Category: Stock Market

It’s been another big week for S&P/ASX 200 Index (ASX: XJO) shares amid some stellar reporting season results and a long-awaited acquisition green light from a government regulator.

Here’s what saw these four blue-chip stocks grab the Motley Fool’s headlines in the trading week just past.

Four ASX 200 shares grabbing the Motley Fool’s headlines

First up we have ANZ Group Holdings Ltd (ASX: ANZ) and Suncorp Group Ltd (ASX: SUN).

Both ASX 200 shares made headline news together on Tuesday. That came after the Australian Competition Tribunal approved ANZ’s $4.9 billion acquisition bid for Suncorp’s banking segment.

ANZ made its initial bid for Suncorp’s bank way back in July 2022. That bid was eventually blocked by the Australian Competition and Consumer Commission (ACCC) in August 2023 amid fears it would stifle competition among the banks.

The acquisition now awaits the final tick of approval from Australian Treasurer Jim Chalmers as well as Queensland’s state government.

Which brings us to the third ASX 200 share leaping into the Motley Fool’s headlines this week, Fortescue Metals Group Ltd (ASX: FMG).

The mining stock grabbed our attention with some very strong first-half results for the six months ending 31 December.

Among the highlights, Fortescue’s half-year revenue increased by 21% year on year to US$9.5 billion. And net profit after tax (NPAT) of US$3.3 billion was up 41% year on year.

This saw Fortescue increase its fully franked interim dividend by 44% to AU$1.08 per share. Fortescue shares now trade at a 7.4% dividend yield.

Commenting on those results, Fortescue Metals CEO Dino Otranto said:

Whether it’s through our first green energy projects, our diversification into the high-grade segment of the iron ore market through Iron Bridge, or expansion of our global footprint with the Belinga Iron Ore Project in Gabon, we remain committed to creating value for all our stakeholders.

Rounding off the list of ASX 200 shares grabbing the Motley Fool’s headlines over the week is Block Inc (ASX: SQ2).

The ASX 200 BNPL stock reported its fourth quarter 2023 results on Friday. And boy did investors like those numbers, sending the Block share price up 16.8% on the day at one point!

Among the highlights was a 24% year on year jump in net revenue to US$5.77 billion. And gross profit of $2.03 billion was up 22%.

The company’s balance sheet also impressed, with $7.7 billion in available liquidity as at 31 December.

Looking ahead, Block CEO Jack Dorsey said, “We’ve done a lot recently to reduce our costs. Now we’re going to focus on growth.”

Judging by the ASX 200 share’s outsized share price gains on Friday, investors appeared to believe that growth is on the horizon.

The post Why these 4 ASX 200 shares grabbed the Motley Fool’s headlines this week appeared first on The Motley Fool Australia.

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More reading

• Better buy: Fortescue or BHP shares?
• Here’s how the ASX 200 market sectors stacked up this week
• Here are the top 10 ASX 200 shares today
• Qantas descends, Treasurer’s RBA dilemma and Twiggy’s payday: Scott Phillips on Nine’s Late News
• 25 ASX 200 shares with ex-dividend dates next week

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

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BHP Group Ltd (ASX: BHP) shares and Fortescue Ltd (ASX: FMG) shares are both known for paying big dividends to shareholders. But which of the ASX mining giants is a better buy?

Almost all of Fortescue’s revenue comes from iron ore, for now at least. BHP is involved in a number of different commodities, including iron ore, copper, nickel and coal.

Most of the time, diversification is a good thing. But, BHP’s nickel exposure has caused some pain after the recent multi-billion write-down of the nickel division on its balance sheet.

They’re both big enough that I don’t think size makes much difference for a choice. They’re both excellent miners, though Fortescue’s iron ore production is generally lower-grade.

Dividend yield

Both businesses just reported their FY24 half-year results.

BHP decided to cut its dividend by 20% to US 72 cents, while Fortescue hiked its dividend by 44% to A$1.08 per share. Despite BHP being significantly larger by market capitalisation than Fortescue, the Fortescue dividend is almost the same size in dollar terms.

Of course, if the iron ore price were to fall, BHP’s other commodities (such as copper) could help offset that pain.

According to the estimate on Commsec, for the full 2024 financial year. Fortescue could pay a grossed-up dividend yield of 10.8% and BHP could pay a grossed-up dividend yield of 7.7%.

For investors purely focused on short-term dividend income, Fortescue seems like the more appealing choice.

Green efforts

Both of these mining companies provide commodities that the world needs. Iron ore is an essential element of steel, which is used in construction, car manufacturing, infrastructure and many more uses.

BHP has expanded in copper, and it’s working on a large potash project in Canada called Jansen. I think both copper and potash have attractive futures – copper is needed for electrification, while potash is a fertiliser that supposedly has less emissions.

Fortescue is working on a myriad of different green energy initiatives, including the production of green hydrogen and green ammonia. It’s also building a division that works on producing high-performance industrial batteries.

If the world is to reach net zero, it will need to replace the fuel used by planes, boats and other heavy machinery. Green hydrogen and green ammonia could be the answer if produced in large enough quantities. I like this move by Fortescue because it diversifies which customers it’s selling to and opens it up to another commodity.

Valuation

Fortescue isn’t generating any earnings from its green division yet, but the Fortescue share price is only priced at 8.4x FY24’s estimated earnings, according to the projection on Commsec.

The BHP share price is valued at 10.5x FY24’s estimated earnings, so it’s priced higher than Fortescue.

Foolish takeaway

With the iron ore price as high as it is, above US$120 per tonne, I wouldn’t be jumping on either ASX iron ore share. But, on the face of it, Fortescue looks like the better choice, particularly if the green energy initiatives pay off.

The post Better buy: Fortescue or BHP shares? appeared first on The Motley Fool Australia.

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More reading

• Qantas descends, Treasurer’s RBA dilemma and Twiggy’s payday: Scott Phillips on Nine’s Late News
• 25 ASX 200 shares with ex-dividend dates next week
• Everything you need to know about the supersized Fortescue dividend
• Fortescue share price rises on huge 41% profit growth in FY24 half-year result
• 3 ASX 100 and ASX 200 shares I’d buy now for a $1,820 passive income in 2024!

Motley Fool contributor Tristan Harrison has positions in Fortescue. 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.

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Starting from just a modest amount, anyone can build an ASX stock portfolio to fatten up for a significant flow of passive income later.

Just $20,000, which is about half the savings that the average Australian has in their bank account, can get you started.

I reckon, eventually, you could sit back and watch an average of $25,000 every year land in your bank account.

It’s all possible using the power of compounding.

Check this out:

Invest and keep adding to it

Let’s hypothetically assume you can build a portfolio with that $20,000 that can, over the long term, average a compound annual growth rate (CAGR) of 12%.

I contend that this is reasonable, with diligent research and stock selection.

Quality businesses like Johns Lyng Group Ltd (ASX: JLG) and Lovisa Holdings Ltd (ASX: LOV) have managed to return 40.6% and 23.3% per annum over the past five years.

So with a mixture of those sorts of winners, some neutrals and the inevitable losers, there’s no reason why your $20,000 can’t grow at 12% a year.

Just practice sensible diversification, and act on sensible advice.

But it’s not just about investing and then forgetting about it.

Big rewards only come with hard work, and you need to keep saving and adding to this investment.

Assuming that you can afford to add $400 a month, after 12 years of monthly compounding, the nest egg will have grown to $211,436.

Passive income after 12 years of 12%

Now let’s have some fun.

From the 13th year, sell off the 12% gains each year.

That will provide you with an annual passive income of $25,372.

Mission accomplished.

Of course, the share market can be volatile so you won’t receive this much every single year. 

In some years, the passive income will be far less. In others, it will be much more.

But if you maintain a portfolio with a 12% CAGR, over the long run the cash flow will average out to $25,372.

The moral of the story is that regardless of how much you can afford to put in, start investing.

You can’t buy time, but it’s such an important ingredient.

The post I’d aim to turn a $20,000 savings account into $25,400 of passive income appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here’s how these 3 ASX 200 shares just earned substantial broker upgrades
• A once-in-a-decade chance to get rich from ASX 200 shares?
• Here are the top 10 ASX 200 shares today
• Why Bega Cheese, Domino’s, Lovisa, and Universal Store shares are rocketing today

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group and Lovisa. The Motley Fool Australia has recommended Johns Lyng Group and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investing for the long-term makes a lot of sense to me, so I’m going to talk about three ASX shares that I think are buys and that I could own for the rest of my life.

If we own an ASX share forever, it would reduce brokerage costs and it might reduce how much capital gains tax we’re required to pay along the way compared to if we had regularly sold those holdings for a gain.

Holding for the long term also means we’re giving compounding the longest time to work its magic.

With that in mind, these are the three ASX shares I’d choose.

Telstra Group Ltd (ASX: TLS)

Telstra seems to be the clear leader in the telecommunications sector, and it’s adding many more thousands of subscribers every reporting period. Not only that, but mobile price increases are also leading to a growing average revenue per user (ARPU), which is offsetting Telstra’s cost increases.

An internet connection seems to be becoming more important as the years go by. It’s being used more for e-commerce, connecting with government services, banking, work, education, entertainment and so on.

I don’t think the internet is going away – I’d suggest most households and businesses see the internet bill as an essential one to pay for beyond the foreseeable future.

I’m more confident about Telstra’s ultra-long-term outlook than the shorter-term because of the chance that 5G (or 6G) could be faster and better than what the NBN can provide. That could mean that households and businesses switch en masse to wireless internet, which may enable Telstra to capture much more of the broadband profit margin (rather than paying a lot to the NBN).

The ASX share seems committed to paying appealing dividends each year, which is promising for shareholders wanting cash flow.  

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns farmland across Australia, in a number of sectors including cattle, vineyards, almonds, macadamias and cropping.

The business is achieving rental growth in a few different ways. Most of its tenancy contracts have rental income growth built-in, either with fixed increases or CPI-linked inflation increases, with some having occasional market reviews.

The ASX share is regularly investing in improvements at its farms, such as increased water access, better infrastructure or altering the farm type to a profitable choice, such as macadamias.

Farmland has been a useful asset for thousands of years. I think that’s going to continue for decades or even centuries.

As long as management makes sure the portfolio is focused on the right commodities and ensures it doesn’t take on too much debt, I think this could be a very long-term investment.

It’s currently paying an annualised distribution of 11.73 cents per unit, which is a forward yield of 5.3%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This ASX share is the one that I’d feel most confident about holding for the ultra-long term.

It operates as an investment house, meaning it invests in other assets on behalf of shareholders.

This company has already been operating for over 120 years, so it has proven it has longevity.

It is invested in a number of sectors including resources, building products, property, agriculture, financial services, credit/bonds, electrical parts and many more.

The investment flexibility allows it to find opportunities across various sectors and business sizes. One of the most attractive features of the business is that it can invest in both public and private businesses.

I think its portfolio can still be performing well for many years from now, and paying dividends. It has grown its dividend every year since 2000 and paid a dividend each year since 1903.

This ASX share may well be my biggest position 10 years from now, 20 years from now and 30 years from now. I like that its portfolio is positioned to deliver both capital growth and dividend growth.

The post 3 ASX shares to buy and hold forever appeared first on The Motley Fool Australia.

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More reading

• 25 ASX 200 shares with ex-dividend dates next week
• A once-in-a-decade chance to get rich from ASX 200 shares?
• Buy these ASX 200 dividend shares for a big income boost
• How I built $5,000 of passive income starting with $0
• Buy Telstra and these ASX 200 dividend stocks

Motley Fool contributor Tristan Harrison has positions in Rural Funds Group 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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Tech shares led the ASX 200 market sectors for the second consecutive week, with a 3.29% gain over the past five trading days. This comes on top of last week’s 6.2% rise, so tech investors must be cheering!

The S&P/ASX 200 Index (ASX: XJO) lost 0.28% over the week to finish at 7,643.6 points on Friday.

Seven market sectors finished the week in the green.

Let’s review.

Tech shares led the ASX sectors again this week

It’s hard to look past Nividia Corp as the catalyst for another great week for ASX tech stocks.

We first learned of Nvidia’s “insane result“‘ for 4Q FY23 early yesterday morning. After that, the S&P/ASX 200 Information Technology Index (ASX: XIJ) began a steady rise, gaining 2.04% of this week’s 3.29% lift.

Overnight, the Nvidia share price launched 16.4% higher to a record US$785.38 (and plenty of analysts say it can go much higher over the next year, with the most bullish predicting US$1,400 per share).

Nvidia’s 16.4% gain contributed to a 2.94% surge in the NASDAQ, which dragged many other popular US tech stocks higher, including Meta Platforms 3.87%, Amazon 3.55%, and Apple 1.12%.

As usual, our tech sector followed Wall Street today and soared on the exciting momentum.

The biggest of our tech stocks, Wisetech Global Ltd (ASX: WTC) had a ripper week with its share price up 10.38% to $87.95. This follows the release of the company’s 1H FY24 results on Wednesday.

Wisetech announced revenue of $500 million, which was 32% higher than 1H FY23. EBITDA leapt 23% to $230 million and underlying net profit after tax (NPAT) was $128 million, up 5%.

For the 15th time in a row, Wisetech raised its dividend. It declared a fully franked interim dividend of 7.7 cents per share, up 17%.

Among the other big ASX 200 tech stocks this week:

• The Xero Limited (ASX: XRO) share price gained 2.79% to finish at $119.91 on Friday
• Nextdc Ltd (ASX: NXT) shares lifted 1.47% to $15.17
• The Altium Limited (ASX: ALU) share price fell 0.62% to $65.60.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up this week, according to CommSec data.

Over the past five days:

The post Here’s how the ASX 200 market sectors stacked up this week appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• The Brainchip share price is up 213% this month. Is Nvidia to blame?
• 25 ASX 200 shares with ex-dividend dates next week
• Is the Nvidia share price on course to reach US$1,400?
• Why are ASX tech shares booming on Friday?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Altium, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, WiseTech Global, and Xero. 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 positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Tracy Vo for Nine’s Late News on Thursday night to unpack the latest business news, including a lower profit for Qantas Airways Limited (ASX: QAN), calls for the Treasurer to retain his power of veto over the Reserve Bank of Australia (RBA), and a billion dollar payday for Andrew ‘Twiggy’ Forrest.

The post Qantas descends, Treasurer’s RBA dilemma and Twiggy’s payday: Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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More reading

• 25 ASX 200 shares with ex-dividend dates next week
• Brokers name 3 ASX shares to buy now
• Why Qantas shares could rise over 50%
• 5 things to watch on the ASX 200 on Friday
• Everything you need to know about the supersized Fortescue dividend

Motley Fool contributor Scott Phillips has positions in Fortescue. 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.

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The Pexa Group Ltd (ASX: PXA) share price is having a strong finish to the week.

In late trade, the property technology company’s shares are up 5.5% to $12.14.

This follows the release of the company’s half-year results.

Pexa share price jumps on half-year results

• Revenue up 16% to $163.3 million
• Group operating EBITDA margin at 36%
• Operating EBITDA up 12% to $58.8 million
• Group net profit after tax before amortisation (NPATA) down 36% to $15 million
• Net loss after tax of $4.6 million (from $4 million profit)

What happened during the half?

For the six months ended 31 December, Pexa reported a 16% increase in revenue to $163.3 million.

This reflects an 11% lift in Pexa exchange revenue to $149.6 million, an 80% jump in Digital Growth business revenue to $7.2 million, and a 261% increase in International business revenue to $6.5 million.

Operating EBITDA was up 12% to $58.8 million for the half. This was driven by a 17% jump in Pexa exchange EBITDA to $82.9 million, which was partially offset by operating losses from its other businesses.

Pexa’s NPATA came in at $15 million for the half, down from $23.5 million a year earlier. Management advised that this reduction was primarily due to costs associated with the acquisition of Smoove, restructuring costs, and higher amortisation arising from investments.

Management commentary

Pexa’s CEO, Glenn King, was pleased with the half. He said:

Across the Group, these results represent the discipline we have brought to executing our strategy. This includes improving the efficiency of our business through our Productivity Enhancement Program and beginning to embed our capital management framework. We have made strong progress to ensure we are well placed to execute on our strategic objectives in the second half, but we still have more to do to realise our ambitions in Australia and overseas.

Pleasingly, PEXA Exchange continues to perform strongly and has maintained its leading market position, reflecting the resiliency of the platform. It delivered a good first-half result, benefiting from CPI-linked price increases, increased market volumes and penetration and a shift in activity towards higher-value transfers.

How does this compare to expectations?

Goldman Sachs described the result as “strong” and notes that its margins are tracking ahead of its FY 2024 guidance. The broker adds:

PXA reported 1H24 Sales/EBITDA/Adj. NPATA +16%/+12%/-8% vs. pcp to A$163mn/A$59mn/A$26mn, which were +2%/+8%/+15% vs. GSe and +5% vs. Visible Alpha Consensus Data EBITDA (A$56mn). FY24 guidance reiterated including group operating EBITDA margins (ex. Smoove) >35%. Net debt/EBITDA increased to 2.5x (1H23 2.3x) with PXA flagging no current expectation of material acquisitions to come.

Outlook

Pexa has reaffirmed its previous guidance for FY 2024. It expects:

• Group operating EBITDA margin of 35% or better
• Exchange operating EBITDA margin of 50-55%
• Net cash outflows of $70 million to $80 million for the International and Digital Growth businesses
• Breakeven operating EBITDA for Digital Growth for the month of June 2024.

The Pexa share price is down approximately 2% over the last 12 months.

The post Pexa share price jumps on ‘strong’ half-year result appeared first on The Motley Fool Australia.

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More reading

• 50% down: 2 ‘world leader’ ASX 200 shares ready to bounce back

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 and PEXA 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.

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Of all the index funds on the ASX, those that track the Nasdaq 100 Index have delivered some of the greatest returns in recent years.

Propelled by their huge stakes in the stellar ‘magnificent seven’ tech stocks, exchange-traded funds (ETFs) like the BetaShares Nasdaq 100 ETF (ASX: NDQ) have delivered some breathtaking returns for investors, that make our own ASX seem very tame by comparison.

Just take NDQ units.

Over the 12 months to 31 January 2024, this ETF has returned an astonishing 51.31% (including dividend distributions). The fund has also averaged a Warren Buffett-esque 22.63% per annum over the past five years.

Until recently, the BetaShares Nasdaq 100 ETF was the only Nasdaq-specific fund on the ASX. But last year, it was complimented with the addition of the Global X US 100 ETF (ASX: N100).

Given the kinds of numbers above, it’s not too surprising to see that the ASX has just welcomed not one, but two more ETFs that give investors additional Nasdaq exposure.

Betashares just yesterday launched the BetaShares Nasdaq Next Gen 100 ETF (ASX: JNDQ), as well as the BetaShares Nasdaq 100 Equal Weight ETF (ASX: QNDQ).

Both of these ETFs give investors exposure to Nasdaq stocks. But both offer different paths to doing so. We’ll start with the Nasdaq 100 Equal Weight ETF, as it’s a little simpler to explain.

Two new Nasdaq ETFs hit the ASX

So like most index funds, the BetaShares Nasdaq 100 ETF (NDQ) holds the 100 shares in its portfolio in weighted proportions. This means that the largest shares (by market capitalisation) take up far more room in the fund’s portfolio than the smaller ones.

To illustrate, right now Microsoft – the largest public company in the world at present – commands an NDQ weighting of around 8.8%. In contrast, one of the smaller holdings in this ETF is the pharmacy chain Walgreens Boots Alliance. It holds just a 0.1% weighting in the same portfolio.

However, the QNDQ ETF seeks to change this paradigm. As its name implies, this fund gives every stock in the Nasdaq 100 an equal weight, meaning that Microsoft has the same level of weighting and influence on this fund as Walgreens. That would be around 1%.

The Nasdaq Next Gen 100 ETF is a little different though. Instead of holding the largest 100 shares on the Nasdaq (as NDQ and QNDQ both do), it tracks the largest 100 shares outside the Nasdaq 100 (the Nasdaq 101-201 if you will).

So rather than having access to names like Microsoft, Apple, Amazon and Tesla, you’re getting smaller companies like eBay, DraftKings, Zoom Video and Baidu.

On day two of these funds’ ASX lives, both are doing well and are above the price the units listed at yesterday. But it will be interesting to see how both of these new Nasdaq ETFs go over longer periods of time, especially compared to the uber-popular BetaShares Nasdaq 100 ETF.

The post Meet the ASX’s new NASDAQ ETFs appeared first on The Motley Fool Australia.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Baidu, BetaShares Nasdaq 100 ETF, Microsoft, Tesla, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended eBay and has recommended the following options: long January 2026 $395 calls on Microsoft, short April 2024 $45 calls on eBay, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The RPMGlobal Holdings Ltd (ASX: RUL) share price is up 8.91% at $2.14 amid a broader tech stock rally on Friday.

RPMGlobal provides technology solutions, advisory consulting, and training to the mining industry.

The company is outperforming its ASX All Ords peers, with the S&P/ASX All Ordinaries Index (ASX: XAO) up just 0.49% by comparison.

But technology is the hottest market sector of the day, with the S&P/ASX 200 Information Technology Index (ASX: XTX) currently up 1.49%.

This follows a 2.94% surge for the NASDAQ overnight.

Popular US tech stocks made impressive gains, led by Nvidia Corp, which shot up 16.4% to a new record high of US$785.75 after the semiconductor company released its 4Q FY23 numbers.

Meta Platforms gained 3.87%, Amazon rose 3.55%, and Apple lifted 1.12%.

As earnings season continues, RPM Global released its 1H FY24 numbers last week.

Let’s take a look at the report.

1H FY24 results disappoint market despite 466% profit surge

The RPMGlobal share price fell 5.7% the day after the company released its 1H FY24 results post-close.

Despite reporting a 466% increase in profit, ASX investors punished the stock. Perhaps they were expecting even better?

For the half year ended 31 December 2023, RPMGlobal reported:

• Group revenue of $56.3 million, a 20.6% rise on the prior corresponding period (pcp) of 1H FY23
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $10 million, up 88.7% pcp
• Profit after tax $6.8 million, up 466.7% pcp
• Net assets of $58.2 million, up $0.8 million as of 31 December 2023
• Cash of $23.3 million and no debt.

What else happened in 1H FY24?

RPMGlobal said net revenue from the software division increased 24.9% to $37.1 million, with software subscription revenue up 26% to $21.3 million. The company said some of this growth was due to customers converting their software licenses from perpetual to subscription.

Software consulting revenue rose 22.6% to $6.5 million. Maintenance and support revenue fell 9.7% to $6.5 million. Perpetual licence sales were steady at $1.1 million.

The company noted that it has outlaid $10 million in an on-market share buyback over the past year.

What did RPMGlobal management say?

The company said its software products and advisory services were gaining market share from competitors, evidenced by Southeast Asia sales and the reputation built by the advisory business.

Management commented:

AMT continues to be selected and implemented by the world’s major mining companies, and XECUTE is quickly becoming the ‘go-to” operational product for tier two miner’s and has started to make serious inroads into the tier one global miners.

We believe XECUTE will begin to rival AMT in terms of market acceptance and revenue generation in the next few years.

What’s next for RPMGlobal?

Management said it was optimistic about the years ahead, given RPMGlobal’s strong balance sheet, healthy cash flow, and competitive advisory and software offerings.

RPMGlobal share price snapshot

The RPMGlobal share price has risen 34% over the past year, while the ASX All Ords has lifted 5.4%.

The post RPMGlobal share price up 9% amid tech stock rally appeared first on The Motley Fool Australia.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Amazon, Apple, Meta Platforms, Nvidia, and RPMGlobal. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Nvidia, and RPMGlobal. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Flight Centre Travel Group Ltd (ASX: FLT) shares will be on focus next week when the travel agent giant releases its half-year results.

Ahead of the release on Wednesday, let’s see what the market is expecting.

Flight Centre half-year results preview

According to a note out of Goldman Sachs, its analysts are expecting the company to report explosive growth for the first half.

Its analysts have pencilled in sales growth of 28.5% to $1,288.1 million and earnings before interest and tax (EBIT) growth of 344.9% over the prior corresponding period. This is modestly higher than the market consensus estimate.

As for dividends, the broker is expecting a 23 cents per share dividend for the full year.

Flight Centre’s dividends are usually weighted to the second half, so this could mean an interim dividend in the region of 8 cents per share.

Elsewhere, analysts at Morgans recently commented on their expectations for the first half of FY 2024. They said:

Earnings are seasonally skewed to the 2H (even more so post the Scott Dunn acquisition). 2Q NPBT was guided to be below the 1Q of A$54m. In line with seasonal trends, 1H cashflow is usually weak.

Should you buy Flight Centre shares?

At present, Goldman Sachs is sitting on the fence with this one. It has a neutral rating and $20.70 price target on the company’s shares. This implies potential downside of 5% from current levels.

Morgans, on the other hand, is feeling more upbeat. It has an add rating and $26.00 price target on Flight Centre’s shares.

If the broker is on the money with this recommendation, it would mean upside of 19% for investors over the next 12 months.

The post Own Flight Centre shares? Here’s what you need to know ahead of its results 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 recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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