Author: openjargon

The West African Resources Ltd (ASX: WAF) share price is in focus after the company reported group gold production of 125,179 ounces for the June 2026 quarter, up 37% at Sanbrado compared to Q1, and confirmed it remains on track to meet its annual production guidance.

What did West African Resources report?

• Q2 group gold production: 125,179 oz (Sanbrado 57,608 oz, Kiaka 67,571 oz)
• Q2 group gold sales: 110,737 oz at an average realised price of US$4,556/oz
• Year-to-date group gold production: 232,905 oz
• Year-to-date group gold sales: 214,883 oz at US$4,744/oz
• On track to achieve 2026 guidance of 430,000–490,000 oz gold

What else do investors need to know?

WAF continued to ramp up open pit and underground mining at its Sanbrado centre, with underground mined ounces rising 60% from the prior quarter. The Sanbrado process plant’s gold output rose, thanks to higher grades and recovery rates.

At Kiaka, open pit mining output fell 24% from Q1, mainly due to a reduction in ore tonnes and grade, while processing still delivered growth in gold produced. Regulatory delays affected explosives supply at Kiaka, leading to operational adjustments prioritising ore production.

WAF is also working with the Burkina Faso government and SOPAMIB on finalising SOPAMIB’s 25% acquisition of Kiaka SA, valued at approximately A$176 million.

What did West African Resources management say?

Executive Chairman and CEO Richard Hyde said:

With year-to-date production of 232,905 ounces of gold from our two large low-cost gold production centres of Sanbrado and Kiaka in Burkina Faso, WAF is on-track to achieve 2026 annual production guidance of 430,000 – 490,000 ounces of gold. I look forward to releasing our full quarterly activities report in the coming weeks.

What’s next for West African Resources?

The company expects to maintain 2026 gold production volumes despite delays in permits, with Sanbrado mine plans retaining flexibility to adjust for timing impacts. Subject to government approvals, development of Sanbrado’s M5 South underground is expected to commence in early 2027.

At Kiaka, operational plans continue to adapt to the available explosives supply, focusing on “free dig” mining areas. WAF remains engaged with authorities to secure outstanding approvals and supports growth at both production centres.

West African Resources share price snapshot

Over the past 12 months, West African Resources shares have risen 29%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 3% over the same period.

View Original Announcement

The post West African Resources posts June 2026 quarter gold production update appeared first on The Motley Fool Australia.

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• Lynas Rare Earths inks $50m deal for new Malaysian magnet factory
• Netwealth posts strong FUA growth and secures Morgan Stanley platform deal
• a2 Milk Company posts double digit FY26 revenue growth despite China supply setback

Motley Fool contributor Laura Stewart 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 article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Lynas Rare Earths Ltd (ASX: LYC) share price is under the spotlight today after the company announced a long-term partnership with JS Link to build a rare earth magnet factory in Malaysia. Key highlights include Lynas’ A$50 million investment into JS Link and an exclusive supply agreement for rare earth materials through to January 2038.

What did Lynas Rare Earths report?

• Signed a long-term partnership agreement with JS Link for a Malaysian magnet factory
• Lynas to invest A$50 million in ordinary equity of JS Link (approx. 4.58% stake)
• New magnet factory in Kuantan, Malaysia, will have a 3,000 tonne per annum capacity
• Lynas will exclusively supply rare earth materials to JS Link’s Korean and Malaysian plants until January 2038
• The new factory is expected to create up to 400 jobs in Malaysia

What else do investors need to know?

The new magnet factory will be located near Lynas’ existing advanced materials plant in Kuantan. This strategic location is expected to support both the local economy and Lynas’ expansion in the region.

Magnets produced at the new site are set to supply key manufacturing industries, including automotive, wind energy, and electronics, targeting markets in Korea, Malaysia, and beyond.

Lynas’ equity investment in JS Link will be subject to a three-year escrow period, reflecting a longer-term commitment to this partnership.

What did Lynas Rare Earths management say?

Lynas Rare Earths Interim CEO Pol Le Roux said:

This partnership brings together Lynas’ rare earths processing expertise with JS Link’s magnet manufacturing capability to create a new manufacturing industry in Malaysia. This is an exciting project for the development of a sustainable rare earths industry in Malaysia and delivers on our Towards 2030 growth objective of expanding into the outside China metal and magnet supply chain.

What’s next for Lynas Rare Earths?

Lynas continues to focus on expanding its presence in the rare earths supply chain outside of China, supporting global demand for sustainable technology inputs. The partnership with JS Link underpins its “Towards 2030” strategy and may help cement Lynas’ position as a key supplier in the automotive and clean energy markets.

As construction of the new factory progresses, investors will be watching for updates on timelines, job creation, and the ramp-up of production to meet demand across key growth industries.

Lynas Rare Earths share price snapshot

Over the past 12 months, Lynas Rare Earths shares have risen 122%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 3% over the same period.

View Original Announcement

The post Lynas Rare Earths inks $50m deal for new Malaysian magnet factory appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lynas Rare Earths Ltd. 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 article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Netwealth Group Ltd (ASX: NWL) share price is in focus today after announcing an expanded relationship with Morgan Stanley (NYSE: MS) and providing an FY26 outlook. Key highlights include preliminary FY26 funds under administration (FUA) net flows of $15.4 billion, and projected FY27 FUA net flows rising to between $18 billion and $20 billion.

What did Netwealth Group report?

• Preliminary FY26 FUA net flows: $15.4 billion
• Projected FY27 FUA net flows: $18–20 billion (up 17%–30% on FY26)
• FY26 EBITDA margin guidance: ~49%
• FY27 expected EBITDA margin: ~47%
• Capitalised software investment: $12 million (FY26), expected $17 million (FY27)
• FY26 dividend to be based on underlying earnings

What else do investors need to know?

Netwealth has expanded its agreement with Morgan Stanley Wealth Management Australia to provide a platform solution for ASX-listed equities and domestic investments. This major win comes on the back of recent investments in technology and product offerings, including the launch of Netwealth Private and integrated iHIN capability.

A subset of Morgan Stanley’s clients will transition to the Netwealth platform, which will operate alongside Morgan Stanley’s proprietary global platform. Advisers will continue to manage relationships, but the move highlights Netwealth’s strategic push into the $600 billion stockbroking and private wealth market.

What did Netwealth Group management say?

CEO and Managing Director Matt Heine said:

We are pleased to announce the expansion of our relationship with Morgan Stanley, which reflects the deliberate, multi-year investment we have made to extend our product and platform capabilities in a highly scalable way. The investment has underpinned the continued development of our product offering, including the delivery of Netwealth Private and individual HIN capability, alongside a platform designed to deliver scale, digital enablement, and a high-quality client experience that supports our adviser clients and their growth.

What’s next for Netwealth Group?

The company sees strong growth momentum, supported by structural and demographic trends in the platform market. Netwealth aims to double FUA over the next four years, driven by core growth, new client wins, and expansion into adjacent markets.

Management expects continued investment in product, technology, and service delivery to further enhance platform capability and scalability. The group will remain disciplined with capital allocation, targeting high-return opportunities that support long-term earnings growth.

Netwealth Group share price snapshot

Over the past 12 months, Netwealth shares have risen 43%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 3% over the same period.

View Original Announcement

The post Netwealth posts strong FUA growth and secures Morgan Stanley platform deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 Netwealth Group. The Motley Fool Australia has positions in and has recommended Netwealth 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 prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The a2 Milk Company Ltd (ASX: A2M share price is in focus today after the company reported preliminary FY26 results, featuring revenue up more than 12% to about $1.97 billion, even as China infant milk formula (IMF) sales declined due to supply chain disruptions.

What did The a2 Milk Company report?

• FY26 revenue of approximately $1.97 billion, up over 12% year-over-year
• China label IMF sales down around 14% on FY25 after supply chain issues in 4Q26
• EBITDA margin expected at the high end of 14.0% to 14.5% guidance
• NPAT anticipated to be slightly up on FY25, with underlying NPAT also rising
• Cash conversion of about 70%, well above the previous 50% outlook
• Strong sales across other key categories, including English label IMF and liquid milk

What else do investors need to know?

The a2 Milk Company faced several challenges in the China IMF market during the fourth quarter, such as freight issues, production bottlenecks, and new customs requirements, which led to product shortages. Many customers had to temporarily switch to other brands, impacting in-market sales.

Since then, these supply issues have largely been resolved, with stock levels now back in line and increased product flows across major channels. Management is prioritising marketing and sales efforts to win back previous customers and attract new ones in China.

What’s next for The a2 Milk Company?

Investors can expect a further update when the company releases its audited FY26 results and FY27 outlook on 17 August 2026. Management says efforts will continue to recover China label market share while accelerating new user acquisition with retail and distribution partners, supported by stable supply chains.

The business is also focused on maintaining the growth seen in other product categories and driving operational improvements to support ongoing profitability. Investors will be watching for more detail on strategy and guidance next month.

The a2 Milk Company share price snapshot

Over the past 12 months, a2 Milk shares have declined 3%, trailing the S&P/ASX 200 Index (ASX: XJO), which has risen 3% over the same period.

View Original Announcement

The post a2 Milk Company posts double digit FY26 revenue growth despite China supply setback appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

With lots of ASX shares to choose from on the Australian market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are outlined below. Here’s why they are bullish on them:

Genesis Minerals Ltd (ASX: GMD)

According to a note out of Bell Potter, its analysts have retained their buy rating on this gold miner’s shares with a trimmed price target of $9.75. This follows news that Genesis Minerals has delivered a definitive proposal to merge with Vault Minerals Ltd (ASX: VAU). Bell Potter points out that if implemented, the enlarged company will have pro-forma production of 600,000 to 700,000 ounces per annum. The broker is positive on this, noting that acquiring Vault Minerals delivers a materially better capital allocation outcome than the company’s current five-year plan assumes. In light of this, the broker thinks investors should be snapping up shares at current levels. The Genesis Minerals share price is currently trading at $6.03.

Life360 Inc. (ASX: 360)

A note out of Citi reveals that its analysts have retained their buy rating on this location technology company’s shares with an improved price target of $31.95. The broker has upgraded its user growth estimates for FY 2026 on the belief that its growth will trough in the second quarter. Citi expects this to be underpinned by new feature launches and integrations with Uber and Apple Watch, which could support engagement and expand its addressable market. The Life360 share price last fetched $27.79.

REA Group Ltd (ASX: REA)

Analysts at Morgans have retained their buy rating on this property listings company’s shares with a reduced price target of $199.00. According to the note, the broker continues to believe that REA Group is one of the highest quality stocks in the classifieds industry. And while there are concerns that trading conditions could be tough due to Federal Budget changes and higher interest rates, Morgans points out that REA Group has levers to pull to offset this weakness. As a result, the broker feels that recent share price weakness is a buying opportunity for investors. The REA Group share price last traded at $143.67.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor James Mickleboro has positions in Life360 and REA Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Life360, and Uber Technologies. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) shares edged 2.77% higher and produced total returns, including dividends, of 7% in FY26.    

Here, we review new notes from the experts regarding three ASX 200 shares. 

Let’s take a look.

Life360 Inc (ASX: 360)

The Life360 share price fell 17% to $26.70 on 30 June amid a broader technology sector downturn in FY26.

Chris Savage from Bell Potter has a buy rating on this ASX 200 tech share for FY27.

In a new note last week, Savage said:  

Life360 is our key pick amongst the large tech stocks we cover based on quality, valuation and potential catalysts.

We note the stock looks reasonable value on a 2027 EV/EBITDA multiple of c.23x versus the FY27 EV/EBITDA of Technology One (which has a September year end) of c.26x.

The broker raised its 12-month price target from $33 to $35. 

Savage noted that Life360 will report its 2Q FY26 results on 11 August, and said this may be a catalyst for the share price for three key reasons: 

1. We expect MAU growth to rebound to 4.3m – consistent with 2Q2025 – if not higher (VA consensus is 4.6m) which importantly will imply an exit run-rate of close to 5m given the Android issues which persisted into April and even May; 2. We expect paying circle growth to be strong again at c.155k which is notably above VA consensus of c.135k and even see upside risk to our forecast closer to the 1Q2026 result of 202k; and 3. If paying circle growth is >155k then we see potential for a further upgrade to 2026 revenue and EBITDA guidance as paying circle growth is obviously the key driver of subscription revenue.

Wesfarmers Ltd (ASX: WES)

The Wesfarmers share price rose 6.67% in FY26 to finish at $90.40 on 30 June. 

James Bills from Shaw and Partners has a hold rating on the market’s largest ASX 200 consumer discretionary share.

Bills explained why on The Bull this week:  

Wesfarmers continues to demonstrate strength through its diversified portfolio of businesses, particularly with solid contributions from retail giants Bunnings and Kmart.

The group’s ability to generate consistent earnings and reinvest capital effectively supports its premium valuation.

Recent updates indicate stable trading conditions, although cost pressures and a softer consumer backdrop may limit near term growth.

While the company remains a high quality industrial with strong management, its current valuation suggests more of a balanced risk-reward profile, which supports a hold stance.

South32 Ltd (ASX: S32)

The South32 share price ripped 34.02% to close out FY26 at $3.90. 

Morgans downgraded its rating on this ASX 200 mining share from accumulate to hold last week.

The broker also cut its 12-month target price from $5 to $4.50.

Morgans said: 

S32 has agreed to sell its entire ali business for total consideration of US$5.6bn (US$4.1bn upfront), and transfer of US$1.2bn closure/rehab liabilities.

Our view on S32’s aluminium sale is genuinely mixed. It leaves S32 a simpler and, in important respects, a better business, but also a smaller and less valuable one.

We reduce our valuation on S32’s ali assets to in line with the agreed Alcoa deal… As a result we update our rating to HOLD (from Accumulate).

 

 

The post Buy, hold, sell: Life360, South32, Wesfarmers shares appeared first on The Motley Fool Australia.

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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 Life360 and Wesfarmers. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX shares often take a back seat to property when it comes to investing. Australians have long viewed property as the ultimate wealth-building asset. Bricks and mortar have created fortunes over decades, and owning an investment property remains a dream for many.

But shares deserve just as much attention.

While property can deliver impressive long-term returns, investing in quality ASX shares offers several advantages that many investors overlook. Here are three reasons why shares may be the smarter choice for growing wealth.

You can start investing with far less money

One of the biggest barriers to property investing is the upfront cost. Buying an investment property often requires a substantial deposit, stamp duty, legal fees, inspections, insurance and ongoing maintenance. For many Australians, saving enough to get started can take years.

ASX shares are different. You can begin building a diversified portfolio with a few hundred dollars and add to your investments whenever you have spare cash. Instead of waiting until you’ve saved tens of thousands of dollars, you can put your money to work immediately.

That flexibility also makes dollar-cost averaging much easier. By investing regularly, regardless of market conditions, investors can smooth out the impact of market volatility over time.

Shares give you instant diversification

Buying one investment property usually means putting a large amount of money into a single asset in a single location. If that suburb underperforms or the local economy weakens, your investment can suffer.

With ASX shares, diversification is much easier. An investor can spread their money across banks, miners, healthcare companies, retailers and technology businesses. They can also gain international exposure through exchange-traded funds (ETFs), reducing reliance on any one company, industry or economy.

Diversification won’t eliminate risk, but it can significantly reduce the impact of any single investment disappointing.

More flexibility and liquidity 

Liquidity is one of the share market’s biggest advantages. If you need access to your money, you can generally sell ASX shares within minutes during market hours, with the proceeds typically settling within a couple of business days.

Selling property is a completely different experience. The process can take weeks or months, involves agent commissions and legal costs, and there’s no guarantee you’ll achieve your desired sale price.

Shares also require far less ongoing management. There are no tenants to find, no repairs to organise, no leaking roofs to fix and no unexpected maintenance bills arriving in the mail.

Many companies even reward shareholders with regular dividends, providing an income stream without the day-to-day responsibilities that come with owning an investment property.

Why not combine the best of both worlds

Investors don’t necessarily have to choose between ASX shares and property. A balanced approach can offer the best of both worlds.

For example, buying shares in REA Group Ltd (ASX: REA) provides exposure to Australia’s property market through the country’s leading real estate listings platform, while Mirvac Group (ASX: MGR) and Stockland Corp Ltd (ASX: SGP) give investors access to major residential and commercial property developments.

These ASX shares allow investors to benefit from housing market activity, rental demand, and new developments without the high upfront costs or ongoing responsibilities of owning an investment property. At the same time, they retain the flexibility and liquidity that come with investing on the share market.

The post Property or ASX shares? Here’s why I’d choose the share market appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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.

It has been one of the most dramatic destructions of shareholder value in recent ASX history.

WiseTech Global Ltd (ASX: WTC) shares have fallen approximately 70% over the past twelve months. The company has shed tens of billions of dollars in market capitalisation. This has landed the logistics software company among the worst-performing stocks in the entire ASX 200.

Yet something has shifted in the past week.

There are small but noticeable signs that at least some investors are beginning to reassess.

The question remains whether that reassessment is warranted.

What actually drove the 70% fall

The sell-off in WiseTech shares has been primarily driven by governance concerns rather than by any fundamental deterioration in the CargoWise business itself.

Founder and Executive Chair Richard White has faced a series of allegations over the past twelve months, including separate ASIC and AFP investigations and most recently reports of an AFP inquiry into alleged trafficking matters, which White has emphatically denied.

Each successive wave of negative coverage has eroded institutional confidence in a way that the underlying business numbers alone have not justified.

WiseTech has maintained its FY26 guidance, expecting revenue of US$1.39 billion to US$1.44 billion and EBITDA of US$550 million to US$585 million at a healthy 40% to 41% margin.

However, the market has stopped paying a premium multiple for that growth while the governance cloud remains.

The case for a rebound for WiseTech shares

The bull case starts with the business itself, which has not broken.

CargoWise is used by 23 of the world’s top 25 global freight forwarders. Switching costs are high and as a result customer retention has remained robust even through the governance turmoil.

The platform serves more than 22,000 logistics companies across 193 countries and is deeply embedded in mission-critical workflows that cannot be easily or cheaply replaced.

Furthermore, CEO Zubin Appoo recently purchased approximately $1 million of WiseTech shares on-market. This is a signal of insider confidence that management believes the shares are trading below intrinsic value.

On valuation, WiseTech shares trade on approximately 28 times FY27 earnings and closer to 15 times FY28 earnings.

At 15 times FY28 earnings, a business with WiseTech’s market position and expected earnings growth rate looks quite attractive. The broker community agrees.

Twelve of the fifteen analysts covering WiseTech rate the stock as a buy or strong buy, with none recommending a sell.

Bell Potter retains a buy rating with a price target of $71.75, implying significant upside from today’s price.

The case against WiseTech shares

Governance concerns are not resolved simply because the share price has fallen far enough.

Stuart Bromley from Medallion Financial Group retains a hold rating. The broker notes that while WiseTech remains one of Australia’s highest-quality technology businesses, near-term sentiment may remain volatile amid management executing its long-term strategy.

For the share price to sustain a recovery rather than simply bounce from deeply oversold levels, the market will need greater clarity on three things: the resolution of the Richard White legal matters, confirmation that the CargoWise Value Pack transition with large customers is progressing, and a FY26 full-year result in August that confirms the guidance the company has maintained throughout the year.

None of those three catalysts has yet landed.

Until they do, investors will continue to face a great deal of uncertainty.

Foolish takeaway

WiseTech shares are down 70% for reasons that are substantially governance-driven rather than business-driven.

The CargoWise platform is intact, guidance has been maintained, the CEO is buying shares, and twelve of fifteen brokers see significant upside.

Whether WiseTech shares are ripe for a rebound depends on whether the governance cloud lifts in FY27.

If it does, the business case for a material recovery is well-established.

If it does not, patience will be required for longer than most investors would like.

The post Are WiseTech shares ripe for a rebound? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven 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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A falling share price can look tempting. Some of the best long-term investments are made when quality companies are temporarily out of favour.

But not every beaten-down ASX share is a bargain. Sometimes a stock is cheap because the business is getting worse, earnings are under pressure, or the market has finally stopped believing an over-optimistic story.

So how can investors tell the difference?

Start with the reason for the fall

The first step is to understand why the share price has dropped.

A high-quality company can fall because of short-term market fear, weaker sentiment, broker downgrades, or concerns that may prove less damaging than investors first thought.

ResMed Inc (ASX: RMD) is a good example of a company that has been sold down at times because of worries about competition, margins, and weight-loss drugs. This is despite it continuing to record strong earnings growth year after year.

That is very different from a company falling because of repeated earnings downgrades, weak cash flow, rising debt, governance problems, or a business model that is not delivering.

A share price fall is not enough information by itself. The reason behind the fall is what needs the most attention.

Check whether earnings can recover

A cheap-looking ASX share needs a believable path back to better profits.

Investors can ask whether revenue is still growing, whether margins can improve, whether costs are under control, and whether management has a realistic plan.

CSL Ltd (ASX: CSL) shows why this is so important. After a sharp share price fall, the key issue is not simply whether the healthcare giant looks cheaper than it used to. Investors need to assess whether its plasma, vaccines, and Vifor businesses can rebuild momentum after a difficult period.

A value trap is more dangerous because earnings keep sliding while the share price keeps looking cheaper on old numbers.

That is why relying only on a low price-to-earnings ratio can be risky. A stock trading on 10 times earnings is not cheap if those earnings are about to fall sharply.

Look at the balance sheet

Debt can turn a difficult period into a serious problem.

A company with a strong balance sheet has more options. It can keep investing, absorb weaker conditions, avoid emergency capital raisings, and wait for the cycle to improve.

A heavily indebted company has less room to make mistakes.

Higher interest costs can eat into profits, lenders may become more demanding, and shareholders can be diluted if the company needs fresh equity at a weak share price.

That is particularly important with smaller speculative shares. Brainchip Holdings Ltd (ASX: BRN), for example, has regularly attracted attention because of its technology story, but investors also need to consider revenue, cash burn, and dilution when judging whether a lower share price is really a bargain. In Brainchip’s case, investors buying the dip have consistently experienced further weakness.

Separate sentiment from substance

Markets can become too negative. A company may still have valuable assets, loyal customers, strong brands, useful technology, or a leading market position even when the share price is under pressure.

That is often where long-term investors can find opportunity. 

WiseTech Global Ltd (ASX: WTC) is an interesting case because the business still has high-quality logistics software, but governance concerns and leadership uncertainty have weighed heavily on confidence. That shows how a damaged share price can sometimes reflect issues outside the core product.

The key is separating a damaged share price from a damaged business.

If the market is worried but the company’s competitive position remains strong, the selloff may eventually prove excessive.

If customers are leaving, margins are shrinking, debt is rising, and management keeps missing guidance, the lower share price may be telling the truth.

Be patient

Investors do not need to decide immediately. A watchlist can be useful because it allows time to follow company updates, compare management promises with results, and see whether the investment case is improving.

Some fallen ASX shares will recover strongly. Others will keep disappointing.

The best bargains usually come from quality businesses facing temporary pressure, not weak businesses wearing a cheaper price tag.

The post How to tell if an ASX share is cheap or a value trap appeared first on The Motley Fool Australia.

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• 2 ASX healthcare shares crashing, now bouncing: buy, hold or sell?
• Buy, hold, sell: Dexus, Resmed, BHP shares
• Here are the top 10 ASX 200 shares today
• Down 35%+, should you buy Zip and WiseTech shares?

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

We’re now a week into the 2027 financial year, though it’s much the same as FY26 so far. Investors may be asking themselves: where should I invest my money in FY27?

The attractiveness of some investments may have changed in the last few months following the Federal budget. Property investors who buy an established residential property can no longer benefit from negative gearing (the losses are carried forward until the property makes a profit), though buyers of new builds can still make use of negative gearing.

The outlook for sizeable capital gains for residential property looks challenging in the short to medium term.

In my view, there are three areas that still make a lot of sense for investors.

Commercial property

Residential properties may have been impacted, but commercial property looks as attractive as ever to me. Commercial properties are normally positively geared, which is great for investor cash flow.

However, I’m not looking to become a property manager. Instead, I believe that high-quality real estate investment trusts (REITs) are a great option to invest my money because I can buy a stake in a portfolio of properties in a single transaction.

Names like Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF) offer exposure to quality property portfolios and good distribution yields. As a bonus, they are all trading at large discounts to their last reported net tangible assets (NTA).

High-quality exchange-traded funds

Another area that I think is well worth investing in is exchange-traded funds (ETFs) and listed investment companies (LICs) because of the diversification and returns they can provide over the long-term.

I’d rather invest in international shares than local shares because I’m not sure that ASX blue-chip shares are going to grow earnings materially in the near-term. Major ASX bank shares face headwinds from the property taxation changes, as well as a challenge from Macquarie Group Ltd (ASX: MQG), while African iron ore from new projects could be a headwind for earnings from BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG).

In my view, something like the Vanguard MSCI Index International Shares ETF (ASX: VGS) makes a lot of sense because it provides exposure to well over 1,000 shares from the global share market.

But, given the uncertainty of how various intriguing investment trends will play out – AI, data centres, private credit, the lack of fuel and other resources flowing out of the Middle East, and inflation – I think high-quality businesses are best-suited to these conditions.

Over the long-term, I believe ideas such as VanEck MSCI International Quality ETF (ASX: QUAL) and Betashares Global Quality Leaders ETF (ASX: QLTY) can outperform the wider global share market, so that could be a great place to invest my money.

ASX shares that can grow earnings

The final place that could be a good area to invest is good ASX shares with solid earnings growth potential.

There are plenty of businesses that could deliver pleasing returns over the long-term as they grow their earnings. The ASX is more than just the largest businesses.

I’m thinking of names like Temple & Webster Group Ltd (ASX: TPW), Breville Group Ltd (ASX: BRG), Sigma Healthcare Ltd (ASX: SIG), TechnologyOne Ltd (ASX: TNE), Siteminder Ltd (ASX: SDR), L1 Group Ltd (ASX: L1G), Lovisa Holdings Ltd (ASX: LOV), Wesfarmers Ltd (ASX: WES) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

These aren’t the only names I’d buy to invest my money for my portfolio, there are plenty of exciting options!

The post How should I invest my money in FY27? appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $70,000 annual passive income?
• 5 of the best investments on the ASX right now to complement your superannuation
• Buy, hold, sell: Dexus, Resmed, BHP shares
• 2 world-class ASX 200 shares I want in my portfolio
• Up 57%! 3 compelling reasons to still buy BHP shares today

Motley Fool contributor Tristan Harrison has positions in Breville Group, Rural Funds Group, SiteMinder, Technology One, Temple & Webster Group, VanEck Msci International Quality ETF, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Macquarie Group, SiteMinder, Technology One, Temple & Webster Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Rural Funds Group, SiteMinder, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended BHP Group, Lovisa, Macquarie Group, Technology One, Temple & Webster Group, Vanguard Msci Index International Shares ETF, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.