Category: Stock Market

On Friday, the S&P/ASX 200 Index (ASX: XJO) ended the week on a positive note. The benchmark index rose 0.5% to 7,860 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market is expected to sink on Tuesday despite a positive start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 78 points or 1% lower. On Wall Street, the Dow Jones was up 0.2%, the S&P 500 rose 0.2%, and the Nasdaq pushed 0.35% higher.

Life360 named as a buy

The Life360 Inc (ASX: 360) share price still has plenty of upside according to analysts at Bell Potter. In response to its Nasdaq listing, the broker has reaffirmed its buy rating with a $17.00 price target. This implies potential upside of 23% for investors over the next 12 months. It said: “The next potential catalyst we see for the stock is the H1 result in August – or any update provided sooner – given we expect another solid result and good MAU growth.”

Oil prices jump

It could be a great start to the week for ASX 200 energy shares Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 3.1% to US$77.89 a barrel and the Brent crude oil price is up 2.7% to US$81.79 a barrel. This was driven by analysts predicting that summar fuel demand could create a supply deficit.

Nine chair quits

Nine Entertainment Co Holdings Ltd (ASX: NEC) shares will be on watch today amid news that its chair, Peter Costello, has quit. This follows reports that Costello allegedly assaulted a journalist from The Australian at Canberra Airport. Commenting on his exit, the outgoing chair said: “The board has been supportive through the events of the last month and last few days in particular. But going forward I think they need a new chair to unite them around a fresh vision and someone with the energy to lead to that vision for the next decade.”

Gold price rises

ASX 200 gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a reasonably positive session after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.15% to US$2,328.7 an ounce. Traders were buying the precious metal ahead of the release of US inflation data.

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

More reading

• This ASX 200 share still looks cheap to me. But don’t just take my word for it!
• Here are the top 10 ASX 200 shares today
• Why IDP Education, Novonix, PYC, and Regis Resources share are racing higher
• Why Beach Energy, Life360, Viva Leisure, and Wildcat shares are dropping today
• Life360 shares tumble after Wall Street debut

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has recommended Nine Entertainment. 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 are a popular option for income investors.

And it isn’t hard to see why.

Each year the banking giant shares a good portion of its profits with its shareholders in the form of dividends.

This often leads to above-average dividend yields from the shares of Australia’s oldest bank.

But with its shares up 23% over the last six months and trading not too far from a 52-week high, most analysts now believe they are fully valued.

In light of this, income investors may want to look at alternatives to Westpac shares.

But which ASX income stocks could be good options? Let’s take a look at three. They are as follows:

Eagers Automotive Ltd (ASX: APE)

The first option to consider buying is Eagers Automotive. It operates one of Australia’s largest auto dealership networks.

The team at Bell Potter is feeling positive about the company and sees recent weakness as a buying opportunity. The broker has a buy rating and $13.35 price target on its shares.

As for income, it expects the company to pay fully franked dividends of 64.5 cents per share in FY 2024 and then 73 cents per share in FY 2025. Based on its current share price of $10.14, this represents dividend yields of 6.35% and 7.2%, respectively.

Inghams Group Ltd (ASX: ING)

Morgans thinks that Inghams could be an ASX income stock to buy. It is Australia’s leading poultry producer and supplier.

It feels that its shares are undervalued based on its market leadership position and favourable consumer trends. The broker has an add rating and $4.40 price target on its shares.

As well as plenty of upside, Morgans is expecting some generous dividend yields. It has pencilled in fully franked dividends of 22 cents per share in FY 2024 and then 23 cents per share in FY 2025. Based on the current Inghams share price of $3.63, this equates to dividend yields of 6.1% and 6.3%, respectively.

IPH Ltd (ASX: IPH)

Finally, another alternative to Westpac shares could be IPH. It is a leading intellectual property solutions company with operations across the globe.

Goldman Sachs is a big fan of the company and believes it is “well-placed to deliver consistent and defensive earnings with modest overall organic growth.” It has a buy rating and $8.70 price target on its shares.

In respect to dividends, the broker is forecasting fully franked dividends of 34 cents per share in FY 2024 and then 37 cents per share in FY 2025. Based on the current IPH share price of $6.54, this represents yields of 5.2% and 5.7%, respectively.

The post Forget Westpac shares and buy these ASX income stocks appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 ASX income stocks to buy now
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• Why you should sell CBA, Westpac, and Bank of Queensland shares in June
• 2 high-yield ASX shares I’d buy right now for dividends
• Insiders are buying these 6 ASX All Ords shares

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 Goldman Sachs Group. The Motley Fool Australia has recommended Eagers Automotive Ltd and IPH. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of exchange-traded funds (ETFs) to choose from on the Australian share market.

Let’s take a look at three that could be quality options for investors when the market reopens after the public holiday. They are as follows:

Betashares Energy Transition Metals ETF (ASX: XMET)

If you are interested in gaining exposure to the decarbonisation megatrend, then the Betashares Energy Transition Metals ETF could be worth a look.

This fund provides investors with easy access to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements.

The team at Betashares is very positive on this ETF and named it on its list of 12 ASX ETFs ideas for 2024.

The fund manager appears to believe the companies held by the ETF are well-positioned to benefit from increasing demand for these metals. It said:

The Earth is blessed with all the minerals we need to power the transition to CO2-free energy. However, defining, extracting, and processing all those deposits is going to require significant new investment. […] Both electric cars and clean energy use notably more metals than their conventional counterparts, and many of these minerals have highly concentrated and insecure supply chains.

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

Another ASX ETF for investors to look at is the BetaShares S&P/ASX Australian Technology ETF.

It provides investors with easy access to leading companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology.

This ETF was also recently highlighted as one to buy by the team at Betashares. The fund manager commented:

With the nascent adoption of AI, cloud computing, big data, automation, and the internet of things, there’s a good chance that the next decade’s major winners will come from the tech sector. Despite Australia’s sharemarket skewing heavily towards financials and resources, investors can gain direct exposure to Aussie tech stocks via ATEC.

iShares S&P 500 ETF (ASX: IVV)

Another ASX ETF for beginner investors to consider buying this month is the iShares S&P 500 ETF.

It gives you access to the 500 of the top listed companies on Wall Street. This means that you will be investing in a diverse group of shares, including countless household names, from a range of different sectors.

Blackrock, the fund manager, notes that this means it can be used “to diversify internationally and seek long-term growth opportunities in your portfolio.”

The post 3 amazing ASX ETFs to buy when the market reopens appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in June and hold for retirement
• Is the iShares S&P 500 ETF (IVV) a good buy right now?
• 3 of the best ASX ETFs to buy in June
• 5 ASX ETFs that could be great long-term buys
• Own the ASX’s Vanguard US Total Markets ETF (VTS)? Here’s what you’re invested in

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 iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One popular ASX 200 mining stock could be in danger of crashing deep into the red.

That’s the view of analysts at Goldman Sachs, which are urging investors to sell this miner before it’s too late.

But which mining giant is it? Is it BHP Group Ltd (ASX: BHP)? Thankfully for its shareholders, it isn’t the Big Australian.

Goldman is actually tipping its shares as a buy with a $49.00 price target.

Nor is it Rio Tinto Group Ltd (ASX: RIO), which the broker has a buy rating and $138.90 price target on.

The ASX 200 mining stock that could crash over 30% according to Goldman Sachs is Mineral Resources Ltd (ASX: MIN).

Why could the ASX 200 mining stock crash?

While Goldman acknowledges that Mineral Resources has an enviable track record. It isn’t enough for the broker to be positive on the investment opportunity here. It said:

We continue to highlight that MIN has an impressive 20-yr track record of generating high returns on capital with an average ROIC of >20% since listing. This has been achieved through MIN’s ability to build and operate crushing plants and mining projects faster and at lower capital intensity than most other companies. Despite this impressive track record, we continue to rate MIN a Sell.

One of the key reasons that its analysts think its shares are a sell is its valuation. They highlight the premium its shares trade at compared to peers. Goldman explains:

Fully valued vs. peers and downside to PT: trading at ~1.35xNAV (A$54.6/sh) based on our volume and operating assumptions and long-run price assumptions. MIN is pricing in long-run commodity prices ~20% higher than our estimates. MIN is also trading at ~17x NTM EBITDA (vs. Aus lithium peers on ~8.0x and large cap iron ore peers on ~5x) and ~7x FY26E.

In addition, Goldman notes that the ASX 200 mining stock is exposed to weak lithium prices, which it believes are heading even lower. It adds:

Lithium price expected to decline further from over 2024: our commodity team expect spodumene prices to average US$800/t and hydroxide at US$10,000/t (vs. spot c. US$1200/t and US$10,000/t) in 2H CY24 driven by our view of a market surplus over 2024-2025, and for the price to trade at or below marginal cost which we think will be set by Chinese integrated lepidolite producers.

Major downside predicted

Goldman has put a sell rating and $47.00 price target on its shares.

Based on the current Mineral Resources share price of $68.63, this implies potential downside of approximately 32% for investors over the next 12 months.

In addition, the broker expects disappointing dividends yields of just 0.3% in FY 2024 and FY 2025. This is a far cry from the juicy yields shareholders have received in recent times.

The post Guess which popular ASX 200 mining stock could crash over 30% appeared first on The Motley Fool Australia.

More reading

• Is it time to cash in these 2 ASX large-cap stocks?
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• Guess who just slapped a buy rating on BHP shares?
• Mineral Resources shares race higher on $1.3b asset sale
• 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. 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.

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Pilbara Minerals Ltd (ASX: PLS) continues its long run as the most shorted ASX share with 21.4% of its shares held short. This is down slightly week on week again but is still significantly higher than second place. Concerns over a lithium surplus appear to be behind this.
• IDP Education Ltd (ASX: IEL) has 12.8% of its shares held short, which is down materially week on week. Last week, this language testing and student placement company revealed that it is being negatively impacted by student visa changes in a number of key markets.
• Syrah Resources Ltd (ASX: SYR) has short interest of 10.7%, which is down week on week again. This graphite miner’s shares have been targeted due to weak battery materials prices, production suspensions, and further cash burn.
• Liontown Resources Ltd (ASX: LTR) has 10% of its share held short, which is up slightly week on week. There are concerns that lithium prices will stay at low levels for years. This doesn’t make it a good environment to commence production at Kathleen Valley in the middle of the year.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest fall week on week to 9.6%. There are concerns over the travel agent giant’s revenue margins and consumer travel spending.
• Westgold Resources Ltd (ASX: WGX) has short interest of 9.6%, which is now up for a fifth week in a row. This appears to have been driven by doubts over the gold miner’s proposed merger with Canada-based Karoa Resources.
• Chalice Mining Ltd (ASX: CHN) has short interest of 9.5%, which is up week on week again. This mineral exploration company’s Gonneville Project is a globally significant critical minerals project, but it is still a long way off production and even a final investment decision.
• Sayona Mining Ltd (ASX: SYA) has short interest of 9.4%, which is flat from last week. It is yet another lithium miner that is being targeted due to weak lithium prices.
• Australian Clinical Labs Ltd (ASX: ACL) has short interest of 8.5%, which is down meaningfully since last week. This health imaging company is guiding to another sharp decline in its earnings in FY 2024.
• Healius Ltd (ASX: HLS) has short interest of 8.4%, which is up week on week. It is another health imaging company that is battling tough trading conditions at present.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

More reading

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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 Idp Education. 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.

The share market has been getting very excited about the artificial intelligence (AI) megatrend this year.

And rightly so. It’s no exaggeration to say that AI is going to change the world.

We’ve only really had a small taste of this in the last few years but expect things to accelerate as AI continues to improve and more money is invested in the space.

The good news for investors is that there are ways to gain exposure to AI with ASX shares.

And I don’t mean with supposed AI shares like Brainchip Holdings Ltd (ASX: BRN), which has promised the world and delivered nothing in a market dominated by a US$3 trillion behemoth.

I mean with genuine industry leaders that are leveraging AI to cement their position and drive long-term growth. Let’s take a look at two:

Pro Medicus Limited (ASX: PME)

The first ASX AI share to look at is health imaging technology company Pro Medicus,

Goldman Sachs recently spoke about how the company’s AI revenues could grow from a small percentage of its overall sales into something significant in the future. It said:

AI opens an incremental US$620mn TAM today (growing at a +34.7% CAGR) with radiology receiving the majority (c.80%) of recent FDA AI algorithm clearance. We believe PME is well positioned to take share as the incumbent viewing platform across many large, and likely early adopters of new technology.

PME is generating revenue from its Visage breast density AI algorithm (developed via a partnership with Yale) today, and we see the potential value for AI to be significant with adoption driven by improved accuracy and clinical outcomes. We forecast AI to comprise 9% of PME’s revenue by FY30E (from <1% in FY25E), with upside if PME achieves faster AI attach penetration, higher price per scan, and a greater proportion of algorithms developed in-house where no royalties are paid to a partner.

Goldman has a buy rating and $136.00 price target on its shares.

NextDC Ltd (ASX: NXT)

Another ASX AI share to look at is data centre operator NextDC. While it isn’t necessarily offering AI services, it is servicing the huge data centre demand for capacity that AI needs to function.

In April, Goldman Sachs commented on this. It said:

NextDC believes AI is driving global data centre growth from 15% to 19% with Australia and broader APAC remaining well-positioned for growth and the fastest growing region. AI is increasing average power density racks (kW/Rack) growing 2.5x to c80-100kW. NXT are seeing demand pipeline for singular deals in the vicinity of 50-100MW and see market growth accelerating. AI demand is also stemming from a 40%/60% mix from inference/training, with upside for inference to reach 70%.

The broker currently has a buy rating and $18.59 price target on its shares. Though, it is worth noting that other brokers are even more bullish. For example, Morgan Stanley has an overweight rating and $20.00 price target.

The post 2 ASX AI shares that could be set to soar in 2024 and beyond appeared first on The Motley Fool Australia.

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

If you are on the hunt for some ASX dividend shares to buy this month, it could be worth checking out the two below that Bell Potter has named as top picks for income investors in June.

Here’s what the broker is saying about them:

Rural Funds Group (ASX: RFF)

Bell Potter thinks that this agricultural property company could be an ASX dividend share to buy this month.

It highlights that its shares are trading at an abnormally large discount to their net asset value. It feels this is excessive and has created a compelling buying opportunity for income investors. The broker said:

RFF trades at a historical high discount to its market NAV per unit ($2.78 pu) at ~28%. While we are in general seeing large discounts to NAV in ASX listed farming and water assets to market NAV, the discount that RFF is trading appears excessive and we are seeing a valuable opportunity in RFF. While the timing of that value discount closing is difficult to call, investors are likely to be rewarded with a ~6% yield to hold the position until such a time as the asset class rerates. Furthermore, RFF aims to achieve income growth through productivity improvements, conversion of assets to higher and better use along with rental indexation which is built into all of its contracts with its tenants.

Bell Potter has a buy rating and $2.40 price target on Rural Funds’ shares.

As for income, it is forecasting dividends per share of 11.7 cents in FY 2024 and FY 2025. Based on its current share price of $2.02, this will mean yields of 5.8% for investors.

SRG Global Ltd (ASX: SRG)

Bell Potter also thinks that SRG Global would be one of the best ASX dividend shares to buy this month.

It is a diversified industrial services group that provides multidisciplinary construction, maintenance, production drilling and geotechnical services The broker believes that SRG will be a beneficiary of accelerating growth in iron ore and gold production volumes over the next five years. It commented:

SRG’s short-to-medium term outlook is reinforced by Government-stimulated construction activity in the Infrastructure and Non-Residential sectors and increased development and sustaining capital expenditures in the Resources industry. The resulting expansion in infrastructure bases across these sectors will likely support increased demand for asset care and maintenance in the medium to long-term. We anticipate Mining Services will be a beneficiary of accelerating growth in iron ore and gold production volumes over the next five years.

Bell Potter has a buy rating and $1.30 price target on its shares.

In respect to dividends, the broker is forecasting fully franked dividends of 4.7 cents in FY 2024 and then 6.7 cents in FY 2025. Based on its current share price of 89 cents, this will mean dividend yields of 5.3% and 7.5%, respectively.

The post 2 of the best ASX dividend shares to buy in June appeared first on The Motley Fool Australia.

More reading

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• Why Genesis Minerals, Lovisa, Northern Star, and SRG Global shares are rising today
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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Srg Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There’s one S&P/ASX 200 Index (ASX: XJO) share that looks really cheap to me, and I’m not the only one who believes it has good growth potential.

Collins Foods Ltd (ASX: CKF) is a large franchisee of KFC outlets in Australia, Germany and the Netherlands. It also has a relatively small network of Taco Bells in Australia.

The chart below shows that Collins Foods share price has dropped more than 20% since January 2024. A lower share price is part of the reason why I think it’s cheap, but it’s also the appealing price/earnings (P/E) ratio and potential growth rate.

So, let’s look at what makes this ASX 200 share seem such a bargain, in my opinion.

Low forward earnings multiple

I’m very attracted to businesses where the P/E ratio is low, but earnings are compounding at a pleasing rate.

Collins Foods’ most recent result showed good same-store sales (SSS) growth and an ongoing increase in its store network, generating pleasing total revenue growth and profit growth.

During the FY24 first-half period, KFC Australia saw SSS growth of 6.6% and KFC Europe SSS growth was 8.8%. KFC Australia expects to open nine to 12 new restaurants in FY24, while KFC Europe is expected to see another three stores open in the FY24 second half.

Collins Foods’ continuing operations HY24 revenue grew by 14.3% to $696.5 million, and the underlying net profit after tax (NPAT) rose by 28.7% to $31.2 million.

The broker UBS thinks the ASX 200 share could generate earnings per share (EPS) of 53 cents in FY24, which would put it at 18x forward earnings.

But profit could be much better than that. The broker UBS has projected EPS of 79 cents for FY26, 92 cents for FY27, and $1.03 for FY28. That implies profit could also double over the next four years, which could make the FY24 P/E ratio of 18 very good value, in my opinion.

UBS has a price target of $10.95 on Collins Foods shares, which implies a possible rise of 15% over the next year, though the broker only rates the ASX 200 stock as neutral right now.

Foolish takeaway

I’ve put my money where my mouth is and recently bought Collins Foods shares for my own portfolio.

I think it’s a cheap growth stock and can provide good dividend income. UBS’ predictions suggest it could pay a grossed-up dividend yield of 4.4% for FY24 and 9.4% in FY28.

The post This ASX 200 share still looks cheap to me. But don’t just take my word for it! appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Collins Foods. 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 Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Chances are if you offered most Australians who are working today the opportunity of a comfortable retirement beginning tomorrow, they would seize it with both hands. After all, most of us wouldn’t work if we didn’t have bills to pay… at least as much as we do.

Late last month, my Fool colleague Bronwyn went through the average age at which most Australians officially retire and enter their golden years. She found that the average age for the 130,000 people who retired in 2022 was 64.8 years. That broke down to 66.9 years for men and 63.2 years for women.

Interestingly, the most common reason that Australians chose to retire was reportedly “access to financial support”. That came in ahead of “sickness, injury or disability” and “not being able to find employment”.

So we know that a plurality of those Australians who decide to retire do so because they can afford to.

Once we reach the Age Pension eligibility age of 67, the possibility of at least a modest retirement becomes a reality for most Australians.

But what about those Australians who, through luck, hard work or a combination of the two, find themselves able to retire much earlier than that? Is there an age too young to retire?

Retirement: How early is too early?

This is obviously going to be a highly subjective question. Many of us love working, keeping busy and making a valuable contribution to society. Perhaps some of these people intend to keep working until they drop, not because they have to but because they want to.

There’s nothing wrong with that.

But what about others who would retire tomorrow if they could? Well, I’m a firm believer in a quote often attributed to the late Queen Elizabeth II:

Work is the rent you pay for the room you occupy on Earth.

It’s my belief that in order to achieve and maintain true happiness, we must pursue a valuable contribution to society.

What that contribution is can be whatever you make it through. It could be working for a company (perhaps your own) or in a government in order to bring more good into the world.

But it could also be raising children or grandchildren, looking after a loved one or working for a charity. It could be creating beautiful art or music, or else writing a book or poetry.

Life is too short to dedicate time to a job we don’t like, and that doesn’t bring fulfilment. So if you have the opportunity to retire, use it to bring happiness to yourself and those around you. If everyone adopted this attitude, I don’t think there’s an age that is too young to ‘retire’ in Australia.

The post What age is too young to retire in Australia? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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.

There are a good number of options for investors to choose from in the gold sector, but one of the best ASX 200 gold stocks to buy right now could be Capricorn Metals Ltd (ASX: CMM).

That’s the view of analysts at Bell Potter, which believe the gold miner’s shares are undervalued at current levels.

What is the broker saying about this ASX 200 gold stock?

According to a note, the broker has been running the rule over Capricorn Metals following a couple of recent developments.

It feels that the ASX gold stock has all the qualities required to trade at a premium to sector averages. So, with its shares pulling back materially due to a surprise weather-related quarterly production miss, its analysts feel that investors have been gifted a great opportunity to pick up shares. It explains:

We have reviewed our sector-based valuation metrics in the context of a pullback in the CMM share price and the recent 26% increase in the Ore Reserve at CMM’s 100%-owned Mt Gibson Gold Project (MGGP). We have also reviewed CMM’s track record of project construction and commissioning and delivery to production and cost guidance, which screens as one of the most reliable in the sector.

Combined with CMM’s sector leading cash generation, we take a view that CMM should trade at a premium to sector average valuation metrics. As such, we view CMM’s current market valuation as an attractive entry opportunity to the stock.

What else is the broker saying?

Bell Potter highlights that the Mt Gibson Gold Project is a high quality operation with significant growth potential.

And with a resource update on the horizon, it feels that the ASX 200 gold stock could get a boost when it is released. It adds:

The MGGP is one of the largest undeveloped stand-alone gold projects in Australia, with a Resource of 125Mt @ 0.8g/t Au for 3.3Moz and Reserve of 62Mt @ 0.9g/t Au for 1.8Moz.

We view the MGGP as highly prospective for further Resource growth, which is a focus of current drill programs. We anticipate a Resource update in the September quarter 2024 being a positive catalyst for CMM. The MGGP sits on granted Mining Leases and is currently progressing through permitting, with updates expected in the coming month. Combined with CMM’s funding capacity, which will help preserve equity value through the development phase, and CMM’s strong track record of project development, we view the path to production and commercialisation as relatively low risk.

Big returns 

The note reveals that Bell Potter has a buy rating and $6.50 price target on the company’s shares. This implies potential upside of 36% for investors over the next 12 months. It concludes:

CMM is a sector leading gold producer with a strong balance sheet, clear organic growth options and a management team with an excellent track record of delivery. The MGGP continues to be advanced toward development and will position CMM as a ~270kozpa, top-10 ASX-listed gold producer.

The post Is this the very best ASX 200 gold stock to buy now? 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 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.