Category: Stock Market

The Adairs Ltd (ASX: ADH) share price is down over 40% in the past year and it has sunk 65% from its peak in April 2021. This could be the right time to invest in the ASX dividend stock with a possible large payout and the prospect of potential capital gains.

Adairs operates three different businesses – Adairs, Mocka and Focus on Furniture.

Many ASX retail shares have quite cyclical earnings because of the way the economy can go through strength and weakness. Sometimes households don’t have as much money to spend and that is materially hurting demand and sales.

The ASX dividend stock hasn’t exactly seen its sales sink, but a decline can lead to a huge loss of investor confidence.

Weak FY24 expected

At the company’s AGM, it said group sales in the first 21 weeks of FY24 were down 9%. It said the impact of higher interest rates and the cost of living pressures has seen a “significant” decline in traffic across each business of around 10%.

It also said the outlook for the rest of FY24 is expected to remain “challenging” because of the economic headwinds and the business is being managed accordingly.

With this in mind, it’s understandable that the Adairs share price has fallen. But, investing should be a long-term endeavour and what happens in one year won’t decide its long-term performance. It could be a good contrarian opportunity now with a possible economic rebound not too far away.

The current estimate on Commsec is that the ASX dividend stock may generate earnings per share (EPS) of 16.2 cents.

The potential recovery

I’m not banking on interest rate cuts starting this year, nor do I think they’re going to go down to 2% in rapid succession. But, I do think the impending start of cuts could spur an earnings recovery and perhaps excite investors about the Adairs share price.

On Commsec, the forecast suggests Adairs’ EPS could rise 36% in FY25 and then go up another 25% to 27.5 cents per share in FY26. That would put the company at 7.5x FY25’s estimated earnings and 6x FY26’s estimated earnings.

No-one should focus too much on the specific forecast numbers for the ASX dividend stock, the actual numbers could be better or worse than the predictions.

But, I’d point out that, generally, central banks won’t want to be restrictive forever and recent wage inflation may help household spending in the future when finances aren’t as tight.

I think FY19 was a good example of weakness and then subsequent recovery for its performance, though history won’t necessarily repeat itself.

When the company emerges from this period, it could be much more profitable than before.

Adairs is working on a number of initiatives to grow profit such as opening larger stores that are more profitable and it can showcase more of its products. It’s also planning to keep opening new stores, with plans for a national rollout of Focus on Furniture stores. There’s also the possibility that Adairs’ (paying) membership numbers and online sales could keep growing over time.

Costs have increased during this inflationary period, but Adairs has recently taken control (from DHL) of its national distribution centre which could make a material difference in the medium-term to margins and operational efficiency.

ASX dividend stock forecast payouts

In FY24, the Adairs dividend may only be 4.3 cents per share (according to Commsec) amid these difficult economic circumstances. It’s possible it may not even pay a dividend.

But, in FY25 Adairs is forecast to pay an annual dividend per share of 14.5 cents if earnings rebound as predicted. That would be a grossed-up dividend yield of 12.5%.

FY26 could see the business pay an annual dividend per share of 19.4 cents, which would be a grossed-up dividend yield of 16.8%.

The short-term outlook is weak, but that’s why we’re being presented with a more attractive Adairs share price today, which could mean big dividend yields in the future.

The post 1 ASX dividend stock down 65% to buy right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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 used to be very popular with income investors.

The travel agent giant would regularly pay big (and growing) dividends to its shareholders each year.

However, these payouts have not recovered fully yet from the pandemic.

For example, the Flight Centre dividend that was paid out in FY 2023 was just a modest 18 cents per share.

This equates to a 0.85% dividend yield at current prices, which is hardly anything to get excited about.

But will that change for investors in FY 2024? Let’s take a look and see what analysts are predicting from Flight Centre.

How big will the Flight Centre dividend be in 2024?

According to a note out of Citi, its analysts expect the Flight Centre dividend to become more attractive this year.

And while the broker isn’t necessarily expecting a big yield, it will be close to resembling what investors became accustomed before COVID ruined the party for them.

The note reveals that Citi has pencilled in a fully franked 49 cents per share dividend for the year, which represents a 2.3% yield for investors.

In addition, the broker sees decent upside for its shares from current levels. It has a buy rating and $23.60 price target on Flight Centre’s shares.

This implies potential upside of 11% for investors over the next 12 months, which brings the total potential return to beyond 13%.

And if you’re willing to be patient, Citi thinks you will be rewarded with some bigger dividends in the coming years.

The broker is expecting an increase to 77 cents per share in FY 2025 and then another increase to 84 cents per share in FY 2026. If this proves accurate, it will mean fully franked yields of 3.6% and 3.9%, respectively.

The post How big will the Flight Centre dividend be in 2024? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has 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 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Microsoft (NASDAQ: MSFT) is the world’s second-largest company in terms of market capitalization, valued at $3 trillion as of this writing. The stock’s impressive 67% jump in the past year — fueled by its artificial intelligence (AI) prospects — has played a key role in helping the tech giant reach that position.

However, Nvidia (NASDAQ: NVDA) has witnessed a much bigger jump in its market cap over the same period. It is now the sixth-largest company in the world, valued at $1.5 trillion, up from less than $500 billion a year ago. Microsoft, for comparison, was valued at $1.8 trillion a year ago. The following chart shows the magnitude by which Nvidia’s market cap jump has outpaced Microsoft’s over the past year.

NVDA Market Cap data by YCharts.

Just like Microsoft, Nvidia is reaping the benefits of growing AI adoption, though in a much bigger way. The semiconductor giant has been growing much faster than Microsoft, which explains why its stock price growth has outpaced the latter. However, can Nvidia sustain its faster growth and become more valuable than Microsoft by 2030? Let’s find out.

Microsoft’s AI business has gained impressive traction

Microsoft is providing AI-enabled software and services to customers. These include generative AI-powered web search through Bing, an AI-enabled web browser in the form of Edge, and an AI companion known as Copilot that aims to boost productivity through numerous tools, such as allowing users to create images from text prompts, draft documents, create presentations, and summarize emails, among other things.

Additionally, Microsoft is looking to capitalize on the growing demand for cloud-based AI services. The tech giant’s Azure OpenAI service gives its customers access to multiple large language models on a pay-as-you-go model. As a result, Microsoft customers can develop generative AI applications without investing in expensive hardware.

The good part is that Microsoft’s Azure OpenAI service has already gained solid traction. The company points out that “more than 18,000 organizations now use Azure OpenAI service, including new-to-Azure customers.” This puts the company in a nice position to capitalize on the fast-growing and lucrative AI cloud computing market, which is expected to generate annual revenue of $274 billion in 2029, compared to $67 billion in 2024.

It is worth noting that Microsoft’s cloud business has started growing at a faster pace than its rivals. The company’s Azure cloud service recorded 29% growth in the third quarter of 2023, outpacing Google Cloud’s jump of 22% and Amazon Web Services’ 12% growth. Microsoft management pointed out that it saw an acceleration of 3 percentage points in Azure revenue thanks to AI. So, it won’t be surprising to see the company gain more share of this fast-growing market.

In all, the rollout of AI across multiple Microsoft services could help the company generate an additional $100 billion in annual revenue by 2027, according to investment banking firm Evercore. That would be a big boost for Microsoft, given that it has generated $218 billion in revenue in the trailing 12 months. However, investors should note that the company believes its AI-focused business will scale up gradually.

What’s more, a look at consensus growth estimates suggests that Microsoft’s revenue is anticipated to increase in the mid-teens over the next couple of fiscal years.

MSFT Revenue Estimates for Current Fiscal Year data by YCharts.

AI is driving much stronger growth at Nvidia

While Microsoft is a play on the software side of the AI market, Nvidia sells the hardware on which the services that the former is selling are trained. For instance, OpenAI used an estimated 30,000 graphics cards from Nvidia to train ChatGPT. Market research firm Omdia estimates that Microsoft purchased an estimated 150,000 units of Nvidia’s flagship H100 AI-focused graphics card in 2023.

Given that each of these graphics processing units (GPUs) is priced at an average of $40,000, Microsoft would have paid Nvidia an estimated $6 billion for these chips last year. Microsoft, however, is not the only customer in line for Nvidia’s AI processors. Other tech giants, such as Meta Platforms, Amazon, Alphabet, Oracle, and Baidu, are also procuring Nvidia’s AI chips to train AI models.

As it turns out, the demand for Nvidia’s H100 processors is so strong that they reportedly command a waiting period of 36 weeks to a year. That’s not surprising as Nvidia controls an impressive 85% of the market for AI chips, according to investment bank Raymond James. Given that the AI chip market is anticipated to grow at an annual pace of 38% through 2032 and generate annual revenue of roughly $384 billion, Nvidia’s dominant position in this market explains why analysts are upbeat about the company’s long-term growth.

According to Japanese investment bank Mizuho, Nvidia may even generate annual revenue of $300 billion by selling AI chips in 2027. Even though that estimate seems quite ambitious, it shows just how big of an impact AI will likely have on its business compared to Microsoft, whose AI-focused revenue in 2027 could be a third of Nvidia’s, as per Evercore. This also explains why Nvidia’s earnings are anticipated to grow much faster than Microsoft’s.

Can Nvidia indeed be worth more than Microsoft?

According to consensus estimates, Nvidia’s earnings could increase at an annual rate of 102% over the next five years. The company ended fiscal 2023 with earnings of $3.34 per share, meaning its bottom line could jump to $107 per share if it keeps doubling each year for the next five years. Using the Nasdaq-100 index’s forward earnings multiple of 29 as a proxy for tech stocks, Nvidia’s stock price could hit $3,100 in five years. That would be 5x the company’s current stock price.

Microsoft, on the other hand, is predicted to clock annual earnings growth of 15% for the next five years. Using its fiscal 2023 earnings of $9.81 per share as the base, Microsoft’s bottom line could increase to $19.73 per share after five years. That points toward a stock price of $572, using the Nasdaq-100’s forward earnings multiple, an increase of just 41% from current levels.

So, Nvidia could become a bigger company than Microsoft before 2030 in terms of market cap, given the much faster growth it may achieve because of its dominant position in the AI chip market. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Will Nvidia stock be worth more than Microsoft by 2030? appeared first on The Motley Fool Australia.

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Harsh Chauhan has no position in any of the stocks mentioned. 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Baidu, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool Australia has recommended Alphabet, 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Meta Platforms Inc (NASDAQ: META) stock has popped in after-hours trade on Wall Street.

At the time of writing, the Facebook and Instagram owner’s shares are up a massive 15% to US$453.01.

Investors have been scrambling to buy the tech behemoth’s shares following the release of its quarterly update.

Meta stock pops on quarterly update

For the three months ended 31 December, Meta reported a 25% increase in revenue to US$40,111 million. This brought its revenue for 2023 to US$134,902 million, which represents an increase of 16% year on year.

Key drivers of its fourth quarter growth were an 8% increase in Family Daily Active People (DAP) to 3.19 billion, a 21% jump in ad impressions across its Family of Apps, and a 2% lift in the average price per ad.

Another positive was that its total costs and expenses reduced 8% during the fourth quarter to US$23.73 billion. This reduced its full year increase in costs to just 1%.

The sum of the above was earnings per share of US$5.33 for the quarter (up 203%) and US$14.87 for 2023 (up 73%).

Meta founder and CEO, Mark Zuckerberg, commented:

We had a good quarter as our community and business continue to grow. We’ve made a lot of progress on our vision for advancing AI and the metaverse.

First ever dividend

A big surprise from the result was the announcement of the company’s maiden dividend. Meta has declared a cash dividend of US$0.50 per share, which will be payable on 26 March.

This won’t be the last dividend, with management stating that it “intend[s] to pay a cash dividend on a quarterly basis going forward, subject to market conditions and approval by our board of directors.”

How does this compare to expectations?

As you might have guessed from the way that Meta stock has jumped this morning, this result was ahead of expectations.

According to CNBC, the market was expecting revenue of US$39.18 billion and earnings per share of US$4.96.

Whereas Meta delivered revenue of US$40.1 billion and earnings per share of US$5.33. In addition, its daily active users and average revenue per user metrics were also stronger than expected.

Outlook

Meta expects first quarter 2024 total revenue to be in the range of US$34.5 billion to US$37 billion.

This guidance assumes foreign currency is neutral to year-over-year total revenue growth, based on current exchange rates.

The post Meta stock pops 15% after profits triple 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. 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 Meta Platforms. The Motley Fool Australia has recommended Meta Platforms. 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 S&P/ASX 200 Index (ASX: XJO) share Lovisa Holdings Ltd (ASX: LOV) could grow to become a leading ASX dividend share in the coming years.

A low-cost jewellery retailer may not sound like the sort of business that can deliver piles of cash, but I think it’s one that all investors should take note of.

Dividends have soared

The past isn’t necessarily going to be repeated again, but I think Lovisa’s dividend trajectory is compelling and suggests ongoing growth could be useful.

In FY23, Lovisa paid an annual dividend of 69 cents per share, compared to 33 cents per share in FY19, which is an increase of 109%.  

I wouldn’t expect the ASX 200 share’s dividend to double again by FY27, but it could keep rising strongly if the net profit after tax (NPAT) keeps growing and the dividend payout ratio stays quite generous.

Payouts expected to keep growing

On Commsec, Lovisa is estimated to pay an annual dividend per share of 91 cents in FY26, which would be growth of 32% from FY23. Excluding the effect of franking credits, that would translate into a forward dividend yield of 4%, or 5.1% at the same franking rate as the last dividend.

The broker UBS has forecast the Lovisa dividend could rise to $1.32 per share, which would be a rise of 91% over five years between FY23 to FY28. That means in FY28, the dividend yield could be 5.9%, or 7.5% at the same franking rate.

Lovisa ended FY19 with 390 stores and in FY23 it finished with 801 stores, an increase of 105%. Perhaps it’s unsurprising that Lovisa has grown its dividend at almost exactly the same pace as its store growth.

The more stores the ASX 200 share has, the more profit it can make and then the bigger dividends it can pay.

At the company’s AGM, it said in the first 20 weeks of FY24 that total sales had increased 17% year over year and opened another 35 net new stores.

To me, one of the most exciting things about Lovisa is that it has only just entered a number of markets including Vietnam, mainland China, Hong Kong, Taiwan, Mexico, Canada, Spain, Italy and Ecuador.

Australia has a population of around 27 million, while many of the markets I just mentioned have much bigger populations. That doesn’t necessarily mean they’re all going to have the same store-to-population ratio as Australia (which has around 170 stores). I think there’s plenty of scope for Lovisa to double its store count in the next five or six years, which could mean Lovisa is able to double its dividend.

Lovisa share price valuation

In the last five years, Lovisa shares have risen to 210%. At the current share price, Lovisa is valued at just 15x FY28’s estimated earnings, according to UBS.

If the ASX 200 share’s profit can keep growing, I think the Lovisa dividend and (hopefully the Lovisa share price) can keep rising.

The post Why Lovisa could become one of the top ASX 200 shares for dividend income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended 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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QBE Insurance Group Ltd (ASX: QBE) shares could be a top buy right now.

That’s the view of analysts at Goldman Sachs, which believe the insurance giant’s shares could offer big returns over the next 12 months.

What is Goldman saying about QBE?

Goldman has been looking over the quarterly update of industry peer Chubb Ltd (NYSE: CB) and was pleased with what it saw.

The broker highlights the following from Chubb’s update:

Ex CATs, the current accident year COR was 79% which improved by 1.8% on pcp – driven by a 2.2% improvement in the loss ratio and a 0.4% increase in the expense ratio – positive read for QBE. […] Chubb comments on rate and strength of loss reserves read positively for QBE. […] Chubb’s confidence in book growth (pricing / volume) as well as margin improvement into FY24 – is a positive read for QBE.

Buy rating reaffirmed on QBE shares

According to the note, the broker has reaffirmed its buy rating and $18.52 price target on QBE’s shares.

Based on the current QBE share price of $16.02, this implies potential upside of 15.6% for investors over the next 12 months.

In addition, the broker is forecasting a 59 US cents per share dividend in FY 2024. This equates to a very attractive 5.6% dividend yield.

Goldman commented:

We are Buy rated on QBE because 1) QBE has the strongest exposure to the commercial rate cycle. 2) QBE’s achieved rate increases continue to be very strong. 3) QBE is also growing volumes: QBE is currently getting strong top line growth on a constant currency basis ex rate increases. 4) North America on a pathway to improved profitability. 5) Valuation not demanding.

The post Why Goldman Sachs thinks QBE shares are a top buy 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 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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Australia is fortunate to host a huge group of excellent dividend stocks, but I still prefer investing in ASX growth shares.

That’s not necessarily because dividend shares don’t perform. It’s just more about the enjoyment of the investment process.

There are two facets to this.

First is that I find growth shares less maintenance. With dividend stocks, you need to worry about reinvesting the income, which adds time and effort for more research and the tax implications.

The second advantage is that I derive pleasure in watching businesses I have invested in growing to the next stage. It’s exciting.

If you agree with my arguments, there are a couple of ASX growth shares that are looking pretty good to pick up right now.

But if you commit, just be prepared to be in it for the long haul:

How about a 1,500% return in 5 years?

Telix Pharmaceuticals Ltd (ASX: TLX) is an Australian company developing diagnostic and therapeutic products for different types of cancer.

I like its long-term prospects because the business is at a sweet spot in its life cycle.

In 2022, Telix released its first product into the commercial market, thereby generating its first flow of real revenue.

Since then, that income has allowed it to progress future products through the arduous testing and approval pipeline and head towards profitability.

The next few years could see the fruits of those activities, which could put a rocket under the share price.

Professional investors are bullish, with all eight analysts surveyed on CMC Invest currently rating Telix as a buy.

Telix shares have returned an incredible 1,494% over the past five years.

These ASX growth shares have tripled in 19 months 

Life360 Inc (ASX: 360) sounds like a creepy mobile app, but it seems to be popular in the US.

It’s a “family locator” app that allows parents to track the whereabouts of their children. Similarly, it can also be used for family members to monitor their elderly relatives.

There are also safety features such as car crash detection, calling for roadside assistance, and SOS alerts.

According to a company presentation made at a conference in November, about 10% of families in the US use the app.

What about the business though?

After tech shares started selling off in 2022 due to inflation fears, the management declared that it would turn from a cash-burning startup to a more mature business focused on profitability.

The market has appreciated the pivot, sending the Life360 share price tripling since June 2022.

Co-founder and chief executive Chris Hulls said in a quarterly update in November that Life360 continues to improve its cash flow.

“We continue to carefully balance expense management with investment in the significant long term growth opportunities available to us.

“Excluding commissions, operating expenses increased by $1.2 million or 2.4% YoY, compared with a $21.5 million or 38% uplift in revenue, demonstrating the operating leverage of Life360’s business model.”

Just like Telix, this one’s popular with those who invest for a living.

According to CMC Invest, seven out of eight analysts rate the tech stock as a buy.

The post 2 top ASX growth shares to buy right now and hold for the long term appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Life360 and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. 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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I already own many ASX dividend shares in my share portfolio. But one sector that I’ve hit a number of foul balls on has been ASX retail shares. 

I’m hoping that my next retail stock will turn the tide here. That’s why I’m considering an investment in Premier Investments Limited (ASX: PMV) shares in 2024.

Retail stocks seem to be my kryptonite. I’ve invested in quite a few over the years, with names like Adairs Ltd (ASX: ADH) and Dusk Group Ltd (ASX: DSK) joining my portfolio at one point or another. But alas, most of these investments have turned out to be dividend traps to varying degrees.

The dividends from Adairs shares have declined dramatically over the past 18 months – largely thanks to the company’s decision to scrap its final dividend for 2023 entirely.

Similarly, with Dusk stock, the company’s total of 11 cents per share in payouts last year was a shadow of the 20 cents per share investors enjoyed over 2022.

But I have far more confidence in Premier Investments shares.

Why I’m considering Premier Investments shares for my next dividend buy

Why? Well, firstly, this company has a better recent track record with doling out dividends.

Not only did Premier Investments deliver its highest-ever payouts last year (totalling $1.14 in ordinary dividends per share and handily beating its 2022 output of 92 cents per share), but it also lavished 41 cents per share in special dividends on investors.

Today, these dividends give Premier shares a trailing dividend yield of more than 4%. That comes fully franked too.

In other words, Premier is showing strength, while other ASX retail stocks are displaying weakness.

Secondly, this company has shown that it is able to rely on its diverse portfolio of retailers to deliver returns to shareholders. Premier owns the Smiggle, Jay Jays, Just Jeans and Peter Alexander retail chains. These are some of the best-performing brands in the country. I’m sure many readers can personally attest to it, given Christmas is still a fresh memory.

Last September, the company told shareholders that its retail earnings for the 2023 financial year rose by 6.4% to $357.9 million. Sales at Peter Alexander and Smiggle were up 11.8% and 22.4%, respectively.

Keep in mind that this occurred over a year of tough economic conditions. Consider the high inflation and rising interest rates that FY2023 was burdened with.

Thirdly, Premier Investments’ chair Solomon Lew is widely considered to be one of the country’s best business operators. He has been at Premier for decades and has an established track record of delivering outstanding results for investors over long periods of time.

So all in all, I think Premier Investments is one of the best ASX retail shares on the market today and is worthy of a spot in any ASX dividend share portfolio. Hopefully, it will be in my own before too long.

The post [FRI] Here’s why Premier Investments shares are on my ASX dividend watchlist appeared first on The Motley Fool Australia.

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More reading

• Buying ASX retail shares? You’ll want to see these numbers
• Premier Investments stock: 3 reasons it’s on my buy watchlist
• Here are 3 top ASX dividend shares to buy now: analysts
• If you invest $10,000 in Premier Investments shares, how much passive income will you receive in 2024?
• ‘Short-term correction’: 2 ASX stocks I’d load up on if the market turns sour

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

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) ran out of steam and dropped deep into the red. The benchmark index fell 1.2% to 7,588.2 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set to end the week on a positive note following a good night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 13 points or 0.2% higher this morning. In late trade on Wall Street, the Dow Jones is up 0.6%, the S&P 500 is up 0.85%, and the NASDAQ is up 1%.

Oil prices sink

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a tough finish to the week after oil prices slumped overnight. According to Bloomberg, the WTI crude oil price is down 2.34% to US$74.07 a barrel and the Brent crude oil price is down 2.1% to US$78.83 a barrel. Traders were selling oil amid optimism over a cease-fire in the Israel-Hamas war.

Pinnacle results

The Pinnacle Investment Management Group Ltd (ASX: PNI) share price will be on watch today after the company released its half year results. The investment management company posted a net profit after tax of $30.2 million. This was down slightly from $30.5 million during the prior corresponding period.

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a decent session after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.3% to US$2,073 an ounce. Strong US jobs data boosted rate cut hopes.

CBA remains a sell

Commonwealth Bank of Australia (ASX: CBA) shares are still a sell according to analysts at Goldman Sachs. This morning, the broker has reaffirmed its sell rating and lowly $82.37 price target. This implies potential downside of 28% from current levels. Goldman believes that “CBA’s consumer banking skew leaves its earnings more exposed to sector wide headwinds.”

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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More reading

• History suggests snubbing the ASX 200 at record highs could be a costly mistake — here’s why
• After 8 days of gains and a record high why is the ASX 200 tumbling today?
• Better buy: Westpac or CBA shares?
• 2 ASX 200 dividend shares to buy in 2024 for dependable passive income
• 5 things to watch on the ASX 200 on Thursday

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 Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Electric vehicle, energy, and technology company Tesla Inc (NASDAQ: TSLA) is unique. It made electric cars cool. An eccentric CEO, Elon Musk, leads it. The company has sold clothing apparel with a double meaning, aimed at poking fun at those who doubted it.

But the company’s relationship with shareholders might stand out most of all. It maintains a large shareholder base of individual investors and has already split its stock for them twice.

A new bull market has begun, which could bode well for the share price. Should you be on the lookout for Tesla’s next stock split?

Why do companies split their stock?

Companies split their stock for a couple of reasons. A stock split is when a company divides its stock into a higher number of smaller shares. It’s like cutting a pie into smaller slices so more people can have some.

Suppose you own 10 shares of a stock trading at $100 ($1,000 in total). The company splits its stock 4-to-1, dividing each share into four. Your 10 shares would become 40 shares, trading at $25 each. You still have $1,000 worth of stock but more shares at a lower price per share.

This point is crucial: A stock split impacts the share price because each share represents a smaller portion of the company. Fundamentally, the value of the stock itself doesn’t change. The pie never gets bigger just because you cut it into more pieces.

So, why do companies do it? First, it makes it easier for individual investors to accumulate shares. It also creates some buzz around a company, which may be good for the share price in the short term.

Tesla’s stock-split history

Tesla has split its stock twice. The first time was a 5-to-1 split in 2020, and the second was a 3-to-1 split in 2022:

TSLA data by YCharts

The company has noted two reasons for stock splits. First, it awards stock to employees as compensation, and splitting it into smaller shares helps them manage their stake in the company.

Second, Tesla knows that individual investors heavily support it, and the company wants to ensure the stock remains accessible to them. According to Wall Street Zen, non-insider individuals own roughly 44% of the company’s outstanding shares.

Will Tesla split its stock? Here’s what matters

Today, Tesla stock is trading at just over $180 per share, far from its 52-week high of $299. Tesla didn’t split at roughly $300, so it’s hard to see a split coming without the stock at least hitting a new high.

Investors should focus more on the company’s recent fourth-quarter earnings report, which gave shareholders a glimpse into the short- and medium-term future. Management stated that vehicle deliveries would likely decline in 2024 because Tesla was focusing resources on readying a next-generation vehicle design that it believes could spark its next major growth phase.

The market often doesn’t look very far ahead, so this anticipated production decline could keep shares from new highs despite the broader market recently enjoying its own all-time highs.

What ultimately matters is whether investors believe Tesla will continue to grow and create value for its shareholders over time. Its next-generation platform aside, there’s certainly no shortage of growth opportunities in electric vehicles, energy storage, and artificial intelligence (AI). Tesla’s stock has already returned 11,000% over its lifetime, and the future looks as bright as ever.

If you don’t wish to buy whole shares of the stock today, consider a stock broker that allows fractional shares so that you can invest a fixed dollar amount, regardless of whether the stock splits.

Including Tesla in a long-term-oriented and diversified portfolio could help you enjoy the benefits of investing in several great companies.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Stock-split watch: Is Tesla next? appeared first on The Motley Fool Australia.

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More reading

• Tesla stock has tanked 27% in 2024: Is it time to buy the dip?
• Tesla share price screeches 6% lower as vehicle growth hits speed bump
• Automation era: Why I’m buying more Tesla shares despite margin decline

Justin Pope 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 Tesla. 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 originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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