The Reserve Bank of Australia (RBA) decided this week to increase the cash rate by 25 basis points (0.25%), which I think has opened up significant opportunities with some ASX share sectors.

I’m always on the lookout for potential buys that could mean strong returns.

Sometimes that means investing in businesses that consistently grow earnings year after year. But there can also be excellent cyclical opportunities when we buy at the weaker point of the cycle.

High interest rates are a headwind for some areas of the ASX share market, and I think that opens up an opportunity to buy during a temporary dip. Hopefully, interest rates will start coming down again at some point, and that could lead to a significant turnaround of investor confidence.

I’m going to highlight three areas that now look significantly undervalued.

Real estate investment trusts

A lot of real estate investment trusts (REITs) now trade at significant discounts to their underlying net asset value (NAV) or net tangible asset (NTA).

I love being able to buy assets for less than they’re worth, and I think, on a long-term basis, that the current unit prices are trading too cheaply.

With how taxes have changed for investing in residential property, I think there could be stronger investor demand for commercial property, which could be supportive for REIT unit prices in the medium term.

I don’t necessarily think that every single REIT is a buy, but I’d focus on the ones with positive long-term outlooks and rising rental income.

I think industrial properties and farmland are two areas with promising outlooks. That’s why I currently really like Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF).

Each of those four ASX shares has declined recently, but they’re offering strong distribution yields, making them particularly appealing today.

ASX retail shares

The high cost of living and higher interest rates are likely to be a headwind for retail spending, particularly for discretionary retailers.

Retail spending is notoriously cyclical, and it can lead to volatile businesses during an economic cycle.

Even if consumers do reduce spending somewhat, I don’t think the current prices reflect the long-term prospects of the retail businesses, largely just the shorter-term pain.

I’d look at names like JB Hi-Fi Ltd (ASX: JBH), Nick Scali Ltd (ASX: NCK), Universal Store Holdings Ltd (ASX: UNI), Lovisa Holdings Ltd (ASX: LOV), Temple & Webster Group Ltd (ASX: TPW), and Wesfarmers Ltd (ASX: WES).

I think they could be great opportunities to buy today for the longer term.

ASX defensive shares

Higher interest rates can make defensive businesses look less appealing because investors can get a solid return from safe investments like savings accounts, term deposits, and quality bonds.

I think ASX defensive shares could be a great investment amid higher interest rates, and lower rates in the future could make the current valuations very attractive.

After recent falls, I think names like Propel Funeral Partners Ltd (ASX: PFP), Transurban Group (ASX: TCL), Telstra Group Ltd (ASX: TLS), Medibank Private Ltd (ASX: MPL), and Sonic Healthcare Ltd (ASX: SHL) look appealing.

These aren’t the only ASX shares on my watchlist after the RBA interest rate rise, but they’re among my favourite ideas today.

The post Where I’d invest in ASX shares after the recent RBA rate rise appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Propel Funeral Partners, Rural Funds Group, and Temple & Webster Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Temple & Webster Group, Transurban Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Rural Funds Group, Telstra Group, and Transurban Group. The Motley Fool Australia has recommended Lovisa, Nick Scali, Sonic Healthcare, Temple & Webster Group, Universal Store, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Liontown Ltd (ASX: LTR) share price is in focus after the company approved a $389 million Final Investment Decision (FID) to expand its Kathleen Valley lithium operations, aiming to lift spodumene concentrate production capacity by 56% to approximately 780,000 tonnes per annum (ktpa).

What did Liontown Resources report?

• Final Investment Decision approved for $389 million expansion at Kathleen Valley.
• Expected production capacity to increase from ~500 ktpa to ~780 ktpa (a 56% boost).
• Forecast unit operating costs to fall to A$840–920 per tonne (FOB basis) once fully ramped up.
• Capital intensity of A$1,619 per tonne—among the lowest of recent brownfield expansions.
• Payback period for the expansion estimated at approximately 2.5 years.
• The project is set to create roughly 400 full-time jobs, supporting local communities.

What else do investors need to know?

The expansion will see operational flexibility enhanced through the accelerated development of the Kathleen’s Corner Underground mine, complementing existing Mount Mann operations. Upgrades to the processing plant and non-process infrastructure—including power and water facilities—will support the increased capacity and maintain efficiency.

With construction phased over three years, first ore from new mining areas is targeted for the first quarter of FY28. Incremental capital required for expansion is already reflected in Liontown’s FY27 guidance, with funding planned via existing cash and ongoing cash flow. The company also highlights its ability to sell into both spot and contract markets, providing flexibility in volatile conditions.

What did Liontown Resources management say?

Managing Director Tony Ottaviano said:

Our expansion decision demonstrates confidence in Kathleen Valley’s world-class resource, cost competitiveness, and our team’s ability to deliver value for shareholders, employees and regional communities.

What’s next for Liontown Resources?

Liontown is prioritising a disciplined delivery schedule, with the construction program spread across mining, processing, and infrastructure streams. The company targets average production of around 780 ktpa by Q1 FY30, reinforcing Kathleen Valley’s position among the world’s top 10 lithium producers. Management expects lower unit costs and flexibility to adapt to market conditions, supported by robust long-term lithium demand and a structural market supply gap.

Looking ahead, Liontown will continue development and commissioning activities, aiming for sustained low-cost production as global lithium needs evolve. The expansion offers Liontown a platform for future growth and potential upside as the battery materials sector matures.

Liontown Resources share price snapshot

Over the past 12 months, Liontown shares have declined 4%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 2% over the same period.

View Original Announcement

The post Liontown Resources approves $389m Kathleen Valley lithium expansion appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Tabcorp vs The Lottery Corporation shares: Which is the better buy this week?

Choosing between Tabcorp Holdings Ltd (ASX: TAH) and Lottery Corporation Ltd (ASX: TLC) feels like picking a ticket in two different draws. Both companies should be pretty familiar to Aussie investors, especially after the 2022 demerger that left them operating in distinct (yet related) corners of the gaming and wagering industry. If you’re weighing up Tabcorp vs The Lottery Corporation shares this week, here’s a closer look at the core points of difference.

The case for Tabcorp

Tabcorp is one of Australia’s best-known gambling companies, now focusing on wagering and gaming services after spinning off its lotteries and keno business in 2022. Its well-known TAB brand offers betting both online and in a broad network of retail venues outside Western Australia, covering more than 90% of the population according to its most recent public description. Tabcorp also provides gaming solutions to clubs and pubs through its MAX business, and remains a major racing broadcaster with Sky Racing and Sky Sports Radio.

Looking at the numbers:

• Tabcorp’s market cap stands at $2.09 billion, making it significantly smaller than its old lottery sibling.
• The current P/E ratio is elevated at 45.05, indicating investors are paying a hefty price for current earnings compared to profits.
• The dividend yield is 3.30%, but notably, its most recent dividends have been unfranked, a big shift from its fully franked payouts prior to the demerger.

Looking through Tabcorp’s dividend history, you’ll see a marked reduction in dividend size (now just 3 cents per share over the last year, with recent payments unfranked) since lotteries and keno departed, and a share price that’s lost about 5.1% year to date.

The case for Lottery Corporation

The Lottery Corporation is Australia’s largest and most established lotteries and keno business. If you’ve ever bought a Powerball or Oz Lotto ticket, you’ve experienced its reach. The Lott holds long-term or exclusive lottery licenses in every state and territory except WA and boasts an enormous distribution network — more than 3,800 retailers plus online, as per its company profile. Its keno games are available in over 3,400 venues. Its brands permeate Aussie culture, and it’s tough to walk into a newsagent and not see their logo.

Fundamentally, the post-demerger Lottery Corporation is showing strong profit metrics:

• Market cap is $10.71 billion — five times larger than Tabcorp in today’s figures.
• P/E ratio is 37.58, not exactly low, but lower than Tabcorp’s, reflecting the lottery business’s healthy margins and consistent demand.
• It’s offering a 3.43% dividend yield, with all recent dividends fully franked — a clear tick for income seekers, especially compared to Tabcorp’s recent unfranked payments.

The Lottery Corporation’s year to date return is -3.6%, a bit better than Tabcorp’s, and it has steadily paid fully franked dividends, including a special dividend after the demerger.

Valuation comparison

Here’s how both companies stack up on the numbers that actually matter:

	Tabcorp	The Lottery Corporation
Market Cap	$2.09 billion	$10.71 billion
P/E Ratio	45.05	37.58
Earnings per Share	$0.020	$0.128
Dividend Yield	3.30%	3.43%
Dividend Franking	0% (recently)	100%
Dividend per Share	$0.03	$0.17
YTD Return	-5.1%	-3.6%

Note: Tabcorp’s reported P/E ratio may be based on a different earnings measure (e.g. underlying or forward earnings) than the EPS figure shown, which is why they may appear inconsistent.

The big standout here is the greater yield and full franking at The Lottery Corporation — a meaningful difference for Aussie income investors. Tabcorp’s much higher P/E and lower earnings per share suggest less bang for your buck on recent earnings, at least for now.

Recent share price performance

Comparing recent momentum up to 25 September 2026:

• Tabcorp closed at $0.91 on 25 Sept 2026, down 1.1% that day and showing a year to date return of -5.1%.
• The Lottery Corporation finished at $4.81, also down on the day by 1.6%, but its year to date return is a slightly smaller -3.6%.
• Both stocks have faded in 2026 so far, but The Lottery Corporation has been less volatile, with tighter daily moves on average.

Which is the better buy?

If I could only choose one this week, my pick would be The Lottery Corporation. Here’s why: it trumps Tabcorp on profitability, pays out a higher and fully franked dividend, and has a much bigger (and arguably more defensive) business model thanks to its exclusive lottery licences and huge retail reach. While both shares have dipped this year, The Lottery Corporation is holding up a little better, and its lower P/E ratio means you’re paying less for each dollar of earnings despite the higher quality and predictability of those earnings.

Tabcorp’s business, now leaner post-demerger, seems to be offering smaller, unfranked dividends and isn’t showing clear earnings momentum — while still being more “expensive” on a P/E basis. Absent any strong short-term catalyst or evidence of a turnaround, I find The Lottery Corporation a much more compelling option for both stability and income, even if it’s not exactly cheap.

The post Tabcorp vs The Lottery Corporation: Which ASX gaming share comes out on top? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 The Lottery Corporation. The Motley Fool Australia has recommended The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.