Fortescue Ltd (ASX: FMG) remains one of Australia’s largest iron ore producers and a popular choice among resources investors.

But if I had $10,000 ready to invest today, I would be looking closely at what the next few years could bring rather than what the company has delivered in the past.

For now, I would keep my money on the sidelines.

The forecasts have moved the wrong way

Fortescue shares are trading around $17.99, which may initially look tempting after periods of weakness.

The problem for me is the earnings outlook. According to CommSec, consensus earnings per share forecasts have been trimmed this week and now stand at $1.34 in FY27, $1.21 in FY28, and $1.13 in FY29.

That implies earnings could fall by around 16% between FY27 and FY29.

I would be more comfortable buying a cyclical miner when the valuation gives me a greater margin for error or when I can see a stronger earnings outlook developing.

At $17.99, Fortescue trades on a PE ratio of roughly 13 times estimated FY27 earnings. By FY29, that rises to almost 16 times because analysts expect profits to decline.

For a business whose earnings remain heavily influenced by the iron ore price, I do not think that looks particularly compelling.

The dividend outlook is also weakening

Fortescue has historically attracted plenty of attention from income investors because it can distribute substantial amounts of cash when iron ore conditions are favourable.

Current forecasts suggest those payments could move lower over the next few years. Consensus estimates point to dividends per share of 85.8 cents in FY27, falling to 77.6 cents in FY28 and 70.7 cents in FY29.

That is still a meaningful amount of income, but I am more interested in the direction of travel.

If those forecasts prove accurate, both earnings and dividends would be declining at the same time.

That makes it harder for me to get excited about investing $10,000 today, particularly when there are other large miners competing for my money.

I still think Fortescue is a strong miner

My hesitation does not mean I think Fortescue is a poor business.

It has built an enormous iron ore operation in Western Australia and has spent years developing the infrastructure, mining expertise, and export network needed to move huge volumes efficiently.

That scale remains a major strength.

Iron ore demand and prices could also turn out stronger than analysts currently expect. If that happens, the earnings and dividend forecasts could eventually move higher again.

Fortescue is also investing beyond its traditional iron ore operations, although I would want to see those newer opportunities make a more substantial contribution before relying on them in my investment case.

For now, the core business remains closely tied to iron ore, and the consensus numbers suggest the next few years may be challenging.

Hold rather than buy

If I already owned Fortescue shares, I would not necessarily rush to sell them.

The company remains a major producer with valuable assets, and commodity markets can surprise in either direction.

But there is a difference between being willing to continue holding a good mining business and deciding that today is an attractive moment to put another $10,000 into it.

I would want either a cheaper entry point or signs that the earnings outlook is beginning to improve before becoming more positive.

Foolish takeaway

I would not invest $10,000 into Fortescue shares at around $17.99 today.

The company itself still has plenty going for it, but the current forecasts do not give me enough reason to buy. Earnings are expected to decline through FY29, dividends are forecast to follow them lower, and the shares would still be trading at almost 16 times FY29 earnings if those estimates prove accurate.

For me, Fortescue is closer to a hold than a buy right now. I would be happy to keep watching and reconsider if the price or earnings outlook becomes more attractive.

The post Should I invest $10,000 into Fortescue shares? appeared first on The Motley Fool Australia.

More reading

• Here’s the dividend forecast out to 2028 for Fortescue shares
• Buy, hold, sell: Pro Medicus, Fortescue, CBA shares
• 2 ASX dividend gems I’d buy for a $20,000 superannuation income boost
• 8 ASX shares just upgraded by the experts
• Buy, hold, sell: Fortescue, Northern Star, and Megaport shares

Motley Fool contributor Grace Alvino 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.

ASX stock Cash Converters Ltd (ASX: CCV) has delivered its sixth consecutive annual dividend of 2 cents per share, which, at the current share price, equates to a dividend yield of 6.7%.

But the analyst team at Shaw and Partners believes there is also share price upside from here, with a buy rating on the shares and a bullish share price, which I’ll get to shortly.

First, let’s have a look at Cash Converters’ recently released full-year results.

Profit down in year of transition

The company’s net profit fell 20% year-on-year to $19.7 million, on revenue of $429.2 million, up 11%.

The company’s gross loan book fell 3% to $236.6 million while cash on hand fell 49% to $37.2 million.

Chief Executive Officer Sam Budiselik said FY26 was a year of change for the company.

He added:

We are pleased to report a full-year result reflecting the deliberate execution of our strategic transformation, including exiting payday lending, materially growing the new Cashies Loan book and substantially expanding our corporate store network. While this transformation has created near-term earnings volatility as the composition of the Group’s earnings has changed, we now have a simpler business supported by a broader base of growing retail and international earnings. Following the successful launch of Cashies Loan, the Group has simplified its personal lending offering, improving the customer journey and reducing servicing costs. The Cashies Loan book reflected strong demand closing the year up almost five times at $114.1m ($23.1m at 30 June 2025). The overall quality and composition of the Group’s loan portfolio continued to improve, with the Group Net Loss Rate declining to 11.1%, from 16.0% in FY25. Legacy payday loans now comprise only 2.4% of the Group’s $236.6m total gross loan book.

Mr Budiselik said the company’s store segment delivered strong growth, with operating EBITDA up 49.7% to $46.8 million and same store sales increasing 13%.

The company is also expanding its luxury store concept, with third party AI authentication technology enabling an expansion in the product range.

Shares looking cheap according to broker

Shaw and Partners said in its note to clients that the results were as expected.

They added:

CCV is demonstrating that it can drive synergy and efficiency through corporatisation of its franchised store networks – a key element of our BUY recommendation. Further store acquisitions are signalled for FY27.  

Shaw and Partners said the company was trading well below the valuation levels of its international industry peers.

They have a price target of 41 cents on Cash Converters shares compared to 29.5 cents currently.

Cash Converters is valued at $209.9 million.

The post This high-yield ASX stock could deliver 40% share price gains: Broker appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Bendigo and Adelaide Bank, PLS, EOS shares
• Why I think the IVV ETF is a strong buy for ASX investors
• Should I invest $10,000 into Fortescue shares?
• EOS shares rocket 13% today. Can the rally keep going?
• BHP share price hits new record high

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.

Electro Optic Systems Holdings Ltd (ASX: EOS) shares are charging higher on Tuesday after the defence tech company released its half-year results.

At the time of writing, the EOS share price is up a sizeable 13.02% to $9.72.

That takes its gain over the past month to more than 40% and continues what has been a very strong run for shareholders.

With the stock pushing higher again today, it appears investors are clearly liking what they see.

So, can EOS shares keep climbing from here?

Revenue jumps 283%

The numbers show just how quickly the business has grown over the past year.

EOS reported revenue from continuing operations of $168.8 million for the six months to 30 June, up 283% from $44.1 million a year earlier.

Defence Systems drove most of the increase, with revenue climbing to $163.7 million from $38.8 million. Space Systems was largely flat at $5.1 million, compared with $5.3 million last year.

The big improvement in revenue also flowed through to earnings. Underlying EBITDA came in at $21.6 million, a big turnaround from the $14.9 million loss recorded in the prior corresponding period.

However, EOS still reported a statutory net loss after tax of $33.7 million. This included a $34 million non-cash accounting adjustment linked to its MARSS acquisition.

Gross margin came in at 58%, down from 76% a year ago. The prior period benefited from a one-off $12 million reversal of late delivery penalties.

Order book keeps growing

There was more good news in the order book.

EOS finished June with an unconditional order book of around $846 million, up 84% from $459 million at the end of December. It is also almost 5 times the $170 million reported a year ago.

The company signed more than $300 million of new orders during the half, with most of its current order book expected to be delivered through the rest of 2026 and during 2027.

The recently acquired MARSS business is also off to a strong start.

MARSS has already secured around $200 million of orders in 2026, while giving EOS greater exposure to AI-enabled command and control systems and counter-drone tech.

EOS ended June with $256 million in unrestricted cash, leaving the company well funded as it works through its growing order book.

Can EOS shares keep climbing?

There’s plenty going right at EOS at the moment.

Management expects FY26 revenue of between $360 million and $400 million, which would be a record result for the company.

Strong demand across the defence sector is also supporting the outlook, particularly for counter-drone systems, remote weapon systems, and high-energy laser weapons.

EOS is currently chasing several opportunities across these areas, while its order book provides better visibility for future revenue growth.

Of course, the share price has already run a long way. EOS shares are up more than 40% in just one month, so expectations are now much higher.

Still, with revenue growing very quickly, and the order book standing at $846 million, there could be more room to run.

The post EOS shares rocket 13% today. Can the rally keep going? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Bendigo and Adelaide Bank, PLS, EOS shares
• Electro Optic Systems half-year earnings surge on booming defence demand
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Aaron Teboneras 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 Electro Optic Systems. 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.