Author: openjargon

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

The Nvidia (NASDAQ: NVDA) stock story keeps getting better, thanks primarily to the incredible demand for the company’s graphics processing units (GPUs) and related technology that enable artificial intelligence (AI) capabilities. It’s not too late to buy shares. Indeed, I just outlined 25 reasons to buy Nvidia stock now.

But there’s a key question worth addressing that doesn’t get much attention: When should you consider selling shares of Nvidia stock?

There are no “right” answers. Investors vary in terms of financial and personal factors. That said, below are three solid reasons for any investor to consider selling shares of Nvidia stock.

1. When CEO Jensen Huang no longer leads the company

Investors should consider selling at least some of their Nvidia shares when Huang no longer leads the company he co-founded in 1993. He reportedly turned 61 earlier this year and seems to love his work, so barring any health issues, he could be at Nvidia’s helm for a good number of years more. To say that Huang will be difficult to replace is an understatement.

Nvidia is many years ahead of the competition in AI-enabling technology thanks to Huang’s foresight. Starting more than a decade ago, he began to steadily use profits from Nvidia’s once-core computer gaming business to position the company to be in the catbird seat when the “AI Age” truly arrived. And arrive it did in late 2022, when generative AI made a big splash on the tech scene with OpenAI’s release of its ChatGPT chatbot. Generative AI greatly expands the potential applications for AI.

2. If and when the company’s GPUs seem to be losing their AI-enabling “gold standard” status

A more exact (but too long) subheading is the above plus the following tacked on: “And if the company fails to develop whatever tech is knocking its GPUs from their lofty position.”

Nvidia’s GPUs are by far the favored chips for speeding up the training of AI models and the running of AI applications in data centers. Estimates vary, but it’s widely projected that the company has more than a 90% share of the market for AI GPU chips for data centers, and more than an 80% share of the overall data center AI chip market.

This is a fantastic market to control. Advanced Micro Devices CEO Lisa Su projects that the global data center AI chip market will reach $400 billion in revenue by 2027, which would equate to a compound annual growth rate (CAGR) of more than 72% from its estimated size of $45 billion in 2023.

Nvidia’s data center business accounted for about 87% of its total revenue last quarter, and some greater (but unknown) percentage of its total profits. So, investors should consider selling shares if signs start pointing to the company’s tech being displaced as the gold standard for enabling AI processing in data centers.

How will we know? What signs will there be?

Other than staying abreast of the general space, there are two specific things investors can do. First, listen to Nvidia’s quarterly earnings calls. Besides being interesting, Huang and CFO Colette Kress are very forthright. Recordings of these calls are posted on Nvidia’s investor relations site, so you can listen at your leisure.

Second, monitor Nvidia’s margins — gross, operating, and profit, with special attention to gross margin. A company’s margins will steadily decline when it’s losing its competitive advantages. The key word is “steadily.” Occasional short-term declines or ups and downs aren’t usually reason for concern.

Below is Nvidia’s 10-year margin history. There are ups and downs, but the overall trend has been decisively up. This is a winner of a margin profile chart. (I used trailing-12-month margins for all three margin types because this smooths out some of the quarterly ups and downs. But you can also use quarterly data, as that might be easier.)

Data by YCharts. Gross margin = gross profit/revenue. Operating margin = operating income/revenue. Profit margin = net income/revenue. Gross profit, operating income, net income, and revenue can all be found on a company’s quarterly income statements.

3. To rebalance your investment portfolio

Nvidia stock has performed amazingly well over the long term, and particularly since 2023. So, in the last year and a half, it has no doubt grown to account for a much larger percentage of many investors’ total portfolios.

No matter how terrific a company, it’s risky to have too many of your eggs in one basket. That’s especially true with technology stocks, which tend to be inherently more volatile than stocks of companies in more stable industries.

So, it makes good sense for investors to regularly — perhaps, quarterly or annually — rebalance their portfolio so no single stock becomes too large a holding relative to their total investments. “Too large” is highly subjective, so you’ll have to decide what percentage range you’re comfortable with. 

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

The post Nvidia stock is still a great buy — but when should investors sell shares? appeared first on The Motley Fool Australia.

More reading

• Prediction: This will be Nvidia’s next big move
• Is Nvidia stock a buy after the 10-for-1 stock split?
• Will Apple stock be worth more than Nvidia by 2025?
• Is Nvidia going to $5 trillion after its 10-for-1 stock split?
• 4 top ASX 200 stocks to buy now for the AI revolution

Beth McKenna has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices and Nvidia. The Motley Fool Australia has recommended Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are lucky enough to have $10,000 burning a hole in your pocket, then it could be worth putting it to work in the share market.

But would Woolworths Group Ltd (ASX: WOW) shares be a good option for these funds? Let’s see what an investment today could potentially turn into in one year.

Investing $10,000 into Woolworths shares

At present, the supermarket giant’s shares are changing hands for $32.50.

This means that if you were to invest $10,000 (and a further $10), you would end up owning 308 Woolworths shares.

Let’s now see what these shares could be worth this time next year.

According to a recent note out of Goldman Sachs, its analysts believe that now could be a great time to invest in the retailer.

In fact, your $10,000 investment could become worth significantly more if the broker is on the money with its recommendation.

It currently has a conviction buy rating and $39.40 price target on Woolies shares. If they were to rise to that level, those 308 units would have a market value of $12,135.20. That’s over $2,000 more than your original investment.

But wait, there’s more! Every six months, Woolworths shares a portion of its profits with shareholders in the form of dividends.

Goldman is expecting the company to pay fully franked dividends of $1.08 per share in FY 2024 and then $1.14 per share in FY 2025.

Let’s assume that this means dividends of $1.11 per share over the next 12 months (the final dividend of FY 2024 and the interim dividend of FY 2025). This would mean dividend income of $341.88 from those 308 shares.

In total, this brings the total return on investment to approximately $2,650.

Why invest?

Goldman believes that Woolworths shares are being undervalued by the market. Particularly given its It explains:

WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.

The post How much could a $10,000 investment in Woolworths shares become in one year? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• What is boosting the Treasury Wine share price on Thursday?
• Are Woolworths shares a bargain after falling 20%?
• If I buy 1,000 ANZ shares, how much passive income will I receive?
• Why QBE shares could deliver huge returns for investors that buy them today

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.

If you’re wanting to build an income portfolio, then it could be worth considering the four ASX dividend stocks listed below.

Here’s why analysts think these buy-rated shares could be excellent options for income investors right now:

Coles Group Ltd (ASX: COL)

The first ASX dividend stock that could be a buy is Coles. It is of course a supermarket giant with over 800 stores across the country. In addition, it has a liquor network comprising almost 1,000 stores across several brands.

Morgans is a fan and has an add rating and $18.95 price target on its shares.

As for income, the broker is forecasting fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $17.01, this will mean dividend yields of 3.9% and 4.1%, respectively.

Telstra Group Ltd (ASX: TLS)

Goldman Sachs is feeling positive on this telco giant and sees it as an ASX dividend stock to buy. Particularly given the low risk earnings and dividend growth that is expected in the coming years.

The broker expects this to support the payment of fully franked dividends of 18 cents per share in FY 2024 and then 18.5 cents per share in FY 2025. Based on the current Telstra share price of $3.53, this equates to yields of 5.1% and 5.25%, respectively.

Goldman has a buy rating and $4.25 price target on Telstra’s shares.

Transurban Group (ASX: TCL)

Analysts at Citi think that Transurban could be an ASX dividend stock to buy. It is a leading toll road operator, building and operating toll roads in Australia and North America. Among its portfolio are CityLink in Melbourne and the Eastern Distributor in Sydney.

Citi currently has a buy rating and $15.50 price target on its shares.

It is expecting dividends per share of 63.6 cents in FY 2024 and then 65.1 cents in FY 2025. Based on the current Transurban share price of $12.55, this will mean yields of 5.1% and 5.2%, respectively.

Universal Store Holdings Ltd (ASX: UNI)

A final ASX dividend stock that could be a buy is Universal Store. It is the youth fashion retailer behind the Universal Store, Perfect Stranger, Thrills, and Worship brands.

Morgans is positive on the company, noting that “UNI’s focus on offering high quality, fashionable apparel in a well-presented store environment with high levels of service is paying off.”

The broker expects this to underpin fully franked dividends per share of 26 cents in FY 2024 and then 29 cents in FY 2025. Based on the current Universal Store share price of $5.00, this will mean yields of 5.2% and 5.8%, respectively.

Morgans has an add rating and $6.50 price target on its shares.

The post Why Telstra and these excellent ASX dividend stocks could be buys appeared first on The Motley Fool Australia.

More reading

• Buying Coles shares? Here are key metrics you’ll want to know
• Analysts name 3 small cap ASX shares to buy for big returns
• 3 lower-risk ASX shares for beginner investors
• Buy and hold these ASX dividend shares until 2034
• Overinvested in BHP shares? Here are two alternative ASX dividend stocks

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Universal Store. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Transurban Group. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 healthcare stock Neuren Pharmaceuticals Ltd (ASX: NEU) has posted impressive gains over the past year but one director appears to still see value in today’s share price.

Neuren shares closed the session on Thursday at $19.31, up 2.6% for the day. The ASX 200 healthcare stock outperformed the benchmark S&P/ASX 200 Index (ASX: XJO), which rose by 0.44%.

Over the past year, the Neuren Pharmaceuticals share price has risen 48.3% while the ASX 200 has lifted just 8.6%.

So, it’s interesting to see one of the company directors ploughing more of his own funds into the ASX 200 healthcare stock despite this impressive price lift.

Director invests almost $100,000 in Neuren shares

Neuren Pharmaceuticals issued a notice to the ASX yesterday advising that director Joseph Basile has increased his stake in the company by 50%.

Basile bought 5,000 Neuren shares on-market on Tuesday through his self-managed super fund (SMSF) for $19.49 apiece, for a total consideration of $97,450.

He already owned 10,000 Neuren shares, so the purchase lifted his stake in the ASX 200 healthcare stock by 50%.

What’s the latest news from this ASX 200 healthcare stock?

The last piece of price-sensitive news from Neuren came on 27 May when the company announced top-line results from the Phase 2 clinical trial of its second drug candidate, NNZ-2591.

The drug treats Pitt Hopkins syndrome (PTHS), which is a neurodevelopmental condition that causes developmental delays. It causes moderate to severe intellectual disability, hyperventilation and/or breath-holding while awake, seizures, gastrointestinal issues, speech difficulties, and sleep disturbances.

The top-line results showed a “statistically significant improvement” across all four efficacy measures.

Neuren Pharmaceuticals CEO Jon Pilcher said:

We are very excited about the results of this first clinical trial in Pitt Hopkins patients. This underserved community has such urgent unmet need and we can now continue towards our goal of developing a first approved treatment.

The ASX 200 healthcare stock rocketed 15.7% on the day of the news.

PTHS is caused by the loss of one copy, or a mutation, of the TCF4 gene on the 18th human chromosome. The incidence of PTHS is estimated at between 1 in 11,000 people and 1 in 41,000 people.

Neuren develops drugs for serious childhood neurological disorders that have no or limited approved treatments.

In the United States, all of its drugs have the designation of ‘orphan drug’. Biotechs working on orphan drugs are given special incentives, such as longer exclusive marketing rights, to ensure they make a profit.

Neuren also has an orphan drug designation for NNZ-2591 in Europe.

Neuren Pharmaceuticals share price snapshot

This ASX 200 healthcare stock has flown 1,565% higher over the past five years.

This compares to an 18.3% gain for the ASX 200.

The post This ASX 200 healthcare stock is up 48% in a year, but one director is still buying! appeared first on The Motley Fool Australia.

More reading

• These ASX shares could rise 25% to 35%
• Why Cettire, Neuren, Peter Warren, and Qantas shares are falling today
• Which ASX biotech shares are pioneering the future of medicine?
• This ASX 200 stock can rocket to a record high: Broker
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Bronwyn Allen 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 Australian share market has historically provided investors with a return of approximately 10% per annum.

But that doesn’t mean that all ASX stocks rise by that level. Some will underperform and some will outperform the market.

And sometimes you will see shares that deliver mouth-watering returns that make the market return look minuscule.

The good news for investors with a high tolerance for risk is that analysts at Bell Potter see potential for one speculative ASX stock to do exactly this. In fact, they see scope for its shares to triple in value over the next 12 months.

Which ASX stock could rocket?

According to a note this morning, the broker believes that Meteoric Resources NL (ASX: MEI) shares could be extremely undervalued by the market.

In response to a revised resource estimate for the Capão do Mel (CDM) rare earths deposit at the Caldeira Project in Brazil, the broker has reaffirmed its speculative buy rating and 50 cents price target on its shares.

Based on its current share price of 16.5 cents, this implies that the ASX stock could rise 200% between now and this time next year.

What is the broker saying?

Bell Potter was pleased with the ASX mining stock’s resource estimate. It commented:

The M+I [measured and indicated] Resource at CDM defined 85Mt at 3,034ppm TREO, which included a high-grade core of 36Mt at 4,345ppm TREO using a 3,000ppm cut-off. Importantly, the high-grade zone we believe supports production over the first ~8 years (BPe). The scoping study, which was delayed until the release of the updated CDM Resource, is due for imminent release, and will be a major catalyst for the stock and broader ion adsorption/ ionic clay (IAC) projects. The updated resource for the entire Caldeira project increases to 619Mt at 2,538ppm TREO.

Its analysts then explain why they think investors should consider buying Meteoric Resources shares. The broker said:

We view the Caldeira project and MEI as being attractively positioned vs peers and maintain our valuation of $0.50/sh and Speculative Buy recommendation. We anticipate MEI will look to de-risk the project over the next 12 months, with the key catalyst being the release of the scoping study on its Southern projects. We currently estimate the market is factoring in less than the current depressed spot price for NdPr of ~US$50/kg, which differs significantly from our outlook of US$95/kg over the long term.

All in all, this could make it worth a closer look if you are wanting exposure to rare earths and have a high tolerance for risk.

The post Meet the speculative ASX stock that could rise 200% appeared first on The Motley Fool Australia.

More reading

• Small-cap expert reveals ASX mining stock with 150%+ upside

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.

Tesla (NASDAQ: TSLA) stock gained in Thursday’s daily trading session, with the electric vehicle (EV) innovator’s share price up almost 3% as of the close.

Tesla stock gained ground following indications that CEO Elon Musk’s latest compensation package is likely to be approved. After the market closed yesterday, Musk indicated that shareholders were poised to give the green light for a hotly contested pay package valued at roughly $56 billion. He also indicated that shareholders were voting in favor of moving the company’s place of incorporation from Delaware to Texas. Wall Street is apparently feeling bullish about both news items.

Musk’s big payday moves closer to reality, but there’s a catch

In 2018, Tesla board members approved a performance-based compensation package that would potentially award Musk with as much as $56 billion worth of company stock. But a Delaware judge struck down the pay package this January on the grounds that the company’s board had not shown that the compensation was fair or provided evidence that they had engaged in meaningful negotiations about the CEO’s pay. Shareholders have been voting on whether to reauthorize the deal.

While most of the votes on Musk’s pay package were submitted yesterday, a small remainder will be submitted later today. The pay package appears likely to pass, but some legal experts think that the Tesla CEO’s compensation will once again wind up being challenged in court.

What comes next for Musk and Tesla stock?

There’s no doubt that Musk’s leadership has been instrumental in Tesla’s incredible rise and stock performance. On the other hand, the EV company has been facing some significant challenges lately. Further complicating the question of Musk’s compensation, Tesla stock has seen big sell-offs this year despite an overall bullish backdrop that has powered explosive gains for many tech stocks.

TSLA data by YCharts

Valued at roughly 72 times this year’s expected earnings, Tesla continues to trade at highly growth-dependent multiples despite somewhat sluggish performance for the business. With the company facing pressure from the rise of Chinese EV makers and other players in the space, it may be hard to justify the company’s valuation when viewing it through the lens of a traditional automobile maker. But Musk has continued to invest heavily in innovation initiatives, and some investors are willing to assign a premium to the stock based on his vision and the company’s track record of disruption.

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

The post Why Tesla stock jumped today appeared first on The Motley Fool Australia.

More reading

• Why Telstra and these excellent ASX dividend stocks could be buys
• This ASX 200 healthcare stock is up 48% in a year, but one director is still buying!
• Meet the speculative ASX stock that could rise 200%
• Sell these ASX 200 stocks now: Goldman Sachs
• Is the 11% dividend yield from Yancoal shares too good to be true?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. Keith Noonan 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.

Now could be the time to sell the two ASX 200 stocks in this article.

That’s the view of analysts at Goldman Sachs, which have slapped sell ratings on them this morning.

Which ASX 200 stocks are sells?

The first stock that could be a sell is stock exchange operator ASX Ltd (ASX: ASX).

In response to its investor day update this week, the broker has reiterated its sell rating and $55.45 price target on its shares.

Based on its current share price of $58.14, this implies potential downside of 4.5% for investors over the next 12 months.

Commenting on the ASX 200 stock’s investor day event, the broker said:

Elevated Capex to persist at ~$160-180m p.a. across FY25 to FY27 implying ~$510m cumulative spend (at midpoint) across that 3 year period on CHESS, derivatives & trading + maintenance capex. We note that while ASX’s technology roadmap extends beyond FY27, ASX does guide to capex reducing into FY28. 2) D&A will continue to be a drag on earnings growth: ASX guidance implies ~$50m D&A charge in FY25. We think D&A will gradually increase in a staged manner based on ASX’s guided capex spend and as system releases go live through FY25-FY28+ using a useful life of about 7-10 years. We now forecast a more material increase in D&A by FY30 (assuming all major projects go live before then).

Reece Ltd (ASX: REH)

Another ASX 200 stock that has copped a sell rating is Reece.

This morning, Goldman has initiated coverage on the plumbing parts company’s shares with a sell rating and $23.35 price target. This implies potential downside of 12.1% for investors over the next 12 months.

The broker appears to believe the market is too optimistic on the company’s US expansion and feels it will take time to have a meaningful impact. It explains:

US provides growth optionality…over time. Limited geographic spread and low network density in a fragmented market supports store roll out growth opportunity with margin expansion to complement market growth over time. However, assessing the network density of competitors like Ferguson and Watsco suggests this is a long-dated opportunity. We forecast a 7% 3yr EBITDA CAGR (USD) for this segment.

In light of this and with the ASX 200 stock trading on higher than normal multiples, the broker feels it is fully valued today. It adds:

REH is trading in excess of its historical average premium to the S&P ASX200 (0.6x standard deviations above its 5yr average). Compared to its peer set, REH is also trading above its historic premiums despite lagging the peer set on metrics such as EBIT margins and EBIT growth (note we forecast a 5% EBIT CAGR for REH, in line with Visible Alpha consensus). We initiate at Sell.

The post Sell these ASX 200 stocks now: Goldman Sachs appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Guess which ASX 200 stock crashed 8% on Thursday
• Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today
• 3 ASX shares with high insider ownership
• Why Goldman Sachs just slapped a sell rating on this ASX 200 stock

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.