Stock Pick

Author: openjargon

  • Did you catch the latest rumour about Wesfarmers shares?

    Sad shopper sitting on a sofa with shopping bags.

    Wesfarmers Ltd (ASX: WES) shares are down around 0.5% today, though the stock is noticeably outperforming the market. The S&P/ASX 200 Index (ASX: XJO) has fallen a nasty 1.5% as some investors expect the US Federal Reserve to delay its first interest rate cut.

    The news of the day regarding Wesfarmers stock, albeit only speculation at this stage, is that the company’s Catch business may be headed for the chopping block. Wesfarmers may be best known as the owner of Bunnings, Kmart, and Officeworks, but it also owns some smaller businesses, including e-commerce player Catch.

    The company acquired Catch approximately five years ago for $230 million as it looked to expand its online shopping capabilities.

    Catch to be dropped?

    According to reporting by The Australian, there are “suggestions” Wesfarmers may be considering the future of the e-commerce business.

    The purpose of owning Catch was to assist with its overall digital retail capabilities and help grow earnings.

    The Australian noted the Catch business has been making losses for years, leading to a “view in the market” that Wesfarmers boss Rob Scott may want to call it quits on the online shopping business.

    Recent performance and improvement initiatives

    Whether a divestment is imminent or not, Wesfarmers has been working hard to improve the Catch business.

    In its FY24 first-half result, Wesfarmers reported it had reduced losses made by Catch. Catch’s HY24 earnings improved to a $41 million loss, from a $108 million loss in HY23. However, it also reported Catch’s gross transaction value fell by 29.7% to $317 million which was “driven by [a] planned reduction to [the] in-stock range”.

    Catch has reduced its first-party (1P) range – products it sells directly on behalf of other businesses – by 70% to 28,000 products, focusing on profitable, in-demand demand categories.

    The adjustments improved unit economics, and the online retailer is continuing to reduce the cost base and “develop enhanced marketplace capabilities.” It also reduced its headcount by 50% over the year to 31 December 2023.

    The warehouse cost per order was reduced by around 30% in the first half of FY24, with lower freight costs per order and faster deliveries to customers. Wesfarmers also boasted that Catch has more efficient paid marketing.

    Catch is looking to shift from a 1P business to an asset-light, third-party (3P) business (where sellers are responsible for holding and despatching stock). This can provide greater customer choice and seller competition, while returning to Catch’s “deals heritage”.

    Wesfarmers stated the online retailer can leverage Flybuys and Wesfarmers’ paid service, OnePass, to drive free customer traffic and reduce customer acquisition costs.

    The company also believes it can develop new revenue streams, such as “fulfilled by Catch”, retail media and last-mile fulfilment solutions.

    Wesfarmers share price snapshot

    Since the start of 2024, the Wesfarmers share price has risen by around 16%.

    The post Did you catch the latest rumour about Wesfarmers shares? appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Wesfarmers Limited right now?

    Before you buy Wesfarmers Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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

  • The secret recordings of Alito and Roberts will likely backfire

    United States Supreme Court Chief Justice John Roberts (L) and Associate Justice Samuel Alito (R) pose for an official portrait.
    Supreme Court Chief Justice John Roberts (L) and Associate Justice Samuel Alito (R) were captured in a secret recording made by a documentary filmmaker pretending to be a Catholic conservative.

    Alex Wong via Getty Images

    • A documentary filmmaker secretly recorded SCOTUS justices Alito and Roberts at a recent event.
    • The tapes prompted criticism of the justices, but one legal expert told BI they could backfire.
    • Serious issues face the court, and the tapes could make the justices more secretive.

    Early Monday, Rolling Stone reported that a documentary filmmaker posing as a Catholic conservative created secret audio recordings of conversations with Supreme Court Justices John Roberts and Samuel Alito at an exclusive charity gala.

    Some critics questioned the ethics of Lauren Windsor's surreptitious recording, while others underscored how Associate Justice Alito's comments starkly contrasted with Chief Justice Roberts' responses to the undercover provocations.

    But the recordings, which come as the Supreme Court is wracked by ongoing scandals and plummeting public trust, may not result in any newfound transparency and could create the opposite: an even more secretive high court, one legal scholar told Business Insider.

    What the secret recordings captured

    The New York Times on Monday evening appeared to confirm the veracity of the recordings, in which Alito — who recently came under fire over an upside-down American flag seen outside his home in 2021 — seemed to endorse the idea that the US should return to being a country of "godliness" while casting doubt on the possibility of future compromise between liberals and conservatives.

    "One side or the other is going to win," Alito told Windsor at the event, according to both outlets. "There can be a way of working, a way of living together peacefully, but it's difficult, you know, because there are differences on fundamental things that really can't be compromised."

    Windsor, who has made a career of documenting left-wing movements like Occupy Wall Street and targeting conservatives with the website Project Veritas Exposed, continued to coax Alito, according to the audio, telling the justice she believed the solution would be "winning the moral argument."

    "Like, people in this country who believe in God have got to keep fighting for that, to return our country to a place of godliness," she can be heard saying.

    "I agree with you, I agree with you," Alito concurs.

    In contrast, Roberts' remarks appeared more measured. He rebutted Windsor's argument that the court should lead the country morally.

    "Would you want me to be in charge of putting the nation on a more moral path?" the chief justice said, according to the reports. "That's for people we elect. That's not for lawyers."

    Windsor told The Times that making the secret recordings was the only way she believed she could get answers to her questions.

    "I wanted to get them on the record," she told the outlet. "So recording them was the only way to have proof of that encounter. Otherwise, it's just my word against theirs."

    Why the recordings could backfire

    Jonathan Adler, an expert on the Supreme Court and law professor at Case Western Reserve University, told Business Insider that Windsor's recordings do not provide any new insight into how the justices interpret law. Instead, he said, they are an unhelpful distraction from significant issues facing the court.

    "This sort of thing is going to mean that the justices do things — like go to the Supreme Court Historical Society or equivalent, other institutions — less often," Adler said. "It will encourage the justices being more cloistered and more walled off from citizens, the legal community, and so on. And it's not clear why that would be good for the country or for the court or anything else."

    Much of what the justices said on tape, Adler said, can be gleaned from public speeches or their previous case rulings, which Adler noted are much more thoughtfully considered than spontaneous remarks made in response to a stranger trying to provoke a response.

    Instead, he said, the tapes now distract from the serious cases before the court about the scope of judicial power, the nature of presidential immunity, and issues like parental rights, gender identity, and the climate crisis.

    "I think it'd be much, much more fruitful if we were devoting time to helping people unpack and understand those questions and those issues — because that's what matters," Adler said. "I mean, whether or not Justice Alito thinks that the country's political or tribal divisions are likely to be solved anytime soon doesn't tell us very much."

    Representatives for the Supreme Court did not immediately respond to requests for comment from Business Insider.

    Read the original article on Business Insider

  • Russia has started sending female convicts to fight in Ukraine: report

    Russian servicewoman marching during the Moscow Victory Day parade on May 9, 2024.
    Russian servicewoman marching during the Moscow Victory Day parade on May 9, 2024.

    Bai Xueqi/Xinhua via Getty Images

    • Female convicts are joining Russia's war efforts against Ukraine, per The New York Times.
    • Inmates were promised pardons and a monthly salary of $2,000 during recruitment.
    • But this is the first time they are being sent to the battlefield after signing on last year.

    Russia's military is starting to tap into another source of manpower — female convicts.

    A group of female convicts were released from a prison near St. Petersburg last month to fight in Ukraine, The New York Times reported on Monday, citing two former inmates it had spoken to.

    According to The Times, roughly 10% of the prison's 400 inmates signed on with the military last year.

    Military recruiters had offered the inmates one-year contracts as combat medics, frontline radio operators, and snipers, per The Times.

    In addition to pardons, recruits would also receive a monthly salary of $2,000, The Times reported.

    This is the first time enlisted female convicts are reported to have been sent to join the fighting in Ukraine. The female inmates had remained in prison even after signing on last year, per The Times' interviews with former and current inmates.

    It's unclear if this release of female convicts is the start of a larger, nationwide program. Russia's defense ministry did not immediately respond to a request for comment from BI sent outside regular business hours.

    The Russian military's reliance on attrition warfare has seen it turn to unorthodox and controversial recruitment measures to fuel its war effort.

    Prison inmates have long been a staple in the Russian Armed Forces. Back in December 2022, the US Department of Defense estimated that the Russian mercenary organization, the Wagner Group, had around 40,000 prisoners serving on the front lines.

    Russia has recruited so many inmates that its prison population has plummeted significantly. Russia's Deputy Justice Minister Vsevolod Vukolov said in October that the country's prison population had plunged from 420,000 before the war to 266,000, a historic low, per The Washington Post.

    Earlier in March, a local official told lawmakers that some prisons had to be closed because of "a one-time large reduction in the number of convicts," per the Russian newspaper Kommersant.

    And it's not just inmates.

    Russian officials have begun setting their sights on the country's African migrants. African migrant workers and students have been threatened with deportation if they do not agree to fight in Ukraine, Bloomberg reported on Sunday.

    But funnelling its population into the military risks exacerbating Russia's already precarious labor market.

    In December, the Russian Academy of Science's Institute of Economics said that Russia's economy had a shortage of around 5 million workers.

    "Unemployment is 3%, and in some regions, it is even lower. This means there are practically no workers left in the economy," Russian Central Bank Gov. Elvira Nabiullina said in November.

    Read the original article on Business Insider

  • 4 top ASX 200 stocks to buy now for the AI revolution

    Happy woman and man looking at an iPad.

    Looking for some top S&P/ASX 200 Index (ASX: XJO) stocks to tap into the massive growth potential presented by the rapid rise of artificial intelligence (AI)?

    Read on!

    With an eye on that growth potential, shares in generative AI chip maker Nvidia Corporation (NASDAQ: NVDA) have soared 209% over the past 12 months. That gives the US tech giant a market cap of US$3.0 trillion!

    And AI has helped fuel some strong outperformance across the tech sector. Here in Australia, the S&P/ASX All Technology Index (ASX: XTX) is up 28% over 12 months, far outpacing the 9% gains posted by the ASX 200 over this same time.

    But you don’t have to stick to ASX 200 stocks in the tech space to potentially capture outsized gains from the mass adoption of AI.

    Below I look at four top companies outside of the tech space that Bell Direct market analyst Grady Wulff says offer investors attractive exposure to the booming growth of AI.

    ASX 200 stocks tapping into the AI revolution

    First up, we have real estate investment trust (REIT) Goodman Group (ASX: GMG).

    The ASX 200 stock has the potential to capitalise on AI by providing the fast-growing technology with the space it needs to do its thing. Namely data centres.

    Citing Goodman’s latest results, Wulff noted that as at 31 March:

    Goodman has $12.9 billion of development work in progress (WIP) across 82 projects with 40% of the WIP projects representing data centres currently under construction.

    Goodman’s global power bank increased by 0.3GW in Q3 to 4.3GW across 12 major global cities… The global expansion of GMG in the high-demand data centre market makes the industrial property REIT an attractive AI exposure investment opportunity in 2024.

    The Goodman share price is up by around 77% in a year.

    The second ASX 200 stock Wulff flags to benefit from the rollout of AI is biotech company Telix Pharmaceuticals Ltd (ASX: TLX).

    Telix “is leading the way in the use of AI, through its acquisition of Dedicaid in April 2023,” she said.

    According to Wulff:

    Dedicaid’s core asset is a clinical decision support software (CDSS) AI platform capable of rapidly generating indication specific CDSS applications from available data sets for use with specific types of imaging modalities.

    She added that AI could help drive efficiencies and trim Telix’s costs:

    AI has the ability to accelerate Telix’s testing and clinical trial scope by adding predictive AI capabilities to automate the classification of lesions and enhance efficiency in the imaging workflow … to reduce the high costs associated with such processes.

    The Telix share price is up around 55% in a year.

    This brings us to my third ASX 200 stock outside the tech space that could achieve significant benefits from AI; supermarket giant Coles Group Ltd (ASX: COL).

    Wulff said:

    Using AI, Coles has pioneered an AI journey that helps the company to predict the flow of units and even streamline the checkout process by scanning fresh produce that comes up immediately, saving the customer scrolling through pages upon pages of product options to find the correct item.

    She added that Coles is also employing AI technologies “to personalise the delivery of promotions and suggested purchases to customers through its Flybuys customers every week”.

    The Coles share price is down by around 6% in a year.

    Rounding off my list of ASX 200 stocks to buy now for the AI revolution is the biggest company on the index, BHP Group Ltd (ASX: BHP).

    Wulff pointed out that the Aussie mining industry is already employing AI “across a vast array of operations from safety to assay testing and more”.

    As for BHP, she said:

    BHP launched a collaboration with Microsoft to utilise AI and machine learning for improving copper recovery at the world’s largest copper mine, the Escondida Mine in Chile. Given copper’s growing use in the green energy transition globally, declining grades at existing copper mines and fewer new discoveries made, the use of AI and machine learning at the Escondida Mine unlocks greater production and value potential for BHP.

    BHP is also using AI to optimise and increase operation efficiencies in the loading process of iron ore exports from WA by reducing spillage and damages to rail infrastructure during times of unexpected surges in volumes.

    Shares in the ASX 200 mining stock are down around 2% in a year.

    The post 4 top ASX 200 stocks to buy now for the AI revolution appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Bhp Group right now?

    Before you buy Bhp Group shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bhp Group wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    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 Goodman Group, Nvidia, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Goodman Group, Nvidia, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Here’s the iron ore price forecast through to 2027

    A group of three men in hard hats and high visibility vests stand together at a mine site while one points and the others look on with piles of dirt and mining equipment in the background.

    When it comes to investing in the mining sector, three of the most popular options for investors are BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Fortescue Ltd (ASX: FMG) shares.

    These miners are popular because they have high quality operations and generate significant amounts of free cash flow when times are good. This free cash flow then allows them to reward their shareholders with big dividends.

    However, all three mining giants are at the mercy of commodity prices. And one particular commodity has a major influence on their profitability and ultimately their dividends – iron ore.

    And while BHP and Rio Tinto are diversifying their operations, the iron ore price still has a significant impact on their performances. For example, US$9.7 billion of BHP’s first half underlying EBITDA of US$13.9 billion was generated from its iron ore operations.

    Whereas for Rio Tinto, iron ore contributed US$20 billion of its US$23.9 billion underlying EBITDA in FY 2023. And of course Fortescue only generates revenue from iron ore at present.

    Clearly, the future direction of the iron ore price will have a major impact on how these miners perform.

    But where is the steel making ingredient heading in the coming years? Let’s take a look at what analysts at Goldman Sachs are forecasting for the base metal.

    Iron ore price forecast through to 2027

    According to a note out of the investment bank this week, its analysts expect the benchmark 62% fines iron ore price to average US$111 a tonne in 2024. This is broadly in line with the current spot price of US$109 a tonne, but down from an average of $120 a tonne in 2023.

    Further weakness is expected in 2025, with Goldman forecasting an average price of US$95 a tonne for the year. This reflects the broker’s belief that global seaborne iron ore demand will increase slightly to 1,573 million tonnes (MT), but for supply to lift 2% to 1,573 MT, leaving supply and demand balanced.

    A smaller decline in the iron ore price is expected in 2026, with Goldman forecasting an average price of US$93 a tonne. This is based on the broker’s forecast for a small reduction in global demand to 1,560 MT, largely due to weaker demand in China. At the same time, Goldman expects global supply to lift 1% to 1,594 MT. This creates a 34 MT surplus.

    Finally, in 2027, the broker is forecasting a further small decline to an average of US$92 a tonne for the iron ore price. This reflects a 2% lift in global seaborne supply to 1,629 MT and smaller 1% lift in demand to 1,580 MT, creating a 49 MT surplus.

    In summary, that is:

    • 2024: US$111 a tonne
    • 2025: US$95 a tonne
    • 2026: US$93 a tonne
    • 2027: US$92 a tonne

    The post Here’s the iron ore price forecast through to 2027 appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Bhp Group right now?

    Before you buy Bhp Group shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bhp Group wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    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.

  • Are these beaten-up ASX shares too cheap to ignore?

    a man and a woman kneel in a boxing ring with exaggerated make-up injuries, posing in humorous stance with the woman leaning back on her knees and the man leaning against her bright pink boxing glove as he gasps for air.

    I love looking at opportunities that have been sold off because they offer the potential to buy the dip. Some S&P/ASX 200 Index (ASX: XJO) shares could be a bargain amid recent volatility.

    When businesses have long-term potential but suffer a short-term valuation decline, it could suggest it’s an opportunistic time to buy.

    Some industries, such as ASX retail shares and ASX mining shares, can behave quite cyclically, giving us a chance to buy at a temporarily lower price.

    With that in mind, I think the two ASX shares below are worth scrutinising.

    Super Retail Group Ltd (ASX: SUL)

    Super Retail is one of the largest retailers in Australia with four key brands – Supercheap Auto, Rebel, BCF and Macpac.

    The chart below shows that the Super Retail share price has fallen more than 20% since 20 February 2024.

    Why the negativity? The company said in an update that sales have slowed, with total sales in the second half of FY24 showing a negative year-over-year change. According to Super Retail, in the second half of FY24, total like-for-like sales were down 1%, with Rebel sales down 2% and BCF sales down 5%.

    However, the company revealed some positives – group sales across March and April were up approximately 1% year over year. Supercheap Auto benefited from “strong demand in auto maintenance categories”, Rebel footwear sales improved after introducing new and expanded brand ranges, and Macpac sales growth was “driven by a strong performance in New Zealand.”

    The increase in wages and other costs is a headwind for the business’ profitability, but I don’t believe it will last forever. The company said in its May trading update that store foot traffic and transaction volumes “continue to grow”, which is a positive.

    It has opened 16 net new stores during FY24 to date, with expectations of opening another seven before the end of FY24. I think this bodes well for future revenue growth, once trading conditions improve on a per-store basis.

    According to Commsec, the Super Retail share price is valued at just 12x FY24’s estimated earnings.

    Sandfire Resources Ltd (ASX: SFR)

    Sandfire is one of the larger ASX copper shares, with a market capitalisation of approximately $4 billion. It’s a global miner, with projects in Western Australia, Spain and Botswana.

    Copper is an important decarbonisation resource that’s useful because it conducts electricity well. For example, electric vehicles need more copper than traditional vehicles. Copper is also needed for the expansion of the electrical grid and the manufacture of renewable energy generation like wind.

    McKinsey research suggests there could be a 6.5 million metric ton deficit between supply and demand by 2031, which translates into a 20% deficit in percentage terms. I think this could provide strong support for the copper price and Sandfire’s earnings over the next decade.

    As shown on the chart below, the Sandfire share price is down around 10% since 20 May 2024, following a decline in the copper price over the same time period.

    I think this could be an opportunity to invest in the ASX 200 share at a lower price.  

    The post Are these beaten-up ASX shares too cheap to ignore? appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Sandfire Resources Nl right now?

    Before you buy Sandfire Resources Nl shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Sandfire Resources Nl wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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

  • 25 reasons to buy Nvidia stock now

    A group of people push and shove through the doors of a store, trying to beat the crowd.

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

    Nvidia (NASDAQ: NVDA) stock has been a superb performer over the short and long terms. The artificial intelligence (AI) chip leader held its initial public offering (IPO) in January 1999, six years after the company was founded. In honor of Nvidia stock turning 25 years old earlier this year, below are 25 reasons — in no particular order — to buy it.

    As background, Nvidia has four market platforms: data center, gaming, professional visualization, and auto & robotics. Data center is its largest (accounting for 87% of revenue in its most recent quarter) and fastest growing due to surging adoption of AI, particularly generative AI. Generative AI exploded onto the scene in late 2022 with the release of the ChatGPT chatbot.

    1. Company is run by a founder

    Nvidia CEO Jensen Huang was one of the company’s three co-founders. Studies show that stocks of founder-led companies tend to outperform others over the long term.

    2. Founder-CEO has much skin in the game

    Huang owns about 868 million shares of Nvidia stock following Friday’s 10-for-1 stock split (discussed in No. 6), as of the most recent available data. This stake is worth about $105 billion, as of the stock’s closing price on June 7. Given this massive stake, investors can be sure Huang’s interest is aligned with their interests.

    3. CFO’s huge stock holdings suggest much confidence in Nvidia’s future

    CFO Colette Kress owns 6.43 million shares of Nvidia stock following Friday’s 10-for-1 stock split (discussed in No. 6). These shares were worth about $777 million, as of June 7. A CFO probably has the best handle of everyone in a company — including its CEO — on its financial performance at any given time. So, it seems safe to say that Kress is very optimistic about Nvidia’s growth prospects.

    4. Nvidia stock’s longer-term performance is phenomenal

    Over the last 10 years, Nvidia stock has returned 25,431% through June 7. That’s more than 100 times the S&P 500 index’s return of 230%. Put another way, a $1,000 investment in Nvidia stock a decade ago would now be worth more than $250,000.

    A stock’s past performance is no guarantee of its future performance. However, a stock’s long-term performance often reflects the ability of a company’s top management to establish and implement successful strategies.

    5. AI market is projected to continue to grow briskly

    In 2024, the global AI market is projected to reach revenue of $184 billion, and have a compound annual growth rate (CAGR) of 28.5% through 2030, when it will be worth an estimated $826.7 billion, according to Statista.

    This is a huge positive for Nvidia, whose graphics processing unit (GPU) chips and related products and services are used for training and deploying AI applications.

    6. Nvidia’s 10-for-1 stock split just occured on June 7

    On Friday, June 7, Nvidia stock split 10-for-1. Investors who owned the stock as of the day before received nine additional shares for each share they owned. The stock is scheduled to begin trading on a split-adjusted basis on Monday, June 10.

    On Friday, Nvidia stock’s closing price was $1,208.88, which means that its split-adjusted price was $120.89.

    Potential benefits for investors of Nvidia’s stock split include a boost in price from greater demand for shares, and a higher chance at being included on the Dow Jones Industrial Average index.

    7. The company dominates the data center AI chip market

    It’s widely estimated that Nvidia 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.

    8. Data center AI chip market is projected to continue to grow like gangbusters

    In 2023, the global market for chips to accelerate AI processing in data centers was worth about $45 billion, according to an estimate by Advanced Micro Devices (NASDAQ: AMD) CEO Lisa Su. She projects this market will reach $400 billion in revenue by 2027, which equates to a blistering CAGR of 72.7%.

    9. Nvidia’s data center business has strong competitive advantages

    Advanced Micro Devices (AMD) and Intel have recently entered Nvidia’s turf — AI-enabling GPUs for data centers. Investors shouldn’t be overly concerned. Nvidia’s competitive advantages don’t only stem from its GPUs, but also its software, particularly CUDA, which has been used by millions of developers for many years. CUDA enables its GPUs to possess the parallel processing capabilities needed for accelerating general and AI computing.

    10. Its revenue is growing rapidly

    Nvidia’s year-over-year revenue growth over the last four quarters starting with the most recent quarter: 262%, 265%, 206%, and 101%.

    11. Its profits are increasing even faster than revenue

    Nvidia’s adjusted earnings per share (EPS) are growing faster than its revenue, which reflects its expanding profit margins. This dynamic is being driven by its highly profitable data center business growing faster than its other businesses. Here’s the company’s year-over-year adjusted EPS growth over the last four quarters starting with the most recent quarter: 461%, 486%, 593%, and 429%.

    12. Its free cash flow is also growing rapidly

    Nvidia’s year-over-year free cash flow (FCF) growth over the last four quarters starting with the most recent quarter: 465%, 546%, N/A (FCF was negative in year-ago period), and 634%.

    13. Wall Street expects strong profit growth over the next 5 years

    As of June 7, Wall Street projects that Nvidia will grow adjusted EPS at an average annual rate of 46.5% over the next five years.

    14. Nvidia nearly always beats Wall Street’s expectations

    Nvidia nearly always beats Wall Street’s quarterly earnings estimates — and oftentimes, by a lot. In the prior four quarters, the company’s adjusted EPS has exceeded the analyst consensus estimate by percentages ranging from 10% to 29%.

    If this dynamic continues, Nvidia’s CAGR over the next five years will be higher than the 46.5% that analysts now expect.

    15. The stock’s valuation is reasonable

    At Friday’s closing price, Nvidia stock is priced at 44.6 times forward estimated earnings. In a vacuum, this is a high valuation. But it’s reasonable for a company that Wall Street expects to grow adjusted EPS 109% this fiscal year and at an average annual rate of 46.5% over the next five years. Moreover, analysts are likely underestimating its growth potential, as covered above.

    16. It’s much more profitable than its main competitors and peers

    Company GAAP Profit Margin (TTM)
    Nvidia 53.4%
    Advanced Micro Devices 4.9%
    Intel 7.4%
    Qualcomm 23%
    Broadcom 29.9%

    List is not all-inclusive. Data sources: YCharts and finviz.com. GAAP = generally accepted accounting principles. TTM= trailing 12 months.

    17. It’s reportedly forming a custom chip business unit

    Sources have reported and signs suggest that Nvidia is forming a custom chip business unit so that it can capture some of the custom chip development work for big tech companies that currently goes to chipmakers such as Broadcom. The new unit will reportedly help companies design custom chips for AI and other applications.

    18. It’s the largest supplier of graphics cards for gaming

    Gaming is Nvidia’s second largest market platform, accounting for 10% of its revenue in its most recent quarter. The company is the world’s largest supplier of graphics cards for computer gaming. In the first quarter of 2024, it had an 88% share of the desktop discrete GPU market, according to Jon Peddie Research. AMD and Intel had a 12% and less than 1% share, respectively.

    19. PC gaming market is projected to continue its solid growth

    In 2023, the global personal computer (PC) gaming market generated about $80.3 billion in revenue, according to Statista, which projects this market will be worth $141.9 billion in 2028. That equates to a CAGR of about 12.1%.

    20. Nvidia generates some recurring revenue

    Nvidia has relatively recently begun launching software and service offerings that generate recurring revenue. In February, CFO Kress said that in fiscal Q4 the company’s software and services offerings reached an annualized revenue run rate of $1 billion.

    21. Its revenue should get a big boost when driverless vehicles become legal

    Nvidia’s revenue should get a big boost when driverless vehicles become legal across the U.S. and world. Hundreds of vehicle manufacturers, tier 1 suppliers, and others are developing on the company’s autonomous vehicle AI computing platform, DRIVE.

    When Nvidia’s partners use its DRIVE platform in production vehicles, they need to buy a DRIVE AI computer for each vehicle. Its big-name partners include luxury vehicle maker Mercedes-Benz and electric vehicle (EV) giant BYD.

    22. Its sovereign AI business has multibillion-dollar potential

    Nations and other sovereign entities have relatively recently begun using Nvidia’s technology to build their own sovereign AI cloud services. The “sovereign AI infrastructure market represents a multibillion-dollar opportunity over the next few years,” CFO Kress said last November on the company’s fiscal Q3 2024 earnings call.

    23. It just ramped up its robotics initiatives

    In March, Nvidia introduced it Project GR00T (Generalist Robot 00 Technology) AI foundation model for humanoid robots and major updates to its Isaac robotics platform.

    24. Its balance sheet is in solid shape

    At the end of the last quarter, Nvidia had cash and cash equivalents of $7.6 billion and long-term debt of $8.5 billion.

    25. Employes really like working for Nvidia

    On Glassdoor.com, Nvidia employees and former employees give the company an overall rating of 4.6 stars (on a scale of 1 to 5), as of June 7. Employee satisfaction is particularly important for companies in the technology realm, as there is a limited amount of top tech talent. Nvidia’s rating is the highest of all the so-called Big Tech companies.

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

    The post 25 reasons to buy Nvidia stock now appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Nvidia right now?

    Before you buy Nvidia shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Nvidia wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, BYD Company, Nvidia, and Qualcomm. Beth McKenna has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and Intel and has recommended the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Guess which beaten-up ASX 200 stock is being bought up by this multi-billion-dollar fundie

    A man and a woman sit in front of a laptop looking fascinated and captivated.

    Multi-billion-dollar fund manager Ellerston Capital is the latest fundie to undertake a buy-up of ASX education stock IDP Education Ltd (ASX: IEL).

    IDP Education is a global education company that offers English language tests and helps overseas students get into university courses in Australia, New Zealand, the United States, and the United Kingdom.

    IDP Education shares are trading at $15.04 on Tuesday, down 1.89% for the day.

    Let’s investigate.

    What’s happening with this ASX 200 stock?

    This ASX 200 stock has taken a beating over the past 12 months, falling 37.3% while the S&P/ASX 200 Index (ASX: XJO) has risen 8.4%.

    Key challenges for the company include cuts to migration in several countries, thereby stemming the flow of international students seeking a world-class education via its placement services and language tests.

    Some traders expect IDP shares to weaken further, thereby providing an opportunity for short-term profit via short bets. This is why the ASX 200 stock is one of the most shorted equities on the market right now.

    However, other experts see an opportunity to buy the dip and capitalise on an anticipated rebound over the medium to long term.

    As reported in the Australian Financial Review (AFR), Ellerston portfolio manager and director Chris Kourtis told clients in a note that IDP Education shares were trading at an “attractive entry point”.

    Kourtis said:

    [IDP Education] is a name we have patiently been monitoring for some time.

    The uncertainty associated with the near-term earnings risk in major markets like Canada and the UK have clearly weighted heavily on the stock and analysts have rebased their earnings lower.

    But Kourtis thinks they’ve overdone it, adding: “[IDP] should emerge stronger when global migration and education reverts in the medium term.”

    What’s the latest news from IDP Education?

    Last week, the company told the market that student visa changes in several countries had led to lower volumes of language testing and university placements in 2H FY24.

    As a result, management is expecting flat earnings in FY24, with “challenging” market conditions ahead.

    The company expects the size of the international education market to decline by 20% to 25% over the next 12 months.

    As a result, IDP will cut costs to offset the impact of fewer students on revenue while aiming to grow its market share.

    The company said:

    As the leading quality player in the sector, IDP remains very well placed to help students and institutions navigate these challenging market conditions and expects to grow its market share in student placement.

    Despite the shorter dated cyclical dynamics, IDP remains confident in the long-term growth drivers for the industry.

    Experts explain why this ASX 200 stock is a buy

    The AFR reports that Airlie Funds Management and DNR Capital have also bought this ASX 200 stock this year.

    Magellan Financial Group Ltd (ASX: MFG) has also just become a major shareholder with an initial 5% stake purchased on 31 May.

    Airlie’s Emma Fisher told the AFR last month that her fund deemed IDP a good business that was “cheaper than its worth”.

    Jamie Nicols from DNR Capital told clients in a note that their purchase was opportunistic and part of a broader strategy to buy high-quality ASX businesses that were on the nose with investors.

    Prasad Patkar, the head of investments at Platypus Asset Management, recently described the ASX 200 stock as offering “stand-out value”.

    Goldman Sachs recently reiterated its buy rating on IDP Education. However, it reduced its 12-month share price target from $25.30 to $21.75 following the company’s update last week.

    The broker commented:

    IEL remains well placed to capitalise as conditions normalise into FY26E, with IEL selectively investing for growth while SP competitors come under significant pressure. In our view the regulatory headwinds are cyclical, while structural SP growth can resume off the FY25E baseline.

    But not everyone is on board…

    John Athanasiou of Red Leaf Securities reckons the ASX 200 stock is a hold for now.

    Commenting on The Bull, he said:

    IDP Education remains a quality business, but we have regulatory concerns about possible cuts to net migration in Australia.

    Also, the company expects the international education market to decline between 20 per cent and 25 per cent in the next 12 months. It remains confident about the longer term.

    While IDP’s fundamentals are robust, the company recently announced that adjusted earnings before interest and tax in fiscal year 2024 are expected to be broadly in line with the prior year. The company is implementing a cost cutting program. We suggest monitoring developments closely.

    The post Guess which beaten-up ASX 200 stock is being bought up by this multi-billion-dollar fundie appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Idp Education right now?

    Before you buy Idp Education shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Idp Education wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Idp Education. 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.

  • 3 popular ASX ETFs smashing record highs today

    It’s been an absolutely dire start to the trading week for the S&P/ASX 200 Index (ASX: XJO) and most ASX 200 shares this Monday. At the time of writing, the ASX 200 has tanked by a horrid 1.3%, pulling the index down to under 7,760 points. But strangely, that hasn’t stopped no less than three ASX exchange-traded funds (ETFs) smashing out new record highs today.

    Yep, we’ve seen three popular ASX ETFs spring to new records this Monday.

    First up is the BetaShares Nasdaq 100 ETF (ASX: NDQ). NDQ units are currently up a robust 1.11% at $43.80 each but climbed as high as $43.81 earlier this morning – a new record high.

    Then we have the iShares S&P 500 ETF (ASX: IVV). This index fund is presently enjoying a lift of 1.01% up to $54.16 a unit. That’s right on this ETF’s new record high.

    Finally, let’s talk about the VanEck MSCI International Quality ETF (ASX: QUAL). QUAL units are trading at $56.61 at the time of writing, up a compelling 0.95% for the day thus far. But those units climbed as high as $57 each earlier this morning, which, you guessed it, is a new record high for QUAL.

    So how on earth are these three ASX ETFs hitting new record highs today while the ASX 200 is having such a horror show of a Monday?

    How are these three ASX ETFs hitting new record highs today?

    This might seem like a very strange occurrence. But there is a simple explanation for these three ETFs’ new highs today. All three are largely uncorrelated to the ASX 200 Index and the performance of ASX shares.

    The BetaShares Nasdaq 100 ETF is an index fund that tracks the largest 100 non-financial US shares that are listed on the NASDAQ stock exchange. The NASDAQ is one of the two major stock exchanges over in the United States. This exchange is famous for housing the vast majority of America’s tech giants. That’s everything from Apple, Amazon and Microsoft to PayPal, Netflix and NVIDIA.

    Last Friday night (our time), the US markets exploded higher, in stark contrast to what we’re seeing on the ASX today. The NASDAQ-100 Index (NASDAQ: NDX), which the NDQ ETF tracks, rose 0.39% to 19,074.67 points, just a whisker off its all-time high of 19,113.88 points.

    As such, it’s not too shocking to see an ASX-listed index fund that tracks the NASDAQ respond so enthusiastically to this Friday night move higher on the ASX today.

    Different ASX ETF, same holdings

    It’s a similar story with the iShares S&P 500 ETF. This index fund tracks the S&P 500 Index (SP: .INX). This index is composed of the largest 500 companies on the US markets, drawn from both the NASDAQ and the New York Stock Exchange.

    Last Friday night saw the S&P 500 rise 0.26% up to 5,360.79 points. Again, that’s only a hair’s breadth away from the S&P 500’s all-time record of 5,375.08 points.

    So again, there’s no shock to see an ASX-listed, S&P 500-tracking index fund leap higher today.

    The VanEck International Quality ETF is a bit of a different case though. This ETF isn’t really an index fund; rather, it is an actively managed ETF that gives investors access to a portfolio of stocks chosen for their fundamental characteristics.

    However, this ETF is still very much an international investment. More than 75% of its holdings are currently US shares. Further, its top holdings are the same names that you’ll find at the top of both NDQ and IVV’s portfolios: Nvidia, Apple, Microsoft and Meta Platforms.

    Foolish takeaway

    So once more, given the performance of the US markets last Friday night, there’s not much mystery as to why this ETF is performing so well today.

    The experience of these three ASX ETFs this Monday just goes to show how having a diversified portfolio of shares that includes holdings from outside the ASX can help investors insulate their investments from the woes of a single stock market.

    The post 3 popular ASX ETFs smashing record highs today appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Ishares S&p 500 Etf right now?

    Before you buy Ishares S&p 500 Etf shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Ishares S&p 500 Etf wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, Microsoft, Netflix, Nvidia, PayPal, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short June 2024 $67.50 calls on PayPal. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, PayPal, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Leading brokers name 3 ASX shares to buy today

    With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

    Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

    Brambles Ltd (ASX: BXB)

    Analysts at Morgan Stanley have upgraded this logistics solutions company’s shares to an overweight rating with an improved price target of $16.60. The broker made the move on valuation grounds. It highlights that the company’s shares are trading at a huge discount to their five-year average multiples. This is despite Brambles having a positive earnings growth outlook and being positioned to announce material share buybacks in both FY 2025 and FY 2026. In light of this, its analysts believe that a compelling entry point has been created for investors and has upgraded its shares accordingly this morning. The Brambles share price is currently changing hands for $14.70.

    Capricorn Metals Ltd (ASX: CMM)

    According to a note out of Bell Potter, its analysts have retained their buy rating and $6.50 price target on this gold miner’s shares. The broker believes that recent share price weakness has created a very attractive opportunity for investors to buy Capricorn Metals’ shares at a cheap price. Particularly given a recent 26% increase in ore reserves at the 100%-owned Mt Gibson Gold Project in Western Australia. In addition, the broker highlights that the company has sector leading cash generation. Combined with its strong production record, it believes this means that its shares deserve to trade at a premium to sector average valuation metrics. The Capricorn Metals share price is fetching $4.48 on Tuesday.

    Life360 Inc (ASX: 360)

    Another note out of Bell Potter reveals that its analysts have retained their buy rating on this location technology company’s shares with a trimmed price target of $17.00. This follows the completion of the company’s highly anticipated Nasdaq IPO. Bell Potter was pleased with the listing, remains very positive on its outlook, and is forecasting strong earnings and revenue growth through to at least 2026. It also highlights that the next potential catalyst it sees for the stock is its half year result in August. The broker notes that it is expecting another solid result from the market darling. The Life360 share price is trading at $13.70 this afternoon.

    The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Life360 right now?

    Before you buy Life360 shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Life360 wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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.