Author: openjargon

The All Ordinaries Index (ASX: XAO) is up a healthy 0.7% today, but ASX All Ords stock Melbana Energy Ltd (ASX: MAY) isn’t joining in the rally.

Shares in the oil and gas company closed yesterday trading for 6.6 cents. In morning trade on Tuesday, shares were swapping hands for 3.6 cents apiece, down a precipitous 45.4%. The share price has since regained some of those losses, trading for 3.9 cents apiece at the time of writing, down 40.9%.

Here’s what’s putting the ASX All Ords stock under heavy selling pressure.

What did the ASX All Ords stock report?

The Melbana Energy share price is crashing after the company released an update after market close yesterday on its appraisal well Alameda-3.

The ASX All Ords stock holds a 30% interest in and is the operator of Block 9 PSC, an oil project located onshore in Cuba, where the well is situated.

On 9 June, the company commenced a flow test of the Marti reservoir, penetrating the Alameda-3 well.

As you can likely guess by the cascading share price, all did not go well with the latest testing.

Melbana Energy noted that despite good indications of fracturing from wireline logs and high reservoir pressures, “results of the test were not as expected”.

The ASX All Ords stock took two stabs at flowing the well but said that both times it did not achieve the complete removal of drilling mud and downhole fluids from the test string. And oil did not flow to surface.

On the plus side, Melbana reported recovering oil on reverse circulation of the DST string, demonstrating the presence of oil very deep on the structure.

The company has ruled out mechanical blockage and suspects the lack of flow is due to emulsions in the lower portion of the test string. It has now suspended the Marti reservoir section while it awaits the results of the latest data analysis.

Melbana will now conduct tests on the shallower Alameda formation.

What did management say?

Commenting on the flow test results sending the ASX All Ords stock plunging today, Melbana Energy executive chairman, Andrew Purcell, said:

The logs we have obtained in the Marti formation show excellent fracturing and the down hole pressure is very high. This is consistent with what we encountered here last time but, so far, we’ve been unable to get clean flow to surface.

There may have been a reaction between the different fluid system we are using this time (which has delivered excellent well control) and the reservoir so we’re going to pause this test whilst we study the samples and data we’ve obtained and get on to testing the shallower Alameda formation in the meantime.

With today’s intraday losses factored in, the ASX All Ords stock is down 56% over 12 months.

The post Why did this ASX All Ords stock just crash 45%? appeared first on The Motley Fool Australia.

More reading

• Buy ’em now! Brokers name 3 ASX All Ords shares to add to your portfolio
• Insiders are buying these ASX shares after selloffs
• Should investors be bullish about BHP shares with the FY25 outlook?
• ASX healthcare stock surges 11% on ‘incredibly valuable’ FDA news
• Nvidia jumped 27% after its stock split announcement. Can Broadcom beat it?

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 BHP Group Ltd (ASX: BHP) share price has fallen 15.59% since the start of 2024. With the changing economic picture, investors may be wondering whether FY25 can reignite things for the ASX mining share.

In the last few weeks, BHP has attempted to take over the UK miner Anglo American, but those offers were knocked back, and now BHP shares are trading at a near 52-week low.

The price of the resource is usually a key factor in the profitability and success of commodity stocks like BHP. Let’s examine what the outlook is for BHP.

Iron ore price forecast to recover

I believe the iron ore outlook is key for BHP because the iron division normally generates the most profit for the ASX mining share.

June 2024 has seen the iron ore price fall to US$106 per tonne, the lowest in two months and much lower than the start of 2024 when it was above US$140 per tonne.

The recent decline in June has been, according to Trading Economics, due to pessimistic iron ore demand expectations with China. Trading Economics noted Dexin China, a property developer, has been ordered to liquidate by a Hong Kong court just one year after a restructuring was approved. It’s the latest in a string of Chinese developers to be wound up.

Trading Economics said this liquidation “added to doubts over a potential recovery” for the sector amid Chinese consumer weakness and “plunging home demand” significantly denting home sales in China. There has been a 34% year over year plunge in sales from the 100 largest Chinese constructors.

These developments have increased expectations of low iron ore demand. However, the Chinese government has proposed a number of measures to support distressed property developers and help reduce the country’s rising housing inventory.

However, Trading Economics is forecasting that the iron ore price can recover based on its global macroeconomic models and analyst expectations. In 12 months, it expects the iron ore price to reach US$125.97 per tonne, an increase of almost US$20 per tonne.

If that forecast of a higher iron ore price comes true, it could significantly increase BHP’s short-term profitability and help support BHP shares.

Strengthening view on the copper price

If BHP can grow its copper exposure, then copper could become a more important element for the ASX miner in the future. It wanted to buy Anglo American for the copper mines, so it will have to find another source of copper growth.

Analysts at Macquarie recently increased their forecast for the copper price for 2025 by 9% to US$9,575 per tonne. This price would represent a higher price than most of the past decade, according to Statista.

FY25 profit forecast

In terms of BHP’s 2025 annual numbers, the broker UBS has forecast BHP to generate US$55.5 billion of revenue, US$0.5 billion more than what’s forecast for FY24.

UBS has suggested BHP could generate earnings before interest and tax (EBIT) of US$23.6 billion in FY25, which would represent an increase of more than US$7 billion compared to expectations of US$16.1 billion of EBIT in FY24.

The broker has forecast BHP could generate US$13 billion of net profit after tax (NPAT), which would be approximately US$400 million more than FY24’s estimated NPAT of US$12.6 billion.

UBS suggests BHP could pay an annual dividend per share of US$1.54 in FY25, which is US 17 cents more than the projected payout of US$1.37 in FY24.

It seems analysts are expecting FY25 to be a better year for BHP shares than FY24.

The post Should investors be bullish about BHP shares with the FY25 outlook? appeared first on The Motley Fool Australia.

More reading

• 3 lower-risk ASX shares I think are perfect for beginners
• Are BHP or Wesfarmers shares a better buy?
• Top brokers name 3 ASX shares to buy next week
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25
• 2 outstanding ASX 200 shares to buy and hold for a decade

Motley Fool contributor Tristan Harrison 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. 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.

Race Oncology Ltd (ASX: RAC) shares are roaring higher on Tuesday morning.

In early trade, the ASX healthcare stock is up 11% to $1.94.

Why is this ASX healthcare stock surging?

Investors have been buying the clinical stage biopharmaceutical company’s shares this morning after it received a major boost in the United States.

According to the release, the United States Food and Drug Administration (FDA) has extended Rare Paediatric Disease Designation (RPDD) to RC220 bisantrene for the treatment of childhood (paediatric) subtypes of acute myeloid leukemia (AML).

This isn’t the first time the company has been granted this important designation. RPDD was previously granted by the FDA to RC110 bisantrene in 2018.

The company notes that RPDD is granted for new treatments of serious or life-threatening diseases which affect fewer than 200,000 people in the United States and which primarily affect individuals less than 18 years of age.

Approximately 70% of rare diseases are exclusively paediatric in onset, with 95% of rare diseases having no approved treatments.

What are the advantages?

The ASX healthcare stock explains that RPDD qualifies a sponsor eligible to receive a Priority Review Voucher (PRV) from the FDA at the time of marketing approval or authorisation for drug in the paediatric rare disease area.

In addition, the RPDD for paediatric AML may enable Race Oncology to be eligible to receive a PRV that can be redeemed for an accelerated 6-month review of RC220 bisantrene or any other new drug application submitted to the FDA.

Another positive is that granted PRVs may also transferred or sold to other companies for use in the same manner on the secondary market. And these are certainly very valuable.

Management highlights that the reported purchase prices of PRVs to third parties on the open market have averaged more than US$100 million. Two PRVs have been sold in recent times for US$110 million.

‘Incredibly valuable’

Race Oncology’s CEO, Dr Daniel Tillett, was pleased with the news. He said:

US FDA RPDD is incredibly valuable as not only does it offer eligibility for the award of a PRV, but the ability to work with passionate clinicians and regulators to bring help to children and adolescents facing an enormously challenging disease with few effective treatment options.

The ASX healthcare stock’s chief medical officer, Dr Michelle Rashford, adds:

There is a need for new medicines designed to treat these rare childhood cancers which can be devastating for families. The US government has created incentives like the Priority Review Voucher scheme to encourage companies to invest in research and clinical studies in paediatric cancers. To be able to contribute to better treating childhood cancers like paediatric AML by collaboratively working with a dedicated international paediatric cooperative group would be very rewarding.

The post ASX healthcare stock surges 11% on ‘incredibly valuable’ FDA news appeared first on The Motley Fool Australia.

More reading

• Why Arizona Lithium, Bapcor, Race Oncology, and Tower shares are pushing higher

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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Investors went wild for Nvidia‘s (NASDAQ: NVDA) stock split. 

Shares of the artificial intelligence (AI) chip leader jumped 27% from the stock split announcement on May 22 to the execution of the split on June 7.

The gains were enough to put Nvidia past the $3 trillion market cap mark and within a hair of becoming the most valuable company in the world. (It’s in a close three-way race with Apple and Microsoft.) While a strong first-quarter earnings report from Nvidia also helped give the stock a boost, the stock split seemed to be the main reason for the 27% pop. Shares continued to march higher after the earnings report, and even gained another 9% in the week after the split went into effect.

Now, fellow chip stock Broadcom (NASDAQ: AVGO) is taking a turn. Following Nvidia’s 10-for-1 stock split, Broadcom announced a similar 10-for-1 split when it reported fiscal second-quarter earnings after hours on June 12. Broadcom’s stock split is set to go into effect on July 15.

Investors seem to like the move. Shares of Broadcom, which may be best known for its networking chips, have already jumped 16% in the two days since the announcement.

Broadcom was due for a stock split

Broadcom shares now trade above $1,700, higher than Nvidia was before its stock split. This is one of the highest share prices on the market.

In the announcement, management said the stock split was intended to “make ownership of Broadcom stock more accessible to investors and employees.”

Since it was acquired by Avago (which took the name Broadcom) in 2016, the company hasn’t split its stock, though the old Broadcom split its stock three times between 1999 and 2006.

While the share price appreciation is one reason for the stock split, Broadcom’s growth potential in the generative AI era offers another reason for the split.

Broadcom acquired virtualization software specialist VMWare late last year, and VMware has been the primary driver of its growth. Revenue jumped 43% in the second quarter to $12.5 billion, ahead of estimates at $12 billion, though without VMware, revenue rose 12%.

Management also said revenue from AI products reached $3.1 billion, representing roughly a quarter of total revenue. Management said demand from cloud infrastructure companies for both networking and custom accelerators is strong. It now expects networking revenue to grow 40%, compared to its earlier forecast of 35%, due to AI demand. It also raised its full-year revenue guidance from $50 billion to $51 billion, $11 billion of which would be AI revenue.

Is Broadcom a buy?

With or without the stock split, Broadcom looks like a smart long-term stock to own. The company has a long history of successfully integrating acquisitions and cutting costs, and it looks poised to do that again with VMware.

Meanwhile, the company might not have as much exposure to AI as Nvidia, but its competitive strengths in areas like networking and custom ASIC chips are becoming apparent. For example, seven of the largest eight AI clusters in deployment today use Broadcom Ethernet solutions.

Broadcom stock has soared in recent months so some of the growth in AI is baked into the price. But its financials also got a boost from the VMware acquisition, which is giving profits a significant boost.

Buying Broadcom on the stock split alone isn’t a good idea, but the split could help push shares higher in the coming months. As enthusiasm for AI stocks continues to percolate, Broadcom deserves to gain with the broader sector, as it’s clearly benefiting from increasing demand for generative AI. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nvidia jumped 27% after its stock split announcement. Can Broadcom beat it? appeared first on The Motley Fool Australia.

More reading

• 3 reasons to buy Nvidia like there’s no tomorrow (Hint: The stock split Isn’t 1 of them)
• 5 Reasons Nvidia isn’t in an AI-fueled bubble
• 2 reasons to buy Nvidia after the stock split (and 1 reason to sell)
• With nothing in my savings account, I’d use Warren Buffett’s golden rule to build wealth
• Which ‘other’ US AI stock is soaring this week?

Motley Fool contributor Jeremy Bowman has positions in Broadcom. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Sun Silver Ltd (ASX: SS1) share price is catching the eye of investors on Tuesday morning.

At the time of writing, the ASX mining stock is up a sizeable 16% to 53 cents.

Why is this ASX mining stock rocketing?

Investors have been fighting to get hold of the silver and gold explorer this morning after it released an update on the Maverick Springs Silver-Gold Project in Nevada, United States.

According to the release, the company has identified an outstanding high-grade target zone within the north-western section of the “globally significant” project.

The ASX mining stock notes that the high-grade target zone was defined as part of an ongoing comprehensive review of historical data, drill material, and recent field activities. During these reviews, the company’s team has uncovered exceptional high-grade silver intervals in multiple historic drill-holes of up to 6,216g/t Silver (Ag).

Management highlights that these zones are significant as they lie on the north-western boundary of the defined mineralised zone. Furthermore, the grades and intercept widths are significantly larger than the average grades and intercepts of the current JORC modelled mineral resource.

In addition, recent fieldwork has identified rocky outcrops and pathfinder elements up to 1.2 km from the current defined mineralisation boundary in the North-West. It believes that this supports the theory that potential resource extensions may be located in this area.

But it gets better. Management points out that the absence of rocky outcrops within the current mineralised zone excites the team about the possibility of surface mineralisation in the north-west area of the property.

Sun Silver’s exploration team is now finalising drill-hole locations to target the high-grade zone as well as extensional targets along trend.

It notes that definition and mapping of these high-grade intercepts near the north-western corner has guided the exploration team in targeting continuation of mineralisation along-trend but also focusing on higher grade areas as part of its inaugural drilling campaign.

‘Boosted confidence’

The ASX mining stock’s executive director, Gerard O’Donovan, was very pleased with the news. He said:

Defining this high-grade zone and generating inaugural drill targets validates our diligent analysis of crucial data and drill information at Maverick Springs. Mapping high-grade results near the north-western border of the current Resource has boosted confidence in potential for extension of mineralisation beyond defined boundaries and the potential for discovering higher grades. We look forward to testing these theories in our upcoming inaugural drill campaign.

The post Guess which ASX mining stock is rocketing 16% on a new discovery appeared first on The Motley Fool Australia.

More reading

• ASX healthcare stock surges 11% on ‘incredibly valuable’ FDA news
• Nvidia jumped 27% after its stock split announcement. Can Broadcom beat it?
• 2 ASX dividend shares offering over 5% yield
• 3 winning tips both Warren Buffett and Peter Lynch recommend
• These beaten down ASX lithium stocks could rise 35% to 85% in 12 months

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.

In the world of investing, dividends are like the steady heartbeat of a healthy portfolio. They provide a regular income stream, offering a cushion against market volatility.

Are you seeking some reliable ASX dividend shares with impressive yields? Read on to explore two ASX shares currently offering dividend yields of over 5%.

Metcash Ltd (ASX: MTS)

Where do you shop for groceries these days? Surely, Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) are the main ones that come to mind.

In addition to these two retail giants, IGA Supermarkets are also doing well, with over 1,400 stores nationwide.

Furthermore, IGA owner Metcash shares are trading cheaper than its bigger peers. Using earnings estimates by S&P Capital IQ:

• Metcash shares are trading at 13x FY25 estimated earnings
• Woolworths shares are trading at 23x FY25 estimated earnings
• Coles shares are trading at 20x FY25 estimated earnings

Based on actual dividends paid over the past 12 months, Metcash offers a higher dividend yield than its peers.

• Metcash offers a fully franked dividend yield of 5.9%
• Woolworth offers a fully franked dividend yield of 3.2%
• Coles offers a fully franked dividend yield of 3.9%

Its 1H FY24 results were mixed. While revenue, net of charge-through sales, grew by 1.3% from a year ago to $7.8 billion, its underlying operating profit decreased 3.4% to $246.5 million. Underlying net profit after tax was down 10.9% to $142.5 million.

With that said, in the same report, Metcash provided a positive trading update for the second half. For the first four weeks of 2H FY24, food sales, excluding volatile Tabacco products, increased by 4.8%, while hardware and liquor sales were up 2.4% and 1.5%, respectively.

The Metcash share price closed Tuesday at $3.72 after falling 4% over the past month.

HomeCo Daily Needs REIT (ASX: HDN)

HomeCo is a property trust focused on owning and managing a portfolio of properties that cater to everyday consumer needs. The real estate investment trust (REIT) currently manages about 1,200 tenants across over 50 properties, serving major brands like Woolworths, Coles, Bunnings, KFC, and more.

In 1H FY24, the REIT boasted robust leasing fundamentals, with over 99% occupancy and rent collection. Funds from operations (FFO) increased by 1% from a year ago to $89.4 million, or 4.3 cents per share (cps) on a unit basis. The trust distributes nearly 98% of its FFO, or 4.2 cps for 1H FY24, in accordance with the REIT’s distribution requirement.

The annual distribution is 8.4 cps, yielding 6.8% at the current security price of $1.22. Although there’s no franking credit attached to it, this is a pretty generous yield.

The trust appears undervalued based on its net asset value. Its net assets were valued at $3.1 billion as of 31 December 2023. This is $1.44 per unit of security, meaning its current security price is at a 16% discount to its asset value.

Morgans also recently recommended HomeCo Daily Needs REIT to buy due to the resilience of its cash flows and its exposure to accelerating click and collect trends.

The HomeCo Daily Needs REIT unit price closed at $1.22 on Monday after falling 3.17% over the past month.

The post 2 ASX dividend shares offering over 5% yield appeared first on The Motley Fool Australia.

More reading

• Where Aussies are spending their money, and the ASX shares that could benefit
• Here are the top 10 ASX 200 shares today
• 3 ASX shares trading below their book values
• 3 lower-risk ASX dividend shares for retirees
• These buy-rated ASX dividend stocks offer 6%+ yields (and plenty of upside)

Motley Fool contributor Kate Lee 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 HomeCo Daily Needs REIT and Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Navigating the stock market can feel like trying to find your way through a complex maze. It’s easy to get lost amidst the twists and turns of market trends, financial jargon, and endless investment options.

However, the insights of investment legends like Warren Buffett and Peter Lynch can illuminate the path, making the journey much less daunting.

These financial experts advocate for simple yet effective strategies that any investor can embrace to enhance their investment outcomes.

Think long term

Buffett and Lynch’s wealth has been built on the principle of holding their investments over extended periods.

Warren Buffett famously said his favourite holding period is forever. Peter Lynch also noted the real key to making money in stocks is not to get scared out of them.

They recommend against the temptation of constant buying and selling in reaction to the market’s immediate fluctuations. If you’ve chosen a solid company at a fair price, allow your investment the time it needs to mature. While the market is inherently volatile, fundamentally strong companies tend to appreciate in value over the long haul.

Just consider the following two charts to see the result of long-term investing. Betashares Nasdaq 100 ETF (ASX: NDQ) shares have more than quadrupled since the ETF’s listing in May 2015. This is approximately an 18% growth every year on average.

The Vanguard Australian Shares Index ETF (ASX: VAS) share price rose from $70 to $95.82 over the past 10 years, implying a cumulative average annual return (CAGR) of about 3%. But this isn’t too bad considering its generous dividend payment of $3.74 over the last 12 months, yielding 3.9% at the current share price. Adding the capital growth and dividend yields, its total annual return is close to 7%.

Invest in what you know

Focus on businesses or sectors within your area of understanding. You don’t have to be an authority, but a solid understanding of how a company operates and its keys to success is vital.

Consider the products you enjoy or the services you find indispensable. If you have faith in these, they might be viable investment opportunities.

Your next big idea may come from where you work. You may be a plumber and like particular piping products from certain brands. Or you may be a medical professional and prefer to use products or systems from one company.

This strategy minimises risk by keeping you within your comfort zone.

Seek quality at a fair value

It’s a common error to hunt for cheap stocks thinking they are bargains. Buffett and Lynch encourage a focus on the intrinsic quality of a company and its potential for long-term growth.

Aim to discover outstanding companies at reasonable prices, rather than just any company at a discount. This approach entails a bit of research to ascertain the real value of a company and patience to invest at an opportune, fair cost.

Washington H Soul Pattinson & Company Ltd (ASX: SOL) may be in that sweet spot today after a 10% drop in the share price over the past three months, as my colleague Tristian highlighted. The company is a consistent dividend payer, offering a fully franked dividend yield of 2.8%.

Foolish takeaway

Investing wisely doesn’t have to be overly complex. These strategies might seem simple, but they’re powerful tools for creating a successful investment portfolio.

The post 3 winning tips both Warren Buffett and Peter Lynch recommend appeared first on The Motley Fool Australia.

More reading

• Why these strong ASX ETFs could be top long term picks
• 2 ASX shares with shareholder-friendly policies
• Top ASX AI stocks to buy in June 2024
• Records tumble! Hot ASX ETFs smash all-time highs again on Friday
• Brickworks share price jumps on big Soul Patts news

Motley Fool contributor Kate Lee 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 BetaShares Nasdaq 100 ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The lithium industry has been a tough place to invest in recent times.

But if you believe that the tide will soon change, then it could be worth taking a look at the three ASX lithium stocks listed below.

That’s because they have been named as buys and tipped to rise materially from current levels. Here’s what analysts are saying about them:

Arcadium Lithium (ASX: LTM)

Bell Potter remains very positive on this lithium giant. It likes the miner due to its diversified operations, which provide exposure to various lithium types. In addition, it highlights the company’s strong production growth potential. It said:

LTM provides the largest, most diversified exposure to lithium in terms of mode of upstream production, asset locations, downstream processing and customer markets. It is a key large-cap leverage to lithium prices and sentiment, which we expect to improve over the medium term. The group has a strong balance sheet and growth portfolio.

The broker has a buy rating and $9.50 price target on its shares. This implies potential upside of approximately 85% for investors.

IGO Ltd (ASX: IGO)

Over at Goldman Sachs, its analysts are positive on battery materials miner IGO despite being bearish on lithium.

The broker likes IGO due to the low costs of its Greenbushes operation. It feels this leaves IGO well-positioned in the current environment of low prices. It commented:

Greenbushes is the lowest cost lithium asset in our coverage. Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate). We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects.

Goldman Sachs has a buy rating and $8.10 price target on IGO’s shares. If the ASX lithium stock rose to that level, it would mean a return of 35%.

Liontown Resources Ltd (ASX: LTR)

Analysts at Bell Potter are also very positive on this lithium developer which is on the cusp of becoming a fully-fledged miner.

Liontown’s Kathleen Valley (KV) lithium project is due to begin roaring in the middle of the year, which means it is perhaps just weeks away from producing the battery making ingredient.

Bell Potter thinks very highly of the KV project. It said:

100% owned KV lithium project remains highly strategic in terms of its stage of development, long mine life and location. LTR has offtake contracts with top tier EV and battery OEMs (Ford, LG Energy Solution and Tesla). Hancock Prospecting has a 19.9% interest in LTR. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.

The broker currently has a speculative buy rating and $1.85 price target on the ASX lithium stock. This suggests that upside of 85% is possible from current levels.

The post These beaten down ASX lithium stocks could rise 35% to 85% in 12 months appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today
• Here are the top 10 ASX 200 shares today
• 2 ASX shares to buy that are at 52-week lows
• 3 ASX lithium stocks to buy in June 2024

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 Goldman Sachs Group. 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-listed exchange-traded funds (ETFs) can expose investors to sectors and companies that Aussies normally would need to look overseas for.

The infrastructure sector is responsible for the backbone of the US economy. Plenty of businesses are involved in owning and operating infrastructure, which can be good investments.

The US is the world’s biggest economy and more than 330 million people live there. However, according to the ETF provider Global X, the US is in “dire” need of infrastructure upgrades, with at least US$3.8 trillion ($5.76 trillion) worth of additional investment to “adequately repair existing infrastructure and keep pace with economic expansion.”

Global X also said a growing driver of demand for infrastructure investment is the increased frequency of natural disasters. In 2023, the US reportedly experienced a record-breaking 28 weather and climate disasters, each costing more than US$1 billion.

Which ASX ETFs can be used to take advantage?

Some businesses are involved with infrastructure projects’ construction, engineering, material procurement, transportation, and equipment distribution processes.

These companies can significantly benefit from the increased expenditure on US infrastructure from governments and privately-funded infrastructure projects.

The Global X US Infrastructure Development ETF (ASX: PAVE) invests in US-domiciled companies to capture the value of growing spending in the world’s largest economy.

Some businesses inside the PAVE ETF include Eaton Corp, Trane Technologies, Quanta Services, Martin Marietta Materials, Emerson Electric and Parker Hannifin. It has a total of approximately 100 holdings.

In terms of risks, Global X noted that these companies “typically face intense competition and can be adversely impacted by shifts in government regulations and actions.”

Do other funds provide infrastructure exposure?

Other ASX ETFs and investments can also provide exposure to global infrastructure. The US economy’s size leads to those funds usually having a large weighting to US shares.

Examples include Vanguard Global Infrastructure Index ETF (ASX: VBLD) (with a 68.8% US weighting), VanEck FTSE Global Infrastructure (Hedged) ETF (ASX: IFRA) (with a 57.2% US weighting) and Magellan Infrastructure Fund (currency hedged) (ASX: MICH) (with a 38% US weighting).

While these ASX ETFs have a smaller allocation to US infrastructure, they’re also not targeted at the new spending on infrastructure in the country. Instead, many of the businesses in the portfolios I mentioned have existing assets that are typically generating strong cash flows for shareholders and are hard to replicate.

The post How to get exposure to a potential $5.7 trillion US sector with ASX ETFs appeared first on The Motley Fool Australia.

More reading

• 3 winning tips both Warren Buffett and Peter Lynch recommend
• These beaten down ASX lithium stocks could rise 35% to 85% in 12 months
• Bell Potter says these ASX shares are strong buys
• Buy these ASX shares for a winning retirement portfolio
• Guess which ASX 300 share could rise over 50%

Motley Fool contributor Tristan Harrison 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 Emerson Electric. The Motley Fool Australia has recommended Magellan Infrastructure Fund. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.