand and US$65 million drawn on its US$100 million credit facility. Management stated it did not foresee any near-term capital needs.

Sezzle will report its fourth-quarter results on 27 February.

What did management say?

Commenting on the December results driving the ASX BNPL share sharply higher today, Sezzle CEO Charlie Youakim said:

In 2022, we set out on a mission to become profitable by year end… We are excited, as we have shown investors that we are clearly on the path to profitability with a well-capitalised balance sheet that does not require additional capital.

Looking ahead, Youakim added:

We are now working on additional initiatives to build upon what we have started and achieve positive Net Income and Adjusted EBTDA for 2023. We look forward to updating investors and the market on our initiatives as part of our fourth quarter conference call in late February.

How has the ASX BNPL share been tracking?

2023 is shaping up to be a different year for the embattled buy now, pay later stock.

With today’s big leap factored in, the Sezzle share price is up 59% since the opening bell on 3 January.

But as you can see in the chart below, the company still has a way to go to recoup last year’s losses. Over the past 12 months, the Sezzle share price remains down 70%.

The post Guess which ASX BNPL share just rocketed 24% on return to profitability appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 share is projected to pay the biggest dividend yield in FY24?
• Can income investors bank on a 6% dividend yield from NAB shares?
• South32 share price higher on quarterly update
• Will the ASX 200 hit new all-time highs this week? Here’s what to watch
• Buy ANZ and this ASX dividend share: analysts

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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Analysts across Australia regularly release research notes that provide estimates for the future sales, earnings, and dividends of ASX 200 shares.

While analysts rarely agree with each other, by combining their estimates we have a consensus that can be used by investors to get an idea of what the market is expecting from a particular company.

If we then bring all these consensus estimates together, we can compare and rank them to find out things such as which companies are predicted to grow their earnings the most or provide the biggest dividend yield.

On this occasion, let’s focus on the latter and take a look at which ASX 200 share is forecast to offer the biggest yield in FY 2024.

Which ASX 200 share will offer the biggest dividend yield in 2024?

According to consensus estimates, New Hope Corporation Limited (ASX: NHC) shares are expected to provide the biggest dividend yield in FY 2024.

Current consensus estimates point to the coal miner paying its shareholders a fully franked $1.32 per share dividend that year.  While this will be down from an estimated $1.73 per share in FY 2023, it still equates to a whopping yield of 19.5%.

As mentioned above, the consensus estimate brings together lots of different estimates. This means that some analysts expect lower dividends being paid and others expect higher dividends to be paid by New Hope.

For example, the team at Morgans expects an 80 cents per share dividend in FY 2024, whereas Citi expects an even larger dividend of $1.93 per share. These estimates equate to fully franked dividend yields of 11.8% and 28.6%, respectively, for that financial year.

Time will tell which analysts have made the right call. But, either way, a hefty dividend yield looks likely in FY 2024 from this ASX 200 share.

The post Guess which ASX 200 share is projected to pay the biggest dividend yield in FY24? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Can ASX 200 coal shares really deliver dividend yields of over 10% in FY24?
• ASX 200 to yield 4.4% in 2023. These 2 dividend shares pay more than twice that
• Here are the top 10 ASX 200 shares today
• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24

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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Investors seeking passive income have likely cast their eye over National Australia Bank Ltd (ASX: NAB) shares. The S&P/ASX 200 Index (ASX: XJO) big four bank currently offers a respectable 4.78% dividend yield.

However, some income investors might be looking for a bit more oomph.

Fortunately, one top broker has tipped NAB to grow its dividends by 21% in the coming years, potentially leaving the share offering a near-6% yield.

Let’s take a look at what the future could hold for the dividend-paying banking giant.

Could NAB shares soon boast a near-6% dividend yield?

The NAB share price has outperformed over the last 12 months, gaining 12% to trade at $31.60 compared to the ASX 200’s 4% rise.

And now, the bank could be a passive income winner, according to top broker Goldman Sachs.

The broker has a buy rating and a $35.60 price target on the stock – representing a potential 12.6% upside.

But that’s not the only improvement the broker is tipping. It also expects NAB to up its dividends over the coming years.

NAB paid out $1.51 per share of dividends in the financial year 2022. That was made up of a 73-cent interim offering and a 78-cent final payout.

The broker expects the bank’s dividends to rise to a total of $1.73 per share in financial year 2023.

It also forecasts ASX 200 banks’ net interest margins (NIMs) to begin plateauing this year as housing volumes trough and business volumes slow. However, it’s hopeful asset quality will remain strong.

Looking further ahead, Goldman Sachs tips NAB’s payouts to jump to $1.78 per share in the 2024 financial year and to a whopping $1.83 per share in FY2025.

At its current share price, $1.83 of dividends would see NAB shares boasting a near-6% dividend yield, coming in at 5.79%.

However, if both the broker’s price target and dividend expectations were to come to fruition in financial year 2025, the stock could be trading with a decent 5.14% yield.

The post Can income investors bank on a 6% dividend yield from NAB shares? appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 share that could thrive in a recession: Scott Phillips
• 5 things to watch on the ASX 200 on Monday
• How to find undervalued ASX shares to buy now and hold in 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 Group. 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 South32 Ltd (ASX: S32) share price is on the rise on Monday.

In morning trade, the mining giant’s shares are up 0.5% to $4.60.

This follows the release of its second quarter and first half update.

South32 share price rises on update

For the three months ended 31 December, South32 reported quarter on quarter production growth across most commodities.

Among the highlights were a 17% increase in metallurgical coal production to 1,483kt, a 13% increase in nickel production to 10.8kt, and a 17% lift in zinc production to 16.4kt.

And while South32’s copper production fell 1% quarter on quarter, this couldn’t stop the miner from recording a first half copper equivalent production increase of 12%. This reflects recent investments in copper and capacity.

Aluminium production increased by 15% during the first half, with a 50% uplift in low-carbon aluminium, following the acquisition of an additional shareholding in Mozal Aluminium and restart of the Brazil Aluminium smelter.

Finally, South32’s Illawarra Metallurgical Coal operation finished the half strongly thanks to improved volumes and labour productivity. This almost offset a very poor first quarter, with first half production ultimately falling 1% over the same period last year to 2,753kt.

Management commentary

South32’s CEO, Graham Kerr, was pleased with the quarter. He said:

Group copper equivalent production increased by 12 per cent in the December half year, as we benefitted from transactions that have repositioned our portfolio toward metals critical for a low-carbon future. Australia Manganese also achieved record half year production, while Cerro Matoso successfully commissioned the Ore Sorting and Mechanical Ore Concentration project, underpinning a 15 year extension to the mining contract.

Mr Kerr also revealed that the miner has managed to deliver on its operating cost guidance despite inflationary pressures. He added:

Despite industry wide inflationary pressures, we expect Operating unit costs for the first half to be in-line with or below guidance for the 2023 financial year at the majority of our operations. We remain focused on delivering safe and stable operational performance, and efficiencies to mitigate cost pressures and capture higher margins as markets improve.

Outlook

Management revealed that it is well positioned to capture the benefit of improved market conditions, with further expected production growth in the second half and its ongoing focus on cost management to mitigate inflationary pressures.

One slight negative, though, is that FY 2023 production guidance at Cannington has been revised lower by 11% and at Brazil Aluminium by 25kt or 25%. This is due to lower mill throughput and labour availability impacting mining rates at Cannington, and a slower ramp-up to nameplate capacity at Brazil Aluminium.

The South32 share price is now up over 16% since this time last year.

The post South32 share price higher on quarterly update appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• My top predictions for ASX 200 mining shares in 2023
• Buy South32 and this ASX dividend share: experts
• Why Baby Bunting, Origin, Rio Tinto, and South32 shares are dropping today
• Here are the 3 most heavily traded ASX 200 shares on Monday

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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Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.

WAM operates several listed investment companies (LICs). Some, such as WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There’s also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation of under $300 million at the time of acquisition.

WAM says WAM Microcap targets “the most exciting undervalued growth opportunities in the Australian microcap market”.

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

Qualitas Ltd (ASX: QAL)

WAM described Qualitas as one of Australia’s leading alternative real estate investment managers.

It has $5.5 billion of capital committed across real estate private credit, opportunistic real estate private equity, income-producing commercial real estate, and build-to-rent residential.

WAM noted that Qualitas announced the establishment of a $50 million warehouse facility for its listed Qualitas Real Estate Income Fund (ASX: QRI). The WAM investment team believes it will be “immediately earnings accretive” for Qualitas and allow the listed income fund to deploy its capital more effectively.

The business released a “strong trading update” at its AGM and WAM noted that capital deployed in FY23 to date was more than $1 billion. That’s more than 50% of the total capital deployed in FY22 in just four months.

WAM also pointed out that Qualitas reaffirmed its FY23 earnings guidance of $30 million to $33 million of net profit before tax.

It pointed out that the small-cap ASX share is “significantly exposed” to the senior commercial real estate loan business, with the funds structured in a way that provides “positive earnings leverage” to a higher interest rate environment.

The fund manager concluded:

Coupled with the company’s stronger rate of capital deployment to date, Qualitas appears well positioned to upgrade its earnings guidance at the upcoming 2023 first half result in February. Its balance sheet is also strong with a significant net cash position, providing optionality to deploy further capital into existing and new strategies or undertake earnings-accretive acquisitions. Overall, we view Qualitas as attractively valued given the positive growth outlook on offer.

MMA Offshore Ltd (ASX: MRM)

The other small-cap ASX share that WAM mentioned was MMA Offshore which provides supply vessels and a comprehensive suite of marine and subsea services to the offshore energy sector as well as government, defence, and wider maritime industries.

The fund manager said that last month, MMA Offshore announced that it expects to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) in the range of $30 million to $32 million in the first half of FY23. This would represent growth of 70% compared to the second half of FY22.

WAM explained that the good earnings guidance happened because of stronger-than-expected market conditions during the first half of FY23, driven by “increased activity” in the company’s traditional oil and gas markets and offshore wind developments in Southeast Asia.

Here are WAM’s final thoughts on the small ASX share:

We continue to believe that the recovery in oil and gas activity following disruptions caused by the coronavirus lockdowns, combined with the growth in offshore wind developments, presents a unique opportunity for MMA Offshore to secure meaningful contracts moving forward.

The post 2 exciting undervalued small ASX shares to buy: fund manager appeared first on The Motley Fool Australia.

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More reading

• ASX income stocks: A once-in-a-decade chance to get rich?
• Should I buy Pilbara Minerals shares following the lithium miner’s latest update?
• Bought $5,000 of ANZ shares 5 years ago? Here’s how much passive income you’ve received
• The ASX 200 share that could thrive in a recession: Scott Phillips
• I’d aim for $1 million buying just a few ASX shares

Motley Fool contributor Tristan Harrison has positions in Wam Microcap. 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 share market can be a treasure trove of opportunities when there’s negativity among investors. Lower prices mean better value opportunities, but it also pushes up the dividend yield on offer from ASX income stocks.

Let me show you what I mean.

If a company has a dividend yield of 5%, but then its share price drops by 10%, the yield becomes 5.5%. If the share price falls 20% then the yield becomes 6%.

What we’ve seen over the past year is inflation and interest rates pummelling various asset classes. Some areas of the share market haven’t escaped that pain.

But, large share market declines don’t happen very often, so I’d say this is a rare opportunity for investors to grab some businesses with much higher yields than they normally offer.

Here are some of the areas where I’m seeing ASX income stock opportunities.

ASX retail shares

In theory, higher interest rates are meant to push down the value of most assets.

But, many retailers have been particularly hit with the prospect of the economic situation hurting their sales and earnings.

However, while the short-term may be difficult, I think the valuation of some retailers means the yields could be very high, such as Adairs Ltd (ASX: ADH), Accent Group Ltd (ASX: AX1), Universal Store Holdings Ltd (ASX: UNI) and Nick Scali Limited (ASX: NCK).

Quality property stocks

It’s understandable that some ASX property shares have been hit hard as interest rates jumped higher.

Real estate investment trusts (REITs) are suffering from the double whammy of pressure on property valuations and debt being more expensive.

But, the higher rate of inflation is also boosting their rental income, which is supportive for valuations and distributions to investors.

However, the higher interest rates could cause pain to riskier and highly leveraged players in the property space. So, I’d be careful about which names to choose.

If I had to pick a few names, it would largely be due to their quality tenants and the length of the leases on the contracts. They would be: Charter Hall Long WALE REIT (ASX: CLW), Centuria Industrial REIT (ASX: CIP), Rural Funds Group (ASX: RFF) and Brickworks Limited (ASX: BKW). Brickworks has an impressive asset base, it doesn’t rely on its building products earnings to fund the dividend.

Fund managers

With the big hit to various asset classes over the last twelve or so months, funds under management (FUM) have taken a significant hit.

However, I think that once the interest rates stop rising, investor confidence could start returning. That could lead to generally-rising asset prices and a return of good FUM inflows as well. That could make fund managers good ASX income stocks at this level.

Active fund managers do face the headwind of competition from low-cost exchange-traded funds (ETFs). But, the good performing ones could do well, particularly from the lower valuations we’re seeing.

With pretty high dividend payout ratios, I think some fund managers could pay very good dividend income in the next few years, including Pinnacle Investment Management Group Ltd (ASX: PNI), GQG Partners Inc (ASX: GQG) and Pacific Current Group Ltd (ASX: PAC).

The post ASX income stocks: A once-in-a-decade chance to get rich? appeared first on The Motley Fool Australia.

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More reading

• My top predictions for ASX All Ords shares in 2023
• 2 low risk, high quality ASX shares to buy for a retirement portfolio: analysts
• 2 of the best ASX dividend shares to buy right now: analysts
• One oversold ASX 300 dividend share (with a 6% yield) to buy now
• How to invest $10,000 this year to create ‘safe’ passive income

Motley Fool contributor Tristan Harrison has positions in Brickworks and Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, Brickworks, and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Adairs, Brickworks, Pinnacle Investment Management Group, and Rural Funds Group. The Motley Fool Australia has recommended Accent Group. 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 Pilbara Minerals Ltd (ASX: PLS) share price has gone on a great run since the start of 2023. It has already risen by 25% and continues to impress investors.

The ASX lithium share just released its quarterly update for the three months to 31 December 2022. It was able to tell investors about its production, sales price, huge cash pile, and more. The company jumped 13% on the day the update was released.

Let’s have a look at the highlights.

Quarterly update

Pilbara Minerals revealed that spodumene concentrate production was 162,151 dry metric tonnes (dmt), an increase of 10% quarter over quarter. Shipments were up 8% quarter over quarter to 148,627 dmt.

The average realised sales price for the spodumene concentrate was US$5,668 per dmt, up 33% quarter over quarter.

But the unit operating costs declined 5% quarter on quarter to A$579 per dmt.

The ASX lithium share also reported a substantial increase in its cash balance. It rose $851.1 million to $2.23 billion.

Pilbara Minerals pointed to a number of other highlights during the quarter which may have impacted the company’s shares.

It saw improved pricing outcomes after negotiating price reviews with major customers.

The board approved pre-FID (final investment decision) expansion project funding of $38.3 million to maintain the company’s project schedule, with the final investment decision scheduled within the three months to March 2023.

It also announced a formal joint venture with Calix Ltd (ASX: CXL) to support the future development of a mid-stream demonstration project.

A $250 million Australian government debt facility was approved to support the company’s P680 expansion project. This involves processing improvements at the Pilgan plant in Western Australia.

Finally, the ASX lithium share announced a capital management framework, including its first dividend policy.

Are Pilbara Minerals shares a buy?

I think the business has a very promising future. But buying at the right Pilbara Minerals share price could be key to giving investors a margin of safety.

It’s certainly not cheap at the moment. But the average realised selling price in FY23 to date is almost US$5,000 per dmt. Time will tell if the lithium price falls back, but the long-term demand for electric vehicles looks very promising.

At the current lithium price, Pilbara Minerals is making an enormous amount of cash flow, as we can see from how rapidly its cash balance is building.

Looking at the Pilbara Minerals share price of $4.55, it’s valued at nine times FY24’s estimated earnings according to Commsec.

I think it can still be a good long-term buy at this level, particularly with its plans to increase its production and also get more involved with the lithium value chain.

However, after the recent run, it’s a bit more expensive. The ASX lithium share could go both higher or lower, so I think it’s worthwhile expecting volatility. Taking that mentality may make the ride seem less scary.

The post Should I buy Pilbara Minerals shares following the lithium miner’s latest update? appeared first on The Motley Fool Australia.

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More reading

• My top predictions for ASX lithium shares in 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Brokers name 3 ASX shares to buy now
• Why Fisher & Paykel, Pilbara Minerals, Resolute, and Whitehaven Coal are storming higher

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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The last five years have likely been rough for those invested in ANZ Group Holdings Ltd (ASX: ANZ) shares. The stock has tumbled 14% in that time.

Right now, Each ANZ share will set a buyer back $24.75. However, back in January 2018, the banking stock was trading at $28.88.

That means a near-$5,000 investment five years ago would be worth just $4,281.75 today.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained around 22% over the last half-decade.

But have the dividends on offer from ANZ made up for its share price’s disappointing performance? Let’s take a look.

ANZ dividends help investors break even despite share price falls

Here’re all the dividends the smallest of the big four banks has paid out since January 2018:

ANZ dividends’ pay date	Type	Dividend amount
December 2022	Final	74 cents
July 2022	Interim	72 cents
December 2021	Final	72 cents
July 2021	Interim	70 cents
December 2020	Final	35 cents
August 2020	Interim	25 cents
December 2019	Final	80 cents
July 2019	Interim	80 cents
December 2018	Final	80 cents
July 2018	Interim	80 cents
Total:		$6.68

An investor who bought $5,000 worth of ANZ shares five years ago, likely would have realised $6.68 per share in dividends over the life of their holding – a total of $1,155.64.

Thereby, their investment would have broken even in the end, even returning around $430.

That leaves the banking stock having posted a return on investment (ROI) of around 8.8%, including both share price movements and dividends.

Additionally, some shareholders might have benefited from franking credits offered by the ASX 200 bank in that time. Nearly all its payouts over the last five years have been fully franked.

ANZ shares currently boast a notable 5.9% dividend yield. And that could be set to grow.

Top broker Citi is tipping ANZ to pay out $1.66 per share in dividends this financial year and $1.76 per share next financial year, my Fool colleague James reports.

The post Bought $5,000 of ANZ shares 5 years ago? Here’s how much passive income you’ve received appeared first on The Motley Fool Australia.

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More reading

• 2 excellent ASX passive income shares to buy next week: analysts
• ANZ’s cheat sheet: How can ASX investors make the most of ‘ample opportunity’ in 2023?
• Dividends, dividends, dividends! 3 ASX 200 bank shares forecasting yields over 8%
• What could we expect for ASX 200 bank shares this earnings season?
• Should I buy ANZ shares before earnings season?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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The S&P/ASX 200 Index (ASX: XJO) is home to many varied businesses. Some are cyclical while others can be consistent and resilient. Amid ongoing fears of a recession, Domino’s Pizza Enterprises Ltd (ASX: DMP) shares could be one option during a possible economic downturn.

With strong inflation and higher interest rates, a recession certainly appears more likely than in the last couple of years.

Domino’s has grown into a global business. It holds the exclusive master franchise rights for the Domino’s brand and network in Australia, New Zealand, Belgium, France, the Netherlands, Japan, Germany, Luxembourg, Denmark, Malaysia, Singapore, and Taiwan. It’s also acquiring the Cambodia business. The Domino’s brand is owned by Domino’s Pizza Inc, a business listed in the US.

Over the past four months, the Domino’s share price has gained more than 35%. However, in the last year, it’s still down by around 30%. But, this means that it’s now at a lower valuation.

Expert view

The Motley Fool’s Scott Phillips was recently talking to Gemma Dale on the NABTrade podcast, Your Wealth.

He suggested that some ASX (200) shares could do well during a recession, including Domino’s. Phillips said the pizza company’s value range of food could be an attractive deal compared to eating out. As such, the company could be in a sweet spot in the “affordable luxury” space.

Phillips shared some wise advice that long-term winners are “really, really attractive”. If an investment can do moderately well for a really long time, it can compound and be successful.

Domino’s has long-term goals for growth. The company’s goal over the next three to five years is to achieve same-store sales growth of 3% to 6%.

It also has a goal to achieve organic store openings of 8% to 10% of the network annually in the next three to five years.

Certainly, combining same-store sales growth and growing its number of stores could lead to promising earnings growth.

Valuation of the Domino’s share price

Using the estimates on Commsec, the ASX 200 share could be valued at 40 times FY23’s estimated earnings.

But profit is expected to jump over the next two financial years.

In FY24, it could generate earnings per share (EPS) of $2.30, putting the Domino’s share price at 32 times FY24’s estimated earnings.

Then, in the 2025 financial year, it may be able to achieve EPS of $2.74. This would put the pizza business at 27 times FY25’s estimated earnings.

As we can see, the company’s forward price/earnings (P/E) ratio is expected to steadily reduce in the coming years.

The post The ASX 200 share that could thrive in a recession: Scott Phillips appeared first on The Motley Fool Australia.

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More reading

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• 2 excellent ASX passive income shares to buy next week: analysts
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• Here are the 3 most heavily traded ASX 200 shares on Friday

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 Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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 ASX small-cap space could contain some of the market’s next blue chips.

It’s far easier for a business to double in size from $500 million to $1 billion than it is for a company to grow from $50 billion to $100 billion.

I think that smaller ASX shares have a longer growth runway and, therefore, can produce stronger returns over time.

But I only want to consider ideas that are already producing good revenue. I’m not thinking about high-risk biotech names or other similar sorts of categories. So, with that in mind, these are four of my favourite ideas for long-term growth which could help build a portfolio worth $1 million.

Airtasker Ltd (ASX: ART)

Airtasker is a small-cap ASX tech share that provides a platform for people to advertise for free the service they are seeking. Taskers can then offer to do the work — and outline their fees. The type of tasks involved can be almost anything – delivery services, photography, furniture assembly, removals, various handyperson jobs, and so on.

The business is already producing positive earnings before interest, tax, depreciation and amortisation (EBITDA) in Australia. It’s also rapidly growing in the US and the UK too, which are two huge markets.

Airtasker has a very high gross profit margin, which means it’s able to invest a lot of its new revenue back into growth expenditures such as marketing.

Certainly, the company is already showing a desire for geographical expansion. As such, I believe it has a long growth runway with other countries it can expand into, such as Canada and New Zealand.

Volpara Health Technologies Ltd (ASX: VHT)

I think Volpara is one of the most exciting small-cap ASX healthcare shares. It has AI-powered image analysis that enables advanced breast screening, helps healthcare professionals better understand the cancer risk of patients, and enables healthcare providers to streamline work and improve performance.

The business recently announced that in the three months to December 2022, it achieved positive operating cash flow after a 42% increase in cash receipts in constant currency terms.

It continues to grow its annual recurring revenue (ARR) while decreasing its cost base, boosting profitability.

If it can keep selling more of its services to its existing (and growing) customer base, then the average revenue per user (ARPU) will keep improving and this should further boost profit margins.

I think the small-cap ASX share has a very promising future, particularly if it can get a good foothold in Europe.

Healthia Ltd (ASX: HLA)

Healthia is an allied healthcare business. It’s involved in a number of areas including networks of optometry, podiatry, and physiotherapy clinics.

I think this is quite a defensive sector, so its earnings could perform adequately in the period ahead.

The Healthia share price has dropped 40% over the past year, making it much better value. With the Australian population rising, and becoming older, I think there are useful tailwinds for the business.

If it can keep acquiring additional clinics and improve the performance of its existing network, I believe the business is on course for a good future.

I think it looks very reasonably priced, trading at 12 times FY23’s estimated earnings, according to Commsec.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is another small cap ASX share that I believe has plenty of potential.

It’s an online retailer of homewares and furniture which has more than 200,000 products on sale.

A lot of the products sold are from third-party suppliers, which are shipped straight to customers. This cuts shipping times, reduces the need for Temple & Webster to hold inventory, and makes that part of the business quite capital-light.

But the company also has a growing selection of private-label products.

If Australia follows the e-commerce trend of the UK then, in the coming years, the company’s online share of the market could rise from mid-teens in Australia to a percentage in the high 20s, according to Temple & Webster.

The business is heavily investing in technology, such as an AI interior design service, and an augmented reality (AR) service which enables people to visualise products in their home space.

With its high level of reinvestment, I think the company can benefit from growing scale and achieve attractive margins in time.

The expansion into the home improvement categories (like painting, plumbing, and flooring) also gives the small-cap ASX share a very large addressable market to aim for.

The post I’d aim for $1 million buying just a few ASX shares appeared first on The Motley Fool Australia.

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More reading

• My top predictions for ASX All Ords shares in 2023
• 3 reasons to buy these top ASX growth shares: experts
• This All Ords share is booming 9% after turning cash flow positive
• Here are 2 excellent ASX growth shares to buy now: experts
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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 Healthia, Temple & Webster Group, and Volpara Health Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies. The Motley Fool Australia has recommended Healthia and Temple & Webster Group. 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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