Author: openjargon

Whether you’re actively buying S&P/ASX 200 Index (ASX: XJO) shares or simply considering it, you’ll probably like the latest inflation forecast from National Australia Bank Ltd (ASX: NAB).

On Wednesday, at 11:30am AEST, the Australian Bureau of Statistics (ABS) will release the monthly consumer price index (CPI) data covering the month of May.

Last month the ABS reported that, over the year to April, the monthly headline CPI indicator had increased by 3.6%. If you take out volatile items and holiday travel, underlying inflation increased by 4.1%, in line with the inflation data in December.

Those sticky inflation figures led to the Reserve Bank of Australia holding the official interest rate at the current 4.35% at its meeting last Tuesday.

In its battle to tame soaring inflation, which reached almost 8% at the end of 2022, the RBA has hiked interest rates 13 times since May 2022. It’s hard to believe today, but back then the official Aussie cash rate stood at a rock bottom 0.10% following years of ‘stubbornly absent’ inflation.

Should the inflation data surprise to the upside this Wednesday, ASX 200 shares could come under pressure amid concerns that the RBA’s next move in August may be to hike rates once more.

On that front, however, NAB has a fairly positive forecast.

NAB’s inflation forecast could see ASX 200 shares rally

Indeed, NAB’s inflation forecast could see ASX shares rally into the end of the week.

According to NAB (courtesy of The Australian Financial Review), “The May CPI indicator is not the full CPI and should be looked at with a view to implications for the Q2 CPI on July 31, ahead of the RBA’s August meeting and forecast update.”

With that caveat in mind, NAB said:

This month, being the second month of the quarter, contains better coverage of a range of services categories that will help guide the RBA assessment of domestic inflation pressure and firm up Q2 forecasts.

We pencil in 3.6 per cent year-over-year, versus consensus for 3.8, from 3.6 per cent in April. The below consensus pick looks to be due to a large expected fall in volatile travel prices in the month. Prices fall seasonally in May, but the magnitude of the measured decline is highly uncertain.

For the ex-volatiles and travel number, we pencil in 3.9 per cent from 4.1 per cent, though the risk sits with a 4.0 per cent.

While some ASX shares have come under pressure amid hot-running inflation and rising rates, that’s not true for ASX 200 bank stocks.

NAB shares, for example, are up a whopping 42% over the past 12 months.

The post Buying ASX 200 shares? Here’s why you’ll like NAB’s inflation forecast appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today

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.

I believe that buy and hold investing is one of the best ways to grow your wealth.

This is because it allows you to benefit from the power of compounding, which is what happens when you earn returns on top of returns.

But which ASX 200 stocks could be great long term options and compounding machines? Two to consider according to analysts are named below. They are as follows:

NextDC Ltd (ASX: NXT)

Morgans thinks this data centre operator could be a great long-term option for investors.

In fact, the broker believes that the ASX 200 stock could more than double in value in the coming years thanks to the growing demand for data centre capacity and its ongoing expansion. It said:

NXT’s shares have rallied significantly in the last decade and months as investors gained confidence in growing demand and management’s execution. The demand wave from business digitisation and cloud adoption will only get bigger as the third wave (AI) starts rolling into data centres. We think NXT is especially well placed to succeed given its partner ecosystem (enterprise users of cloud are also AI users). If you believe that these dynamics benefit DCs, then acknowledge that NXT has sold just 15% of its planned capacity, what could 100% sold look like? In this note we simplify and unpack the key requirements for success and ascertain that if NXT can fund and fill the planned pipeline, then it could be a $40+ stock.

For now, the broker has an add rating and $19.00 price target on NextDC’s shares.

Xero Ltd (ASX: XRO)

Another quality buy and hold option for investors to consider buying is Xero. It is a cloud accounting platform provider with 4.2 million subscribers globally.

Goldman Sachs thinks that the ASX 200 stock would be a great long term option for investors. This is due to its significant market opportunity, which the broker has previously described as giving it a multi-decade growth runway.

In addition, with the company recently pivoting to profitable growth, it sees now as the time to snap up its shares. It explains:

Xero is a Global Cloud Accounting SaaS player, with existing focuses in ANZ, UK, North American and SE Asian markets. We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company’s pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.

Goldman currently has a buy rating and $164.00 price target on its shares.

The post 2 ASX 200 compounding machines to buy and hold forever appeared first on The Motley Fool Australia.

More reading

• 7 excellent ASX growth shares to buy next week
• 2 top ASX growth shares to buy today and hold for 10 years
• What are the best ASX shares to buy with $500 in 2024?
• Are ASX REITs a good investment right now?
• 3 explosive ASX tech stocks to buy and hold forever

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

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline. At the time of writing, the benchmark index is down 0.7% to 7,742.6 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Cettire Ltd (ASX: CTT)

The Cettire share price is down a massive 50% to $1.13. Investors have been hitting the sell button today after online luxury products retailer warned that “the operating environment within global online luxury has become more challenging” with heightened levels of discounting. In response to these challenging conditions, the company “has selectively participated in the promotional activity, leading to an increase in marketing costs relative to sales and a decline in delivered margin percentage.” Investors may believe that this marks an end of Cettire’s explosive sales and earnings growth.

Metcash Ltd (ASX: MTS)

The Metcash share price is down 3% to $3.66. This follows the release of the wholesale distributor’s FY 2024 results this morning. Metcash reported a 0.7% increase in revenue to $15.9 billion but an 8.2% decline in underlying profit after tax to $282.3 million. This reflects earnings growth in Food and Liquor being offset by lower earnings in Hardware and increased corporate costs. In light of this, the Metcash board cut its fully franked final dividend by approximately 23% to 8.5 cents per share.

ResMed Inc. (ASX: RMD)

The ResMed share price is down 12% to $28.04. This has been driven by concerns over the efficacy of weight loss drugs on treating sleep apnoea. Eli Lilly And Co (NYSE: LLY) released trial results for tirzepatide, sold under the brand names Mounjaro and Zepbound, that revealed that all primary and key secondary endpoints were met in adults with obesity. The trials demonstrated a mean reduction of up to 62.8% on the apnoea-hypopnea index (AHI), or about 30 fewer events restricting or blocking a person’s airflow per hour of sleep, compared to placebo.

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment share price is down almost 7% to 45.7 cents. This follows the release of a guidance update from the casino and resorts operator this morning. Due to the challenging economic environment and cost of living pressures, Star Entertainment’s performance has weakened in the fourth quarter. As a result, in FY 2024 management expects group revenue to be between $1,675 million and $1,685 million and normalised group EBITDA to be in the range of $165 million to $180 million. The latter represents a significant decline on FY 2023’s normalised EBITDA of $317 million.

The post Why Cettire, Metcash, ResMed, and Star Entertainment shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Why did the Cettire share price just crash 42%?
• ResMed share price plunges 13% as weight-loss results reawaken worries
• Guess which ASX 200 stock just slashed its final dividend by 23%
• Star Entertainment shares tumble on disappointing earnings guidance
• This ASX dividend share could pay an 8% yield in 2026!

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

Despite the past month’s sell-down, spurred by a retrace in uranium prices, ASX uranium stocks have broadly delivered some benchmark smashing longer-term returns.

Over the past 12 months the All Ordinaries Index (ASX: XAO) has gained a healthy 10.0%.

Here’s how these leading ASX uranium stocks have performed over that same time:

• Paladin Energy Ltd (ASX: PDN)* shares are down 5.7%
• Bannerman Energy Ltd (ASX: BMN) shares are up 121.4%
• Deep Yellow Limited (ASX: DYL) shares are up 94.0%
• Boss Energy Ltd (ASX: BOE) shares are up 29.5%
• Alligator Energy Ltd (ASX: AGE) shares are up 27.5%

(*Paladin shares entered a trading halt today pending an announcement. Rumour has it this could be related to a possible capital raising to fund a new uranium acquisition.)

And those smashing one-year gains could be just the tip of the iceberg amid what pundits are labelling the new global nuclear renaissance.

ASX uranium stocks could help power the world

Amid a global charge to build new nuclear power plants for carbon free baseload power, the World Nuclear Association forecasts uranium demand growth will outpace global supply growth through to 2040.

In another bullish signal for ASX uranium stocks, Russian uranium is now off the menu for the United States as part of the sanctions for the nation’s invasion of Ukraine. Other nations are also looking at banning Russia’s uranium exports.

And the US is among the 27 nations recently declaring its intention ramp up nuclear energy.

According to US Energy Secretary Jennifer Granholm:

We are entering a new era of nuclear energy, our single largest source of carbon-free electricity. We plan to invest up to US$900 million to accelerate nuclear deployment, add more small modular reactors, and reach more Americans with clean energy.

The US has said it will source its nuclear fuel both domestically and from its allies.

With Australia a top US ally and sitting on the world’s largest proven economic uranium reserves, ASX uranium stocks could have some big opportunities ahead.

Last year, US congressman Neal Dunn questioned the Australian government’s opposition to uranium.

Dunn said (quoted by The Australian Financial Review):

We talk about, ‘Why isn’t Australia with us on this?’ There are a lot of commercial opportunities. You have got the uranium ore, you have got the skills, all you lack is the will.

That will may now be emerging. At least, if opposition leader Peter Dutton and the Coalition have their way.

As you’re likely aware, Dutton is pushing for Australia to invest heavily in constructing nuclear plants. A move the Labor government still strongly opposes.

140% potential gains on the table

According to Morgan Stanley, the “nuclear renaissance” now underway may need US$1.5 trillion (AU$2.3 trillion) of investment between now and 2050.

And the broker noted that if Australia’s restrictive policies on uranium exploration and mining are lifted, it could usher in some outsized gains for ASX uranium stocks like Paladin.

According to Morgan Stanley’s Shannon Sinha (quoted by the AFR):

Nuclear power remains divisive. High construction costs, as well as concerns about waste and safety, plus political sensitivity, mean that nuclear is likely to remain a binary issue for many markets.

Sinha added, “Paladin’s Australia resource base is currently impacted by uranium mining bans in Australia, but we note that the political stance on this may be changing.”

Morgan Stanley estimates the ASX uranium stock could be a major beneficiary if the government eases restrictions on its Western Australian and Queensland assets.

The broker said the Paladin share price could soar as high as $32.00 in this event, representing a potential upside of 142% from Friday’s closing price of $13.24.

The post How the ‘nuclear renaissance’ could send ASX uranium stocks like Paladin through the roof appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• Here’s why ASX uranium shares like Deep Yellow are running hot today
• What Bill Gates, ASX uranium shares and the AI revolution have in common
• 3 reasons ASX uranium stocks can keep charging higher into 2025

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.

This Monday marks exactly one week until the start of July. That means there’s only one week left in June, as well as the 2024 financial year. It also means that from next Monday on, we’ll be able to lodge our tax returns for the financial year that is about to pass us by. So let’s talk about why you won’t want to forget your franking credits when you do your taxes.

Franking credits are an important component of the tax return for anyone who owns ASX shares. Overlooking them when you do your taxes would be a huge mistake.

But let’s explain why by looking at what franking credits are and why they’re worth paying attention to.

What are franking credits?

Franking credits are a unique feature of our Australian taxation system. They are paid out at the same time a company pays a fully or partially franked dividend.

Whenever a company pays out a dividend, it must do so from a pool of profits on which it has already paid corporate tax. When you or I receive this dividend, we must also declare it to the Australian Taxation Office (ATO) as taxable income and pay tax on this cash accordingly.

But you may notice a problem here. By the time this dividend cash makes its way into our bank accounts, it has theoretically been taxed twice. Once at the corporate level and once as personal income. That’s not exactly a fair outcome.

To account for this, companies include franking credits with any dividends funded from previously taxed profits. These credits can be thought of as a receipt of sorts that proves taxes have already been paid on this pool of cash.

Most ASX shares pay corporate taxes in Australia. If that’s the case, dividends from these companies usually come fully franked. But if a company makes profits and pays taxes offshore instead of in Australia, it might not generate franking credits. This is normally the case when a company pays a partially franked dividend or a dividend that is completely unfranked.

How does a franked dividend help us at tax time?

When we receive franking credits, we can use them to claim a tax deduction from the ATO up to the value of the taxes already paid. As such, franking credits reduce the income tax we might otherwise be required to pay to the ATO.

Thus, franking can form a big portion of the overall wealth-building benefits of investing in and owning ASX shares.

To illustrate, let’s take an ASX dividend share that has paid out a yield of 4% over FY2024. If these dividends were fully franked, that dividend yield would instead gross up to be worth 5.71%, with the value of those full franking credits included.

As you can see, franking is not something that should be ignored. It can help reduce your debt or assist you in getting a larger refund when you lodge your FY2024 tax return. So don’t forget about your franking this tax time. Doing so would be a huge own goal.

The post Don’t forget your franking credits this tax time appeared first on The Motley Fool Australia.

More reading

• 2 ASX 200 compounding machines to buy and hold forever
• Why Cettire, Metcash, ResMed, and Star Entertainment shares are sinking today
• How the ‘nuclear renaissance’ could send ASX uranium stocks like Paladin through the roof
• Why Cleanaway, IGO, Myer, and Premier Investments shares are pushing higher
• CBA share price outpacing BHP shares on Monday in the race for biggest ASX stock

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 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 S&P/ASX 200 Index (ASX: XJO) has started the week in a disappointing fashion. In afternoon trade, the benchmark index is down 0.65% to 7,746.1 points.

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

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway Waste Management share price is up 1.5% to $2.73. This follows news that the waste management company has agreed to acquire the waste and recycling business and assets of Citywide Service Solutions, Citywide Waste, for a total consideration of $110 million. Citywide Waste provides waste management services to approximately 1,500 municipal, commercial, and industrial customers in Melbourne. This includes Melbourne City Council. It generated EBITDA of $10.7 million and EBIT of $6.4 million in the twelve-month period ending February 2024.

IGO Ltd (ASX: IGO)

The IGO share price is up 2.5% to $5.71. This is despite South32 Ltd (ASX: S32) taking legal action claiming to be entitled to royalty payments from the Tropicana Gold Mine in Western Australia. IGO continues to deny that it has any liability to South32 on the basis that the pre-conditions to any entitlement to be paid a royalty have not been satisfied. This gain could have been driven by a broad rebound in the battery materials space on Monday.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is up 17% to 75.5 cents. This has been driven by news that the department store operator is wanting to merge with the apparel brands of Premier Investments Limited (ASX: PMV). This comprises the Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti brands. The combination would see the department store acquire Premier’s apparel brands business in exchange for the issue of new Myer shares. Premier Investments’ chair, Solomon Lew, has indicated that he would be prepared to take an active role as a non-executive director of Myer if the transaction proceeds.

Premier Investments

The Premier Investments share price is up 3.5% to $30.98. Investors also appear to believe that the aforementioned apparel brands merger with Myer would unlock value for Premier Investments shareholders. The company said: “The proposed combination has the potential to deliver a step change in Myer’s scale and market position, deliver synergies and drive sustainable earnings growth. Premier shareholders would benefit given Premier’s existing shareholding in Myer and because Premier shareholders would become shareholders in Myer.” However, it has warned that there is no certainty that the proposal will result in a binding offer or transaction.

The post Why Cleanaway, IGO, Myer, and Premier Investments shares are pushing higher appeared first on The Motley Fool Australia.

More reading

• ASX industrial stock rallying amid $110 million acquisition with ‘valuable efficiencies’
• ASX 200 retailer and Myer shares rocket on ‘significant opportunity’ to combine powers
• Top brokers name 3 ASX shares to buy today
• These beaten down ASX lithium stocks could rise 35% to 85% in 12 months
• 5 things to watch on the ASX 200 on Tuesday

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 recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price is outperforming the BHP Group Ltd (ASX: BHP) share price today, tightening the race that has some market watchers on the edge of their seats.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed Friday trading for $127.68. At time of writing on Monday, shares are changing hands for $127.69 apiece, up a very slender 0.01%.

As for BHP, shares in the ASX 200 mining giant closed Friday at $42.78 and are currently trading for $42.485, down 0.69%.

For some context, the ASX 200 is down 0.6% at this same time as well.

Here’s why the relative performance between the two ASX 200 goliaths matters.

Soaring CBA share price could upend ASX leader

At the current CBA share price, Australia’s biggest bank has a market cap of approximately $214.0 billion.

Despite that very impressive figure, CommBank still comes in second to BHP. With a market cap of approximately $216.7 billion, the iron ore miner remains the biggest stock on the ASX.

BHP has held that crown since November 2021. That’s when it sailed past CBA as the iron ore price rocketed above US$200 per tonne.

But that could be about to change once more.

CBA has joined in the broader bank stock rally over the past year, defying a chorus of bearish analyst forecasts. That rally sees the CBA share price up more than 30% in 12 months.

The BHP share price, meanwhile, has gone the other direction. Investors have sold down the miner amid a retrace in iron ore prices and further weakness forecast in the year ahead as China’s economy continues to sputter along in low gear. This sees the BHP share price down more than 4% in 12 months.

Should CBA stock continue to outpace BHP stock in the days ahead, we could see CommBank retake the biggest ASX stock title for the first time in almost three years.

Expert commentary

Commenting on the blistering rally in the CBA share price, and bank stocks in general, UBS analyst John Storey said (quoted by The Australian Financial Review), “The reason and narrative behind the bank rally is now fundamentally different to what initially sparked it in November.”

Storey explained:

Overall, clients think the impending tax cuts will provide further relief to consumers, while low unemployment numbers, and rising property prices, mean the credit cycle is turning out to be far more benign than initially feared.

Clients see few catalysts on the horizon which could fundamentally derate these stocks from here, outside of valuation.

The post CBA share price outpacing BHP shares on Monday in the race for biggest ASX stock appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Surely CBA shares can’t just keep rising?
• How to turn your savings account into a gold mine starting with $10,000
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• Top 10 most traded ASX shares and US stocks in May

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.