Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is showing no signs of exhaustion in 2024, having nudged to a new all-time high in Tuesday’s session.

On July 15, the Australian benchmark index poked its head above the 8,000 mark for the first time in history. It now rests at 8,049 points just before lunch time today.

Despite the rush hour of gains, investment bank UBS has maintained its end-of-year target for the ASX 200 at 8,000 points.

This means the index would track sideways until yearend, if UBS is correct. Let’s take a look.

ASX 200 hits new highs

The ASX 200 soared to its second new record high this week, surpassing 8,000 points for the first time in history.

As my colleague Seb reported, it was a “momentous session” for Australian equities – and rightly so. The Aussie index has braved off inflation, higher interest rates, geopolitical risks, and whatever else to notch this milestone.

It has climbed over 18% since October last year when it was below 6,800 points. This surge has been driven by strong performances from key sectors, particularly financials and mining.

UBS’ take on the ASX 200

UBS strategist Richard Schellbach remains optimistic about the ASX 200, despite keeping an end-of-year target at 8,000 points on the benchmark.

Schellbach notes that the index is trading at a higher valuation multiple, yet the dividend yield remains comparable to historical levels. According to The Australian, he noted:

Right now the [price-to-earnings-ratio (P/E)] relative of Australian stocks versus global [stocks], sits roughly in the range they have maintained over the last two decades.

At 8000, the ASX200 sits on a richer than usual valuation multiple, whilst the current dividend yield still seems comparable to history…The weighting split between key sectors seen now does not indicate any huge shift within the composition of the equity market.

Schellbach also addresses concerns about market concentration. He asserts that the ASX market capitalisation hasn’t become overly concentrated among the biggest stocks.

The top 5, 10, and 20 companies hold similar market cap weights in the index as they did in 2000.

Given what happened in the year 2000 – the “tech bubble” bursting, resulting in one of the sharpest bear markets in history — I’m not sure if this is a good or bad omen. Time will tell.

Future outlook

UBS says the ASX 200 is trading on the expensive side compared to historical averages. But, it notes this trend is consistent with global equity markets.

When adjusting for long-term market cycles, using a ratio called the “cyclical adjusted PE ratio” or “CAPE”, it says there are no signs of an “earnings bubble.”

Schellbach acknowledges that the period of “peak margins” is over, but Australian companies aren’t “overlearning” based on their return on equity (ROE).

Takeout

The ASX 200’s record high is a testament to the resilience of the Australian economy at large. UBS’ steady end-of-year target is interesting. Whilst it is flat on today’s index value, it also implies no downside either.

Despite this, valuations do matter, and past performance is no guarantee of future results. It’s critical to consider your own personal risk tolerances.

The post ASX 200 hits record high, UBS keeps end of year target steady appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• How is the stock market reacting to yesterday’s attack on Trump?

Motley Fool contributor Zach Bristow 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.

Now that the new financial year is in full swing, ASX shares continue their ascent, with the S&P/ASX 200 Index (ASX: XJO) marching to new all-time highs on Tuesday.

Brokers are in full swing too. Citi has rated three ASX shares as buys in various reports to clients this week.

Here’s a closer look at what the broker said and what it could mean for investors.

Nickel Industries Ltd (ASX: NIC)

Nickel Industries is the first stock Citi upgraded to a buy this week. Analyst Kate McCutcheon noted the nickel player’s share price dropped 14% over the past 10 weeks, creating an attractive entry point.

The analyst sees positive earnings per share (EPS) growth from consensus upgrades and believes the company’s H1 FY24 earnings before interest, tax, depreciation and amortisation (EBITDA) trough is “now cleansed”, according to The Australian.

The ENC HPAL project, in which it owns 55%, is also ahead of schedule. First production is expected in the third quarter of CY25. McCutcheon says that most consensus estimates haven’t yet factored in ENC to the company’s pre-tax earnings.

Citi also believes the market’s cost expectations for NIC’s newer rotary kiln-electric-furnace (RKEF) projects, Oracle Nicke (ONI) and Angel Nickel (ANI), are too high.

NIC is a bottom quartile producer and has demonstrated profitability through cycle with committed production growth to capture pricing upside.

With nickel sub 17,000 a tonne, nickel production cuts, should support sentiment/price. NIC is now the only pure-play nickel producer left on the ASX.

Citi has set a target price of $1.05 for the ASX share. Bell Potter also rates the stock a buy with a $1.54 price target.

These targets represent an upside potential of 22% and 78% from the current price of 80.6 cents per share, respectively.

CAR Group Ltd (ASX: CAR)

Citi sees significant potential in CAR Group. The broker upgraded its rating to buy and increased its target price on the ASX share to $39.80.

At the time of writing, stock in CAR Group —formerly known as Carsales.com — is fetching $35.70 apiece, up nearly 15% this year to date.

Analyst SIraj Ahmed said the bank expects double-digit earnings growth from CAR over the medium term.

Ahmed projects that FY24 earnings per share (EPS) growth should accelerate to 17% from 13.2% in FY23. CAR’s international business, particularly in Brazil and the US, should benefit from rate cuts, he also noted.

While another RBA rate rise and weakening demand are risks to the Australian business, we see Car Group having a very strong position and expect it to deliver solid growth even in a tough environment.

Potential bolt-on mergers and acquisitions (M&A) could further boost growth, especially in the US, Ahmed says.

Citi values the ASX share at $39.80 apiece, implying an 11.7% upside from the current price.

BlueScope Steel Ltd (ASX: BSL)

Citi’s Paul McTaggart also upgraded BlueScope Steel to buy from the firm’s previous neutral rating.

He expects US steel prices have hit their lows and will rise post-Northern summer. McTaggart also noted that US monetary conditions are set to turn expansionary, which could benefit BlueScope.

We think US steel prices are now near their lows with a post Northern summer uptick expected and with US monetary conditions set to turn expansionary.

We trim our target price to $23.70 from $24 but raise our rating to Buy as we look through near term earnings weakness and likely consensus earnings downgrades.

Despite trimming FY25 earnings before interest and tax (EBIT) to $1.11 billion due to falling export spreads, Citi sees EBIT lifting to $1.73 billion by FY27.

Shares in the ASX mining stock are currently swapping hands at $21.41 apiece, meaning Citi’s price target implies around 11% upside potential.

ASX shares Foolish takeout

Citi’s positive outlook on Nickel Industries, CAR Group, and BlueScope Steel suggests it sees strong growth potential in each of these ASX shares.

Investors looking to diversify their portfolios with promising ASX stocks may find these upgrades compelling. As always, consider your investment goals and risk tolerance before making any decisions.

The post Citi names these 3 ASX shares to buy now appeared first on The Motley Fool Australia.

More reading

• Brokers say buy! 3 ASX shares receiving upgrades today
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy now
• Buy this ASX tech stock for a 20%+ return: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Car Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Zip Co Ltd (ASX: ZIP) shares are motionless this morning despite releasing a fourth-quarter update.

Whether you want to buy or sell, a trading halt prevents shareholders from doing either this morning. The need to hit pause on the company’s share price stems from another announcement released alongside Zip’s quarterly figures.

In addition to the buy now, pay later provider’s results, Zip has unveiled a capital raise. Not to make an acquisition or fund an expansion. No… Zip is rattling the tin to retire its existing corporate debt facility early.

Debt demolition with Zip shares

It appears that management hopes to tap into the enthusiasm following a sensational 273% ascension in the Zip share price over the past year.

Now valued at a market capitalisation of $1.8 billion, the company proposes raising roughly 15% of that by selling new shares in two parts.

The first part is a fully underwritten equity placement for $217 million. The second is a non-underwritten share purchase plan for eligible shareholders that will seek to raise a further $50 million, amassing a grand total of $267 million before costs if all goes to plan.

Shares will be issued at the higher option between $1.52 per share or ‘the price determined by a bookbuild process to be undertaken in respect of the placement’. Zip shares last traded at $1.605, meaning the $1.52 would represent a 5.3% discount.

According to Zip, the transaction will strengthen its balance sheet and reset its capital structure. Furthermore, paying down hundreds of millions worth of debt will provide flexibility and liquidity to ‘pursue further growth’.

The corporate debt facility has a limit of $150 million, and Zip had drawn down $130 million of it as of 30 June 2024. The debt’s maturity is set for December 2027, more than three years away.

What about the fourth-quarter results?

Defying the high interest rate environment, Zip achieved growth in the fourth quarter ended 30 June 2024. Financial accomplishments during the quarter include:

• Transaction volume up 19% year-on-year to $2.6 billion
• Revenue up 22.1% to $223.6 million
• Monthly transacting users up 6.1% to 2.1 million

As usual, most of Zip’s revenue growth came from the United States, increasing 46.8% to $121.5 million. For comparison, the Australia and New Zealand region only grew 1.8% to $102.1 million. Similar differences in growth were apparent for transaction volume and number of transactions.

Conversely, Zip saw its number of active customers slip in both regions. Consequently, total active customers decreased by 2.9% to 6 million.

Additionally, bad debts rose to 4.7% of Australian consumer receivables in Q4 — its second-highest level since June 2022. Despite this, cash earnings before tax, depreciation, and amortisation for FY24 are expected to be between $67 million and $70 million.

Zip held $353 million in total cash on its balance sheet at the end of June.

Zip shares are up 159% since the start of the year.

The post Zip shares frozen amid $267 million debt wipe plans appeared first on The Motley Fool Australia.

More reading

• Zip shares fall despite return to ASX 200 index
• 5 things to watch on the ASX 200 on Monday
• Are ASX small-cap shares back in vogue amid a big shift?
• Is it too late to buy Zip shares at their 2-year highs?
• 3 ASX small-cap shares that soared 250% to 675% in FY24

Motley Fool contributor Mitchell Lawler 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 Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 300 Index (ASX: XKO) is up 0.6% today, with one beaten-down ASX 300 stock doing a lot of the heavy lifting.

The surging stock in question is online luxury goods retailer Cettire Ltd (ASX: CTT).

The Cettire share price closed yesterday trading for $1.50. In morning trade on Wednesday, shares leapt to $1.65 apiece, up 10%. After some likely profit-taking, shares are currently changing hands for $1.58, up 5.5%.

Here’s what’s piquing investor interest in the ASX 300 stock today.

Why is the ASX 300 stock flying higher today?

The Cettire share price is charging higher after the ASX 300 stock released additional financial disclosures for its full FY 2024 operations, covering the 12 months through to 30 June.

The company reported on its preliminary expectations for the full year on 24 June. That update saw investors overheat their sell buttons, with the ASX 300 stock closing the day down a precipitous 49.3% at $1.135 a share.

Today, Cettire said it is in a position to confirm gross revenue, average order value, active customers and gross revenue from repeat customers.

These unaudited, now-confirmed metrics are as follows:

• Gross revenue of $975 million to $980 million, up 81% to 82% from FY 2023
• Average order value of $795 to $800, up 6% to 7% year on year
• Active customers of just over 692,000, up 64% from the prior year
• Gross revenue from repeat customers represented 61% of the total, up 3% from FY 2023

Cettire expects to release its full-year FY 2024 results in the second half of August.

What is management saying?

Commenting on the headwinds dragging on the ASX 300 stock in June, Cettire CEO Dean Mintz said that a softening demand environment and an increase in promotional activity “has been visible across our footprint, particularly in the last several weeks as the market has entered the Spring Summer 24 sale period”.

Mintz added:

Additionally, we believe the market is currently being impacted by clearance activity as certain players exit parts of the market.

To continue to expand our market share, Cettire has selectively participated in the promotional activity, leading to an increase in marketing costs relative to sales and a decline in delivered margin percentage.

But all is not doom and gloom for the online retailer.

“The company continues to grow rapidly, is profitable and cash generative,” Mintz stressed.

Cettire share price snapshot

Despite today’s welcome lift, shares in the ASX 300 stock remain down 46% year to date.

The post Down 48% in 2024, why did this ASX 300 stock just surge 10%? appeared first on The Motley Fool Australia.

More reading

• Why Cettire, Deterra Royalties, G8 Education, and Red Hill shares are pushing higher
• Why Arcadium Lithium, Baby Bunting, Cettire, and Qualitas shares are racing higher
• Why Cettire, Collins Foods, Liontown, and Northern Star shares are dropping today
• This smashed up ASX tech stock could rebound 100%+!
• Why Cettire, Metcash, ResMed, and Star Entertainment shares are sinking today

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

Many of Australia’s top brokers have been busy adjusting their financial models and recommendations again. This has led to the release of a number of broker notes this week.

Three ASX shares that brokers have named as buys this week are listed below. Here’s why their analysts are feeling bullish on them right now:

Hub24 Ltd (ASX: HUB)

According to a note out of Bell Potter, its analysts have retained their buy rating and $53.20 price target on this investment platform provider’s shares. This follows the release of a fourth quarter update which revealed that total funds under administration (FUA) increased 30% year on year to $104.7 billion. This comprises platform FUA of $84.4 billion and non-custodial FUA of $20.3 billion. Bell Potter was pleased with Hub24’s performance and believes its shares look cheap relative to other high growth specialist platform providers. Especially given its belief that the positive outlook for principal net flows should underpin incremental earnings growth. It also highlights that it likes the company due to its large exposure to superannuation assets and its ability to deliver complex integrations. The Hub24 share price is trading at $47.44 on Wednesday.

Rio Tinto Ltd (ASX: RIO)

A note out of Morgans reveals that its analysts have upgraded this mining giant’s shares to an add rating but trimmed their price target on them slightly to $130.00. This follows the release of the miner’s second quarter update, which revealed a strong performance from the key Escondida copper operation and improved productivity. And while there are risks emerging for its iron ore production growth in the Pilbara and costs are rising, Morgans remains positive and sees plenty of value in its shares at current levels. The Rio Tinto share price is fetching $117.25 at the time of writing.

Seek Ltd (ASX: SEK)

Analysts at UBS have retained their buy rating on this job listings company’s shares with a reduced price target of $27.10. According to the note, the broker has been busy reviewing the online classifieds space and likes what it has seen. It continues to believe that the industry is well-placed for underlying growth thanks to improving yields and price increases. And while it has trimmed its expectations for Seek slightly for FY 2025, it believes its shares remain undervalued at current levels and sees scope for them to rise strongly over the next 12 months. The Seek share price is trading at $21.31 this morning.

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

More reading

• Should you buy Rio Tinto shares after the miner’s update?
• 2 ASX tech stocks to buy now: Broker
• 5 things to watch on the ASX 200 on Wednesday
• Why are BHP and other ASX 200 mining shares getting hammered on Tuesday?
• Why Champion Iron, Core Lithium, Encounter Resources, and Rio Tinto shares are dropping

Motley Fool contributor James Mickleboro has positions in Seek. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24. The Motley Fool Australia has recommended Hub24 and Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Step One Clothing Ltd (ASX: STP) shares are catching the eye on Wednesday morning.

At the time of writing, the ASX small cap stock is up a massive 25% to $1.82.

What’s going on with this ASX small cap stock?

Investors have been buying the direct-to-consumer online underwear retailer’s shares this morning after it released a strong trading update.

This will no doubt be a welcome relief to shareholders that have endured some hard times since Step One’s IPO in 2021.

After listing at $1.53 per share in November 2021, the company’s shares climbed as high as $3.00 in the first few weeks. However, it wasn’t too long until its shares were down in the low 20s, losing over 90% of their value from top to bottom.

Investors were selling the ASX small cap stock down following a sudden deterioration in its performance caused by challenging trading conditions.

However, it seems that the company has found its legs again and is predicting strong growth in FY 2024.

Strong FY 2024 growth

According to a trading update released this morning, it expects to report revenue of $84 million in FY 2024. This is up 29% on FY 2023’s revenue and 16.3% on what it recorded in FY 2022.

Getting investors even more excited, though, was its earnings growth. Management expects its earnings before interest, tax, depreciation, and amortisation (EBITDA) to increase at the even quicker rate of 42% year on year to $17 million.

This is now higher than the prospectus forecast of $15.1 million for FY 2022, which it previously failed to achieve. Better late than never.

No further financial information was provided by the ASX small cap stock. So, investors will have to wait and see what the above means for net profit and dividends when it releases its full-year results next month. This release is expected to be made on 21 August.

Step One’s founder and CEO, Greg Taylor, was pleased with the company’s performance in FY 2024 and highlights its expanding customer base. He said:

I am pleased to report another period of profitable growth for Step One. Our high-quality sustainable innerwear products, in-house marketing capabilities and brand ownership continue to resonate well with customers. With a strong financial position, we are well positioned to continue expanding our customer base, establish new retail partnerships and grow our brand presence globally. I remain very confident that Step One is in a strong position to continue its profitable growth.

The post ASX small-cap stock rockets 25% on ‘another period of profitable growth’ appeared first on The Motley Fool Australia.

More reading

• 1 market-beating, dividend-paying ASX stock that’s a steal right now
• 1 ASX dividend stock down 28% to buy right now
• Top ASX shares to buy in July 2024

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Core Lithium Ltd (ASX: CXO) share price is surging higher today.

Shares in the All Ordinaries Index (ASX: XAO) lithium stock closed yesterday trading for 11 cents. In morning trade on Wednesday, shares are swapping hands for 12.5 cents apiece, up 13.6% at the time of writing.

This comes following the release of the lithium miner’s quarterly update covering the three months to 30 June.

Read on for the highlights.

Record quarterly shipments boost Core Lithium share price

Investors are bidding up the Core Lithium share price after the miner reported it had achieved record quarterly shipments of 33,027 dry metric tonnes (dmt) of spodumene concentrate.

The Spodumene concentrate, at 4.8% grade was sold at an average price of US$1,078/dmt. That’s 16.5% higher than the prior quarter, which management said reflected “the marginal increase” in spodumene concentrate price over the three-month period.

As expected, spodumene concentrate production declined by 18% to 20,563dmt as the Core’s Run-of-Mine (ROM) stockpiles are now fully depleted, with all processing activities completed as planned.

The company’s operational sites are now being maintained in a state of readiness until such time as market conditions (lithium prices) improve.

The miner reiterated its revised FY 2024 guidance for production of 95,020dmt and operating costs of $1,396/dmt.

The quarter just past also saw Paul Brown take over as CEO, commencing on 4 June.

As at 30 June, Core Lithium had $87.6 million in cash.

What did management say?

Commenting on the results lifting the Core Lithium share price today, Brown said:

We are pleased that we have managed a difficult FY24 with several positive achievements to carry forward into FY25. The June quarter saw record quarterly spodumene concentrate shipments and our lowest quarterly operating costs.

Brown added:

With the suspension of operations and the site moving to care and maintenance, the Company has significantly reduced its cost base across the business…

Looking ahead, we intend to put Finniss in a position where it can restart as a longer life lower cost operation and restore shareholder value through sensible exploration and potential corporate opportunities.

The miner also said that discussions with interested parties are continuing regarding the potential sale of 5,178 wmt of spodumene concentrate in FY25.

Core said its FY 2025 exploration will be focussed on advancing and testing targets with the potential to host lithium deposits “of meaningful scale” within trucking distance of its Finniss lithium processing plant.

The company’s FY 2025 exploration program also includes advancing gold, uranium, niobium, and REE prospects within its Central Australian tenement holdings outside the Finniss region.

Core Lithium share price snapshot

With today’s intraday gains factored in, the Core Lithium share price remains down 87% over 12 months.

The post Core Lithium share price rockets 14% amid ‘positive achievements’ appeared first on The Motley Fool Australia.

More reading

• Why Champion Iron, Core Lithium, Encounter Resources, and Rio Tinto shares are dropping
• Here’s the lithium price forecast through to 2027
• Why Atturra, Bravura, Core Lithium, and Opthea shares are racing higher today
• Top 5 investment themes exciting ASX shares investors in FY25
• Here 3 ASX lithium shares to watch for FY25

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.

Westpac Banking Corp (ASX: WBC) shares and the rest of the big four banks have delivered very strong returns for investors over the past 12 months.

Over the period, Westpac shares are up over 30%, ANZ Group Holdings Ltd (ASX: ANZ) shares are up over 20%, Commonwealth Bank of Australia (ASX: CBA) shares are up 30%, and National Australia Bank Ltd (ASX: NAB) shares are up almost 40%.

While this is great news for shareholders, one leading broker believes now could be the time to take profit and move on.

What is the broker saying about Westpac and other bank shares?

Bell Potter has been busy running the rule over the big four banks. It believes they are expensive now and investors should be underweight with their exposure to the sector before a correction comes. It explains:

The ASX 200 banks index has outperformed the broader index over the past 12 months, generating total returns of 40% (vs the market of 16%). In our view, the banks are too expensive at current levels. Our recommendation is an underweight to the banks as we expect the sector is due a correction without a significant change to the earnings outlook.

Why are they expensive?

The broker highlights that the big four banks look overvalued when compared to global peers. This is even after factoring in the resilient Australian economy and strong historical performances. It adds:

Australian banks appear overvalued compared to global peers. Despite their strong historical performance and the resilience of the Australian economy and housing market, their current Return on Equity (ROE) figures do not justify the elevated Price/Book (P/B) ratios. The current ROE, often in the low-to-mid-teens, seems insufficient to support P/B ratios that are considerably higher than those of global peers with superior ROEs.

One key example is US banking giant JP Morgan (NYSE: JPM), which is performing stronger than Commonwealth Bank but trades at a sharp discount. Bell Potter explains:

For instance, consider JP Morgan (JPM), a high-quality US bank. JPM currently generates an ROE of ~15% and trades on a P/B of 1.7x. In contrast, CBA generates an ROE of ~13% but trades on a P/B of 2.7x. Given the current fundamentals, we struggle to reconcile this 60% premium for CBA over JPM (and other global banks).

Historically expensive

Westpac and the big four bank shares are not just expensive compared to global peers, but also compared to their own historical multiples according to the broker.

It highlights that their valuations imply strong earnings growth is coming. However, the market is actually forecasting earnings to be going backwards in FY 2025. Bell Potter’s analysts explain:

In our view, bank sector valuations are expensive. Most valuation metrics point to elevated prices. The sector forward Price/Earnings (P/E), Price/Book (P/B) and P/E Rel Market all point to the banks being overvalued. P/E, P/B and PE Rel are all above their long-term averages.

For cyclicals, an elevated P/E ratio can sometimes be attributed to temporarily depressed forward “E” (earnings) due to the earnings cycle. However, we would argue that earnings are not weak or cyclically low. The elevated P/B ratio indicates that current market prices may exceed the underlying value of these banks. Above-average multiples could be justified if earnings growth is expected to be above average, but consensus has earnings going backwards in FY25 and low single growth in FY26.

Overall, it seems that now could be a good time to take some profit off the table.

The post Westpac and the other big four bank shares are ‘due a correction’ appeared first on The Motley Fool Australia.

More reading

• NAB share price hits 9-year high amid yet another strong day for ASX 200 banks
• Westpac and three other ASX 200 bank shares smashing new multi-year highs today
• Is now the time to take some profits on CBA shares?
• Prepare for earnings! What ASX bank share buyers can learn from Wells Fargo results?
• ASX 200 shatters record. Why it could still be ‘relatively cheap’ to invest

JPMorgan Chase 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 JPMorgan Chase. 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 a great day to have ASX gold shares in your investment portfolio.

In morning trade, the gold sector is charging higher with solid gains being seen across the board.

Here’s a summary of how some ASX gold miners are performing today:

• The Bellevue Gold Ltd (ASX: BGL) share price is up 3%.
• The Evolution Mining Ltd(ASX: EVN) share price is up 1.5%.
• The Newmont Corporation(ASX: NEM) share price is up 2.5%.
• The Northern Star Resources Ltd (ASX: NST) share price is up 3%.
• The Ramelius Resources Ltd (ASX: RMS) share price is up 2.5%.
• The Regis Resources Ltd (ASX: RRL) share price is up 3%.

This has driven the S&P/ASX All Ords Gold index 2.6% higher this morning.

Why are ASX gold shares rising?

Investors have been bidding gold stocks higher today after the price of the gold price stormed to a record high overnight.

According to CNBC, the spot gold price settled up 1.6% at an all-time closing high of US$2,467.8 an ounce. And during the session, the precious metal hit a new intraday record high of US$2,474.5 an ounce.

This was driven by optimism over the outlook for interest rates after June’s softer US inflation data and some recently dovish comments from the US Federal Reserve Chair, Jerome Powell.

In fact, the share market is so confident that rates are going lower that they are now pricing in a 100% probability of a rate cut in September according to the CME FedWatch tool.

Is it too late to invest?

UBS analyst Joni Teves doesn’t believe that it is too late to invest. Teves commented:

Interest to ‘buy-the-dip’ remained prevalent among investors amid strong sentiment towards gold, which is likely why the market was quick to rally on soft U.S. data prints and dovish Fed expectations. With the market sitting just above the psychological $2400 level, we think risks are skewed to the upside. We think positioning remains lean and there’s space for investors to build gold exposure.

And as I mentioned here earlier this, Bell Potter believes that Capricorn Metals Ltd (ASX: CMM) shares are cheap at current levels.

It has a buy rating and $6.53 price target on the ASX gold share. It explained:

CMM’s management team has a track record of capital efficient project funding, development, commissioning and operation. In our view, FY25 and FY26 should benefit from higher revenue and EPS increases by 32% and 6% respectively. CMM is a sector leading gold producer with a strong balance sheet, a management team with an excellent track record of delivery and clear organic growth options to lift group production to 270kozpa.

The post ASX gold shares race higher after gold price hits record high appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Goldman Sachs says this ASX gold stock is a buy
• 5 things to watch on the ASX 200 on Tuesday
• Why Aussie Broadband, Bellevue Gold, Lifestyle Communities, and Star shares are falling
• Where to invest $10,000 into ASX 200 shares

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

I love finding ASX growth shares that have the capability to deliver impressive financial growth in their results, leading to pleasing share price growth.

It’s easy enough to identify highly-followed businesses with fairly (or very) expensive valuations that reflect their potential growth for the foreseeable future, such as Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC).

Investors may be able to outperform the market if we can find stocks that represent growth at a reasonable price (GARP). In other words, the valuation is appealing for how much earnings growth they may be able to deliver in the next few years.

With that in mind, I believe these three ASX growth shares are very compelling to buy this month.

Close The Loop Ltd (ASX: CLG)

This company works in multiple countries, enabling increased product and economic circularity. One of its main offerings is collecting and refurbishing old electronics.

Close The Loop is a key partner of HP, which has a publicly stated goal of achieving 75% circularity for its products and packaging by 2030. HP ships approximately 40 million PCs annually, with an estimated 300 million HP PCs in the current market, in addition to its various printers and other products.

Close The Loop is the first provider to be appointed as ‘HP Platinum Global Certified Renew Partner’. There is significant potential here.

The ASX growth share hopes to work with other original equipment manufacturers (OEMs) in the future, which could unlock further growth for the business. A new IT refurbishment plant in Mexico will be running by October 2024.

The ASX growth share will also construct a second TonerPlas line after the government awarded $2.2 million in funding. Tonerplas is an additive that increases the longevity of asphalt, which is formulated from a mixture of post-consumer soft plastics and print toner.

According to Commsec, the company is expected to grow its earnings per share (EPS) by 23% between FY24 and FY26. It’s valued at under 7x FY24’s forecast earnings.

Collins Foods Ltd (ASX: CKF)

This ASX growth share is a multinational franchisee operator of KFC outlets in Australia, the Netherlands and Germany.

KFC is a strong brand, and Collins Foods is benefiting from the continuing growth of KFC outlet numbers. In the FY24 result, the ASX share increased revenue by 10.4%, and underlying net profit after tax (NPAT) increased by 15.6%.

During the HY24 period, the company added nine new builds in Australia, bringing the total to 279, and 11 restaurants in the Netherlands (eight acquired and three new builds).

If the Australian and European KFC networks keep growing, then its scale benefits and margins can continue improving. I liked that underlying profit rose faster than revenue, displaying operating leverage.

The forecast on Commsec suggests EPS could grow to 65.8 cents by FY26 (with 21% EPS growth in FY26). This puts it at just 13x FY26’s estimated profit.

Corporate Travel Management Ltd (ASX: CTD)

This ASX growth share provides corporate travel management services. Although the business is facing an uncertain economic environment at the moment, management is confident in the longer term.

From FY25, Corporate Travel aims to grow its revenue by 10% per annum over the next 10 years, partly through winning $1 billion in new clients each year. Any acquisitions made would be in addition to this growth.

The company is working on efficiencies and cost savings to help improve its earnings before interest, tax, depreciation and amortisation (EBITDA) margin. It wants 50% of every new dollar of revenue to fall to EBITDA. This could mean EBITDA grows at a compound annual growth rate (CAGR) of 15% over the next five years.

According to Commsec, the company is projected to grow its EPS by 25% between FY24 and FY26. This would put it at 13x FY26’s estimated earnings.

The post 3 of the best growth-focused ASX shares to buy in July appeared first on The Motley Fool Australia.

More reading

• 2 ASX investments I think all retirees should have
• I’d buy this ASX growth share in a heartbeat
• Here are the top 10 ASX 200 shares today
• 2 ASX shares to watch while they’re still dirt cheap
• ASX passive income: How to make $1,000 per month

Motley Fool contributor Tristan Harrison has positions in Close The Loop and Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Close The Loop, Corporate Travel Management, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Corporate Travel Management, WiseTech Global, and Xero. The Motley Fool Australia has recommended Close The Loop and Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.