Author: openjargon

One of the hottest commodities this year has been copper.

Due to a combination of supply risks and improving demand prospects for energy transition metals, the red metal has been soaring since the start of the year.

The good news for investors is that it may not be too late to gain exposure to copper, with one ASX mining stock still offering investors significant upside potential according to analysts.

Which ASX copper stock is a buy?

The company in question is Aeris Resources Ltd (ASX: AIS).

According to a note out of Bell Potter, it believes that a recent pullback has presented investors with a “second chance saloon” to pick up the ASX copper stock. It commented:

AIS has retreated ~36% from its recent share price high of $0.335/sh in late May 2024, correlating closely with the recent rally and pullback in the copper price. Company specific factors are always at play, but we highlighted (March 2024) AIS’ strong leverage to the copper price and, in our view, this has been the key driver of the movements in AIS’ share price.

Updating our sensitivity analysis for our latest commodity price forecasts and modelled assumptions shows AIS remains most sensitive to the copper price, with a ±5% move driving a ±25% swing in our valuation. AIS’ unhedged copper exposure is one of the key tenets of our investment thesis. We remain bullish on the outlook for copper and see the current pullback as an opportunity to gain exposure via AIS’ Australian operations.

30% upside

The note reveals that Bell Potter has reaffirmed its buy rating and 30 cents price target on the ASX copper miner.

Based on its current share price of 23 cents, this implies potential upside of 30% for investors over the next 12 months. It concludes:

There are no EPS changes in this report and our NPV-based valuation is unchanged. AIS is a copper dominant producer with all its assets in Australia. Its near-term outlook is highly leveraged to the copper price and increasing copper grades and production at the Tritton copper mine. Successful delivery offers significant upside to the share price and demonstrates a strategically attractive asset in Tritton, making AIS vulnerable as a corporate target. We retain our Buy recommendation.

Overall, this could be a good option for investors that are on the lookout for exposure to a booming side of the share market right now.

The post Meet the ASX copper stock that could rise 30% appeared first on The Motley Fool Australia.

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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 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.

Deciding which ASX income stock to buy can be a gruelling process.

Luckily for income investors, analysts have done a lot of the hard work for you and picked out four they think are buys.

Here’s what they are saying about these dividend stock:

APA Group (ASX: APA)

The first ASX income stock to look at is APA Group. It is an energy infrastructure business that owns, manages, and operates a diverse portfolio of gas, electricity, solar and wind assets.

Macquarie is a fan of the company and currently has an outperform rating and $9.40 price target on its shares.

As for income, the broker believes that APA Group’s long run of dividend increases will continue. The broker is forecasting dividends per share of 56 cents in FY 2024 and 57.5 cents in FY 2025. Based on the current APA Group share price of $8.39, this equates to 6.7% and 6.85% dividend yields, respectively.

Coles Group Ltd (ASX: COL)

Over at Morgans, its analysts think that income investors should be buying this supermarket giant’s shares.

The broker currently has an add rating and $18.95 price target on its shares.

In respect to dividends, it is expecting Coles to pay fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $17.10, this implies yields of approximately 3.85% and 4%, respectively.

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Morgans also thinks that Dalrymple Bay Infrastructure could be an ASX income stock to buy.

It is the long-term operator of the Dalrymple Bay Coal Terminal. This has been Queensland’s premier coal export facility since all the way back in 1983.

The broker currently has an add rating and $3.05 price target on its shares. As for income, the broker is forecasting dividends per share of 22 cents in FY 2024 and then 23 cents in FY 2025. Based on the latest Dalrymple Bay Infrastructure share price of $2.93, this will mean yields of 7.5% and 7.85%, respectively.

GDI Property Group Ltd (ASX: GDI)

Finally, the team at Bell Potter thinks that this property company could be an ASX income stock to buy.

Its analysts currently have a buy rating and 75 cents price target on its shares.

As well as plenty of upside, the broker believes GDI Property could provide investors with some big dividend yields in the coming years. It is forecasting dividends per share of 5 cents across FY 2024, FY 2025, and FY 2026. Based on the current GDI Property share price of 60 cents, this implies dividend yields of 8.3% for the next three years.

The post 4 ASX income stocks for Aussie investors to buy now appeared first on The Motley Fool Australia.

More reading

• Can Coles shares outperform the ASX 200 Index from here?
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• Mining, supermarkets, and property: 3 ASX 200 dividend stocks to buy

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

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

The artificial intelligence (AI) trade took a turn for the worse on Monday as Nvidia (NASDAQ: NVDA) shares dropped as much as 6.5%, dragging the entire AI market with it.

Super Micro Computer (NASDAQ: SMCI) fell as much as 8.5%, and Taiwan Semiconductor Manufacturing (NYSE: TSM) was down 3.8% at its low today. The three AI stocks were down 4.9%, 7%, and 3.2%, respectively, at 11:30 a.m. ET. There isn’t any specific news about AI, but investors have a lot on their minds about the future demand for the chips driving AI today.

Nvidia insiders are selling in droves

On Friday, Nvidia insiders, including CEO Jensen Huang, announced massive stock sales beyond just tax sales related to stock options and warrants. Huang reported he sold 240,000 shares on the open market on Thursday and Friday, totaling $31.6 million for just those two days.

In June alone, Huang has already sold nearly $95 million of stock as he’s been touting the growth potential for AI long term. Numerous other executives have also reported large stock sales on the open market.

Insider sales can be an indication they are less bullish on a stock, which is why this is notable.

Is the bubble popping?

As impressive as AI demand has been, the valuations of Nvidia and Super Micro Computer in particular have hit crazy levels. You can see below that Nvidia’s price-to-earnings (P/E) multiple is still over 70 and its price-to-sales (P/S) multiple is 37.6. Super Micro Computer isn’t quite as expensive, but it’s still priced for perfection.

NVDA PE ratio data by YCharts.

Investors must consider how much growth is priced into AI stocks right now and what the likelihood is that they will live up to that potential. Very few AI companies make money, so the money flowing to chips could slow down if those that are developing AI models and tools don’t create business plans that make them sustainable in the long term.

Earnings come into focus

Investors are suddenly thinking about demand because we’re only a few weeks away from the start of earnings season for the second quarter of 2024. That’s when we’ll hear about end demand and margins for tech companies building AI products, including those buying the most Nvidia chips.

If demand is strong, stocks could go up, but investors are taking money off the table for fear there could be some disappointing signs. And with stocks priced to perfection, even the smallest crack in the AI growth story could send them tumbling.

It’s all up to Nvidia

Nvidia is the biggest name in AI, and its fortunes will drive Super Micro Computer and TSMC, which are suppliers to the company and beneficiaries from the overall growth in AI demand. If the market for Nvidia chips continues to grow, the other companies will have plenty of demand.

What I think the focus over the next month will be is the demand for AI products that companies have introduced and whether or not that will lead to more capital spending. If not, there could be a pullback in orders in the future, and that could put both revenue and margin projections into question.

These high valuations and lack of AI business models are why I’m avoiding AI stocks today. The risk is simply too high for the observable reward right now.

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

The post Nvidia stock drops 6.5%, dragging artificial intelligence stocks lower appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Taiwan Semiconductor Manufacturing. Travis Hoium has no position in any of the stocks mentioned. 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.

On the ASX, investors can normally expect dividend payments every six months from their dividend shares. This biannual income schedule is decidedly the norm on the Australian markets. ASX dividend stocks that pay out quarterly payments are rare, and stocks that dole out a paycheque every month are rarer still.

But that doesn’t mean they don’t exist.

One such example is Plato Income Maximiser (ASX: PL8). This listed investment company (LIC) specialises in paying out fat, fully franked dividends. And it does so every single month, with its shareholders getting a paycheque in the proverbial mailbox 12 times a year.

Plato Income Maximiser, like all LICs, manages a portfolio of underlying assets on behalf of its shareholders. In this case, those assets are a collection of diversified ASX dividend stocks, selected on their current and future income potential.

Some of the largest ASX dividend stock positions in Plato’s portfolio include ANZ Group Holdings Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP), Goodman Group (ASX: GMG) and Commonwealth Bank of Australia (ASX: CBA).

Some of Plato’s highest-yielding ASX dividend stocks include Woodside Energy Group Ltd (ASX: WDS), Ampol Ltd (ASX: ALD), Metcash Ltd (ASX: MTS) and Whitehaven Coal Ltd (ASX: WHC).

Over the past 12 months, Plato shareholders have enjoyed a monthly dividend worth 5.5 cents per share. Each of those 12 dividends came with full franking credits attached.

At the current Plato share price of $1.21, these payments give this ASX dividend stock a yield of 5.91%.

$100 a month in cash from this ASX dividend stock?

That means that if an income investor puts approximately $20,350 into Plato shares today, and the company at least maintains its dividend schedule, that investor can expect to enjoy around $100 in passive dividend income every month.

Of course, we should never assume that an ASX dividend stock will continue paying out the dividends it has in the past into the future. But Plato does have a fairly strong record when it comes to maintaining its dividend. Since it was first listed back in 2017, the only significant income cuts came in the COVID-ravaged years of 2020 and 2021.

Over 2022, 2023 and 2024 to date, Plato’s dividends have been remarkably consistent.

That’s in addition to some healthy overall returns from Plato shares. The ASX dividend stock tells us that, as of 31 May, its shareholders have enjoyed a total return (including share price gains, dividends, fees and franking credits) of 9.6% per annum since its 2017 inception. That compares to an average of 9.5% per annum from its ASX 200 benchmark over the same period.

The post This 6% ASX dividend stock can pay $100 cash every month appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Plato Income Maximiser. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group and Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Telstra Group Ltd (ASX: TLS) shares could be trading at an unwarranted discount right now.

That’s the view of analysts at Bell Potter, which are urging investors to snap up the telco giant’s shares.

What is the broker saying about Telstra’s shares?

According to a note from this morning, the broker has been busy updating its financial model to reflect recent developments. It explains:

We update our Telstra forecasts for the flagged restructuring costs of $200-250m across FY24 and FY25 due to the reduction of up to 2,800 staff. We assume the midpoint of the range and apply $100m in FY24 and $125m in FY25. Note there is no change in our underlying forecasts and our underlying EBITDA of $8.2bn and $8.6bn in FY24 and FY25 remain consistent with the guidance ranges of $8.2-8.3bn and $8.4- 8.7bn in each period.

Its analysts concede that these job cuts could be a sign that Telstra is finding it harder to reduce costs than it was expecting. They add:

Our overall view of the update last month was slightly net negative given the size of the job cuts suggests the $500m cost reduction target by FY25 is proving difficult and the turnaround in Enterprise is likely to be slow.

However, one thing that Bell Potter was happy with was the removal of Telstra’s inflation-linked price increases. It explains:

But the removal of annual CPI price rises for postpaid mobile price plans we did not view negatively – as it provides flexibility – and in our view does not indicate increased competition in mobile (as supported by the price rises by Optus in late May).

‘Excessive’ discount

In light of the above, the broker has reaffirmed its buy rating and trimmed its price target by 1% to $4.20.

Based on where Telstra shares currently trade, this implies potential upside of 16% for investors. In addition, 5%+ dividend yields are forecast each year through to FY 2026.

Bell Potter believes that the company’s shares are trading at an excessive discount to its large cap peers and expects this to change in time. Particularly given its attractive dividend yield. It concludes:

Telstra is trading on an FY25 PE ratio of 18.6x based on our underlying forecasts which is a 24% discount to the average 24.4x of the peers (ALL, COL, CSL, GMG, WES and WOW). We view some discount as appropriate but in our view this looks excessive, particularly given the forecast mid to high single digit EPS growth over the next few years, strong market position and the potential for some or all of InfraCo to be sold in the medium term. We also believe the forecast yield of c.5% is supportive of the share price which is higher than all of the peers.

The post Buy Telstra shares due to its ‘excessive’ discount appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.