Author: openjargon

The Charter Hall Long WALE REIT (ASX: CLW) share price is down 34% from April 2022, as shown on the chart below. The ASX dividend stock may be able to provide a high level of passive income.

This real estate investment trust (REIT) is one of the larger businesses in the property sector.

It has a portfolio across a range of different property sectors, including office leases with the government, pubs and bottle shops, telecommunication exchanges, service stations, quality retail, grocery and distribution, food manufacturing, waste and recycling management, Bunnings warehouse properties and other sectors.

I’m not suggesting the ASX dividend stock just because it’s fallen. It also has a number of appealing factors that make it a compelling long-term buy.

Appealing rental factors

As the name of the REIT suggests, it has a long weighted average lease expiry (WALE) of 10.8 years. In other words, the business has signed its tenants on long-term rental contracts, which provides a lot of rental visibility for investors and locks in a lot of future income for the business.

At 31 December 2023, Charter Hall Long WALE REIT had an occupancy rate of 99.9%, so its portfolio is generating almost as much rental income as it can. Nearly all of its tenants are government, ASX-listed, multinational or national tenants.

The business is benefiting from a pleasing level of rental income growth, with around half of the portfolio exposed to CPI-linked reviews. The ASX dividend stock reported a weighted average rental review (WARR) of 4.3% in the FY24 first half, which I think is a solid level of rental growth for a diversified REIT.

Large valuation discount?

Every reporting period, the business tells the market what its net tangible assets (NTA) are. This is the business’ best estimate of the underlying value of its assets and liabilities.

At 31 December 2023, the ASX dividend stock had NTA of $5.14 per security, so the Charter Hall Long WALE REIT share price is at a 31% discount to this.

It’s hard to say precisely what the property portfolio is worth without going through a sales process, but another way to look at the business is based on how much passive income it’s producing.

ASX dividend stock’s passive income yield

The business pays out 100% of its operating (rental) profit each year, which is a generous distribution payout ratio.

However, that choice can still lead to success for shareholders because the rental income is steadily growing, and over time, the properties will hopefully increase in value (thanks to the growing rental potential).

The estimate on Commsec suggests the business could pay a distribution per unit of 27 cents, which is a distribution yield of 7.6%. I think that’s a solid yield and could grow in future years with rental growth, though what happens with interest rates could have a sizeable impact on its net rental profits in the coming years.

The post 1 ASX dividend stock down 34% to buy right now appeared first on The Motley Fool Australia.

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• Here’s how I’d target a $2,000 second income by investing $35 a week
• 2 high-yield ASX dividend shares to buy as they bounce

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 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.

Commonwealth Bank of Australia (ASX: CBA) is one of the most popular, large-cap shares on the ASX. However, bigger doesn’t automatically mean a better investment. Personally, I’m not attracted to the ASX bank stock for a few different reasons.

Yes, the business has performed very well for investors over the past three decades and is still paying a solid dividend yield.

But, I believe there’s more to consider about a potential investment than just the amount of passive income it can deliver. So here’s what makes me want to avoid CBA shares right now.

Competition limiting growth

I think the banking environment has changed significantly over the past decade due to the rise of digital banking and mortgage brokers.

These days, smaller banks and lenders don’t need large branches to provide customers with the service they’re after. This has enabled lenders like Macquarie Group Ltd (ASX: MQG) and ING to increase their market share significantly.

In addition, loans appear to have become commoditised, and prospective borrowers are increasingly using mortgage brokers to help them choose the best loan. Price is a key factor, so lender net interest margins (NIMs) are being challenged. In the quarterly update for the period ending 31 March 2024, CBA said its net interest income was 1% lower than the prior corresponding period, partly due to “continued competitive pressures.”

Just think how many lenders there are on the ASX – CBA, Macquarie, Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), Bank of Queensland Ltd (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), AMP Ltd (ASX: AMP) and Pepper Money Ltd (ASX: PPM). That’s a lot of competition all vying to win volume.

High CBA share price valuation

Every business has a valuation, and we can compare different ASX shares based on certain metrics, such as the price-to-earnings (P/E) ratio or the price-to-book ratio (which compares a company’s market capitalisation to its balance sheet).

Last month, broker UBS said CBA shares were trading at a FY25 price-to-book ratio of 2.7x and a forward P/E ratio of 23x. That puts it among the most expensive banks in the world. The CBA share price is close to 5% higher than it was a month ago, making it even more expensive again.

Using UBS’ estimates, the Westpac share price is valued at 14x FY25’s estimated earnings, the ANZ share price is valued at 12x FY25’s estimated earnings and NAB is valued at 16x FY25’s estimated earnings.

So it seems CBA stock is much more expensive than its peers. I also think there are plenty of other ASX shares, and even industries, where we can find better opportunities that can deliver stronger earnings growth for their valuation. And UBS thinks CBA’s earnings per share (EPS) of $5.72 in FY25 and $5.78 in FY26 are expected to be lower than FY24’s EPS of $5.79.

Furthermore, it’s much harder to grow a huge ASX stock from $200 billion to $300 billion than a smaller business from $1 billion to $2 billion. The bigger a business becomes, the fewer customers it has to reach.

So, while CBA is not a bad company by any stretch, I believe there are many smaller investments on the ASX that could deliver better outcomes for shareholders.

CBA share price snapshot

Since the start of 2024, CBA shares have risen by around 10%. That compares to a rise of just 3% for the S&P/ASX 200 Index (ASX: XJO).

The post 1 popular ASX stock I’m steering clear of appeared first on The Motley Fool Australia.

More reading

• Are CBA shares losing their passive income credentials?
• Unstoppable! CBA share price smashes yet another record high
• Why you should sell CBA, Westpac, and Bank of Queensland shares in June
• Are ASX 200 bank shares a good investment right now?
• How the CBA share price defied the bears to surge in May

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 Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Over the long weekend, I wrote about how analysts at Goldman Sachs are feeling very bearish about Mineral Resources Ltd (ASX: MIN) shares. You can read about that here.

The broker believes the ASX mining stock is seriously overvalued and could be destined to crash deep into the red.

However, another broker doesn’t agree with this view and is urging investors to buy its shares right now.

What is the broker saying about this ASX mining stock?

According to a note out of Bell Potter, its analysts were pleased with news that the company has sold a 49% interest in the Onslow Iron Haul Road to Morgan Stanley Infrastructure Partners for gross proceeds of $1.3 billion. It commented:

The timing of the haul road sale is in-line with guidance, following the commencement of ship loading on 21 May 2024. Prior to the announcement, we had estimated MIN would achieve net after tax proceeds of A$1.1 billion for 49% of 50Mtpa of capacity. The sale is value accretive relative to our estimates as (1) higher net-proceeds will be realised relative to our estimate, and (2) a lower proportion of potential future tolling fees was sold (40 Mtpa vs 50 Mtpa).

In response to the news, the broker has reaffirmed its buy rating with a slightly trimmed price target of $84.00.

Based on the current Mineral Resources share price of $68.63, this implies potential upside of 22% for investors over the next 12 months.

What else did it say?

Bell Potter notes that the Onslow iron ore operations are now ramping up and this means that iron ore production is on the verge of increasing materially.

In light of this and expansions elsewhere in its portfolio, the broker believes the future is looking bright for the ASX mining stock. It concludes:

The commencement of the ramp-up of Onslow operations is the precursor to strong forecast Iron Ore and Mining Services earnings growth, with Stage 1 completion expected by June 2025. MIN is also advancing an unparalleled portfolio of growth options. We expect near-term news flow on (1) the expansion of Onslow to 50Mtpa, (2) development and financing options for MIN’s energy discoveries, with (3) details on lithium expansion timing at Wodgina and Bald Hill also possible. EPS changes are, FY24: 0%, FY25: -46%, FY26: -12% on increased forecast depreciation allowances. Our valuation reduces -1.2% as we increase forecast sustaining capital in FY25.

All in all, time will tell whether the bulls or bears make the right call on this one.

The post Don’t listen to the bears! Buy this ASX mining stock appeared first on The Motley Fool Australia.

More reading

• Guess which popular ASX 200 mining stock could crash over 30%
• Is it time to cash in these 2 ASX large-cap stocks?
• Mineral Resources shares race higher on $1.3b asset sale
• 5 things to watch on the ASX 200 on Thursday
• Bell Potter names the best ASX shares to buy in June

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.

The ASX 200 index is home to the biggest and brightest shares that Australia has to offer.

Two that could be strong buys this month according to analysts at Bell Potter are listed below.

Here’s why they have been named on its favoured list in June:

GUD Holdings Limited (ASX: GUD)

The auto parts products company could be a top option for investors in June according to the broker.

It likes the ASX 200 share due to the resilience of its legacy auto business and exposure to improving new car sales. The broker commented:

The company recently reported an impressive FY23 result with NPAT of $119 million beating Citi forecast by 3% and consensus by 14%. This was driven by the better-than-expected APG performance (the highest-quality business in GUD, in our view) and the improvement in gearing. We see GUD as well-placed to benefit from the ongoing improvement in OEM supply constraints into FY24. Overall, our Buy rating for GUD is predicated on the relative resilience of the legacy auto business and improving momentum in new car sales, which should be favourable for APG’s earnings.

Bell Potter has a buy rating and $12.80 price target on GUD’s shares. This suggests that upside of 22% is possible over the next 12 months. A dividend yield of ~3.5% is also expected from its shares over the same period.

Transurban Group (ASX: TCL)

Another ASX 200 share that has been given the thumbs up by analysts at Bell Potter this month is Transurban. It is a toll road operator with a portfolio of important roads across Australia and North America.

Bell Potter likes the company due to its low risk cash flow, positive exposure to inflation, and its significant growth pipeline. It explains:

We believe the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators. Moreover, TCL provides low risk cash flows over the long term, with long concession duration (30+ years), and relative traffic/income resilience. The group’s current pipeline of growth projects is $3.3 billion (TCL’s share of total project cost) and further huge development opportunities are expected over the next few decades, supported by population and economic growth.

The broker currently has a buy rating and $15.50 price target on its shares. This implies potential upside of 21% for investors from current levels. In addition, it is expecting a dividend yield in the region of 5%.

The post Bell Potter says these ASX 200 shares are strong buys with 20%+ upside appeared first on The Motley Fool Australia.

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• Should you buy this defensive ASX 200 stock on a pullback?
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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 Transurban 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.

The share price of ASX defence company DroneShield Ltd (ASX: DRO) has been on a tear recently – soaring close to 35% higher in just the last month alone. This continues an impressive run for DroneShield (and its shareholders), with the stock up an eyewatering 440% over the past year.

Investors seemingly can’t get their hands on enough DroneShield shares. A recent share purchase plan, announced on 18 April, literally had to close early because of overdemand.

The company was only hoping to raise $5 million from retail investors but received orders for an eye-popping $40 million. The company had to scale back the amount raised to its maximum cap of $15 million and return the remaining funds to investors.

So, what’s the big deal about DroneShield? What has got investors so excited – and why has its share price been rising so much this past month?

What does DroneShield do?

DroneShield develops technology to protect military, government, infrastructure and other critical assets against attacks or surveillance by unmanned aerial devices (in other words, drones). Its products include tactical machinery that can be used to detect and disable drone attacks. It also develops software solutions that can analyse and assess drone threats in real time and launch a coordinated response.

Recent military conflicts in Ukraine and the Middle East have demonstrated how prevalent drones have now become in modern warfare. They are cheap and easy to manufacture, which makes them a particularly pernicious threat on the battlefield. So, it’s no real surprise that demand for technology that effectively counteracts them has been on the increase.

The financials

This uplift in demand is reflected in DroneShield’s recent financial performance. FY23 revenues (for the 12 months ended 31 December 2023) surged 226% higher versus the prior year to a record $55.1 million. DroneShield also reported net profit of $9.3 million for the year — the first time the company has posted an annual profit in its entire history.

And with revenues continuing to trend upwards at such a rapid rate, it’s unlikely to be the last.

In its most recent quarterly activities report, for the three-month period ending 31 March 2024, DroneShield stated that revenues were up a mind-blowing 1000% versus 1Q23, to $16.5 million. What makes this result even more eye-catching is that the March quarter is usually DroneShield’s weakest in terms of sales — which suggests 2024 is already shaping up to be another bumper year.

DroneShield also maintains a very strong balance sheet, with $56.4 million in cash and no debt (as of 31 March 2024).

Why is the DroneShield share price up over the past month?

DroneShield’s share price was buoyed by its 22 May announcement that it had been awarded a $5.7 million repeat contract with a US Government customer – with further ‘material orders’ expected. The order was for DroneShield’s counter-drone (‘C-UsX’) systems, which are capable of detecting and disabling attacks by unmanned devices on air, land and sea.

And this comes hot on the heals of DroneShield’s 17 April announcement that it had been awarded a framework agreement with NATO – the first such agreement awarded in NATO’s history. This could increase DroneShield’s sales by an ‘order of magnitude’ over the coming years, according to the company’s press release.

What’s in store for the future?

Things are going pretty well for DroneShield at the moment, and management is understandably bullish about its near-term outlook.

DroneShield considers the counter-drone market to still be in its infancy. It believes military and security companies are watching conflicts overseas and are realising just how vital counter-drone capabilities are going to be for their ongoing defence. This means spending on counter-drone technology could ramp up even further as militaries around the world bolster their stockpiles. As a global leader in counter-drone technology, DroneShield believes it is well-positioned to take advantage of these emerging trends.

The post Why the DroneShield share price is up 35% in a month appeared first on The Motley Fool Australia.

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• Why DroneShield shares are making headlines again on Thursday
• Up 260% in 2024, this ASX All Ords stock just hit another all-time high
• Why are ASX investors so excited by the DroneShield share price?
• Why Droneshield, TechnologyOne, Telix, and Webjet shares are rising today

Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Appen Ltd (ASX: APX) used to be part of ASX tech royalty. It was a member of the once-vaunted WAAAX group of stocks, along with WiseTech Global Ltd (ASX: WTC), Altium Ltd (ASX: ALU), Afterpay – now owned by Block Inc (ASX: SQ2) – and Xero Ltd (ASX: XRO).

However, whereas the other WAAAX shares suffered through some rocky post-COVID years but have since mostly recovered to even greater highs (with the exception of Afterpay), the Appen share price has lagged far behind.

Like, really far behind.

Since topping out at a share price well above $40 back in August of 2020, Appen has lost close to 99% of its value, and is now trading for just 52 cents a share. Ouch!

A company that once had a market cap of nearly $5 billion, is now sitting at just over $100 million.

So, what went wrong?

To answer that question, let’s start by taking a closer look at what Appen actually does.

What is an Appen?

Appen is a tech company that provides high-quality datasets to artificial intelligence (AI) companies. It uses a crowdsourced global workforce to annotate and curate data which it then sells to big tech companies to help ‘train’ their AI programs.

Large language models, like ChatGPT, work by ingesting huge amounts of data. The AI algorithm searches through this data to identify patterns, correlations, and other connections, to essentially ‘learn’ how human language is constructed.

Appen supplies the data.

But hold on – isn’t AI meant to be a booming industry right now? It’s all over the news – and American AI giant Nvidia Corp (NASDAQ: NVDA) even briefly broke through the magical US$3 trillion market cap barrier. That puts it right up alongside tech behemoths Apple Inc and Microsoft Corp as the largest listed companies in America.

So, if AI is booming, and AI programs need data to function, shouldn’t this be fertile ground for a massive rally in the Appen share price? So then why isn’t Appen following Nvidia to the top of the stock market?

I’m glad you asked.

Concentration risk

Concentration risk is when a company relies too heavily on a small group of large customers to generate its revenues. If those customers cut back on their spending, it leaves a massive hole in the company’s income statement.

Unfortunately, that is what happened to Appen.

It has relied heavily on five major customers to generate most of its revenues: Microsoft, Apple, Meta Platforms, Google parent company Alphabet, and Amazon. And while that might seem like an enviable list of clients to have in your rolodex, relying on them too heavily is still risky.

This came to a head back in 2021, when Apple changed the privacy policy on its operating system to limit the ability for digital advertisers to track customer activity across multiple apps. As part of the Apple update, users could now opt out of having their data collected.

This led to a cutback in digital AI advertising spending from Appen’s major clients.

As a result, Appen had to issue multiple earnings downgrades over the years, disappointing shareholders. For an indication of how far Appen has now fallen, compare its FY23 annual revenues of US$273.0 million with the record revenues of US$447.3 million it reported in FY21. That’s a decline of almost 40% in just two years.

And there was more bad news to come in January 2024, when Google parent company Alphabet announced it would be severing all ties with Appen. To put this in context, Google contributed US$83 million of the US$273 million total revenues Appen reported in FY23.

Can the Appen share price stage a comeback?

Despite what should be favourable macroeconomic conditions, Appen has continued to struggle – and this latest piece of bad news from Google isn’t going to help it at all in the near term.

However, if there is some silver lining to all this, it has been Appen’s pivot towards new markets – and away from its reliance on the big hitters in Silicon Valley. Appen’s Chinese clients delivered record-high quarterly revenue contribution of US$11.1 million in 4Q23. While this certainly won’t make up for the loss of Google, if anything is going to rescue Appen’s business it’s going to be new clients in new markets.

The post Can the Appen share price recover amid AI mania? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Rhys Brock has positions in Altium, Appen, Block, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Altium, Amazon, Appen, Apple, Block, Meta Platforms, Microsoft, Nvidia, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 positions in and has recommended Block, WiseTech Global, and Xero. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Last week was a major one for Life360 Inc (ASX: 360) and its shares.

In case you missed it, the location technology company launched and completed its Nasdaq initial public offering (IPO).

It raised funds by offering a total of 5,750,000 shares of its common stock to US investors at US$27.00 per new share.

Life360 advised that it intends to use the net proceeds it receives from the offering to increase its capitalisation and financial flexibility, to create a public market for its common stock in the United States, and for general corporate purposes, including working capital, operating expenses and capital expenditures.

What are brokers saying about the IPO?

Bell Potter has been busy adjusting its financial model to reflect the IPO. It said:

We have updated our forecasts for the NASDAQ listing but there are no changes in our underlying revenue or EBITDA forecasts. The two key changes we have made are a 3.7m increase in the number of shares on issue – or 11.1m CDIs – and a net increase in cash of c.US$83m (i.e. we assume c.US$17m in underwriting commissions and other expenses related to the offering).

We assume most or all of the expenses related to the offering will impact statutory EBITDA in 2024 but at this stage we make no change to our forecast given the exact amount is unknown and in order to be consistent with the current guidance. We would expect the statutory EBITDA guidance to be updated at the release of the 1H2023 result in August when the actual costs are known and will then look to update our reported forecasts.

Should you buy Life360 shares?

The broker remains very positive on Life360’s shares and sees major upside for them over the next 12 months.

Bell Potter has responded to the IPO by reaffirming its buy rating with a slightly trimmed price target of $17.00. This implies potential upside of 23% for investors. It concludes:

We reduce the multiple we apply in the EV/Revenue valuation from 6.5x to 6.25x given the potential catalyst of the US listing has now been removed and, furthermore, the IPO price was at a discount to the market price on the ASX. There is, however, no change in the 9.3% WACC we apply in the DCF. The net result is a 4% decrease in our PT to $17.00 which is still >15% premium to the share price so we maintain our BUY recommendation. The next potential catalyst we see for the stock is the H1 result in August – or any update provided sooner – given we expect another solid result.

The post Why Life360 shares can rocket almost 25% appeared first on The Motley Fool Australia.

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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.

The performance of the healthcare sector has been relatively underwhelming in recent times.

While this is disappointing, the team at Wilsons believes that things could change in the near future. This could make it a great time for investors to ensure that their investment portfolios are positioned to take advantage of this. The broker said:

After ~2 years of lacklustre performance at the index level, the outlook for the ASX 300 healthcare sector is highly attractive. The sector is well positioned to outperform over the medium-term given its earnings trajectory is considerably stronger than the broader market while the sector’s valuation is also at highly attractive levels.

But which ASX 300 healthcare stocks could be worth considering? Let’s take a look at three that its analysts are feeling bullish on and have in their Focus Portfolio. They are as follows:

CSL Ltd (ASX: CSL)

The first ASX 300 healthcare stock that Wilsons has in its Focus Portfolio is biotechnology giant CSL.

The broker is currently overweight on CSL’s shares. Though, it has admittedly been more positive in the past. It explains:

On balance, our increasingly constructive view on the outlook for Behring’s earnings recovery warrants our modest overweight exposure to CSL, albeit our level of conviction is tempered to an extent by the subdued outlooks of Vifor and Seqirus and the somewhat uncompelling level of R&D pipeline upside over the medium-term. Valuation wise, CSL is broadly in line with our ‘fair value’ range, balancing the fact that a) CSL trades on forward PE of ~27x which is below its 5-year average, and b) CSL is somewhat ‘expensive’ relative to global biopharma peers. To become more constructive on CSL, we are looking for a) developments in the R&D pipeline, b) demonstrated progress on Behring’s margin recovery, and/or c) a meaningful turnaround in the performance of Vifor and Seqirus.

ResMed Inc. (ASX: RMD)

Another ASX 300 healthcare stock that features is sleep disorder treatment ResMed.

Its analysts highlight that its shares trade at a sharp discount to historical multiples. And given how weight loss drugs concerns are starting to ease, it feels a re-rating could take place soon. Wilsons commented:

Notwithstanding RMD’s solid earnings-driven share price recovery, the company remains on an excessive valuation discount at a 12-month forward PE multiple of ~23x, which is a ~30% discount to both the 5-year average and RMD’s ‘pre GLP-1’ level. We expect RMD’s valuation to re-rate higher as GLP-1 concerns progressively abate and the market shifts its focus to the strong fundamental outlook of the business.

Telix Pharmaceuticals Ltd (ASX: TLX)

Finally, this high-flying radiopharmaceuticals company could be worth a closer look.

Wilsons is very positive on the ASX 300 healthcare stock’s Illuccix product and extensive pipeline. It said:

A key appeal of TLX is that its extensive pipeline offers significant valuation and earnings upside potential, which is complimented by the robust cash flows already generated by Illuccix. Following recent pipeline updates on TLX591 (SELECT rPFS data) and Zircaix (BLA submission) there is still a cavalcade of catalysts that represent ‘de-risking’ points in TLX’s valuation and will drive the share price over the next 12 months.

The post 3 ASX 300 healthcare stocks ‘well positioned to outperform’ appeared first on The Motley Fool Australia.

More reading

• CSL shares can ‘absolutely’ head to $500: ASX expert
• 2 ASX biotech shares that could be the next Telix Pharmaceuticals
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• Telix Pharmaceuticals share price jumps to record high on Nasdaq IPO launch
• Bell Potter names more of the best ASX 200 stocks to buy in June

Motley Fool contributor James Mickleboro has positions in CSL, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.