Category: Stock Market

The Goodman Group (ASX: GMG) share price has been in fine form this year.

Since the start of 2023, the ASX 200 industrial property stock has risen a sizeable 15.5%.

Can this ASX 200 stock keep rising?

The good news for investors is that one leading broker doesn’t believe it is too late to jump on the Goodman train.

A recent note out of Citi reveals that its analysts have retained their buy rating with an improved price target of $24.30.

So, with this ASX 200 stock currently trading at $20.04, this still implies potential upside of 21% for investors over the next 12 month despite its stellar gains this year.

Why is Citi raving about Goodman?

Citi has become even more positive on Goodman shares following its recent quarterly update. The broker notes that this update demonstrates that industrial property continues to be the bright spot in real estate.

And while its updated guidance is still a touch behind the broker’s estimate, it is worth remembering that Goodman is usually conservative with these things. Citi commented:

Along with the 3Q23 update, GMG upgraded FY23 EPS guidance to 15% EPS growth from 13.5%, which was almost in-line with consensus but slightly below our previous estimate. The update highlighted ongoing tailwinds for industrial with strong market rent growth improving the future rental upside on GMG’s book. Record low vacancy has driven ongoing development demand resulting in a strong development workbook with $13bn in WIP, with near-term growth in developments from less time taken to develop (which will boost annual earnings).

Looking ahead, the broker believes this ASX 200 stock is well-placed for more of the same in the coming years. In light of this and its attractive valuation, the broker feels Goodman is a top buy right now. It concludes:

We see potential for GMG to generate consistent high-single to low-double digit earnings growth over the medium term driven by rental upside and longer term development projects, which will add to management and development earnings. The stock currently trades at c. 19x FY24e, below global industrial peers, despite having higher earnings growth and lower leverage. We therefore see upside to the share price and retain Buy.

The post Why Citi is raving about this amazing ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 blue chip shares that brokers love
• ‘Bright outlook’: 2 ‘high quality’ ASX 200 shares to pounce on now 
• I think this ASX 200 share is heavily underrated by the market
• Here are 3 ASX 200 blue chip shares that analysts love
• 2 ASX 200 stocks surging ahead following guidance upgrades

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 Goodman 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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The Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) that gives investors the ability to invest in ASX blue chip shares. There are a number of reasons why it could help someone retire early – low fees, diversification, and compounding.

Its job is to track the S&P/ASX 300 Index (ASX: XKO) which is a group of 300 of the largest businesses in Australia. The VAS ETF also has a portfolio of (around) 300 holdings.

Just looking at the number of businesses in the portfolio suggests good diversification. Certainly, having sufficient diversification is one of the important elements in lowering risk. But there’s more to diversification than just the number of holdings. It’s also important to consider what types of businesses the fund is invested in.

Strong exposure to the Australian economy

When we look at the biggest businesses in the Vanguard Australian Shares Index ETF portfolio, they are mainly from two sectors that Australia excels at – resources and banking.

Most people will be familiar with the names I’m about to mention: BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), Woodside Energy Group Ltd (ASX: WDS), Rio Tinto Ltd (ASX: RIO), and Fortescue Metals Group Ltd (ASX: FMG).

At the end of April 2023, more than 51% of the VAS ETF portfolio was invested in just financials and materials. That’s probably not surprising considering how many resources Australia sells and how important the property market is for the economy.

But there are advantages and disadvantages to this high level of exposure to those sectors.

Many of these businesses have fairly low price/earnings (p/e) ratios and quite high dividend payout ratios. This usually results in a rewarding dividend yield for investors. According to Vanguard, the VAS ETF has a dividend yield of 4.4.%, which doesn’t include the franking credits.

However, these sorts of businesses aren’t known for strong capital growth and, as such, the compounding potential might be less. If I were looking to retire early, I’d want to try to grow my nest egg with a good amount of capital growth. Remember, dividends are taxable when received each year, assuming that person has a tax rate of more than 0%.

Let’s compare the returns of the Vanguard Australian Shares Index ETF against one of Vanguard’s other main ETFs – the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Lower returns

Past performance is not a reliable indicator of future performance, but I think we can see the difference between a more growth-focused ETF like the VGS ETF (purple) and the ASX blue chip-focused VAS ETF (blue).

Let’s also look at how the VAS ETF unit price has changed since COVID-19 – it’s currently almost where it was just before COVID-19 hit, whereas the VGS ETF has gained around 15%.

Over the five years to April 2023, the Vanguard MSCI Index International Shares ETF has returned an average of 11.1%, with 8.7% of that per annum being capital growth.

In the five years to April 2023, the Vanguard Australian Shares Index ETF has returned 8.2% per annum, with over half of that (4.7%) being distributions (which are taxed). However, that level of returns can still deliver decent wealth-building for investors and the unit price of around $90 could be a good starting point for investing.

I’m certainly not saying that VAS ETF is a terrible investment. But for investors trying to grow their wealth for retirement, I think there could be better options. However, I will say that Vanguard Australian Shares Index ETF is an effective way to invest in the Australian economy for a low management fee of just 0.10%.

But I’d look to other ETFs as potentially better investment options for longer-term growth.

The post Could buying the Vanguard Australian Shares Index ETF (VAS) at under $90 help me retire early? appeared first on The Motley Fool Australia.

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More reading

• Millionaire magnet: Why are wealthy investors pouncing on the Vanguard Australian Shares Index ETF (VAS)?
• I’m a dividend investor. Should I buy the Vanguard MSCI Index International Shares ETF (VGS)?
• The top 10 ASX shares held by millionaires
• Why is the Vanguard Australian Shares Index ETF (VAS) still below its pre-COVID high?
• Was the Vanguard MSCI Index International Shares ETF (VGS) worth owning in April?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF and Westpac Banking Corporation. 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 Zip Co Ltd (ASX: ZIP) share price is up 12.1% over the past five trading days. 

Zip shares finished yesterday’s session at 55.5 cents apiece, up 0.91%.

While it’s nice to see a green trajectory for the maligned ASX BNPL share, Zip has been in a state of purgatory for a long, long time. 

Is this welcome bump merely a blip or the start of new upward momentum for the Zip share price?

Let’s look into it.

Zip share price stabilises in 2023 

It’s strange writing a headline about a share price pretty much doing nothing for a period. 

That’s not usually newsworthy. 

But following a catastrophic two-year tumble in the Zip share price, a standstill actually looks positive. 

It indicates the company may have finally stopped the bleeding. 

Over the first five months of 2023, the Zip share price has dipped by 0.9%. 

What’s going on with the Zip business? 

Zip shareholders are waiting for the company to get its house in order following a spectacular change of course announced in the second half of 2022. 

Following a tragic 95% decline in the share price – from a historical peak of $13.05 in February 2021 to a trough of 43.5 cents in June 2022 – Zip pulled the pin on its growth-at-all-costs global strategy and made profitability its new focus. 

This change, of course, necessitated a significant downscaling of operations, and a simplified business strategy to achieve positive cash flow and profitability. 

The plan involves a three-pronged process: Growth in the Australia/New Zealand and United States businesses, an improvement in unit economics, and a reduction in costs. 

Zip has now exited 10 of its 14 markets, including the United Kingdom, India, and Singapore.

This leaves Zip with three core markets: Australia/New Zealand, the United States, and Canada.

It has begun the process of selling off its assets in those abandoned markets to boost its balance sheet. 

The company expects to complete this process by the end of next month.  

Mark these dates 

Looking ahead, there are two critical milestones that Zip hopes to achieve. 

The first is turning the US business cash flow positive by the end of FY23 — that’s next month. 

We’ll find out in July or August whether the company has got this done. 

The Australia/New Zealand business has been cash flow positive for four years already. Getting the US business cash flow positive will enable the company to achieve its second goal, which is making the group cash flow positive by the first half of FY24. 

So, we’ll be looking for an announcement on this front in January or February 2024. 

Is this the start of a turnaround on the Zip share price?

To get a turnaround in the Zip share price, we probably need a turnaround in the business first. 

Our latest peek at the books occurred in April when Zip released its Q3 FY23 results. 

As my Fool colleague Bernd reported, Zip increased its quarterly group revenue by 16% in 1H FY23 compared to 1H FY22. 

Year-over-year (yoy) quarterly revenue increased by 23% in Australia and 7% in the US. 

Zip said it “is on track to deliver group positive cash EBTDA during H1 FY24”. 

So, that all bodes well for the Zip share price.  

But analysts appear sceptical about whether Zip can achieve its goals. 

Shorting interest suggests Zip share price will fall 

As my Fool colleague James reported on Monday, Zip remains one of the top 10 most shorted stocks of the ASX, with 10.25% of its shares shorted. 

Short selling is essentially placing a bet that the share price will fall. 

Another reason for the high level of shorting is likely looming new regulations for the BNPL sector. 

Although Zip has previously said it is better placed than other BNPL companies to adapt to stricter rules on credit checks, we still don’t know which of the three models outlined in an options paper will be taken up by the federal government. 

In summary, the three models for BNPL regulation are:

• A tougher industry code, including an affordability test for each customer
• Including BNPL providers under the Credit Act but tailoring their responsible lending obligations
• Applying the Credit Act to the BNPL sector in full.

Choice and 21 other consumer groups are advocating for option three. Zip is pushing for option two.

If Zip gets its preferred regulatory model, and if it achieves its two highly-publicised financial goals for FY23 and 1H FY24, then maybe we will see a turnaround in the Zip share price.

The post The Zip share price has zoomed 12% higher in a week. Is this the beginning of a turnaround? appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
• What’s the outlook for the Zip share price in May?
• Here are the 10 most shorted ASX shares
• Why did the Zip share price dump 9% in April?
• Short sellers reveal 4 ways to spot dud ASX shares

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

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Commonwealth Bank of Australia (ASX: CBA) has been a long-time darling of dividend investors, but it’s not the greatest buy at the moment.

Sure, interest rate rises might be helping margins for banks. But a looming economic slowdown could cancel out that tailwind.

Professional investors are staying away from the big bank.

According to CMC Markets, not one of 16 analysts currently rate Commonwealth Bank shares as a buy.

In fact, 11 of them are urging investors to sell.

Goldman Sachs Group Inc (NYSE: GS) analysts reported last week that Australian bank shares are overpriced at the moment.

They are keeping a sell rating on CBA shares specifically.

“We cannot justify the 12-month forward [price-to-earnings ratio] premium (ex-dividend adjusted) that CBA is trading on versus its peers.”

So if we can’t rely on an old favourite, where should one look for dividends?

A quality dividend stock not often talked about

My pick for a reliable income stock right now is petrol refinery and service station operator Viva Energy Group Ltd (ASX: VEA).

Viva runs the Geelong Refinery as well as the Shell network of petrol stations.

The business expanded its fuel retail footprint with the acquisition of the Coles Express chain from supermarket giant Coles Group Ltd (ASX: COL) towards the end of the last year.

It has an outstanding dividend yield of 8.57% that is fully franked.

Viva shares have managed to steadily grow investors’ capital too. The share price has more than doubled since the COVID-19 crash in March 2020, without too many dramatic troughs on the way.

The Motley Fool’s Bernd Struben also picked Viva as his top dividend stock earlier this month.

“I like Viva Energy as both an ASX income share and one for potential capital appreciation,” he said.

“The company has been expanding through a series of strategic acquisitions.”

The professional community is pretty keen on Viva shares too.

Seven out of 12 analysts currently covering the stock rate it as a buy on CMC Markets.

The post An ASX dividend giant I’d buy over CBA shares appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett is dumping bank stocks. Should you?
• If I invest $10,000 in CBA shares how much passive income will I receive?
• Bank of Queensland is offering the highest savings interest rate of any ASX bank. What might this mean for shareholders?
• Three reasons the CBA share price made news this week
• How much would I need to invest in ASX shares for a retirement income of $65,000 per year?

Motley Fool contributor Tony Yoo 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 positions in and has recommended Coles 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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Anything related to lithium has been hot among ASX investors the past few years, but the price for the battery material has fallen off a cliff recently.

According to dailymetalprice.com, the per-kilogram price for lithium was in the $80s in December but sunk to the mid $20s by the start of this month.

Yikes.

Understandably that drop put downward pressure on ASX lithium shares during the first quarter of 2023.

So with so many investors reliant on such stocks in their portfolios, where is the battery ingredient headed this year?

The analysts at Firetrail Absolute Return Fund fired up their crystal ball this week to answer this dilemma:

What happened to the lithium price?

Firstly, the team pointed out that the world’s second largest economy was to blame for the calamitous drop in the lithium price.

“After a stellar 2022, lithium prices have experienced a sharp reversal so far in 2023,” read the Firetrail memo to clients.

“China’s lithium prices are down around 70% year-to-date.”

But the great news is that it seems to be turning around in the middle kingdom.

“Prices bottomed around $21/kg in April before starting to move higher again recently,” the memo read.

“Sentiment is improving, inventory levels at downstream converters have fallen at the same time supply growth has disappointed.”

What will happen to the lithium price?

We have all read many times how much lithium is, and will be, in demand in the coming years.

But the Firetrail team notes that it’s not a simple matter for the miners to turn up production of the elusive mineral.

“Production misses from the likes of Mineral Resources Ltd (ASX: MIN), Pilbara Minerals Ltd (ASX: PLS) and others [continue] to highlight the complexity of ramping up and maintaining full rates of production.”

But with the prices seemingly passing a trough, Firetrail analysts are predicting a bright outlook for the rest of this year. 

“An acceleration of electric vehicle sales in China and battery production could provide upside to lithium prices in the second half of 2023.”

Already the Pilbara share price is up around 26% over the past month in anticipation of a rebound in commodity prices.

The post Where will ASX lithium shares go in 2023? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues?
• Brokers expect big gains and huge dividends from these ASX 200 mining shares
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• ASX 200 lithium shares: ‘A great opportunity to buy into weakness’?

Motley Fool contributor Tony Yoo 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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Are you wanting to add some ASX dividend stocks to your income portfolio? If you are, then the two listed below could be worth checking out.

Both have recently been named as top buys by analysts and tipped to provide good yields. Here’s what you need to know about these dividend stocks:

Aurizon Holdings Ltd (ASX: AZJ)

The first ASX dividend stock that experts have named as a buy is Aurizon.

It is Australia’s largest rail freight operator, connecting miners, primary producers, and industry with international and domestic markets via its extensive national rail and road network.

The team at Morgans is positive on Aurizon and is expecting some attractive dividend yields from its shares. The broker also continues to “see value in the stock at current prices, supported by the far higher quality Network and Coal haulage businesses.”

In respect to dividends, the broker has pencilled in partially franked dividends of 17 cents per share in FY 2023 and then 19 cents per share in FY 2024. Based on the latest Aurizon share price of $3.52, this will mean yields of 4.8% and 5.4%, respectively.

Morgans currently has an add rating and $3.81 price target on its shares.

Coles Group Ltd (ASX: COL)

Another ASX dividend stock that has been named as a buy is supermarket giant Coles.

Citi is bullish on the company and recently reiterated its buy rating following a tour of Coles’ new Automated Distribution Centre (ADC) located in Redbank, Queensland.

This major project is expected to be fully operational by the end of 2023 and reinforces Citi’s “view that Coles is moving in the right direction and the ADCs have the potential to provide a cost advantage over competitors.”

It is partly for this reason that the broker is forecasting fully franked dividends per share of 69 cents in FY 2023, 73 cents in FY 2024, and then 80 cents in FY 2025. Based on the current Coles share price of $18.11, this represents yields of 3.8%, 4% and 4.4%, respectively.

Citi has a buy rating and $20.20 price target on its shares.

The post Experts say these top ASX dividend stocks are buys appeared first on The Motley Fool Australia.

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More reading

• Why I’d buy companies with pricing power to comfortably beat the ASX index
• 2 ASX 200 dividend stocks brokers rate as top buys
• 5 ASX shares I’d buy for a US recession
• Top brokers name 3 ASX shares to buy next week
• How to invest $10,000 in ASX dividend shares in May

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 Coles Group. The Motley Fool Australia has recommended Aurizon. 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 wanting to strengthen your portfolio with some quality ASX 300 shares, you may want to look at the two listed below.

Both have recently been named as buys by leading brokers. Here’s why they could be buys:

TechnologyOne Ltd (ASX: TNE)

The first ASX 300 share to buy and hold could be enterprise software provider Technology One.

It has really caught the eye in recent years thanks to its ongoing transition to a software-as-a-service (SaaS) focused business. This transition has been very successful so far and management appear confident this positive trend will continue in the coming years. So much so, the company is aiming to almost double its annual recurring revenue (ARR) to $500 million by FY 2026.

The team at Bell Potter is very positive on Technology One and believes it could achieve its target a year earlier than planned. As a result, it suspects that a guidance upgrade could be coming in the near future. It said:

We also continue to forecast total ARR of $385m, $452m and $535m at the end of FY23, FY24 and FY25. That is, we already forecast Technology One will achieve its $500m+ total ARR target in FY25 and hence why we expect the company to bring forward this target by a year at some stage this calendar year.

Bell Potter currently has a buy rating and $17.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX 300 share that could be a great buy and hold option is Temple & Webster. It is Australia’s leading pure-play online retailer of furniture and homewares.

Goldman Sachs is a big fan of the company due to its huge long term market opportunity.

The broker highlights that Temple & Webster has a leadership position in a retail category that is still only in the early stages of shifting online. In addition, it believes the company is well-placed due to the category’s high barriers to entry and its specialised approach to e-commerce. It explains:

We see a long term structural growth opportunity driven by increasing online penetration and consolidation of online market share. We think TPW is best placed to be a winner in a category that favours scale players, requires a specialist approach to e-commerce and logistics, has higher barriers to entry vs. other categories.

In response to the company’s trading update this week, the broker has increased its EBITDA compound annual growth rate (CAGR) estimate to 23.6% between 2022 and 2025.

Goldman has a buy rating and $6.40 price target on the company’s shares.

The post Analysts name 2 excellent ASX 300 shares to buy and hold appeared first on The Motley Fool Australia.

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More reading

• Why Life360, Pointsbet, Serko, and Temple & Webster shares are racing higher
• 2 ASX All Ordinaries shares making big moves on trading updates
• Could ASX shares turn a $10,000 investment into $2,000,000?
• Leading brokers name 3 ASX shares to buy today
• Here are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One and Temple & Webster Group. The Motley Fool Australia has recommended Technology One and Temple & Webster 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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Many of the most impactful risks tied to investing in publicly listed companies are on full display. Whether it is an unprofitable business model, a questionable balance sheet, or a declining market share, these are all obvious areas to evaluate an ASX stock.

One less obvious metric that rarely receives the attention it deserves is the company’s share count. Not just the present number of shares outstanding, but the evolution over the past five to 10 years. Has it dramatically increased, or has it been kept on the straight and narrow?

The danger of shareholder dilution can have disastrous consequences for long-term investors.

How does it quietly consume wealth?

Fractional ownership of a company is only possible through the use of shares.

They are a claim to a piece of the business, allowing numerous shareholders to reap the rewards of its future success. The more shares you own, the bigger the claim to future earnings.

The total number of shares in a company can change over time as needed. For example, an ASX-listed company might issue additional stock to raise capital. Or, additional shares might be created by incentivising employees with stock-based compensation.

This can be worrisome for those already invested.

Like enjoying a bottle of red among friends… if another glass turns up, that means less red going into yours. Another five? Well, it might more closely resemble a shot.

Now imagine the glasses are the number of shares on issue and the wine is company earnings — that’s dilution!

If an ASX stock you own continuously increases the share count over time, your share of earnings will grow smaller and smaller. And, where earnings per share (EPS) goes, the share price will eventually be sure to follow.

The only way a higher share count can be negated — without buying more shares — is for the company to grow earnings above the rate of dilution.

Beware the serial diluter

Avoiding every company that increases its share count is not the answer. There are situations where issuing new shares is necessary. What matters is whether it is being done in a sustainable and shareholder-friendly way.

It all comes down to the capital allocation of the management team. Opportunities will arise when diluting shareholders by 3% might be worthwhile. If an acquisition can deliver 5% earnings growth, a 3% dilution could be justifiable.

The real wealth destroyer is when new shares are issued and EPS growth doesn’t eventuate. Worst still… earnings decline. In that scenario, there are more wine glasses and less wine to go around — devastating!

Take Insignia Financial Ltd (ASX: IFL) for instance. The total number of shares on issue in this ASX stock has more than doubled over the past 10 years. Whereas diluted EPS has decreased by roughly a quarter, as shown above.

In 2017, Insignia (known as IOOF at the time), made an enormous acquisition for nearly $1 billion. Much of the bill was footed by shareholders through the issuing of more shares.

It turns out the deal wasn’t as sweet as what was possibly hoped, with earnings failing to even offset the dilution.

A more exaggerated example is G8 Education Ltd (ASX: GEM). This ASX stock has tripled the number of shares on issue over the past decade. In return, profits have almost halved compared to 10 years ago.

Most of the dilution came about during the pandemic. However, the trend was present well before lockdowns were a thing.

Over time, the share price bears the consequences of this unruly dilution. Today, Insignia Financial and G8 Education have share prices 50% and 63% lower than where they were in 2013.

What to look for in quality ASX stocks?

The impact of severe shareholder dilution slowly chips away at a portfolio. Fortunately, there are a few traits to look for to dodge this dastardly wealth demise.

Firstly, ASX companies with strong balance sheets are a good place to start. There’s less chance of significant dilution if a business has plenty of cash and minimal debt. This is because the company can fund growth initiatives through its own capital, rather than by diluting yours.

Secondly, seek out companies with a history of minimal, or no, increases in share count. It depends, but 0% to 3% dilution per year is generally acceptable.

Finally, the holy grail… find ASX stocks that decrease the number of shares over time. Typically these are profitable companies with healthy balance sheets, able to conduct share buybacks. By buying back stock, your cut of earnings is increased.

The post Silent wealth eater: The hidden danger lurking in ASX stocks and how to avoid it appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Don’t get duped: Why cheap ASX shares can still rip you off

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had another disappointing session and dropped into the red. The benchmark fell 0.5% to 7,199.2 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market is expected to have a strong session on Thursday after a stellar night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 40 points or 0.55% higher this morning. In the United States, the Dow Jones rose 1.25%, the S&P 500 climbed 1.2% and the NASDAQ jumped 1.3%. Optimism over a US debt ceiling deal being reached gave stocks a boost.

Xero FY 2023 results

The Xero Limited (ASX: XRO) share price will be on watch today when the cloud accounting platform provider releases its full-year results. According to a note out of Goldman Sachs, its analysts are expecting FY 2023 revenue growth of 29% to NZ$1,410 million and EBITDA of NZ$295 million. It also expects “operating expenses (as % sale) to be lower end of 80-85% range (GSe 81.6%) and c.80% in 2H23 (GSe. 79.5%).” Goldman is then looking for FY 2024 guidance of 17% revenue growth to NZ$1.65 billion.

Oil prices jump

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a great session after oil prices stormed higher on Wednesday night. According to Bloomberg, the WTI crude oil price is up 2.7% to US$72.76 a barrel and the Brent crude oil price is up 2.7% to US$76.90 a barrel. The US debt ceiling deal optimism also boosted oil prices.

Virgin Money shares go ex-dividend

The Virgin Money UK PLC (ASX: VUK) share price is likely to trade lower on Thursday. That’s because the UK bank’s shares are going ex-dividend this morning for its interim dividend of 6.2 cents per share. Eligible shareholders can look forward to receiving this dividend in a little over a month on 21 June.

Gold price falls

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued session after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.3% to US$1,986.7 an ounce. Hawkish cues from US Fed officials put pressure on gold.

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

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More reading

• How might this news out of China impact the oil price?
• Here are the top 10 ASX 200 shares today
• Top broker upgrades AGL share price by 19%
• Top broker forecasts 39% upside for this ASX 200 gold share
• Could ASX shares turn a $10,000 investment into $2,000,000?

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 looking for blue chip ASX 200 shares to buy, then you may want to check out the two listed below that brokers are particularly positive on.

Here’s what you need to know about them:

Goodman Group (ASX: GMG)

The first ASX 200 blue chip share to buy could be Goodman. It is a leading industrial property company with a world class portfolio of assets spanning the globe.

It has been growing at a strong rate for years and shows no signs of slowing. In fact, management recently upgraded its earnings guidance for FY 2023. This has been driven by ongoing tailwinds for industrial property underpinning strong market rent growth.

This went down well with Citi, which responded by retaining its buy rating with an improved price target of $24.30. Citi commented:

The update highlighted ongoing tailwinds for industrial with strong market rent growth improving the future rental upside on GMG’s book. Record low vacancy has driven ongoing development demand resulting in a strong development workbook with $13bn in WIP, with near-term growth in developments from less time taken to develop (which will boost annual earnings).

Telstra Corporation Ltd (ASX: TLS)

Another ASX 200 blue chip share that is rated highly by analysts is telco giant Telstra.

Morgans is very positive on the company due to favourable industry conditions and the potential for value to be unlocked from asset divestments. Its analysts currently have an add rating and $4.70 price target on its shares. The broker commented:

Telco has the strongest tailwinds in a decade with an increasingly rational market, price rises across the majors and the criticality of telco increasingly recognised. The last major mobile operator Vodafone/TPG increased mobile prices by ~$5 per month in January 2023 and all key players are behaving economically rational. This combines with catalysts including the potential for InfraCo value release following the legal restructure.

The post 2 ASX 200 blue chip shares that brokers love appeared first on The Motley Fool Australia.

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More reading

• ‘Bright outlook’: 2 ‘high quality’ ASX 200 shares to pounce on now 
• Broker says mobile price increases are good news for the Telstra share price
• 5 things to watch on the ASX 200 on Tuesday
• I think this ASX 200 share is heavily underrated by the market
• 3 reasons I’m tipping the Telstra share price to keep rising in 2023

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 Telstra Group. The Motley Fool Australia has recommended Goodman 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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