Author: openjargon

Three S&P/ASX 200 Index (ASX: XJO) stocks just had their outlooks boosted by top brokers.

One is a property developer.

One is leading the technology charge in the logistics space.

And the third is focused on mortgage lending insurance.

And if the brokers have this right, all three ASX 200 stocks could deliver some healthy returns in the year ahead.

(Broker data courtesy of The Australian.)

Three ASX 200 stocks with boosted outlooks

The first ASX 200 stock getting a sizeable broker upgrade is WiseTech Global Ltd (ASX: WTC).

Shares in the logistics software provider are up 0.3% at the time of writing to $92.75. That sees the WiseTech share price up 21% in 2024. The stock also trades on a slender, fully franked trailing dividend yield of 0.2%.

CLSA forecasts a lot more outperformance to come. The broker raised WiseTech shares to a buy rating with a $112.00 price target. That’s almost 21% above current levels.

The WiseTech share price could catch some tailwinds next week when the stock joins the exclusive S&P/ASX 50 Index. That move is part of the S&P Dow Jones Indices June quarterly rebalance.

Which brings us to the second ASX 200 stock earning a broker upgrade, property investor, developer and manager Dexus (ASX: DXS).

The Dexus share price is down 0.9%% at time of writing at $6.48 a share. That sees the share price down 15% in 2024. Dexus shares trade on a partly franked trailing dividend yield of 7.7%.

Jarden Securities believes shares are trading at a bargain. The broker raised Dexus to a neutral rating with a $7.60 price target. That’s more than 17% above current levels.

Rounding off the list of ASX 200 stocks earning broker upgrades is Lenders Mortgage Insurance provider Helia Group Ltd (ASX: HLI).

The Helia share price is rocketing 12.6% in morning trade today. Shares are currently swapping hands for $3.76 apiece. That leaves the Helia share price down 15% in 2024. The stock trades on a partly franked trailing dividend yield of 7.9%.

If you were watching the charts yesterday, you may have noticed that the Helia share price ended the day down a precipitous 20.9%, at $3.34 a share. The stock crashed after the company announced Commonwealth Bank of Australia (ASX: CBA) plans to review the lender’s mortgage insurance (LMI) contract it has with Helia.

Macquarie believes today’s rebound has further to run. The broker raised the ASX 200 stock to an outperform rating with a $3.90 price target.

The post Why these 3 ASX 200 stocks just scored sizeable broker upgrades appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday
• Why Beach Energy, Core Lithium, Helia, and Red 5 shares are dropping today
• ASX 200 stock plunges 15% on CBA deal news
• These four ASX All Ords shares just earned hefty broker upgrades. Here’s why
• Why these 2 ASX 200 shares just scored broker upgrades

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 positions in and has recommended Macquarie Group and WiseTech Global. The Motley Fool Australia has positions in and has recommended Macquarie Group and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

DroneShield Ltd (ASX: DRO) shares are pushing higher again on Thursday after a brief pause this morning.

At the time of writing, the counter-drone technology company’s shares are up a further 3% to a new record high of $1.61.

This latest gain means that the high-flying share is now up 77% since this time last month.

Why are DroneShield shares rising again?

Investors have been snapping up the company’s shares again this morning in response to the release of an announcement.

According to the release, DroneShield has received an order valued at $4.7 million from a new non-government Swiss international customer.

The order will see the company provide the customer with multiple vehicle-based counter-drone (C-UxS) systems.

The release notes that the vehicle-based solution will offer a rapidly deployable C-UxS platform that can be operated in both static and on-the-move (OTM) missions for convoy and mobile VIP protection.

It provides a new level of operational flexibility by incorporating DroneShield’s radio frequency detection and mitigation, radar, and electro-optical sensors, into a single vehicle-based platform. The system will be powered by the DroneSentry-C2 command-and-control system, including its proprietary AI-based sensor fusion engine.

The AI-based sensor fusion engine can track an object to determine its classification and predict its trajectory. It can also assess the threat level. It does this by intelligently determining its threat based on a wide range of data types. Another positive is that it has been designed for complex, high noise environments, with inconsistent data inputs.

The end customer for this technology has not been named by DroneShield. However, it has been described as a high-profile Government agency.

Payments for the order are expected to be received throughout 2024, with the final payment expected to land in the first quarter of 2025.

DroneShield’s CEO, Oleg Vornik, was pleased with the news and believes it demonstrates the quality of the company’s technology. He commented:

This order highlights DroneShield expertise not only as a maker of cutting-edge AI-based C-UAS sensor and effector technologies, but also a system integrator, for demanding applications that involve multiple sensor and effector modalities, operating in tough conditions. We are excited to have this new customer onboard and doing more work with them over coming years.

Following today’s gain, DroneShield shares have now risen by almost 600% since this time last year. This means that a $10,000 investment would have grown to be worth close to $70,000 today.

The post DroneShield shares hit record high on major new AI order appeared first on The Motley Fool Australia.

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• Surely DroneShield shares can’t just keep rising?
• CBA, DroneShield, and these ASX stocks just hit 52-week highs
• Why the ‘opportunity is immense’ for DroneShield shares: fundie
• Does DroneShield stock pay dividends?
• If I’d put $5,000 into DroneShield shares just 1 year ago, here’s what I’d have now

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 positions in and has recommended DroneShield. 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.

Growth stocks are attractive to investors wanting maximum returns in today’s financial world.

Many ASX shares offer excellent opportunities, and smart investors are looking for shares with strong capital growth potential.

As we approach FY25, here are three growth-focused ASX shares that I think are worth considering for the upcoming financial year.

PWR Holdings Ltd (ASX: PWH)

First up is cooling solutions provider PWR Holdings. The company designs and manufactures high-performance cooling solutions for automotive, motorsport, and industrial applications.

PWR serves top-tier global clients, including Formula 1 teams and major automotive manufacturers.

The retail stock reported an excellent set of numbers in its 1H FY24 results, with its revenue rising 22.2% to $64.2 billion and EBITDA up 27.2% to $18.4 billion. Strong growth in the aerospace and defence segment, up 124% from a year ago, continued to support its business, while motorsport revenue delivered a robust 19% growth.

This positive development led the PWR Holdings share price to hit its all-time high of $12.98 in February. However, since then, the share price has dropped about 14% to $11.00 at the time of writing.

At the current share price, PWR shares are trading at 35x FY25 earnings estimates by S&P Capital IQ, mid-point of its trading history of between 20x to 52x. While this is not exactly cheap, I tend to agree with my colleague Tony that the high-quality shares are rarely cheap.

VEEM Ltd (ASX: VEE)

My next pick is ASX small-cap share VEEM, which makes advanced marine technology and engineering parts. The company is well-known for its high-quality gyro stabilisers (gyros), propellers, and other precision parts used in the marine, defence, and aerospace industries.

VEEM is a small ASX company, but it has a presence in the global market and two exciting growth opportunities ahead of it.

VEEM gyros are an innovative product that replaces traditional propeller-based stabilisation. The company has the dominant position in this interesting niche.

In 1H FY24, its gyro sales were $5 million, with orders in hand of $9.2 million. While this may still look small compared to its total revenue of $37.5 million, the company sees a total addressable market of US$1.1 billion from this product. So, it’s a long runway for growth.

The company is collaborating with another industry leader, Sharrow Engineering, to adapt Sharrow’s design to a wider range of vessels. In this exclusive agreement, VEEM would manufacture and sell Sharrow-designed propellers worldwide for inboard-powered vessels. In April 2024, VEEM saw a positive outcome from initial testing and hopes to launch this product line throughout FY25.

The VEEM share price has more than quadrupled over the past year, after hitting an all-time low of 40 cents in July 2023. VEEM shares are trading at 30x FY25 earnings estimates, based on S&P Capital IQ.

DUG Technology Ltd (ASX: DUG)

The last share to discuss is DUG Technology. The company provides high-performance computing solutions, software, and data analytics services. It specialises in innovative cloud-based services, and high-performance computing (HPC). DUG is a global business with offices in Australia, Asia, Americas and Europe.

This ASX small cap share also provides an artificial intelligence (AI) angle.

In June, the Perennial Natural Resources Trust manager Sam Berridge said DUG could offer direct exposure to the AI boom, as my colleague James summarised. He highlighted DUG’s patented immersion cooling technology, which the company claims provides 90% savings in electricity use and manpower.

In 3Q FY24, the company delivered a 39% growth in revenue to US$17.6 million and a 24% growth in EBITDA to US$4.6 million. In response to strong demand, the company is planning to establish a new business unit in the Middle East.

The DUG share price more than doubled over the past year and is at a price-to-earnings ratio of 38x using FY25 estimates by S&P Capital IQ.

The post 3 of the best growth-focused ASX shares to buy in June appeared first on The Motley Fool Australia.

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• This fund returned 30% per annum for 3 years. Here are the ASX shares it’s buying now.

Motley Fool contributor Kate Lee has positions in Veem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dug Technology, PWR Holdings, and Veem. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool Australia has recommended Dug Technology and Veem. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Qantas Airways Ltd (ASX: QAN) shares are in the green today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $6.15. In morning trade on Thursday, shares are swapping hands for $6.16 apiece, up 0.2%.

For some context, the ASX 200 is down 0.03% at this same time.

That’s this morning’s price action for you.

Now here’s how artificial intelligence (AI) can help streamline the company’s costs and services and potentially throw up some ongoing tailwinds for Qantas shares.

Qantas shares bringing artificial intelligence into the skies

If it seems like everywhere you turn AI is cropping up, you’re not alone.

And the skies are no exception.

Though still in its nascent stages, AI is already helping companies improve efficiency, provide better client services and cut costs. And the technology could offer a sustainable boost to Qantas shares.

One area where AI could help the ASX 200 airline drive down costs is maintenance.

Amazon chief technology officer Werner Vogels said the revolutionary new tech could help aeroplane mechanics identify parts that may be close to failing so they can be repaired or replaced.

According to Vogels (quoted by The Australian):

The detection part is crucial for airlines with limited options for maintenance because it means they can bring the aircraft to the place where it can undergo maintenance ahead of time.

There’s huge cost savings to be had in that.

AI has already been helping the performance of Qantas shares by reducing fuel requirements.

In 2018, the ASX 200 airline began using the technology to adjust aircraft’s flight paths in accordance with weather, the particular plane’s capabilities and its fuel supply. AI is estimated to have cut some 2% of Qantas annual jet fuel costs. And with fuel costs in the range of $5 billion a year, that’s no chump change.

Qantas also used AI to help monitor global airspace for potential closures, other aircraft, or potential dangers like volcanic ash.

Why shareholders are eyeing Joyce’s new bonus

In other news, not all Qantas shareholders are pleased that former CEO Alan Joyce is poised to receive another $16 million (or more) payout from the ASX 200 airline.

While that payment is under review, shareholder sentiment is unlikely to influence the outcome.

“‘How much is too much?’ is the wrong question to ask,” Sandon Capital managing director Gabriel Radzyminski said (quoted by The Australian).

Radzyminski added:

Ultimately, it is a question for the board, who in turn are answerable to their shareholders. Boards need to think very carefully about what contractual obligations they enter into when negotiating with CEOs and executives.

Qantas shares are up 15% in 2024.

The post How AI can help Qantas shares fly higher appeared first on The Motley Fool Australia.

More reading

• Could Qantas shares be poised to catch some Chinese tailwinds?
• 3 reasons to be positive on ASX 200 shares in FY25 (and 3 to be wary)
• Where Aussies are spending their money, and the ASX shares that could benefit
• These ASX shares could rise 25% to ~50%
• Why are ASX investors so excited by the Qantas share price?

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.

The S&P/ASX 200 Index (ASX: XJO) mining shares face an uncertain outlook in FY25, with potentially significant elements impacting the demand side of the commodity equation.

There are a few key businesses and commodities within the ASX 200, so those are the areas I’ll focus on in this article. ASX iron ore shares make up the largest commodity exposure within the index, including BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG).

Copper and gold miners, including BHP, Rio Tinto, Sandfire Resources Ltd (ASX: SFR), Newmont Corporation CDI (ASX: NEM), Northern Star Resources Ltd (ASX: NST), and Evolution Mining Ltd (ASX: EVN), also hold a sizeable position in the ASX 200 right now.

While there may be uncertainty, there is also some positivity for each major commodity. Let’s start with iron ore.

Iron ore

This may be the most important commodity for Australia and the ASX because of how much value it can add to the country’s (and households’) finances when iron ore prices are good.

The iron ore price is currently at around US$107 per tonne, which is high enough to enable the ASX 200 mining shares to achieve satisfactory profit margins and generate healthy profits in FY25.

However, the price of iron ore has dropped from above US$140 since the beginning of 2024. Can it improve in FY25?

China is usually the key iron ore buyer, but Trading Economics points out that recent data from the Asian superpower is adding to pessimism. House prices in China declined 3.9% year over year in May, the biggest decline since 2015. There has also been “muted industrial output”, which “dampened expectations that higher manufacturing growth would drive infrastructure-stemmed steel demand to offset the rout in construction.”

Currently, the Chinese government is focused on rolling out measures to address the growing level of housing inventory rather than supporting distressed property developers (who are big users of steel and, therefore, iron ore).

Despite that, Trading Economics’ macroeconomic models and analyst expectations suggest the iron ore price could recover to approximately US$126 per tonne in a year from now. If that happened, I imagine investors could be more optimistic about the profit-making potential of the ASX 200 iron ore shares like BHP, Fortescue and Rio Tinto, as it would represent a rise of more than 17% for the commodity price.

Copper

Analysts have become more optimistic about copper as demand increases in some countries worldwide, though the weak demand in China is offsetting some of that positivity.

Macquarie recently increased its copper price forecast for the 2024 calendar year by 7% to US$9,671 per tonne and for the 2025 calendar year by 9% to US$9,575 per tonne. FY25 is made up of the last six months of the 2024 calendar year and the first six months of the 2025 calendar year.

According to Trading Economics, the copper price has fallen more than 10% in recent weeks, though it’s still up more than 10% since March 2024.

Trading Economics notes that industrial output in China slowed more than expected in May, heightening concerns that demand will not recover for the world’s biggest copper user. Chinese copper inventory is close to a four-year high.

However, with the copper price higher than it was 12 months ago, the ASX’s copper miners may be able to generate stronger mining profits if the commodity price stabilises.

Gold

The gold price has risen more than 15% in 2024 to date, to around US$2,330 per ounce.

ASX 200 gold mining shares and the gold price are two different things, but this higher commodity price can help them generate stronger profits if they can execute operationally during FY25.

Inflation and global uncertainty have helped push up the gold price. Gold is seen as a defensive hedge against risk and volatility.

According to Trading Economics, some central banks plan to increase their gold reserves “within a year due to economic and political uncertainty, despite high prices, according to the World Gold Council’s survey.”

The post What’s the outlook for ASX 200 mining shares in FY25? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• How central banks are primed to drive a new ASX 200 gold stock rally
• Buy BHP and these ASX dividend shares
• Why are these experts so bullish on ASX copper shares?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has positions in Fortescue. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Treasury Wine Estates Ltd (ASX: TWE) share price is under pressure on Thursday morning.

At the time of writing, the wine giant’s shares are down 2% to $12.17.

Why is the Treasury Wine share price falling?

Investors have been selling the company’s shares this morning in response to the release of an update on its outlook for the Penfolds business.

According to the release, Penfolds earnings before interest, tax, self-generating and re-generating assets (EBITS) is expected to be in the range of $418 million to $421 million in FY 2024. This is being driven by strong top-line growth across all portfolio tiers and price points, with the weighting of Bin & Icon portfolio shipments to the second-half completed as planned.

Penfolds EBITS margin in FY 2024 is expected to be approximately 42%. This reflects the reestablishment of entry-level Australian COO Luxury tiers and higher onshore overhead costs in China through the fourth quarter following the removal of tariffs.

Management continues to expect mid-high single digit group EBITS growth in FY 2024, excluding the EBITS contribution from the recently acquired DAOU business.

FY 2025, FY 2026, and FY 2027 Penfolds outlook

In response to the removal of tariffs in China, Treasury Wine has provided investors with an idea of what to expect from its key Penfolds business in the coming years.

In FY 2025, it expects the Penfolds business to deliver low double-digit EBITS growth. This reflects top-line growth driven by price increases and a modest increase in shipments for the Bin & Icon portfolio. This will be partly offset by a step-up in brand building investment and overheads in China of approximately $20 million ahead of increased Bin & Icon portfolio availability from FY 2026. The Penfolds EBITS margin is expected to improve to within the range of 43% to 45% for the year.

Moving on, in both FY 2026 and FY 2027, the Penfolds business will be targeting annual EBITS growth of approximately 15% across both years. This is expected to be driven by a significant increase in availability for the Bin & Icon portfolio from the record 2024 Australian vintage intake.

Penfolds will also be targeting an EBITS margin in line with its long-term target of 45%.

Broker reaction

Goldman Sachs was pleased with the update and notes that these targets are above its own estimates. However, it does concede that there are a few doubts about achieving these numbers. It said:

Whilst we view this guidance as positive and agree that China as a market continues to have attractive TAM for luxury Win/Spirits consumption, our key questions on the call will be largely focused on execution, including the structure of its on-the-ground sales team, go-to-market/distribution, channel profitability/trade marketing support, advertising focus, parallel market control and allocation between the different Penfolds regions.

The Treasury Wine share price remains up 14% in 2024.

The post Treasury Wine share price tumbles on Penfolds China update appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here’s why the Treasury Wine share price is beating the ASX 200 today
• 5 top ASX growth shares to buy in June
• What is boosting the Treasury Wine share price on Thursday?
• Up 12% in 2024, this ASX 200 stock is a top pick for June

Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. 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 recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Mineral Resources Ltd (ASX: MIN) shares are edging lower on Thursday morning.

At the time of writing, the mining and mining services company’s shares are down 1% to $60.00.

Why are Mineral Resources shares falling?

Investors have been selling the company’s shares today in response to the release of a big announcement after the market close on Wednesday.

According to the release, Mineral Resources has completed a comprehensive assessment of the viability of the Yilgarn Hub iron ore operation.

Management notes that having carefully considered all options, the assessment confirmed that the continuity of the Yilgarn Hub is not financially viable beyond the end of 2024. As a result, it has made the decision to cease Yilgarn Hub iron ore shipments by 31 December.

Mineral Resources points out that the decision has been influenced by a combination of factors. This includes the limited remaining mine life across five operating mines that are spread over 220 kilometres, and the significant capital cost and lead time required to develop new resources to ensure continuity of supply.

What’s next?

The company intends to safely ramp down the Yilgarn Hub operations in a staged approach over the next six months. This is expected to see up to four million wet metric tonnes shipped by the end of the calendar year.

Mining operations will then transition into care and maintenance from early 2025.

And while approximately 1,000 employees will be impacted by this change, Mineral Resources notes that it will work with them on redeployment opportunities across other operations. It has almost 800 vacancies across the business, with many more to open in coming months. This includes through the ramp up of the Onslow Iron project.

Mineral Resources’ managing director, Chris Ellison, commented:

This prudent but difficult decision was not taken lightly and follows years of investment to extend the life of our operations in the Yilgarn. MinRes has operated in the region since our maiden shipment from Carina in 2011. In 2018, with the support of the WA Government, we stepped in to save hundreds of Western Australian jobs at Koolyanobbing that were set to be lost with the departure of Cliffs.

By the end of this year, we will have operated Koolyanobbing for six and a half years, exported almost 45 million tonnes via the Port of Esperance and spent $4.2 billion running our Yilgarn operation, exceeding our commitments. I want to thank everyone whose hard work and dedication over the past 13 years made this challenging operation a great success.

Mineral Resources shares are down 19% over the last 12 months.

The post Mineral Resources shares fall on big iron ore news appeared first on The Motley Fool Australia.

More reading

• Buy Rio Tinto and these 4 ASX mining stocks in June
• Don’t listen to the bears! Buy this ASX mining stock
• Guess which popular ASX 200 mining stock could crash over 30%
• Is it time to cash in these 2 ASX large-cap stocks?
• Mineral Resources shares race higher on $1.3b asset sale

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.