Austral Resources Australia Ltd (ASX: AR1) announced about a month ago that it planned to merge with Hammer Metals Ltd (ASX: HMX) in a scrip deal, which valued the smaller company at $80.7 million.

The analysts at Shaw and Partners have run the ruler over the deal and like what they see.

They have issued a new research report into Austral Resources with a buy recommendation and a very bullish share price target, which I’ll get to shortly.

First, let’s have a look at the deal.

Copper assets coming together

Austral has agreed to acquire Hammer for 1.29 Austral shares, while Hammer shareholders will also get shares in a new company that will be spun out to hold its existing gold projects.

Following the merger, Hammer shareholders will own about 31.1% of Austral, which describes itself as “a pure-play ASX listed copper producer and developer operating in Queensland, pursuing an active regional consolidation strategy to feed its Rocklands and Mt Kelly processing hubs”.

Hammer’s board has unanimously supported the deal, along with major shareholders who control about 16% of the company’s shares.

Hammer’s Chair Russell Davis said the deal was a better outcome than a previous offer from Larvotto Resources Ltd (ASX: LRV).

He said:

The Scheme delivers materially higher headline value and provides Hammer shareholders with an expected 31.1% ownership interest in a larger Queensland-focused copper producer, developer and explorer. Austral’s existing oxide production at Mt Kelly, planned restart of the Rocklands sulphide processing facility and ongoing regional consolidation strategy provide an attractive development and production pathway for the combined portfolio. In particular, the proximity of Kalman to Rocklands creates strong strategic logic and the potential for Kalman to become an important long-term source of sulphide feed.

Mr Russell said the board also believed that Austral’s regional operating capability, processing infrastructure, and funding capacity provided a stronger platform to advance Hammer’s broader Mt Isa portfolio and unlock value from its substantial resource and exploration portfolio.

Broker likes the look of the deal

Shaw and Partners said the deal represented a capital-efficient route to growth for Austral.

They said Hammer added resources and exploration upside on top of Austral’s existing copper inventory and would help ramp up production through the company’s Rocklands concentrator.

The broker added:

For HMX holders the offer is a premium to the undisturbed price and provides continued exposure to Mount Isa as well as immediate exposure to copper producing operations.

Shaw and Partners has a price target of 28 cents on Austral shares, compared with the current 7.1 cents.

If achieved, this would constitute an increase of 294.4%.

Austral is valued at $188.5 million.

The post This ASX copper company could rise almost 300%, Shaw & Partners says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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.

Buying shares from the S&P/ASX 200 index (ASX: XJO) for a decade requires looking well beyond what might happen over the next few months.

I want businesses with large markets, strong competitive positions, and plenty of room to become bigger over time.

With that in mind, here are three ASX 200 shares I’d be happy to buy and hold for the next decade.

Life360 Inc (ASX: 360)

The first share is Life360. Its family safety platform now has 102.4 million monthly active users globally, including 54 million in the United States.

I think those numbers highlight both how far Life360 has come and how much opportunity remains. The US is currently its largest and most developed market, but I see no reason why its International business won’t one day be significantly larger than its US business.

This gives Life360 a long runway to grow its user base over the next decade.

There are also plenty of opportunities to generate more revenue from existing users through paid memberships, advertising, and additional services covering families, pets, vehicles, and other connected devices.

If Life360 can keep growing its audience and converting more free users into paying customers, I think earnings could grow strongly for many years.

Megaport Ltd (ASX: MP1)

Another ASX 200 share I’d consider holding for a decade is Megaport.

It started as a way for businesses to connect quickly to cloud providers and data centres. But its opportunity has become considerably larger following its move into compute infrastructure.

Megaport has been winning major artificial intelligence (AI) infrastructure contracts through Latitude.sh. Most recently, it secured three contracts worth approximately $979 million, taking the total value of AI infrastructure contracts announced since April to around $2.3 billion. That is a significant change in scale.

Megaport now has exposure to networking, compute, storage, and the growing demand for GPU infrastructure needed to run artificial intelligence workloads.

There is plenty of execution risk as it invests heavily to fulfil these contracts. But if management delivers, I think Megaport could look like a very different business a decade from now.

TechnologyOne Ltd (ASX: TNE)

A final ASX 200 share I’d buy and hold is TechnologyOne.

This enterprise software company has built an impressive recurring revenue business serving governments, universities, councils, and other large organisations.

Importantly, management still sees substantial growth ahead. TechnologyOne last reported annual recurring revenue (ARR) of $598 million. It is now targeting ARR of more than $1 billion by FY 2030 and expects its profit before tax margin to eventually exceed 35%.

Driving this growth is its SaaS+ strategy, growing suite of AI-enabled products, and international expansion.

In light of this, I think TechnologyOne has the ingredients to keep compounding earnings well into the next decade.

The post 3 ASX 200 shares I’d buy and hold for the next decade appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Life360, Megaport, and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and Megaport. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I think one of the best things about the ASX share market is that we can buy pieces of businesses that help grow our wealth over time, so we can eventually retire.

Compounding is a very powerful tool that can help grow a dollar into significantly more over the years.

We don’t need to run these businesses ourselves. That’s up to management and all other staff at those companies.

Whether that’s some of the world’s biggest companies or some of the up-and-coming ASX shares, we can invest in ideas that can grow over time.

By regularly investing, spending less than we earn, and possibly using superannuation, an Aussie can build a very rewarding level of annual passive income.

Let’s get into what it would take if someone wants to reach $85,000 of investment income each year by 50.

Compounding and building wealth

Compounding helps accelerate our net worth because we don’t need to add as much money to reach a financial goal.

For example, if someone invested $500 per month and it returned 10% per year, it would be worth $1.09 million after 31 years. About $905,000 of that total would come from returns, and only $186,000 would come from the actual deposits.

But I’m sure readers wanting to retire at 50 will want to reach their goal faster than 31 years.

So, let’s assume share market investments continue to return an average of around 10% and run through a few scenarios.

First, let’s double the monthly investment to $1,000 and see what happens then.

By investing $1,000 per month, a 25-year-old investor could reach $1.18 million after 25 years.

If someone aged 30 invested $2,000 per month, they could reach a portfolio value of $1.375 million.

Maybe someone is aged 35 and they have just 15 years to reach 50. Let’s imagine that person saves really hard and invests $3,500 per month. That could reach $1.33 million in that time.

Everyone has a different financial position, so I don’t know how much each household can save, but the above shows how people can regularly put money toward their net worth and eventually retire early.  

Unlocking $85,000 a year of annual passive income

Getting $85,000 each year would be a very good amount to retire on.

However, it would require investors from the above examples to target solid grossed-up dividend yields which typically include franking credits.

For example, accessing $85,000 on a $1.18 million portfolio means finding a 7.2% dividend yield. The sorts of businesses I’d target for that yield include Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI) and WCM Global Growth Ltd (ASX: WQG).

The other end of my target was generating $85,000 from a $1.375 million portfolio. This works out to be a dividend yield of 6.2%. With that target in mind, I’d look at stocks like MFF Capital Investments Ltd (ASX: MFF), Centuria Industrial REIT (ASX: CIP), and
PM Capital Global Opportunities Fund Ltd (ASX: PGF).

By mixing a portfolio of good local shares and international exposure, retirees can build a pleasing stream of passive income, such as $85,000 by age 50.

The post How much do I need to retire on $85,000 a year at 50? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, Mff Capital Investments, Rural Funds Group, and Wcm Global Growth. 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 Mff Capital Investments and Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.