Author: openjargon

AGL Energy Ltd (ASX: AGL) and Pilbara Minerals Ltd (ASX: PLS) shares are both interesting potential investments to think about because of the exposure they can provide to the growth of energy-related demand.

These businesses are constituents of the S&P/ASX 200 Index (ASX: XJO), but that doesn’t mean they’re immune to volatility. As the chart below shows, their share prices have declined significantly over the past few years.

In the last five years, the AGL share price has fallen around 50%, while the Pilbara Minerals share price has dropped 42% since August 2023. Of course, a lower share price doesn’t necessarily mean they excellent buys. But it’s still worth analysing and comparing both shares.

Energy prices are key

It can be quite difficult to predict what’s going to happen next with lithium prices or electricity prices.

AGL is an energy generator and retailer, so it benefits when energy prices go up. Pilbara Minerals is a major lithium miner, so it will benefit if lithium prices rise amid the rise of electric vehicles.

The broker UBS recently noted that near-term wholesale prices have increased. UBS also increased its expectation for wholesale electricity prices to $90MW per hour (up $10MW per hour), reflecting “a slower build out of renewable and transmission capacity, higher levelised cost of energy (LCOE) for new generation and an updated forecast of thermal generation and storage utilisation.”

The energy retailer’s net profit after tax (NPAT) is expected to grow at a compound annual growth rate (CAGR) of 9% between FY26 and FY29.

Sadly, lithium prices are not looking as positive. UBS said it sees a spot price for lithium spodumene of between US$1,050 to US$1,075 as a “fair reflection of a well-supplied market.”

UBS suggested that “continued downside risk remains while supply out of Africa is strong and demand for PHEV [plug-in hybrid electric vehicle] stagnates.”

The broker is wary of Pilbara Minerals’ recent announcement to expand the Pilgangoora operations with its P2000 project. Taking the production to 2mt per annum would reportedly see it rival Greenbushes as the world’s largest spodumene mine. However, “project announcements like this and Manono will likely push out a return to incentive based prices and keep prices near current marginal cost support levels.”

If electric car demand were to recover to a satisfactory level of growth, it could lead to higher lithium prices. AGL can benefit from increasing energy demand from areas like data centres, AI, electric vehicles and a growing population.

My verdict on AGL and Pilbara Minerals shares

Pilbara Minerals doesn’t seem to be doing itself or the lithium price any favours by aiming for such large annual production.

I don’t think it’s clear that the lithium price will recover to previous strong levels, particularly if supply keeps increasing.

AGL can benefit from rising energy prices, investments in energy storage, and growing demand from data centres.

If AGL can grow its profit and dividend in the coming years, I think the business could be a materially undervalued opportunity at today’s prices. That’s why I recently decided to invest in the ASX share, and it would be my pick today.

According to the UBS estimates, the AGL share price is valued at 10x FY25’s estimated earnings.

The post Are AGL or Pilbara Minerals shares a better buy? appeared first on The Motley Fool Australia.

More reading

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• These are the 10 most shorted ASX shares
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• Is it time to dive back into ASX lithium shares?
• Buy this ASX lithium stock and sell this one

Motley Fool contributor Tristan Harrison has positions in Agl Energy. 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.

Are you hunting ASX income stocks to buy? If you are, then it could be worth checking out the two stocks listed below.

They have both been named as buys and tipped to provide investors with good yields in the near term.

Here’s what analysts are saying about them:

Healthco Healthcare and Wellness REIT (ASX: HCW)

Bell Potter thinks that HealthCo Healthcare & Wellness REIT could be an ASX income stock to buy.

It is a real estate investment trust with a mandate to invest in hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness property assets. Management notes that its objective is to provide shareholders with exposure to a diversified portfolio underpinned by attractive megatrends.

Bell Potter is a big fan and highlights its significant development pipeline and huge addressable market as reasons to buy. It said:

HCW has underperformed the REIT sector last 3 months (-10% vs. +22% XPJ) following bond yield reversion and is attractively priced at 20% discount to NTA (but only REIT to record flat to positive valuation movement at 1H24) with double digit 3 year EPS CAGR given high relative sector debt hedging and ability to grow its $1bn development pipeline via attractive YoC spread to marginal cost of debt. Longer term, HCW has significant scope for growth with an estimated $218 billion addressable market where an ageing and growing population should underpin long-term sector demand.

In respect to dividends, the broker is forecasting dividends per share of 8 cents in FY 2024 and then 8.3 cents in FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.16, this will mean dividend yields of 6.9% and 7.2%, respectively.

Bell Potter has a buy rating and $1.50 price target on its shares.

Universal Store Holdings Ltd (ASX: UNI)

Over at Morgans, its analysts think that Universal Store could be a great option for income investors.

It is the youth fashion retailer behind the eponymous Universal Store brand. In addition, it has potential to grow its smaller Perfect Stranger and Thrills brands.

Commenting on its bullish view, the broker said:

Our positive view about the fundamental long-term appeal of Universal Store as a retail proposition and investment opportunity is undiminished. The growth opportunities are in place. Universal Store’s women’s banner Perfect Stranger is performing well, justifying an acceleration in its network expansion; the prospect of building out the wholesale distribution channels acquired with CTC is compelling; and customers continue to respond well to the Universal Store banner, rendering its plan to grow this network to more than 100 stores more than reasonable. Although its core youth customers are far from buoyant, they continue to spend.

Morgans is forecasting fully franked dividends of 26 cents per share in FY 2024 and then 29 cents per share in FY 2025. Based on its current share price of $5.08, this will mean yields of 5.1% and 5.7%, respectively.

The broker has an add rating and $6.50 price target on the ASX income stock.

The post Why brokers say these ASX income stocks are top buys appeared first on The Motley Fool Australia.

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

The ASX dividend stock Kelsian Group Ltd (ASX: KLS) has deviated significantly from its recent highs. The Kelsian share price is down around 50% from April 2021 and 25% over the last year, as shown in the chart below.

Kelsian describes itself as Australia’s largest integrated multi-modal transport provider and tourism operator. It has established bus operations in Australia, Singapore, the USA, London, and the Channel Islands. At 31 December 2023, it had 5,500 buses, 115 vessels, and 24 light rail vehicles.

The company has been operating for over 30 years. It claims to be a leader in sustainable public transport, with Australia’s largest zero-emission bus fleet and electrified bus depot.   

It may not be the most well-known ASX dividend stock, but I believe it could be a compelling option.

Passive income potential

Kelsian has impressively grown its annual dividend per share each year since 2021, which is pretty good considering all of the uncertainty and volatility of the last three years.

Looking at the last two declared dividends, it has a fully franked dividend yield of 3.3% and a grossed-up dividend yield of 4.8%.

The estimate on Commsec suggests the ASX dividend stock could pay an annual dividend per share of 22.7 cents in FY25, which would be a grossed-up dividend yield of 6.2%.

In the subsequent year of FY26, the transportation business is forecast to pay an annual dividend per share of 25 cents. This would represent a grossed-up dividend yield of 6.8% in the 2026 financial year.

So, the business is projected to see a pleasing level of dividend yield and passive income growth in the next couple of financial years.

Are the ASX dividend stock’s earnings going to grow?

I only want to consider investing in businesses whose earnings are likely to grow in the foreseeable future. Profit growth usually drives the share price higher and funds larger dividend payments.

In the FY24 first-half result, the business reported revenue grew by 44.9% to $982.7 million thanks to the acquisition of All Aboard America! and the new Sydney contracts from August 2023 and October 2023. It also reported underlying earnings before interest and tax (EBIT) growth of 29.4% to $58.1 million and statutory net profit after tax (NPAT) growth of 44.1% to $28.1 million.

Kelsian’s outlook commentary on the HY24 result said it’s “well-placed to continue to deliver growth underpinned by economies of scale, efficiencies and global procurement opportunities.”

The ASX dividend stock believes the longer-term list of growth opportunities is “significant”, with many markets “welcoming operational experts to support their decarbonisation agendas”.

Its new contracts in Western Sydney are “in the fastest population growth corridor in Sydney”, and this growth is expected to continue with the launch of a new international airport in 2026. The company is confident of more Sydney contracts, an expansion of routes and higher margins.

The All Aboard America! business provides “a multi-year runway that is both organic and inorganic.” Organic growth examples include “construction and technology sectors, employee shuttle and expansion to new cities.”

According to Commsec estimates, the Kelsian share price is valued at just 12x FY26’s estimated earnings. For a growing business, I believe that’s a very appealing valuation.

The post 1 ASX dividend stock down 50% to buy right now appeared first on The Motley Fool Australia.

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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.

Are you feeling wealthier these days? Or maybe you’re wondering how anyone is getting rich right now.

That may seem like a silly question in the midst of a cost-of-living crisis.

But according to the Australian Financial Review (AFR), the average wealth of Australian adults grew by nearly 10% in 2023. And that was more than twice the growth rate of 56 other countries.

These are the findings of the 2024 UBS Global Wealth Report.

Our wealth is building faster than other countries

On a median basis, our wealth grew by about 5% to US$261,805 per person. That translates to about $386,758 per person in Aussie currency, making us the second-wealthiest people on the planet.

We’ve moved up a spot this year and sit behind Luxembourg, which has the highest median wealth per person, at US$372,258 or AU$549,927.

Below us in third position is Belgium, with a median wealth per person of US$256,185 or AU$378,456.

According to UBS, 1.9 million Australians are currently officially millionaires in US dollar terms. Our country has the third-highest number of millionaires per capita, at 10% of the adult population.

UBS also predicts that this particular population cohort will grow by 21% over the next four years.

How to get rich in Australia?

Well, the bulk of it is ‘on paper’, so to speak.

Australians’ personal wealth is largely tied up in our properties and superannuation.

In fact, UBS says more than half of Australia’s wealth is held in non-financial assets, like real estate.

However, in our broader Asia-Pacific neighbourhood, 60% of people’s wealth is in financial assets like shares, bonds, and cash. In North America, 70% of people’s personal wealth is in these types of assets, too.

The relatively illiquid nature of our wealth is a bit of a problem in a cost-of-living crisis, right?

Our net worth is impressive, but there’s a problem…

We can’t get access to the equity in our homes unless we sell, or ratchet up our home loans, and we can’t access our superannuation until we reach the preservation age.

Home values have been moving higher across Australia for 17 consecutive months.

In June, the national median home value rose by another 0.7%, according to CoreLogic data. In FY24, Australian homeowners gained a median $59,000 in capital gains on paper.

Meantime, our superannuation balances are getting bigger thanks to share market gains in FY24.

The latest data from Chant West suggest the median growth superannuation fund will have risen in value by 9% over FY24.

The average superannuation balance among Australians aged 65 to 69 years (the cohort closest to the retirement age of 67) is $404,553. The median is $198,715.

Of course, all of this property and superannuation wealth sounds great, but it doesn’t help pay the next electricity bill, does it?

This is the problem with being asset-rich. If you’re also cash-poor, you don’t feel so wealthy when you’re struggling to pay for the essentials!

Particularly when you’re also trying to cover what the Reserve Bank estimates to be 30% to 60% higher mortgage repayments these days.

How the next generation is set to get rich

UBS values the coming global intergenerational wealth transfer from baby boomers to Gen Xers at US$83 trillion or AU$122.6 trillion.

And as we know, that money is already being distributed in Australia via the Bank of Mum and Dad.

Andrew McAuley, managing director at UBS Wealth Management Australia, said:

The inheritocracy, the bank of mum and dad, it’s real.

To be able to afford a house, young people are going to need help. The last of the Baby Boomers will have retired, and the oldest Baby Boomers will be starting to pass away.

There’s a real bulge of the population there, and … they’re the first big group who had super. Definitely, there’s going to be a transfer.

Wealth building via ASX shares

One of the great things about investing in ASX shares is the generous dividends many of our big companies pay.

ASX dividend shares can provide a reliable income stream as part of your investment portfolio. And there are big tax advantages if you stick to fully franked ASX shares.

Popular dividend stocks include BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).

The post It’s official, Aussies are getting richer! Here’s how appeared first on The Motley Fool Australia.

More reading

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• Own BHP shares? Here’s your Q4 preview
• ‘Defining trend this decade’: 6 tips for buying AI stocks
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Motley Fool contributor Bronwyn Allen has positions in BHP Group. 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.

Mega ASX 200 iron ore shares BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG) were the top two most traded ASX stocks last month among investors using the SelfWealth trading platform.

Let’s review the top 10.

Top 10 most traded ASX shares in June

Here are the top 10 most traded ASX shares in June by volume (thus incorporating both buy and sell orders), according to Selfwealth Ltd (ASX: SWF).

We have also included the percentage of buy orders next to each ASX share.

Which ASX shares attracted the most buyer interest?

As you can see, ASX 200 mining giant Fortescue received the most buy orders among the top 10 shares.

The Fortescue share price tumbled 13.46% during the month of June. Perhaps investors saw greater value in the stock as the price declined.

Fortescue shares are now trading on a price-to-earnings (P/E) ratio of 7.92x. The Fortescue share price closed on Friday at a nine-month low of $22.10.

Top broker Goldman Sachs has a sell rating on Fortescue with a 12-month share price target of $16.20. But Michael Gable from Fairmont Equities says Fortescue shares are a buy.

BHP shares had the second strongest buying activity during the month.

The BHP share price closed on Friday at $43.40. Goldman has a buy rating on BHP with a 12-month price target of $48.40.

The iron ore price has been falling, and one major bank forecasts that the commodity will weaken further over the next year or so.

On Friday, the S&P/ASX 200 Index (ASX: XJO) closed at 7,959.3 points. It reached a new record high during intraday trading at 7,969.1. This was driven by news out of the US that inflation is easing.

The S&P/ASX All Ordinaries Index (ASX: XAO) closed at 8,206.1 points. The All Ords also set a new record high during intraday trading at 8,212.6 points.

Top 10 most traded US stocks in June

Here are the top 10 most traded US stocks in June among SelfWealth traders.

As shown, the quintessential artificial intelligence stock NVIDIA had the highest percentage of buy orders among the top 10 US shares.

The post Top 10 most traded ASX shares and US stocks in June appeared first on The Motley Fool Australia.

More reading

• It’s official, Aussies are getting richer! Here’s how
• Own BHP shares? Here’s your Q4 preview
• These are the 10 most shorted ASX shares
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• ‘Defining trend this decade’: 6 tips for buying AI stocks

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bronwyn Allen has positions in Anz Group, BHP Group, and Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Alphabet, Amazon, Apple, DroneShield, Goldman Sachs Group, Microsoft, Nvidia, and Tesla. 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 recommended Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Now could be the time to sell ASX Ltd (ASX: ASX) shares.

That’s the view of analysts at Goldman Sachs, which are feeling bearish about the ASX 100 stock.

What is the broker saying about this ASX 100 stock?

Goldman has been looking at the stock exchange operator ahead of its results next month.

It believes there are a number of key issues and trends for investors to look out for. The first is divisional trends. It said:

1) Divisional trends: a) Listings benign: Listed entities declined over 2H24 but fee increases could offset this pressure. Compared to 1H24, IPO volumes were benign and secondary raisings slightly softer. Any recovery here will be lagged as revenues are amortised. b) Derivatives/ Futures strong: over 2H24 v 1H24 benefiting from interest rate volatility. c) Cash market trading up on 1H24: with an improvement through late 2H24 – similar trend for CS.

And while Goldman expects improvements in collateral balances and fee changes, it sees corporate bonds as a drag. The broker adds:

2) Collateral balances expected to improve over 2H24: Albeit ASX flagged stability in the investment spread at 10bps but expected this to increase over time. 3) Corporate bonds: issuance likely to be a slight drag on interest income as deployed. 4) Fee changes: Listing fees generally up ~5% on average we think across Jul-24/Jan-25. We also note fee increases in Austraclear across holding and transaction fees.

Also worth looking out for are movements in its equity investments and regulatory risks. It commented:

5) Equity investment portfolio: a) Sympli: Implications for Sympli from ARNECC pausing the interoperability program and standing down their project team. We expect small losses from Sympli to persist. b) Grow Inc: Update on profitability and participation in latest funding round. 6) Other key issues: a) Progress on ASIC’s investigation into suspected contraventions of the ASIC Act 2001 and the Corporations Act 2001 in relation to the CHESS replacement program — see here — suggesting potential regulatory risks. b) Despite regulatory changes being implemented, we think the threat of competition is low, noting Capex requirements.

Sell rating retained

The note reveals that Goldman has held firm with its sell rating on the ASX 100 stock with an improved price target of $59.50.

Based on its current share price of $64.41, this implies potential downside of 7.6% for investors over the next 12 months.

The broker concludes:

We are Sell rated on ASX because: 1) Capex guidance remains elevated into FY25-FY27 from ongoing CHESS replacement project and technology revamp with risks on execution. 2) Risks arising from enhanced regulatory scrutiny on CHESS replacement and ASIC investigation. 3) Potential upside from a recovery in cyclical revenues is likely to be small with D&A drag to result in very muted earnings growth. 4) ASX’s Clearing and Settlement ROE is well below Group ROE target.

The post Sell this ASX 100 stock now: Goldman Sachs 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 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.