Author: openjargon

If you are wanting to add some ASX 200 blue chip shares to your portfolio in May, then the five shares listed below could be worth a closer look.

These ASX 200 shares have all been named as buys recently by analysts and tipped to rise from current levels.

Here’s what you need to know about them:

Brambles Limited (ASX: BXB)

Analysts at UBS think that Brambles could be an ASX 200 blue chip share to buy. It is a supply chain solutions company that specialises in reusable pallets, crates, and containers for shared use.

The broker was pleased with its stronger than expected first-half results in February and recent third quarter update. In response, the broker has put a buy rating on its shares with an improved price target of $17.30.

CSL Limited (ASX: CSL)

Another ASX 200 blue chip share that could be a buy is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses. These are leaders in their respective fields of blood plasma products, kidney therapies, and vaccines.

Analysts at UBS are bullish on the company. They have a buy rating and $330.00 price target on its shares.

Goodman Group (ASX: GMG)

Another ASX 200 blue-chip share that could be a buy for investors according to analysts is Goodman Group. It is a leading integrated commercial and industrial property company with a world class portfolio of in-demand assets.

Morgan Stanley is very positive on the company’s outlook, especially given its exposure to the artificial intelligence boom through its data centre pipeline. The broker currently has an overweight rating and $36.65 price target on its shares.

Transurban Group (ASX: TCL)

Bell Potter thinks that this toll road operator could be a top blue chip option for investors this month.

It highlights that “the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators.”

Bell Potter has a buy rating $15.90 price target on the company’s shares.

Treasury Wine Estates Ltd (ASX: TWE)

Finally, a fifth ASX 200 blue chip share that has been named as a buy is Treasury Wine. It is the wine giant behind popular brands including Penfolds, Wolf Blass, 19 Crimes, and Blossom Hill. It also recently acquired US-based DAOU Vineyards for $1.4 billion.

Morgans is a big fan of Treasury Wine and sees a lot of value in its shares at current levels. The broker currently has an add rating and $14.03 price target on its shares.

The post 5 ASX 200 blue chip shares to buy now appeared first on The Motley Fool Australia.

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

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

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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 positions in and has recommended Audinate Group, Idp Education, Life360, and Technology One. The Motley Fool Australia has positions in and has recommended Audinate Group and Smartgroup. The Motley Fool Australia has recommended IPH, Idp Education, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Westpac Banking Corp (ASX: WBC) shares have been strong performers in 2024.

Since the start of the year, the banking giant’s shares have risen an impressive 18%.

Can its shares continue to rise or are they fully valued now? Let’s find out what analysts are saying.

Can Westpac shares deliver good returns?

Unfortunately, it seems that almost all brokers believe that the banking giant’s shares are fully valued now.

For example, a note out of Citi on Monday reveals that its analysts have retained their sell rating and $24.75 price target on the bank’s shares.

Despite Westpac being the broker’s favourite big four bank, it is still predicting its shares to fall 8.5% from current levels.

Elsewhere, Macquarie currently has an underperform rating and $26.00 price target and Morgan Stanley has an underweight rating and $24.50 price target.

Why is nobody bullish?

The main reason for the bearish view on Westpac is the valuation of its shares. Together with a few niggling risks and analysts just don’t see a compelling risk/reward on offer with the big four bank right now.

Analysts at Goldman Sachs summarised this. They said:

We believe that low industry-wide RWA growth and WBC’s strong capital position, which even on a pro-forma basis is >12%, well above its 11.0-11.5% target ratio, underpins a sustainable payout ratio at the top of its 65-75% target range. However, against this, WBC’s technology simplification plan comes with a significant degree of execution risk, given historically banks’ large-scale transformation programs have struggled to stay on budget, and we are currently operating in a stickier-than-expected inflationary environment. Therefore, trading on a 12-mo forward PER of 14.5x (14.0x ex-dividend adjusted, which is one standard deviation above its 15-year historic average of 12.7x), we stay Neutral.

According to the note, the broker has a neutral rating and $24.10 price target on its shares. Based on the current Westpac share price, this implies potential downside of approximately 11% for investors over the next 12 months.

But that doesn’t include dividends. Goldman is forecasting fully franked dividends of $1.65 per share in FY 2024 and then $1.50 per share in FY 2025.

As its shares have already gone ex-dividend for its 90 cents per share interim dividend for FY 2024, this means that investors will receive a $1.50 per share over the next 12 months if buying today. This comprises a 75 cents per share final dividend for FY 2024 and then a 75 cents per share interim dividend for FY 2025. This equates to a 5.5% dividend yield, reducing the total 12-month potential loss from 11% to 5.5%.

Overall, investors should be able to find better returns elsewhere without much effort.

The post Are Westpac shares good value or expensive? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Call me eccentric, but I greatly enjoy running my slide rule over S&P/ASX 200 Index (ASX: XJO) stocks to uncover those passive income jewels.

In this process, I tend to stick to dividend stocks trading on the ASX 200. That’s because there’s usually more readily available information in the larger end of the market. And the bigger companies tend to be less volatile than their smaller peers.

It’s also worth screening for companies that offer fully franked dividends. This should enable me to hold onto more of that passive income at tax time.

And I prefer companies with long track records of making two (or more) annual payments, as well as those that have been growing their dividend payouts. This often bodes well for what to expect from their ongoing passive income stream.

Finally, we need to keep in mind that the yields we’re looking at are trailing yields. Future yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.

With that said, we move on to the big reveal.

Pumping $150 a month in passive income from this ASX 200 dividend jewel

The ASX 200 passive income jewel that’s at the top of my radar today is petroleum refiner and fuel distributor, Ampol Ltd (ASX: ALD).

Atop its dividend payouts, the Ampol share price has gained 13% over the past year, currently trading for $35.08 a share.

Although Ampol’s March quarterly update fell short of expectations, this was largely due to temporary refinery outages and disruptions to shipping in the Red Sea, both of which we hope won’t be repeated in the current quarter.

As for the full 2023 calendar year results, Ampol reported a 2% increase in earnings before interest and tax (EBIT) from 2022 – excluding significant items – to $1.30 billion.

And total sales volumes in 2023 soared 17% year on year to reach all-time highs of 28.4 billion litres.

Despite a 25% year on year drop in net profit after tax (NPAT) to $549 million, management declared a record final fully franked dividend of $1.80 a share. Eligible investors will have received that payout on 27 March.

This 16% increase in Ampol’s passive income is precisely the kind of dividend growth trend I look for, as mentioned up top.

Ampol shares also delivered a fully franked interim dividend of 95 cents per share on 27 September.

This sees the ASX 200 dividend jewel paying $2.75 a share over the past 12 months.

So, to pump $150 a month in passive income (or $1,800 a year) from Ampol shares I’d need to buy 655 shares today.

The post Want $150 in monthly passive income? Buy 656 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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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.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is up another 0.3% following the S&P/ASX 200 Index (ASX: XJO) bank stock‘s update last week.

Today’s rise brings the gain over the last month to 12%, significantly outperforming the 2.5% gain for the ASX 200 over the same period.

The last five years have seen significant volatility for the Bendigo Bank share price, as seen on the chart below. Pleasingly, the stock price has just hit a four-year high of $11.04 during late trading on Tuesday. Is the bank entering a new phase of operating strength?

Investors liked the recent update for the ten months to 30 April 2024, with the Bendigo Bank share price up 10% since the update. The regional bank is scheduled to hold an investor day on 23 May 2024.

Trading update recap

Bendigo Bank reported cash earnings after tax of approximately $464 million for the financial year to date, down 2.3% from the previous year.

The net interest margin (NIM) in the financial year to date, after revenue-sharing arrangements, is 1.87%. Before the revenue share arrangement, the year to date NIM was 2.30%. Pleasingly for shareholders, the NIM in April 2024 was higher than the year to date average, possibly suggesting the FY25 NIM could be better than FY24.

Bendigo Bank also reported that its credit expenses remain at “low levels” across all its lending portfolios.

With the update, the Bendigo and Adelaide Bank CEO and managing director Marnie Baker said:

At our half year results in February we reiterated our commitment to managing the business for long term value. We have continued our focus on disciplined growth and prudent management of our costs.

Stronger margins led to upgrades

A number of brokers upgraded their forecasts for the ASX 200 bank stock after seeing that update.

UBS increased its cash earnings per share (EPS) estimates by 7.6%, 12.1%, and 11.1% for FY24, FY25, and FY26, respectively. This was due to the “notably higher net interest margin outlook.” The broker noted that competitive lending pressures and increasing funding costs continue to be offset by higher earnings on capital and deposits.

However, ongoing cost inflation and the ASX 200 bank stock’s investment in digitalisation led UBS to increase its operating expenditure expectations for Bendigo Bank.

How is Bendigo Bank delivering an improving NIM performance when other ASX bank shares are reporting margin compression? UBS said it was “maybe” down to three reasons:

1) the shorted duration of their capital hedge, 2) liquid asset unwind and 3) higher % of business originated through digital and prop channels. We would need more details on the sustainability of this performance, especially in the context of industry trends, but for now drive some of these changes into our NIM forecasts.

According to UBS’s numbers, the Bendigo Bank share price is now valued at 13.5x FY24’s estimated earnings.

Rating on Bendigo Bank shares

UBS increased its price target on the regional bank from $8 to $8.75, an increase of 9.4%.

However, the broker still rates the ASX 200 bank stock a sell because it’s trading 25% higher than its price target. Plus, the company is trading at “slightly above long-term historical averages” in terms of the price/earnings (P/E) ratio.

The post Guess which ASX 200 bank stock just hit a 4-year high? 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 positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX lithium share prices remain volatile this year despite lithium commodity prices stabilising somewhat amid the ongoing surplus supply of lithium for electric vehicle (EV) battery manufacturers.

The lithium carbonate price began the year at US$13,384 per tonne. Today, it’s fetching US$14,579.48 per tonne, up 8.9% since January. The highest price it has reached this year is US$15,995 per tonne in March.

What’s happening with lithium prices?

Trading Economics says the EV industry is still working through battery gluts across the supply chain.

However, Chinese lithium producers have continued to expand capacity and look for new reserves, which has raised expectations of continuing surplus supplies.

According to Trading Economics:

… hopes that the market will eventually balance out drove Chile [to] set plans to double output for the world’s second-largest producer over the next decade.

Such developments follow cuts in battery prices as EV producers continued to take advantage of high inventories of input materials and finished product from extensive subsidies from Beijing in 2022.

Top broker Goldman Sachs predicts that lithium prices will not bottom till 2025.

For example, the broker thinks the carbonate price will average US$11,106 per tonne in 2024, down from an average of US$32,694 in 2023. It tips a further weakening to an average of US$11,000 per tonne in 2025.

Goldman says lithium prices will turn around in 2026, with the average rising to US$13,323 per tonne and then reaching US$15,646 per tonne in 2027.

With all of this in the background, Goldman Sachs recommends the following action on these two ASX lithium shares.

Which ASX lithium share is a buy?

Goldman has a buy rating on ASX lithium and nickel share IGO Ltd (ASX: IGO) and a 12-month share price target of $8.10.

The IGO share price is currently $7.87, down 2.11% on Tuesday and down 47.1% over the past 12 months.

Goldman analyst Hugo Nicolaci said:

We rate IGO as Buy, where on valuation IGO is trading on 0.95x net asset value (NAV) and pricing ~US$1,100/t spodumene, at a discount to peers (~1.2x NAV and ~US$1,300/t), with near-term FCF yields remaining >5% and attractive vs. peers (<0% on average) and supporting ahead of peer returns.

The broker noted that IGO’s Greenbushes mine is the lowest-cost lithium asset among the ASX lithium shares it monitors. It says production growth more than offsets the increasing strip ratio.

IGO owns 49% of Greenbushes and joint venture partner Tianqi Lithium Corp owns 51%.

The broker said IGO’s nickel business would likely decline without further developments or mergers and acquisitions activity.

The broker added:

We expect largely continued growth in net cash, with liquidity stable above the A$1bn threshold for excess capital management payouts from 2H FY25.

Why is this lithium stock a sell?

Goldman has a sell rating on ASX lithium junior Core Lithium Ltd (ASX: CXO) with a share price target of 11 cents. The Core Lithium share price is 15 cents, down 1.94% now and down 86% over the past year.

Nicolaci said the broker rated Core Lithium shares a sell for three main reasons.

The first is valuation, with Core Lithium looking “relatively expensive” trading at a premium of about 1.1x its NAV and an implied LT spodumene price of about US$1,200 per tonne. This compares to a peer average of about 1.05x NAV and about US$1,250 per tonne.

The second is ongoing risks to the timing of its production restart and the lesser likelihood of funding its BP33 exploration from cash flow due to weak declining lithium prices.

Lastly, the broker noted that further exploration activities underway may result in an expanded resource base. However, the development of any discoveries is likely a ways off.

The post Buy one, sell the other: Goldman’s verdict on these 2 ASX lithium shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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.

ASX retail shares can be some of the hardest stocks on the market to assess as a good investment. The retail sector is notoriously cyclical, and its players have to constantly adapt to changing consumer tastes and preferences.

As such, only the strongest ASX retail shares tend to be effective compounders of wealth over long periods of time.

Today, we’ll discuss two ASX retail shares that might just qualify for that label, at least according to one ASX broker. We’ll also cover one stock that this broker is telling investors to avoid.

ASX broker gives verdict on 3 ASX retail shares

As reported in The Australian this week, analysts at ASX broker Macquarie are eyeing two ASX retail shares that might stand to benefit from an artificial intelligence (AI)-fuelled “generational upgrade cycle in computer hardware”.

Macquarie is arguing that household appliances, computers and technology typically have a “5-7 year lifespan”. As such, the COVID boom in this corner of the market should result in an “echo” over the next 18 months or so.

Macquarie’s Ross Curran told The Australian, “An accelerated 5-year refresh rate on PCs instead of the usual 6-year cycle, along with a 15 per cent increase in price, could see a 34 per cent uplift in category”.

As such, Curran has upgraded Macquarie’s earnings estimates for the 2025 financial year for JB Hi-Fi Ltd (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN) and OfficeWorks owner Wesfarmers Ltd (ASX: WES) by 4.5%, 3.7% and 0.5% respectively.

Consequently, Curran has lifted Macquarie’s ratings on JB Hi-Fi and Harvey Norman from ‘Neutral’ to ‘Outperform’. This implies investors should consider buying these ASX retail shares at current pricing.

However, Curran maintained a ‘Neutral’ rating for Wesfarmers, citing concerns over its current high valuation.

A tale of three retailers

To be fair, all three ASX retail shares have enjoyed some healthy rises over the past 12 months. At current pricing, Wesfarmers stock is up 33.8% since this time last year, while JB Hi-Fi has risen 26.7% and Harvey Norman, 21.25%.

Even so, Wesfarmers shares are currently trading on a price-to-earnings (P/E) ratio of 30.8. That looks elevated against JB’s 13.7 and Harvey Norman’s 14.6. Put another way, investors are currently being asked to pay more than double for $1 of earnings from Wesfarmers compared to $1 of earnings from JB or Harvey Norman.

As such, it’s not difficult to understand why Curran sees Wesfarmers shares as more overvalued than those of JB Hi-Fi or Harvey Norman.

The post 2 ASX retail shares just upgraded by brokers (and 1 downgraded) appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman, Macquarie Group, and Wesfarmers. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.