Stock Pick

Author: openjargon

  • Here are the top 10 ASX 200 shares today

    A young girls clings in fright to a big red slide.

    It was a decidedly negative end to the trading week for the S&P/ASX 200 Index (ASX: XJO) and most ASX shares this Friday.

    After recording backsteps for most of the trading week, the ASX 200 dropped a substantial 1.08% today, leaving the index at 7,727.6 points as we head into the weekend.

    This rather sad end to the Australian trading week comes after a dire night up on Wall Street last night (our time).

    The Dow Jones Industrial Average Index (DJX: .DJI) had another shocker, dropping by 1.53%

    It wasn’t quite as nasty for the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC), which fell by 0.39%.

    But let’s return to the ASX now, and grit our teeth for a checkup on what the different ASX sectors were up to today.

    Winners and losers

    As one might anticipate, there wasn’t one sector that escaped unscathed from today’s trading.

    The worst place to be though was invested in consumer discretionary shares. The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) had a horrific day, plunging 2.45%.

    Real estate investment trusts (REITs) were slammed too, as you can see from the S&P/ASX 200 A-REIT Index (ASX: XPJ)’s 1.66% belting.

    Consumer staples stocks were at the pity party, as you can see from the S&P/ASX 200 Consumer Staples Index (ASX: XSJ)’s 1.52% crater.

    Tech shares were invited as well. The S&P/ASX 200 Information Technology Index (ASX: XIJ) tanked 1.52% as well.

    Financial stocks weren’t riding to the rescue either, with the S&P/ASX 200 Financials Index (ASX: XFJ) writing off 1.15%.

    Communications shares did a little better though, illustrated by the S&P/ASX 200 Communication Services Index (ASX: XTJ)’s loss of 0.8%.

    Healthcare stocks were just ahead of that, with the S&P/ASX 200 Healthcare Index (ASX: XHJ) shedding 0.79%.

    Miners were right on the tail too, with the S&P/ASX 200 Materials Index (ASX: XMJ) losing 0.78%.

    Industrial shares came next. The S&P/ASX 200 Industrials Index (ASX: XNJ) got 0.74% cut from its value by the closing bell.

    Gold stocks were no safe haven today, evidenced by the All Ordinaries Gold Index (ASX: XGD)’s 0.49% downgrade.

    Utilities shares were amongst the better performers, with the S&P/ASX 200 Utilities Index (ASX: XUJ) sliding 0.3% lower.

    Finally, energy stocks were our winners of the day, although the S&P/ASX 200 Energy Index (ASX: XEJ) still slipped 0.05% lower.

    Top 10 ASX 200 shares countdown

    Leading the index winners this Friday was contracting company NRW Holdings Ltd (ASX: NWH). NRW shares rose a healthy 2.83% this session up to $2.91 each.

    That was despite a complete lack of news or announcements out of the company today.

    Here’s how the rest of today’s best shares stood at market close:

    ASX-listed company Share price Price change
    NRW Holdings Ltd (ASX: NWH) $2.91 2.83%
    Challenger Ltd (ASX: CGF) $6.62 2.80%
    Polynovo Ltd (ASX: PNV) $2.08 2.46%
    Sandfire Resources Ltd (ASX: SFR) $9.37 2.18%
    Audinate Group Ltd (ASX: AD8) $17.08 1.97%
    Eagers Automotive Ltd (ASX: APE) $10.61 1.63%
    A2 Milk Company Ltd (ASX: A2M) $7.12 1.28%
    Super Retail Group Ltd (ASX: SUL) $12.74 1.27%
    Woodside Energy Group Ltd (ASX: WDS) $27.93 0.65%
    ALS Ltd (ASX: ALQ) $14.02 0.57%

    Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

    The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

    Should you invest $1,000 in The A2 Milk Company Limited right now?

    Before you buy The A2 Milk Company 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 The A2 Milk Company 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 Sebastian Bowen has positions in A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group and PolyNovo. The Motley Fool Australia has positions in and has recommended Audinate Group and Super Retail Group. The Motley Fool Australia has recommended A2 Milk, Challenger, and Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • China made so many solar panels that even its own grid can’t support all the energy produced

    Photovoltaic panels are being seen on the roofs of enterprises in Lianyun township, Anqing city, Anhui province, China, on May 14, 2024.
    China has been on a solar-panel installation blitz.

    Costfoto/NurPhoto/Getty Images

    • China has produced an excess of solar panels, causing overcapacity issues domestically and abroad.
    • The US, EU, and China are facing challenges due to the glut of solar panels.
    • China and Germany are seeing energy market distortions from excessive solar energy production.

    China has made a lot of solar panels, dramatically lowering prices and helping the country's clean energy transition.

    The problem is that Chinese manufacturers seem to have made too many solar panels, according to the US, European Union, and their allies. They are now calling on Beijing to rein in the overcapacity of the panels and other goods, raising prospects of a trade war.

    China's facing its own overproduction problem at home following a breakneck pace of growth in solar energy — one key pillar of the country's "new three" economic drivers. China has installed so many solar panels that they are generating excess power that the country doesn't have storage or transmission capacity for, Reuters reported on Wednesday.

    Such overcapacity has prompted Chinese authorities to withdraw some price support for the sector, leading to fewer solar panel installations, per Reuters.

    China is still setting up solar panels at a rapid pace in the first quarter of 2024, as the installation rate jumped by more than one-third from a year ago, according to official data. However, this growth was much slower than in the 154% surge in the same quarter of 2023.

    As of March this year, China — the world's largest solar energy market — has installed 660 gigawatts of capacity. The US, meanwhile, ended 2023 with 179 gigawatts, enough to power 33 million American homes.

    China's solar panel overcapacity may be exported

    Chinese manufacturers are producing more solar panels than people want to buy domestically, according to a Bloomberg analysis in April.

    Given the oversupply at home, this development points to one possibility that will not be welcomed by the West: China continuing to dump its excess solar panels on the international market.

    Chinese manufacturers are feeling the heat from solar panel overcapacity, too.

    In March, Longi Green Energy Technology, the world's largest solar cell manufacturer, announced it was laying off thousands of workers amid overcapacity and low prices.

    China's solar panel overcapacity is so bad that the country's China Photovoltaic Industry Association is calling for more mergers and acquisitions, as well as restrictions on domestic competition to control capacity, the association said in a post on its official WeChat account on Tuesday.

    Earlier this month, US President Joe Biden announced he will double tariffs on Chinese solar cell imports from 25% to 50%.

    China has pushed back against the West's claim of industrial overcapacity. Beijing says the bloc is trying to contain its economic growth.

    Germany's energy prices are under pressure from too much solar energy

    It's not just China getting hit by an excess of solar energy.

    Germany, too, has been producing so much solar energy that energy prices have fallen into negative territory when output peaks.

    But experts say these are just bumps in the world's energy transition away from fossil fuels to green energy, which, in its next phase, will focus on optimizing supply and demand.

    "Every country in the world that is installing a lot of renewables and then facing the challenges that arise from all this variable intermittent generation, is searching for smart ways, intelligent AI-enabled or at least model-backed approaches to distributing this power and using it in the most efficient and effective way," David Fishman, a senior manager at the Lantau Group economic consultancy, told Reuters.

    "Certainly that's where China is heading," he added to the news agency.

    Read the original article on Business Insider

  • A Ukrainian brigade appeared to use video game clips to say that it took down a Russian Su-25

    A screenshot of a clip posted by the 110th, which appears to be footage from a video game.
    A screenshot of a clip posted by the 110th, which appears to be footage from a video game.

    110th Mechanized Brigade/Screenshot/Facebook

    • A Ukrainian brigade announced the destruction of a Russian Su-25 using what appears to be video game clips.
    • The 110th Mechanized Brigade posted the footage on Facebook on Thursday celebrating its win.
    • The footage resembles gameplay from titles such as War Thunder, Arma 3, or Digital Combat Simulator.

    Ukraine's 110th Mechanized Brigade announced on Thursday that it downed a Russian Su-25 "Frogfoot" fighter in the Donbas, posting footage from what seems to be a video game.

    "We promised that the genocide of Russian 'Sukhois' would continue, we're keeping the promise!" the brigade's official Facebook account wrote in a caption for the clip.

    The brigade said its announcement marked the second Su-25 downed by antiaircraft guns on Thursday, with Ukrainian outlet Kyiv Independent reporting that this was the sixth such fighter reported destroyed by Ukraine in May.

    The video posted by the 110th shows two planes flying over a virtual grass field before the camera switches to a frontal view of the jet's cockpit. The aircraft sustains damage and dives nose-first into the ground.

    Before impact, the clip switches to a blurry view of smoke rising above a field.

    The footage resembles gameplay from titles such as Arma 3, Digital Combat Simulator, or War Thunder, all of which feature the Su-25.

    Notably, footage from Arma 3 is often found in misinformation about active conflict zones, such as the war in Gaza. Recordings from the online multiplayer game have repeatedly been used to misrepresent battles in Ukraine.

    But the 110th's intention behind posting the clips is unclear, as the brigade neither claimed it was a video of live combat nor addressed it as virtual footage.

    On May 19, the same Facebook account announced that its forces had destroyed four Su-25s with a video of 3D-rendered jet models.

    The 110th Mechanized Brigade and press teams for Ukraine's Defense Ministry and Armed Forces did not immediately respond to requests for comment sent outside regular business hours by Business Insider.

    Several pro-Russia social media accounts have seized on the clip as a means to throw doubt on Ukraine's reports of casualties inflicted on Moscow's assets and troops.

    "Official account of the 110th Mechanized Brigade posted another 'alleged downing' of a Su-25," wrote one milblogger.

    Ukraine claimed on Thursday that it's destroyed 355 Russian fixed-wing aircraft since the war began in February, a tally that hasn't been verified by its allies. British intelligence said in April that it estimates Russia has lost at least 100 fixed-wing combat aircraft.

    Russian forces have been intensifying attacks on the frontline in recent weeks, with its Defense Ministry saying on Thursday that it captured the village of Andriivka in the Donbas.

    In the north, Moscow's troops pushed weakened Ukrainian lines back from the border and carried out missile strikes on the city of Kharkiv, which CNN reported killed seven people on Thursday.

    Meanwhile, Kyiv has been receiving a renewed flow of military equipment from the US as part of a long-awaited tranche of $61 billion in aid, which Congress passed in April.

    Read the original article on Business Insider

  • Why the Woolworths share price now offers a ‘very rare opportunity’

    A couple in a supermarket laugh as they discuss which fruits and vegetables to buy

    The Woolworths Group Ltd (ASX: WOW) share price slumped lower today.

    Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $31.51. At market close on Friday, shares finished trading at $31.08 apiece, down 1.36%.

    For some context, the ASX 200 finished the week down 1.08%, pressured by fading hopes of interest rate cuts in 2024.

    With today’s fall factored in, Woolworth’s stock is over 17% in 2024.

    A large part of those losses were delivered on 21 February. That was when the company announced the shock departure of long-serving CEO Brad Banducci.

    Woolies also reported on its half-year results that day, noting inflationary pressures were making customers more cautious.

    And, of course, the Woolworths share price has been hit with some headwinds recently as policymakers debate the merits of legislatively increasing the competitive landscape among Australia’s oligopolistic supermarket operators.

    But much of this looks to be water under the bridge now.

    Indeed, according to Wilson Asset Management investment analyst Hailey Kim, the Woolworths share price now looks to offer ASX 200 investors with “a very rare opportunity“.

    Why the Woolworths share price could be a bargain

    Kim said she has a positive outlook for the ASX 200 supermarket stock despite the recent tough times.

    She noted that Woolies is “the largest supermarket in Australia and they also are in department stores like Big W and also supermarkets in New Zealand as well”.

    As for the recent headwinds dragging on the Woolworths share price, Kim said:

    They’ve been going through some tough times from regulatory environments to cost inflation and also some operational hiccups as well. But fundamentally within the underlying business is very solid.

    Woolworths have invested in their tech and media capabilities well ahead of time, which we think will set them apart in the years to come.

    Kim did caution that Wilson envisions some ongoing volatility over the next few months.

    As for the latter part of 2024, she added:

    When we think about the second half of this calendar year, we think the company will be able to demonstrate the fact that they’ve regained the sales momentum and also market share.

    We have started to see consumers starting to cook and eat more at home, which is a lot more of a household budget friendly option as opposed to dining out. So that’s also positive for the supermarket industry as well.

    Kim said that given the recent Woolworths share price and price-to-earnings (P/E) ratio, the ASX 200 stock presents “a very rare opportunity where you can pick up a quality company at a deep discount”.

    The post Why the Woolworths share price now offers a ‘very rare opportunity’ appeared first on The Motley Fool Australia.

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

    Before you buy Woolworths Group 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 Woolworths Group 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 Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • ASX 200 insider buys up another $2,000,000 in company stock following Wednesday’s 15% crash

    A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.

    When an ASX 200 stock dives 15% in one trading session, the best thing that its ragged investors might hope to see is a senior member of said stock’s management going out and putting their money where their mouth is by buying up significant chunks of shares.

    Not only does this shore up investor confidence, but it can also let investors know that their shares aren’t worth selling. In fact, it might even persuade some that they are too cheap not to pick up some more.

    That’s exactly the scenario that investors in ASX 200 car dealership stock Eagers Automotive Ltd (ASX: APE) are presented with today – the bad and the good.

    The bad first. As we covered on Wednesday, Eagers stock did tank by 15.01% over that day’s session, falling from $12.19 a share down to $10.36. It was worse at one point on Wednesday as well, with the company minting a new 52-week low of $9.87 during intra-day trading.

    The catalyst for this steep fall was the year-to-date trading update Eagers released that day.

    Director buys up big after ASX 200 stock tanks on earnings update

    As we discussed at the time, this update warned investors that the company is expecting to endure a 15% drop in profits for the first half of 2024 compared with the first half of 2023.

    Needless to say, the markets were not impressed with this ASX 200 stock.

    Yet some of the shareholders that were selling out on Wednesday were handing over their shares to none other than Eagers non-executive director Nicholas Politis.

    Politis appears to have taken Warren Buffett’s famous advice about being greedy when others are fearful.

    An ASX filing from Wednesday reveals that Politis picked up no fewer than 200,000 shares in on-market trades during Wednesday’s session. Politis paid an average of $10.403 for one tranche of 100,000 shares and an average of $10.537 for the other 100,000. All up, that would have set this ASX 200 stock’s director back around $2.09 million.

    After these enthusiastic buys, Politis now owns 72,719,049 Eagers shares, which would have a value of just over $770 million at the current share price (at the time of writing) of $10.59.

    No doubt Eagers investors will appreciate this strong vote of confidence from this board member this week.

    Eagers share price snapshot

    Even before this week’s Eagers share price nosedive, this ASX 200 stock had been on struggle street for a while. As it stands today, Eagers shares are now down 27.1% over 2024 to date, as well as by 17.7% over the past 12 months.

    At today’s share price, this ASX 200 stock is trading on a price-to-earnings (P/E) ratio of 9.59, with a trailing dividend yield of 6.99%.

    The post ASX 200 insider buys up another $2,000,000 in company stock following Wednesday’s 15% crash appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Eagers Automotive Ltd right now?

    Before you buy Eagers Automotive Ltd 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 Eagers Automotive Ltd 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 Sebastian Bowen 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 recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Brokers name 3 ASX shares to buy now

    A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.

    It has been another busy week for many of Australia’s top brokers. This has led to the release of a number of broker notes.

    Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone right now:

    Sandfire Resources Ltd (ASX: SFR)

    According to a note out of Macquarie, its analysts have retained their outperform rating on this copper miner’s shares with an improved price target of $10.80. The broker made the move after lifting its copper price forecasts for both the near term and long term. In respect to near term prices, Macquarie has increased its 2024 copper estimate by 7% and its 2025 estimate by 9%.  This is being underpinned by concerns over the outlook for copper supply and a favourable demand outlook. Sandfire Resources remains the broker’s favoured pick for direct exposure to the base metal. The Sandfire Resources share price is currently changing hands for $9.27.

    TechnologyOne Ltd (ASX: TNE)

    A note out of Morgans reveals that its analysts have upgraded this enterprise software provider’s shares to an add rating with an improved price target of $20.50. This follows the release of a solid half year result from the tech company earlier this week. Morgans notes that Technology One delivered on the market’s expectations during the half. But the main highlight was its outlook. Looking ahead, the broker believes that Technology One’s profit growth can accelerate to 15% to 20% per annum growth from 10% to 15% previously. This is being underpinned by the quality of its software, unique SaaS business model, and large market opportunity. The TechnologyOne share price is fetching $17.59 on Friday afternoon.

    Xero Ltd (ASX: XRO)

    Analysts at Goldman Sachs have retained their conviction buy rating on this cloud accounting platform provider’s shares with an increased price target of $164.00. This follows the release of Xero’s full year results, which revealed sales marginally ahead of expectations and earnings comfortably ahead of them. The broker was also pleased to see the Rule of 40 exceeded (41%) and record EBIT margins delivered as Xero benefits from strong revenue growth, cost controls, and much lower than expected capex. In response to the result, the broker has upgraded its earnings estimates through to FY 2026 and lifted its valuation accordingly. The Xero share price is currently trading at $131.30 this afternoon.

    The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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

    Before you buy Macquarie Group 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 Macquarie Group 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 James Mickleboro has positions in Technology One and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Macquarie Group, Technology One, and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group and Xero. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Why Appen, Mayne Pharma, Playside, and PYC shares are storming higher

    Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.

    It has been a tough finish to the week for the S&P/ASX 200 Index (ASX: XJO). In afternoon trade, the benchmark index is down 1.2% to 7,719 points.

    Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising today:

    Appen Ltd (ASX: APX)

    The Appen share price is up over 3% to 61 cents. This follows the release of a trading update at the artificial intelligence (AI) data services provider’s annual general meeting. Management advised: “Revenue stabilisation has continued through the first four months of the year when we account for the loss of Google revenue. We are seeing positive signals on LLM related growth in 2024, including from our Global customers.”

    Mayne Pharma Group Ltd (ASX: MYX)

    The Mayne Pharma share price is up 2% to $5.51. This has been driven by the release of an update on the pharmaceutical company’s share buyback. According to the release, Mayne Pharma has extended its buyback program until 29 November. It has also lifted the total buyback to up to 15% of its shares outstanding from up to 10% previously.

    Playside Studios Ltd (ASX: PLY)

    The Playside Studios share price is up 4% to 90.5 cents. This morning, this game developer revealed that it is developing a multiplayer strategy game based on the Game of Thrones series. This new premium title will be available on PC and recreates the iconic characters and immersive world of Westeros in a real-time strategy. The game is officially licensed by Warner Bros. Interactive Entertainment on behalf of HBO. This release relates to a multi-game deal announced late last year.

    PYC Therapeutics Ltd (ASX: PYC)

    The PYC Therapeutics share price is up over 1.5% to 12.2 cents. This has been driven by news that this clinical-stage biotechnology company has received Orphan Drug Designation (ODD) from the US Food and Drug Administration (FDA) for drug candidate PYC-001. This drug candidate is for the treatment of OPA1-associated vision loss. The company notes that ODD is given to drug candidates designed to treat rare diseases. The benefits of an ODD include tax credits for qualified clinical trials, exemptions from some regulatory fees and the potential for seven years of market exclusivity post approval. Autosomal Dominant Optic Atrophy (ADOA) is a progressive and irreversible blinding eye disease. It affects approximately 1 in every 35,000 people representing a market size of ~$2 billion per annum.

    The post Why Appen, Mayne Pharma, Playside, and PYC shares are storming higher appeared first on The Motley Fool Australia.

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

    Before you buy Appen 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 Appen 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

    Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet, Appen, and Warner Bros. Discovery. The Motley Fool Australia has recommended Alphabet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Why did Goldman Sachs just downgrade Wesfarmers shares?

    Man on a laptop thinking.

    Wesfarmers Ltd (ASX: WES) shares are 3.6% lower on Friday at $63.92 apiece in early afternoon trading.

    There is no news out of the conglomerate today, so the stock is likely just moving with the market.

    At the time of writing, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is the weakest of the 11 market sectors, down 2.19%.

    Wesfarmers is the largest ASX discretionary stock by market capitalisation.

    The benchmark S&P/ASX 200 Index (ASX: XJO) is also 1.14% lower today.

    What’s been happening with the Wesfarmers share price?

    Wesfarmers shares have had a great run over the past 12 months, clocking an impressive 28.6% growth. This compares to a 13.3% lift for the consumer discretionary index.

    In the year to date, Wesfarmers shares have moved 10.9% higher while the index has lifted 4%.

    On 8 May, Wesfarmers shares hit an all-time high price of $71.11.

    So why is top broker Goldman Sachs downgrading this clear sector outperformer?

    Why did this top broker just downgrade Wesfarmers shares?

    Goldman Sachs recently released a new report on ASX retail shares, with analysts Lisa Deng and James Leigh re-jigging their stock picks in the sector.

    There are 6 ASX retail shares they rate as a buy and 3 retail shares they recommend selling.

    However, one that sits in the middle with a neutral rating is Wesfarmers shares. This represents a downgrade for the high-flying stock as it was previously rated a buy.

    Buy thesis on Wesfarmers shares has ‘played out’

    Goldman did not change its 12-month share price target on Wesfarmers in its recent review. Nor did it change its earnings expectations.

    It still likes the stock but explains that its buy thesis has now simply “played out”.

    Goldman put Wesfarmers on its buy list on 25 January and further increased its target price ahead of the company’s Strategy Day on 9 April.

    This was all premised on Bunnings’ better-than-expected performance, the expectation that Bunnings and Kmart would generate high free cash flow for investment into Wesfarmers’ high growth and high-returning businesses in lithium and health, and some upside valuation potential for its health business.

    Deng and Leigh said:

    … our Buy thesis of resilient Retail (Bunning and Kmart) businesses generating ~A$2.0-A$2.5B free cashflow to invest behind growth opportunities (Digital and Health) is now fully factored in.

    Post the 1H23 results and 2023 Strategy day, the above thesis has largely played out …

    Our EBIT/EPS is now not differentiated vs Factset consensus in FY24 though remains ~5% above Consensus in FY25/26e, largely due to Bunnings margin expansion.

    The analysts also commented that they have a more favourable view of consumer staples shares over consumer discretionary shares at the moment.

    Deng and Leigh said they “see better value in staples where valuation and earnings expectations are less demanding”.

    They think consumers are “clearly increasingly value-focused” amid anticipated delays in interest rate cuts, with Goldman recently changing its predicted timing for the first cut from August to November.

    The March retail figures from the Australian Bureau of Statistics (ABS) showed the weakest annual rise in retail spending on record outside the pandemic and the introduction of the GST.

    Not much room left for more share price growth

    Goldman has a 12-month price target of $68.80 on Wesfarmers shares.

    So, there’s not much upside available for investors who buy the stock at today’s price — just 7.6%.

    The post Why did Goldman Sachs just downgrade 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 Bronwyn Allen 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 and 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.

  • Only 1 in 4 Americans think you need a college degree to get a high-paying job: report

    Rear view of young student wearing graduation gown with graduation cap in her commencement day.
    "Only one-in-four U.S. adults say it's extremely or very important to have a four-year college degree in order to get a well-paying job in today's economy," the Pew Research Center said in a report on Thursday.

    Boy_Anupong via Getty Images

    • Most Americans don't think that going to college is worth it these days.
    • Only 1 in 4 adults think you need a degree to get a high-paying job, per the Pew Research Center.
    • The US think tank said it surveyed over 5,000 US adults from November to December 2023. 

    A majority of Americans don't think earning a college degree is a pre-requisite for snagging a high-paying job, according to a Pew Research Center report released on Thursday.

    "Only one-in-four US adults say it's extremely or very important to have a four-year college degree in order to get a well-paying job in today's economy," the center wrote in its report, citing a survey it conducted with 5,203 US adults from November to December 2023.

    Nearly half of the survey's respondents said having a four-year college degree is less important in getting a high-paying job today than it was 20 years ago.

    The US think tank's findings come as an increasing number of American youths are beginning to lose interest in higher education.

    Last year, BI and market research firm YouGov surveyed more than 1,800 Americans across five generations.

    According to the results, 46% of Gen Z respondents said they didn't think college was worth the cost. Only 39% of those surveyed said they felt it was important for them to advance their education.

    The lukewarm reception to higher education should not surprise many, considering how expensive college tuition has gotten.

    The burgeoning debts racked up by college graduates have prompted government intervention. Since taking office, President Joe Biden has approved multiple rounds of debt relief to borrowers.

    "After the 70-year period in which policymakers and social commentators and community leaders all saying from the hymnal that you've gotta go to college to make it in America, that headline, that kind of postulate, has been overthrown," Harvard Business School professor Joseph Fuller told BI's Ayelet Sheffey in December.

    Read the original article on Business Insider

  • China wants its nepo-baby and get-rich-quick influencers gone

    A woman takes a selfie on a yacht.
    A woman takes a selfie on a yacht.

    Kamon Supasawat/Getty Images

    • China's social media is cracking down on influencers trying to get famous by showing off wealth.
    • Some of its biggest platforms said they've removed thousands of posts of luxury flaunting.
    • All of the companies announced bans on the same day, indicating an industry-wide push for reform.

    Wealth-flexing for clout is now officially bad behavior in China.

    China's biggest social media platforms launched a synchronized crackdown on parading wealth last week, removing thousands of posts and punishing dozens of influencers for promoting "bad values."

    It's one of the Chinese internet's most pointed campaigns against "money worship" and flaunting luxury, which Beijing's central government has been ordering companies to regulate.

    The platforms that announced disciplinary measures on May 15 included Weibo, Xiaohongshu, and Douyin — China's loose versions of Twitter, Instagram, and TikTok.

    Weibo, which has close to 600 million active users, posted the most extensive list of bannable behavior, including:

    • Displaying luxury cars or expensive houses as a gimmick to market products or build one's reputation.
    • Uploading pictures of large amounts of cash or people tossing banknotes.
    • Showing luxury services or goods to exaggerate how one can earn "millions in a month," achieve financial independence or start a lucrative business from scratch.
    • Hyping up a "second-generation household," a term that typically describes people who enjoy wealth because their parents are rich.
    • Filming minors using luxury goods to "attract traffic and hype."
    • Stoking discontent among poorer audiences and emphasizing class discrimination, listed by Weibo as "exaggerating and hyping the struggle of the lower classes to survive."

    All three platforms have banned posts and accounts for "money worship" before, but their announcements made in tandem suggest an industry-wide push to clamp down on extravagant wealth.

    Xu Qiuying, an editor for the state-owned paper Beijing News, wrote in a commentary that several influencers caught by the ban had been targeted for using displays of wealth as a marketing ploy.

    "If the rich simply share their real lives, and their wealth comes from legitimate sources, and they just show off their wealth to satisfy their personal vanity, there is nothing wrong with that," Xu wrote.

    Xu claimed that the barred influencers grew their fame by "showing off their wealth" and, in turn, became rich by selling products on livestreams.

    "The 'rich' showed off their wealth to get rich," Xu wrote.

    The account bans came as China's Central Cyberspace Affairs Commission announced a two-month campaign in April to "rectify the unscrupulous traffic-seeking on personal media."

    Authorities said they were concerned by a surge in accounts creating fake personas or misrepresenting their lives to boost their numbers.

    That included people who were "showing off wealth, deliberately showing a luxurious life built on money, thereby attracting fans and diverting traffic," the commission said.

    All of this ties back to a precedent set by China's leader, Xi Jinping, to promote "common prosperity," or the ideal of providing wealth more equally to all Chinese citizens.

    Xi's campaign initially focused on lifting China's vast rural population out of extreme poverty, benchmarked by a minimum salary determined by Beijing. The venture was generally well-received in a China that had turned jaded from widespread corruption and a growing class divide.

    More recently, common prosperity has evolved into a crackdown on "excessive wealth," with the central government stepping up regulations on private industry giants and wealthy families.

    Beijing seems to have toned down its rhetoric of common prosperity as its economy struggled in the post-COVID era. Still, state media continues to laud the idea as one of the country's foundations.

    The campaign may have a long road ahead. In September, the income gap in 2022 between China's richest and poorest urban households was the country's widest since records began in 1985.

    The average household income of the richest 20% in urban areas was 6.3 times that of the poorest 20%, per official data.

    Read the original article on Business Insider