Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory. At the time of writing, the benchmark index is down a fraction to 7,600.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Credit Corp Group Limited (ASX: CCP)

The Credit Corp share price is down 3% to $17.09. Investors have been selling this debt collector’s shares following the release of its half year results. Credit Corp reported a statutory loss after tax of $12.1 million for the period. Though, on an underlying basis, its profits would have been up 5% to $33.5 million.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 8% to $2.68. This has been driven by the industrial chemicals company’s shares going ex-return on capital this morning. Incitec Pivot is returning $500 million to shareholders via a $0.1557 per share equal capital reduction and an unfranked special dividend of $0.1017 per share. The special dividend will be paid to eligible shareholders next week on 8 February.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down 9.5% to 3.8 cents. This follows the release of the lithium miner’s quarterly update this morning. That update revealed a 76% decline in revenue quarter on quarter to $23 million. More importantly, management reported that its unit operating cost increased to A$1,397 per tonne, which is significantly more than its realised selling price of $946 per tonne.

Weebit Nano Ltd (ASX: WBT)

The Weebit Nano share price is down 8.5% to $3.53. Investors have been selling the semiconductor company’s shares after it reported quarterly revenue of less than $500,000. As a comparison, prior to today, Weebit Nano’s market capitalisation was over $700 million. In light of this, it may not be surprising to learn that it is one of the most shorted shares on the ASX.

The post Why Credit Corp, Incitec Pivot, Sayona Mining, and Weebit Nano shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Why is the Weebit Nano share price crashing 10% today?
• Morgans names the ASX cyclical shares to buy for earnings season
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares

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The Liontown Resources Ltd (ASX: LTR) share price is in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock closed yesterday trading for $1.03. In morning trade on Wednesday, shares are swapping hands for $1.00, down 2.5%.

For some context the ASX 200 is down 0.29% at this same time.

This follows the release of the lithium miner’s quarterly update for the three months ending 31 December.

Here are the highlights.

ASX 200 lithium stock slips amid ongoing lithium price headaches

The Liontown share price is sliding despite the company highlighting that its Kathleen Valley Lithium Project remains on budget and on schedule for first production in mid-2024.

The project, located in Western Australia, is now more than 72% complete. Underground mine development kicked off in November.

Open pit mining was also reported to have progressed in line with plans. Liontown mined 1.4 million bulk cubic metres during the quarter.

In preparation for the startup, the ASX 200 miner said it had  222 full-time employees at the end of 2023, with recruitment ongoing.

The quarter just past also saw Liontown execute a long-term Port Access and Services Agreement with Mid West Ports Authority. This will facilitate the export of lithium spodumene concentrate from the Port of Geraldton.

And on 20 October, Liontown completed a $365 million institutional placement. This was supplemented by a $10.8 million placement to chairman Tim Goyder and a $13.8 million Shareholder Purchase Plan.

What did management say?

Commenting on the quarterly results that have so far failed to boost the Liontown share price today, managing director Tony Ottaviano said:

Of the many milestones reached this quarter, the commencement of underground mining was significant and on schedule.

The team has done an outstanding job in seamlessly mobilising to site, commencing six access portals, and achieving 352 total development metres in less than two months. Byrnecut will progressively mobilise further resources to site as we ramp up operations.

Ottaviano added, “I remain confident in our ability to deliver Kathleen Valley, our Tier-1 lithium project, on budget and schedule to first production by mid-2024.”

Addressing the capital-preserving decision to delay the project expansion — which was announced on 22 January and saw the Liontown share price close the day down a precipitous 21% — Ottaviano said:

Post the end of the quarter, we announced that we have commenced a review to examine the options of deferring the mine expansion from 3Mtpa to 4Mtpa until market conditions improve.

The decision to undertake a review of the planned expansion and associated ramp-up of Kathleen Valley was based on short- to medium-term lithium price forecasts, which have materially declined in recent months, including an almost 60% drop since October 2023.

As at 31 December, the company had a cash balance of $517 million.

Liontown share price snapshot

There have been some big ups and downs for the Liontown share price over the past 12 months. The ASX 200 lithium stock surged in March following a takeover offer from Albemarle Corp (NYSE: ALB), which eventually did not go through.

But the miner hasn’t escaped the impacts of the crashing lithium price, which sees the Liontown share price down 40% since this time last year.

The post Liontown share price slips as plunging lithium price outweighs pending maiden production appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Buy, hold, or sell? What is Goldman Sachs saying about Liontown shares?
• Top brokers name 3 ASX shares to buy 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 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 Weebit Nano Ltd (ASX: WBT) share price is having a difficult session on Wednesday.

In morning trade, the semiconductor company’s shares are down 10% to $3.48.

Why is the Weebit Nano share price crashing into the red?

Investors have been hitting the sell button today after the company released its quarterly update and revealed barely any revenue.

According to the release, Weebit Nano received its first intellectual property (IP) licensing revenues for its embedded ReRAM during the quarter. This pulled in revenue of $457,000 for the period.

As a comparison, the current Weebit Nano share price implies a market capitalisation of approximately $670 million.

This is higher than the market capitalisations of companies such as Core Lithium Ltd (ASX: CXO), Kogan.com Ltd (ASX: KGN), Myer Holdings Ltd (ASX: MYR), and Tyro Payments Ltd (ASX: TYR).

Given this woeful revenue generation and lofty valuation, it won’t be a surprise to learn that short sellers are targeting it and labelling it as another Brainchip Holdings Ltd (ASX: BRN) meme stock.

Nevertheless, management remains very positive on the future and is spending heavily on its operations. This led to an operating cash outflow of $12 million for the quarter, reducing its cash balance to $72 million from $84 million.

It also believes that these early revenues are just the tip of the iceberg, though time will tell if that is the case. It said:

While initial proceeds from licensing fees are relatively small, totaling A$457,000, they demonstrate the Company’s significant technical progress in recent years. Weebit’s embedded ReRAM will generate revenues from foundries, IDMs, and product companies in three main ways: licensing fees for design and manufacture; engineering fees for designs and processes; and royalties per customer use. Royalties will be received once customers begin shipping end products.

In 2024, Weebit expects to continue receiving initial small licensing and NRE payments from its existing customers, as well as others which will be signed up during the year. As it takes customers more than a year and a half from when they engage with Weebit until they enter mass production, no royalty payments are expected in 2024.

The Weebit Nano share price is down 30% over the last 12 months.

The post Why is the Weebit Nano share price crashing 10% today? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

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 Kogan.com and Tyro Payments. The Motley Fool Australia has recommended Kogan.com and Tyro Payments. 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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Bubs Australia Ltd (ASX: BUB) shares are catching the eye on Wednesday morning.

In early trade, the ASX All Ords infant formula company’s shares have jumped 18% off their 52-week low to 13 cents.

Why is this ASX All Ords share jumping?

The catalyst for this jump has been the release of the company’s quarterly update this morning.

According to the release, Bubs recorded a 79.7% increase in gross revenue to $25.7 million for the three months ended 31 December.

This was driven largely by Bubs Infant Formula, which reported gross revenue of $18.8 million for the period. This is up 97.8% on the prior corresponding period.

The ASX All Ords share’s United States business was the star performer. It reported a 498% increase in gross revenue to $13.7 million. This means the business now represents 53% of total gross revenue.

Revenue in China grew by a modest 4.5% to $4.2 million and Australia gross revenue fell 4% to $4.8 million. The company’s Rest of World business posted a disappointing 13.1% decline in gross revenue to $1.2 million.

Overall, management believes this leaves it well-positioned to achieve its guidance in FY 2024.

Bubs CEO and managing director, Reg Weine, commented:

Momentum in our business continues to build and Q2 was another very strong quarter with gross revenue up 79.7% on the prior corresponding period driven by our rapid growth in the US. Bubs remain firmly on track to achieve our guidance for FY24. USA market expansion remains our number one priority and despite the recent inventory shortages in the US, we grew our USA revenue by 20.8% over Q1.

Despite its sales growth, Bubs continues to burn through cash. Management advised that operating cash outflow for the quarter increased to $8 million. This was primarily due to the inventory build and increase in safety stock to service the growth in demand in the USA.

The ASX All Ords share ended the period with a cash and available bank facilities totalling $37.2 million.

The post Guess which ASX All Ords share is jumping 18% following its quarterly update appeared first on The Motley Fool Australia.

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More reading

• Why are IGO shares crashing 9% on Wednesday?
• Got $1,000? 2 ASX shares to buy right now
• Two giants of the Nasdaq just reported their results. Did they smash expectations?
• Morgans names the ASX cyclical shares to buy for earnings season
• Why Goldman Sachs rates these ASX growth shares as strong buys

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.

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IGO Ltd (ASX: IGO) shares are on the slide on Wednesday morning.

At the time of writing, the battery materials miner’s shares are down 9% to $7.03.

Why are IGO shares sinking?

Investors have been selling the ASX 200 mining share this morning in response to the release of its quarterly update.

According to the release, the company reported underlying EBITDA of $153 million for the quarter. This is down a sizeable 58% quarter on quarter.

Also falling heavily was its underlying free cash flow, which was down 118% to negative $96 million. Though, the company still has $276 million in net cash and a $720 million undrawn debt facility.

This weak result was driven largely by lower production and higher costs for its Greenbushes operation, together with significantly weaker spodumene prices. In fact, management notes that Greenbushes sales came in $1 billion lower quarter on quarter at $1.3 billion.

Furthermore, the company’s Kwinana Lithium Hydroxide Refinery didn’t recognise any sales during the quarter. As a result, it recorded an EBITDA loss of $169.2 million for the period. Nevertheless, management notes that Kwinana’s product remains qualified and further qualification with potential customers is continuing.

Elsewhere, the company’s nickel production was largely flat during the quarter at 7,118 tonnes. Unfortunately, this means that it has downgraded its FY 2024 nickel production guidance to 28,500 – 31,000 tonnes (from 29,000 – 32,500 tonnes).

Cosmos operation update

Also weighing on IGO shares today is news that it is putting its Cosmos Project on care and maintenance following a review.

That review found a reduction in the expected life of mine, delays in getting the mine to full capacity, and further increases in operating and capital costs. In addition, management notes that commodity prices have deteriorated significantly since the review commenced, which have impacted the economics of Cosmos.

IGO’s managing director and CEO, Ivan Vella, commented,

This is not the outcome anyone at IGO wanted, however we cannot ignore the operational and financial risks involved in continuing to develop Cosmos in the current environment. We still believe there is value in Cosmos, however in this nickel environment we need to be disciplined with our allocation of capital, while retaining our optionality to restart if market conditions improve.

The company expects a total impairment charge to be in the region of $150 million to $175 million.

IGO shares are now down 52% over the last 12 months.

The post Why are IGO shares crashing 9% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• IGO shares drops on lithium update
• Here are the top 10 ASX 200 shares today
• Here’s the lithium price forecast through to 2027
• Top brokers name 3 ASX shares to buy next week

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.

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ASX shares that are delivering good underlying growth may be able to produce strong shareholder returns. I’d happily buy the two investments in this article with $1,000 today.

If I had $1,000 to invest, I’d want to choose something I think can do well over the long term and that I’d want to buy more of in the future. I don’t want to own 40 different investments with $1,000 in each. I’d rather have my portfolio focused on somewhere between 10 to 20 names, unless investing in just a few exchange-traded funds (ETFs).

With that in mind, these are two ASX share options I really like.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This is an ETF that is invested in a global portfolio of businesses that have passed a number of ethical screenings.

It has a total of around 200 names – around 70% of the portfolio is allocated to US businesses, with Japan (9%), Germany (4.4%), the Netherlands (3.5%), Denmark (1.9%), Canada (1.9%) and Switzerland (1.5%) being the countries with a weighting of more than 1%.

The businesses in the portfolio have to be climate leaders in their industry, or be involved in helping the world decarbonise.

This investment process cuts out businesses involved in gambling, alcohol, tobacco, armaments, fossil fuels and other sectors that are engaged in activities deemed inconsistent with responsible investment considerations.

The ETHI ETF also avoids businesses that have supply chain concerns, or if they don’t have gender representation on boards.

It has an annual management fee of 0.59%, which I think is good value considering the extensive process that it has gone through.

Some of the names in the portfolio include Nvidia, Visa and Apple. These three positions currently make up 15.4% of the portfolio.

Past performance is certainly not a guarantee of future performance, but since inception in January 2017, the portfolio has achieved an average return per annum of 16.8%.

Bailador Technology Investments Ltd (ASX: BTI)

Bailador is a business that invests in unlisted technology companies. I like that with this ASX share we can get a good growth profile and diversification across the different businesses.

It currently has a portfolio of seven names, with the biggest three being Siteminder Ltd (ASX: SDR), RC Topco (formerly Rezdy), Access Telehealth and Rosterfy. You can check out the company’s monthly update for a more detailed description of each business, as well as regular commentary on the portfolio’s progress.

There are a few different characteristics that Bailador typically looks for in a business: run by the founders, two to six years in operation, proven business model with attractive unit economics, international revenue generation, a huge market opportunity and the ability to generate repeat revenue.

In the three years to December 2023, the portfolio return after tax has been 13.3% per annum, which is solid considering the disruption of different economic events.

It targets a dividend yield on the pre-tax net tangible asset (NTA) of 4%, excluding the bonus of franking credits. With the business currently trading at a 25% discount to the pre-tax NTA, the dividend yield is bigger than that.

The post Got $1,000? 2 ASX shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• Here are 10 ASX shares I’d buy in 2024
• 2 compelling ASX ETFs I’d buy for my child in 2024
• 2 excellent ASX ETFs I’d buy for diversification and growth

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bailador Technology Investments, Nvidia, SiteMinder, and Visa. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool Australia has recommended Apple, Bailador Technology Investments, 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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All eyes will be on the Nasdaq index tonight after two of its largest companies released their quarterly updates.

The companies in question are tech giants Alphabet Inc (NASDAQ: GOOG) and Microsoft Corp (NASDAQ: MSFT).

How did these two giants of the Nasdaq perform?

Unfortunately for shareholders, both companies appear to have disappointed investors during the three months ended 31 December.

As a result, Alphabet shares are down almost 7% and Microsoft shares are down 2.5% in after-hours trade on Wall Street.

Let’s take a closer look at what they both reported.

Alphabet results

The Google and YouTube owner actually delivered a result ahead of consensus estimates. However, it was a miss on advertising revenue which spooked investors.

Alphabet posted a 13% increase in revenue to US$86.31 billion, representing its best quarterly growth in almost two years. This was ahead of the consensus estimate of US$85.33 billion.

However, its advertising revenue of US$65.52 billion missed expectations by almost US$500 million.

Earnings per share also came in stronger than expected at US$1.64 per share (versus the consensus estimate US$1.59 per share).

Sundar Pichai, CEO, said: “We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come.”

Microsoft results

Microsoft shares also look likely to fall on the Nasdaq index tonight despite its result beating expectations.

It reported revenue of US$62.02 billion and earnings per share of US$2.93. This compares to consensus estimates of US$61.12 billion and US$2.78 per share, respectively.

This outperformance was driven by strong cloud (Azure) growth. Microsoft Cloud revenue was US$33.7 billion for the quarter, up 24% year-over-year. It remains unclear why investors haven’t responded more positively to the result.

And just like Alphabet, Microsoft spoke positively about how AI is impacting its business.

CEO Satya Nadella said: “We’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

The post Two giants of the Nasdaq just reported their results. Did they smash expectations? appeared first on The Motley Fool Australia.

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More reading

• Appen shares crash 37% on huge Google blow
• 3 things ASX investors should watch this week
• Here’s how the ASX 200 market sectors stacked up this week
• Better AI stock: Microsoft vs. Amazon
• Which Nasdaq company just overtook Apple as the world’s largest by market cap?

Suzanne Frey, an executive at Alphabet, 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 Alphabet and Microsoft. The Motley Fool Australia has recommended Alphabet. 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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With earnings season kicking off this morning with the release of the Credit Corp Group Limited (ASX: CCP) half year result, investors may be wondering which ASX shares could be buys before they report.

Well, the team at Morgans has been busy looking at the companies it has under coverage and has picked out a few cyclical ASX shares that it finds “interesting” right now.

These are construction services company Acrow Ltd (ASX: ACF), airline operator Alliance Aviation Services Ltd (ASX: AQZ), baby products retailer Baby Bunting Group Ltd (ASX: BBN), fund manager GQG Partners Inc (ASX: GQG), and energy producer Santos Ltd (ASX: STO).

What did the broker say about these cyclical ASX shares?

Commenting on the market and these ASX shares, the broker said:

We see the S&P/ASX 200 index rangebound in 2024. FY24 EPS is forecast to decline 5% before rebounding 5% in FY25, leaving the heavy lifting down to P/E multiple expansion, but at 16x vs the 14.5x 20-year historical average, there is limited scope for further expansion barring a sharp retreat in interest rates.

While we do not expect the index to do much at the headline level, high-level numbers conceal significant variation across sectors. Cyclicals including consumer and commercial services, media, retail and capital goods offer mid-to-high EPS growth into FY24 at lower relative valuations. Cyclical stocks that look interesting include Acrow, GQG Partners, Alliance Aviation, Baby Bunting and Santos.

What about ratings?

Morgans has price targets of $1.22 on Acrow shares, $5.20 on Alliance Aviation shares, $2.05 on GQG shares, $2.00 on Baby Bunting shares, and $7.80 on Santos shares.

For all but Santos, the broker has add ratings and valuations on these ASX cyclical shares that imply at least 10% upside from current levels.

And in the case of Alliance Aviation, its price target suggests upside of over 50% from current levels. This could make it worth watching very closely during earnings season.

The post Morgans names the ASX cyclical shares to buy for earnings season appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• How US-Iran tensions will support oil prices: CBA analyst
• Could this be jump-starting ASX energy shares today?
• Are ASX growth shares back? How these fundies delivered over 20% upside in 2023
• 5 things to watch on the ASX 200 on Monday

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 Acrow and Alliance Aviation Services. 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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If you’re a growth investor and have room in your portfolio for some new additions, then it could be worth checking out the two named below.

Goldman Sachs is feeling very positively about both of these ASX growth shares and is tipping them as top buys.

Here’s what the broker is saying:

TechnologyOne Ltd (ASX: TNE)

Goldman Sachs is a big fan of this enterprise software provider and sees it as a great longer term option.

This is because it believes the company can deliver mid to high teens earnings per share growth through to at least FY 2026. The broker explains:

In our view, the company is well placed to meet its A$500mn FY26 ARR target through a combination of SaaS flip uplift, net expansion and new customer growth. We see margin expansion resuming from FY24E onwards, which in combination with robust revenue growth should drive a mid-high teens EPS CAGR to FY26E, providing strong earnings visibility. TNE’s share price has historically been driven by its strong rate of compound earnings growth underpinned by its leading market position, high R&D investment and defensive public sector end markets.

In addition, its analysts feel that “TNE’s current valuation does not account for its above-trend earnings growth outlook, nor the defensiveness of its earnings in a more challenging macro environment.”

Goldman has a buy rating and $18.05 price target on its shares.

Webjet Limited (ASX: WEB)

Another ASX growth share that has been given the thumbs up by Goldman Sachs is online travel booking company Webjet.

Its analysts are very positive on the company’s WebBeds business and expect it to benefit greatly from structural growth opportunities. It also feels that the overall business is significantly stronger compared to pre-COVID times. It said:

Our Buy thesis on WEB is premised on 1) WEB demonstrating strong cash generation as the market recovers while current valuation continues to be impacted by macro concerns 2) We believe WEB’s Bedbanks business offers a structural growth opportunity and expect it to drive scale benefits, underpinned by system changes and ERP upgrades as WEB goes through the recovery cycle. 3) We believe the OTA business is exposed to the right channels with the ongoing shift towards digital bookings likely to aid WEB in growing its TAM as well as market share.

Goldman has a buy rating and $8.10 price target on the ASX growth share.

The post Why Goldman Sachs rates these ASX growth shares as strong buys appeared first on The Motley Fool Australia.

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More reading

• Webjet stock: 3 reasons it’s on my buy list
• 3 ethical ASX shares poised to outperform in 2024
• Tripled since COVID: 2 rocketing ASX 200 stocks not too late to buy
• Want $1 million in retirement? 3 ASX shares I think could make it happen
• Here’s how the ASX 200 market sectors stacked up this week

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 Technology One. The Motley Fool Australia has recommended Technology One. 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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There’s a cheap S&P/ASX 200 Index (ASX: XJO) stock on my radar to tap for some market-beating passive income.

To be clear, when I say ‘cheap’ ASX 200 stock, I don’t mean there’s anything shoddy about the company itself. Or its outlook for ongoing, strong future dividend payments.

Instead, I mean that the company’s share price has dropped 16.11% over the past six months, due to circumstances mostly outside of its control.

And I mean that it trades on a price-to-earnings (P/E) ratio of less than six times.

So, without further ado, the cheap ASX 200 stock in question is oil and gas company Woodside Energy Group Ltd (ASX: WDS).

What’s been happening with Woodside shares?

Woodside shares have faced headwinds over the past six months, mostly from a big retrace in energy prices.

The Brent crude oil price, for example, is currently at US$84 per barrel. While that’s up from the mid-December lows of US$73 per barrel, it’s well down from the US$97 per barrel Brent crude oil was fetching at the end of September.

Still, I’m not overly concerned about the retrace in energy prices that have helped put Woodside on my cheap ASX 200 shares list. I’m pretty confident oil and gas prices will tick back up along with the global economic growth outlook once interest rates begin to come off the boil.

This should see Woodside continue to offer passive income investors an outsized yield.

And let’s not forget that the energy giant’s full-year 2023 production ramped up by 18.7% year on year to reach 187.2 million barrels of oil equivalent (MMboe).

With this mind, let’s turn to that very handy $100 a month (or $1,200 a year) in passive income I’m after.

A cheap ASX 200 stock for regular passive income

Over the past 12 months, Woodside shares paid out a total of $3.40 in fully franked dividends. That included the all-time high final dividend of $2.154 per share.

Eligible shareholders will have seen that record passive income hit their bank accounts on 5 April. The interim dividend was paid on 28 September.

At yesterday’s closing price of $31.87 a share, that sees this cheap ASX 200 stock trading at a juicy trailing yield of 10.66%.

Now Woodside’s future dividend yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.

But based on this trailing yield, and my expectations of a rebound in energy prices, I’d need to buy 353 shares of this cheap ASX 200 stock to earn a $100 monthly passive income.

And, of course, I’ll be hoping the Woodside share price delivers some gains as well.

The post I’d buy 353 shares of this cheap ASX 200 dividend stock for $100 in monthly passive income appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• How US-Iran tensions will support oil prices: CBA analyst
• How investing $100 per week can create $1,500 in annual ASX dividend income
• Could this be jump-starting ASX energy shares today?
• Why Bapcor, Domino’s, Santana Minerals, and Woodside shares are charging higher

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.

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