Day: 18 May 2023

More than one expert reckons these days that ASX shares in the uranium industry are about to enjoy a revival not seen for years.

The Market Matters team, for example, reckons it’s a sector with “meaningful tailwinds that are likely to persist for years to come”.

“The global energy mix is changing as decarbonisation is one of, if not, the most dominant investment theme[s] for the next decade,” said the team leader and Shaw and Partners portfolio manager James Gerrish.

“We believe nuclear energy will become a larger slice of the energy mix, and we are seeing tangible evidence of this occurring.”

He noted that year to date almost 100 million pounds of uranium have been contracted, which is already the highest yearly amount for more than a decade.

Funnily enough, the spot uranium price has held steady over the past 12 months, which means related stocks have also gone sideways.

But, of course, both nuclear reactors and uranium mines take a while to reactivate after being dormant for years.

Over the long term, Gerrish’s team are believers.

“Market Matters is bullish on uranium, believing the sector is about to enjoy a period of renaissance.”

But which ASX uranium shares are the best buys at the moment? There are two that were mentioned:

Two well-funded Aussie businesses ready to rake it in

Paladin Energy Ltd (ASX: PDN) is Gerrish’s “preferred pick from a risk-reward perspective”.

“The company owns 75% of the Langer Heinrich mine in Namibia that had been [in] care and maintenance for a number of years,” he said.

“However, works for a restart are now ~50% complete with first production expected next year.”

While more agile mines might produce uranium earlier than that, Paladin will have economies of scale to its advantage.

“They are well-funded, and construction is on time and on budget with further upside in exploration assets in Australia and Canada.”

The Paladin Energy share price is down 3% so far in 2023.

Gerrish’s team already owns the stock in its emerging companies portfolio.

His team’s second pick, Silex Systems Ltd (ASX: SLX), is not a uranium producer as such.

“Silex is developing a laser-enriched uranium technology in conjunction with sector giant Cameco Corp (NYSE: CCJ),” said Gerrish.

“The demonstration plant in Kentucky is expected to be up and running in around 12 months’ time.”

He added that Silex is cashed up after a capital raise this year.

“The US government is also likely to support any capital requirements as part of the inflation reduction act,” said Gerrish.

“Supply of High Assay Low Enriched Uranium (HALEU), which the next generation of nuclear reactors require, is heavily reliant on Russia.”

Silex shares are already 12% higher than where they started 2023. 

Again, the Market Matters team is bullish and long on the stock, holding it in its emerging companies portfolio.

The post The 2 best ASX uranium shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• Down 20% since February, should I buy the dip on Paladin Energy shares?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 3 ASX 300 shares that turned $5,000 into $59,000 or much more in 5 years
• Here are the top 10 ASX 200 shares today

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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One expert is urging investors go “long and bullish” on an ASX stock that’s already rocketed this week.

Shaw and Partners portfolio manager James Gerrish said his Market Matters team likes the look of construction materials supplier James Hardie Industries plc (ASX: JHX).

The stock soared 8.3% on Tuesday after its fourth-quarter results “pleased a nervous market”.

“Encouragingly its 1Q24 guidance was a clear beat – at the midpoint they have guided to 1Q profit of US$155 million vs US$137 million consensus — i.e. 13% above,” Gerrish said in his newsletter.

“In our opinion, the key positive was US margins remained solid and their guidance implies this will continue which will drive earnings upgrades.”

Amid dark clouds for the economy, James Hardie showed off its pricing power by pulling off an amazing magic trick.

“While James Hardie has experienced a drop in sales volumes as the building sector struggles, the company’s ability to increase prices has seen revenues actually increase,” said Gerrish.

“The volume of plasterboard/cladding sold in Australia & New Zealand fell by 10%, but revenue increased by 2% as price increases were pushed onto customers in the March quarter.”

Grab James Hardie shares while they’re cheap

With consumers dealing with interest rates more than three percentage points higher than just a year ago, real estate prices have spiralled down and the construction industry is feeling the pressure.

This presents a tempting buying opportunity, according to Gerrish.

“With plenty of bad news built into James Hardie’s share price after it halved from its late 2021 high, Market Matters remains optimistic towards Hardies,” he said.

“The company is operating well in a tough environment hence when the construction sector does show signs of improvement, James Hardie will be very well positioned to benefit.”

Within Australia, Gerrish feels like conditions will improve for the company and the wider building industry.

“The government committed to a large immigration push plus, of course, they have a huge rental crisis to address sooner rather than later,” he said.

“Although this is unlikely to support the weak construction industry over the coming months, we must be conscious that stocks look at least six months ahead.”

Despite the spectacular rise this week, James Hardie shares are still about 35% lower than their December 2021 high.

The post Go ‘long and bullish’ on this ASX share that just rocketed 8% appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• 3 ASX 300 shares just upgraded by top brokers
• Here are the top 10 ASX 200 shares today
• Why Develop Global, James Hardie, Life360, and Ora Banda shares stormed higher

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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If your portfolio lacks banking sector exposure, then now could be the time to pounce on ANZ Group Holdings Ltd (ASX: ANZ) shares.

With the banking giant’s shares down approximately 10% over the last three months, the team at Citi appear to believe a buying opportunity has opened up for investors.

Particularly given that ANZ shares are the broker’s top pick in the banking sector right now.

What is Citi saying about ANZ shares?

According to a recent note, the broker has a buy rating and $26.50 price target on the bank’s shares.

Based on its current share price of $23.58, this implies potential upside of 12.4% for investors over the next 12 months.

And with Citi expecting ANZ shares to provide investors with 7% fully franked dividend yields through to at least FY 2025, the total 12-month potential return on offer here stretches to almost 20%.

Why is ANZ its top pick?

When reviewing the bank’s recent half-year results, Citi revealed why it thinks investors should choose ANZ above other big four banks. It said:

ANZ reported 1H23 cash earnings of $3,821m, in-line with market expectations. However, unlike its recent reported peers, this result was well-received, despite ANZ facing the same competitive pressures on both sides of its balance sheet. We see ANZ having two key advantages for the current environment: 1) a strong deposit franchise finally showing its strength; and 2) a large weighting to Institutional banking.

These advantages are inextricably linked. We have lowered our forward NIM estimates to reflect the industry competition pressure, but the profile shows a more modest decline. Cash EPS estimates are unchanged in FY23, down 7-8% in FY24/25, with our longer-term ROE of 10.5% thereafter remaining intact. This leaves a more modest 3% TP reduction to $26.50. We see ANZ’s unique capabilities as set to deliver relative outperformance in the current market conditions. ANZ is our preferred Major Bank exposure.

All in all, this could make ANZ a top option to consider if you’re lacking banking sector exposure.

The post Why ANZ shares are Citi’s top banking pick appeared first on The Motley Fool Australia.

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More reading

• Investing in ANZ shares? Here’s what’s happening with the bank’s $3.5 billion Suncorp acquisition
• Citi says these ASX 200 dividend shares are buys for passive income
• Warren Buffett is dumping bank stocks. Should you?
• Why ANZ, Elders, Nanosonics, and Pointsbet shares are falling today
• Why is the ANZ share price sinking 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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Sayona Mining Ltd (ASX: SYA) shares have climbed more than 10% in the last month, but which ASX All Ords lithium company is the largest shareholder?

Sayona shares closed 4.44% lower on Wednesday to finish at 21.5 cents apiece. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) fell 0.98% yesterday.

Let’s take a closer look at the details of the largest shareholder of Sayona Mining stock.

And the largest shareholder is…

Fellow lithium player Piedmont Lithium Inc (ASX: PLL) is the largest shareholder of Sayona stock with a 14.3% stake.

The two companies are involved in a joint venture known as the North American Lithium (NAL) project.

Piedmont has a 25% stake in Sayona Quebec, with the other 75% equity interest owned by Sayona. Sayona Quebec is developing the North American Lithium mine.

Under the joint venture agreement, Sayona will sell Piedmont either 50% of production at the facility or 113,000 tonnes of spodumene concentrate.

Four shipments from this project are planned for the second half of the 2023 calendar year.

Each shipment will include an allocation for Piedmont, along with other customers. The company is also working on other offtake agreements.

Sayona and Piedmont delivered news of the successful restart of the North American Lithium mine, based in Quebec, on 31 March.

The US$80 million restart took place on time, and on budget. Sayona aims to produce 226,000 metric tonnes of spodumene per year from the facility.

A pre-feasibility study assessing downstream production at the project is currently taking place with results expected by the end of the financial year.

Piedmont also has other lithium projects on the go, including the Tennessee Lithium project and the Carolina Lithium project in the US state of North Carolina.

Share price snapshot

The Sayona share price has lost around 20% in the last year. The company has a current market capitalisation of $1.96 billion.

Meantime, Piedmont shares have gained nearly 12% over the past 12 months. Piedmont has a market cap of nearly $366 million.

The post Guess which All Ords lithium company is the biggest shareholder of Sayona Mining stock appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Power portfolios: Millionaire investors shun ASX 200 lithium shares

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 Goodman Group (ASX: GMG) share price has been in fine form this year.

Since the start of 2023, the ASX 200 industrial property stock has risen a sizeable 15.5%.

Can this ASX 200 stock keep rising?

The good news for investors is that one leading broker doesn’t believe it is too late to jump on the Goodman train.

A recent note out of Citi reveals that its analysts have retained their buy rating with an improved price target of $24.30.

So, with this ASX 200 stock currently trading at $20.04, this still implies potential upside of 21% for investors over the next 12 month despite its stellar gains this year.

Why is Citi raving about Goodman?

Citi has become even more positive on Goodman shares following its recent quarterly update. The broker notes that this update demonstrates that industrial property continues to be the bright spot in real estate.

And while its updated guidance is still a touch behind the broker’s estimate, it is worth remembering that Goodman is usually conservative with these things. Citi commented:

Along with the 3Q23 update, GMG upgraded FY23 EPS guidance to 15% EPS growth from 13.5%, which was almost in-line with consensus but slightly below our previous estimate. The update highlighted ongoing tailwinds for industrial with strong market rent growth improving the future rental upside on GMG’s book. Record low vacancy has driven ongoing development demand resulting in a strong development workbook with $13bn in WIP, with near-term growth in developments from less time taken to develop (which will boost annual earnings).

Looking ahead, the broker believes this ASX 200 stock is well-placed for more of the same in the coming years. In light of this and its attractive valuation, the broker feels Goodman is a top buy right now. It concludes:

We see potential for GMG to generate consistent high-single to low-double digit earnings growth over the medium term driven by rental upside and longer term development projects, which will add to management and development earnings. The stock currently trades at c. 19x FY24e, below global industrial peers, despite having higher earnings growth and lower leverage. We therefore see upside to the share price and retain Buy.

The post Why Citi is raving about this amazing ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 blue chip shares that brokers love
• ‘Bright outlook’: 2 ‘high quality’ ASX 200 shares to pounce on now 
• I think this ASX 200 share is heavily underrated by the market
• Here are 3 ASX 200 blue chip shares that analysts love
• 2 ASX 200 stocks surging ahead following guidance upgrades

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 Goodman 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 Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) that gives investors the ability to invest in ASX blue chip shares. There are a number of reasons why it could help someone retire early – low fees, diversification, and compounding.

Its job is to track the S&P/ASX 300 Index (ASX: XKO) which is a group of 300 of the largest businesses in Australia. The VAS ETF also has a portfolio of (around) 300 holdings.

Just looking at the number of businesses in the portfolio suggests good diversification. Certainly, having sufficient diversification is one of the important elements in lowering risk. But there’s more to diversification than just the number of holdings. It’s also important to consider what types of businesses the fund is invested in.

Strong exposure to the Australian economy

When we look at the biggest businesses in the Vanguard Australian Shares Index ETF portfolio, they are mainly from two sectors that Australia excels at – resources and banking.

Most people will be familiar with the names I’m about to mention: BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), Woodside Energy Group Ltd (ASX: WDS), Rio Tinto Ltd (ASX: RIO), and Fortescue Metals Group Ltd (ASX: FMG).

At the end of April 2023, more than 51% of the VAS ETF portfolio was invested in just financials and materials. That’s probably not surprising considering how many resources Australia sells and how important the property market is for the economy.

But there are advantages and disadvantages to this high level of exposure to those sectors.

Many of these businesses have fairly low price/earnings (p/e) ratios and quite high dividend payout ratios. This usually results in a rewarding dividend yield for investors. According to Vanguard, the VAS ETF has a dividend yield of 4.4.%, which doesn’t include the franking credits.

However, these sorts of businesses aren’t known for strong capital growth and, as such, the compounding potential might be less. If I were looking to retire early, I’d want to try to grow my nest egg with a good amount of capital growth. Remember, dividends are taxable when received each year, assuming that person has a tax rate of more than 0%.

Let’s compare the returns of the Vanguard Australian Shares Index ETF against one of Vanguard’s other main ETFs – the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Lower returns

Past performance is not a reliable indicator of future performance, but I think we can see the difference between a more growth-focused ETF like the VGS ETF (purple) and the ASX blue chip-focused VAS ETF (blue).

Let’s also look at how the VAS ETF unit price has changed since COVID-19 – it’s currently almost where it was just before COVID-19 hit, whereas the VGS ETF has gained around 15%.

Over the five years to April 2023, the Vanguard MSCI Index International Shares ETF has returned an average of 11.1%, with 8.7% of that per annum being capital growth.

In the five years to April 2023, the Vanguard Australian Shares Index ETF has returned 8.2% per annum, with over half of that (4.7%) being distributions (which are taxed). However, that level of returns can still deliver decent wealth-building for investors and the unit price of around $90 could be a good starting point for investing.

I’m certainly not saying that VAS ETF is a terrible investment. But for investors trying to grow their wealth for retirement, I think there could be better options. However, I will say that Vanguard Australian Shares Index ETF is an effective way to invest in the Australian economy for a low management fee of just 0.10%.

But I’d look to other ETFs as potentially better investment options for longer-term growth.

The post Could buying the Vanguard Australian Shares Index ETF (VAS) at under $90 help me retire early? appeared first on The Motley Fool Australia.

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More reading

• Millionaire magnet: Why are wealthy investors pouncing on the Vanguard Australian Shares Index ETF (VAS)?
• I’m a dividend investor. Should I buy the Vanguard MSCI Index International Shares ETF (VGS)?
• The top 10 ASX shares held by millionaires
• Why is the Vanguard Australian Shares Index ETF (VAS) still below its pre-COVID high?
• Was the Vanguard MSCI Index International Shares ETF (VGS) worth owning in April?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF and Westpac Banking Corporation. 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 Zip Co Ltd (ASX: ZIP) share price is up 12.1% over the past five trading days. 

Zip shares finished yesterday’s session at 55.5 cents apiece, up 0.91%.

While it’s nice to see a green trajectory for the maligned ASX BNPL share, Zip has been in a state of purgatory for a long, long time. 

Is this welcome bump merely a blip or the start of new upward momentum for the Zip share price?

Let’s look into it.

Zip share price stabilises in 2023 

It’s strange writing a headline about a share price pretty much doing nothing for a period. 

That’s not usually newsworthy. 

But following a catastrophic two-year tumble in the Zip share price, a standstill actually looks positive. 

It indicates the company may have finally stopped the bleeding. 

Over the first five months of 2023, the Zip share price has dipped by 0.9%. 

What’s going on with the Zip business? 

Zip shareholders are waiting for the company to get its house in order following a spectacular change of course announced in the second half of 2022. 

Following a tragic 95% decline in the share price – from a historical peak of $13.05 in February 2021 to a trough of 43.5 cents in June 2022 – Zip pulled the pin on its growth-at-all-costs global strategy and made profitability its new focus. 

This change, of course, necessitated a significant downscaling of operations, and a simplified business strategy to achieve positive cash flow and profitability. 

The plan involves a three-pronged process: Growth in the Australia/New Zealand and United States businesses, an improvement in unit economics, and a reduction in costs. 

Zip has now exited 10 of its 14 markets, including the United Kingdom, India, and Singapore.

This leaves Zip with three core markets: Australia/New Zealand, the United States, and Canada.

It has begun the process of selling off its assets in those abandoned markets to boost its balance sheet. 

The company expects to complete this process by the end of next month.  

Mark these dates 

Looking ahead, there are two critical milestones that Zip hopes to achieve. 

The first is turning the US business cash flow positive by the end of FY23 — that’s next month. 

We’ll find out in July or August whether the company has got this done. 

The Australia/New Zealand business has been cash flow positive for four years already. Getting the US business cash flow positive will enable the company to achieve its second goal, which is making the group cash flow positive by the first half of FY24. 

So, we’ll be looking for an announcement on this front in January or February 2024. 

Is this the start of a turnaround on the Zip share price?

To get a turnaround in the Zip share price, we probably need a turnaround in the business first. 

Our latest peek at the books occurred in April when Zip released its Q3 FY23 results. 

As my Fool colleague Bernd reported, Zip increased its quarterly group revenue by 16% in 1H FY23 compared to 1H FY22. 

Year-over-year (yoy) quarterly revenue increased by 23% in Australia and 7% in the US. 

Zip said it “is on track to deliver group positive cash EBTDA during H1 FY24”. 

So, that all bodes well for the Zip share price.  

But analysts appear sceptical about whether Zip can achieve its goals. 

Shorting interest suggests Zip share price will fall 

As my Fool colleague James reported on Monday, Zip remains one of the top 10 most shorted stocks of the ASX, with 10.25% of its shares shorted. 

Short selling is essentially placing a bet that the share price will fall. 

Another reason for the high level of shorting is likely looming new regulations for the BNPL sector. 

Although Zip has previously said it is better placed than other BNPL companies to adapt to stricter rules on credit checks, we still don’t know which of the three models outlined in an options paper will be taken up by the federal government. 

In summary, the three models for BNPL regulation are:

• A tougher industry code, including an affordability test for each customer
• Including BNPL providers under the Credit Act but tailoring their responsible lending obligations
• Applying the Credit Act to the BNPL sector in full.

Choice and 21 other consumer groups are advocating for option three. Zip is pushing for option two.

If Zip gets its preferred regulatory model, and if it achieves its two highly-publicised financial goals for FY23 and 1H FY24, then maybe we will see a turnaround in the Zip share price.

The post The Zip share price has zoomed 12% higher in a week. Is this the beginning of a turnaround? appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
• What’s the outlook for the Zip share price in May?
• Here are the 10 most shorted ASX shares
• Why did the Zip share price dump 9% in April?
• Short sellers reveal 4 ways to spot dud ASX shares

Motley Fool contributor Bronwyn Allen has positions in Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. 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) has been a long-time darling of dividend investors, but it’s not the greatest buy at the moment.

Sure, interest rate rises might be helping margins for banks. But a looming economic slowdown could cancel out that tailwind.

Professional investors are staying away from the big bank.

According to CMC Markets, not one of 16 analysts currently rate Commonwealth Bank shares as a buy.

In fact, 11 of them are urging investors to sell.

Goldman Sachs Group Inc (NYSE: GS) analysts reported last week that Australian bank shares are overpriced at the moment.

They are keeping a sell rating on CBA shares specifically.

“We cannot justify the 12-month forward [price-to-earnings ratio] premium (ex-dividend adjusted) that CBA is trading on versus its peers.”

So if we can’t rely on an old favourite, where should one look for dividends?

A quality dividend stock not often talked about

My pick for a reliable income stock right now is petrol refinery and service station operator Viva Energy Group Ltd (ASX: VEA).

Viva runs the Geelong Refinery as well as the Shell network of petrol stations.

The business expanded its fuel retail footprint with the acquisition of the Coles Express chain from supermarket giant Coles Group Ltd (ASX: COL) towards the end of the last year.

It has an outstanding dividend yield of 8.57% that is fully franked.

Viva shares have managed to steadily grow investors’ capital too. The share price has more than doubled since the COVID-19 crash in March 2020, without too many dramatic troughs on the way.

The Motley Fool’s Bernd Struben also picked Viva as his top dividend stock earlier this month.

“I like Viva Energy as both an ASX income share and one for potential capital appreciation,” he said.

“The company has been expanding through a series of strategic acquisitions.”

The professional community is pretty keen on Viva shares too.

Seven out of 12 analysts currently covering the stock rate it as a buy on CMC Markets.

The post An ASX dividend giant I’d buy over CBA shares 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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles 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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Anything related to lithium has been hot among ASX investors the past few years, but the price for the battery material has fallen off a cliff recently.

According to dailymetalprice.com, the per-kilogram price for lithium was in the $80s in December but sunk to the mid $20s by the start of this month.

Yikes.

Understandably that drop put downward pressure on ASX lithium shares during the first quarter of 2023.

So with so many investors reliant on such stocks in their portfolios, where is the battery ingredient headed this year?

The analysts at Firetrail Absolute Return Fund fired up their crystal ball this week to answer this dilemma:

What happened to the lithium price?

Firstly, the team pointed out that the world’s second largest economy was to blame for the calamitous drop in the lithium price.

“After a stellar 2022, lithium prices have experienced a sharp reversal so far in 2023,” read the Firetrail memo to clients.

“China’s lithium prices are down around 70% year-to-date.”

But the great news is that it seems to be turning around in the middle kingdom.

“Prices bottomed around $21/kg in April before starting to move higher again recently,” the memo read.

“Sentiment is improving, inventory levels at downstream converters have fallen at the same time supply growth has disappointed.”

What will happen to the lithium price?

We have all read many times how much lithium is, and will be, in demand in the coming years.

But the Firetrail team notes that it’s not a simple matter for the miners to turn up production of the elusive mineral.

“Production misses from the likes of Mineral Resources Ltd (ASX: MIN), Pilbara Minerals Ltd (ASX: PLS) and others [continue] to highlight the complexity of ramping up and maintaining full rates of production.”

But with the prices seemingly passing a trough, Firetrail analysts are predicting a bright outlook for the rest of this year. 

“An acceleration of electric vehicle sales in China and battery production could provide upside to lithium prices in the second half of 2023.”

Already the Pilbara share price is up around 26% over the past month in anticipation of a rebound in commodity prices.

The post Where will ASX lithium shares go in 2023? 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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Are you wanting to add some ASX dividend stocks to your income portfolio? If you are, then the two listed below could be worth checking out.

Both have recently been named as top buys by analysts and tipped to provide good yields. Here’s what you need to know about these dividend stocks:

Aurizon Holdings Ltd (ASX: AZJ)

The first ASX dividend stock that experts have named as a buy is Aurizon.

It is Australia’s largest rail freight operator, connecting miners, primary producers, and industry with international and domestic markets via its extensive national rail and road network.

The team at Morgans is positive on Aurizon and is expecting some attractive dividend yields from its shares. The broker also continues to “see value in the stock at current prices, supported by the far higher quality Network and Coal haulage businesses.”

In respect to dividends, the broker has pencilled in partially franked dividends of 17 cents per share in FY 2023 and then 19 cents per share in FY 2024. Based on the latest Aurizon share price of $3.52, this will mean yields of 4.8% and 5.4%, respectively.

Morgans currently has an add rating and $3.81 price target on its shares.

Coles Group Ltd (ASX: COL)

Another ASX dividend stock that has been named as a buy is supermarket giant Coles.

Citi is bullish on the company and recently reiterated its buy rating following a tour of Coles’ new Automated Distribution Centre (ADC) located in Redbank, Queensland.

This major project is expected to be fully operational by the end of 2023 and reinforces Citi’s “view that Coles is moving in the right direction and the ADCs have the potential to provide a cost advantage over competitors.”

It is partly for this reason that the broker is forecasting fully franked dividends per share of 69 cents in FY 2023, 73 cents in FY 2024, and then 80 cents in FY 2025. Based on the current Coles share price of $18.11, this represents yields of 3.8%, 4% and 4.4%, respectively.

Citi has a buy rating and $20.20 price target on its shares.

The post Experts say these top ASX dividend stocks are buys appeared first on The Motley Fool Australia.

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More reading

• Why I’d buy companies with pricing power to comfortably beat the ASX index
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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 Coles Group. The Motley Fool Australia has recommended Aurizon. 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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