Category: Stock Market

The ASX share market has done incredibly well at growing household wealth over the long term. In this article, I’m going to outline some of the factors that could create excellent wealth.

Is $2 million achievable with $10,000?

There have been some very successful investors in the past who have generated astonishing returns. For example, iconic investor Peter Lynch achieved an average return per annum of 29.2% between 1977 to 1990 with the Fidelity Magellan Fund.

I’m not sure if anyone would be able to replicate Lynch’s investment track record these days of almost 30% per annum for over a decade. Certainly, there are lots of well-equipped (financially and technologically) investors looking for opportunities.

And the good news is most people have more than 13 years to grow their wealth.

Indeed, compounding can grow our finances very quickly. It’s a combination of the (average) return per year and how many years it is left to grow.

The ASX share market has returned an average of around 10% per annum over the long term though, of course, past performance is not a reliable indicator of future returns.

But at that rate, if I invested $10,000 into the ASX share market and it returned 10% per annum, I’d get to $2 million in under 54 years.

How I’d try to grow my wealth quicker

There are a small group of ASX shares that have delivered huge returns over the long term.

If we’d invested in the 2010s in businesses like Altium Limited (ASX: ALU), Pro Medicus Ltd (ASX: PME), WiseTech Global Ltd (ASX: WTC), Aristocrat Leisure Limited (ASX: ALL), Xero Limited (ASX: XRO), REA Group Ltd (ASX: REA), ResMed (ASX: RMD), and TechnologyOne Ltd (ASX: TNE) then we’d be sitting on gains of at least 1,000%.

Certainly, I think there are a lot of factors these businesses have in common.

Firstly, they were a lot smaller than they are today. It’s typically much easier for a business to double in size from $100 million to $200 million than to go from $1 billion to $2 billion.

Another factor is that most of them have large total addressable markets. When a company expands beyond Australia’s shores, it gives them a much larger potential customer base. That longer growth runway with clients means companies can potentially see more profit growth, enabling (hopefully) strong returns for a long time.

Next, I’d want to find businesses that are involved in technology in some way. Technology is very cheap to reproduce for new customers (meaning high gross profit margins) and those businesses can expand very quickly. I think that’s why many of the best-performing businesses over the last 15 years revolve around technology, even if they’re not specifically from the IT sector.

Finally, I’d suggest that businesses involved in digitising the world have a strong tailwind. The world is increasingly going digital and moving online.

No one can know what ASX shares are next going to deliver returns of 1,000%. But I think some of the smaller businesses that have some of the elements I’ve just outlined are: cancer screening and risk assessment business Volpara Health Technologies Ltd (ASX: VHT), online marketplace for local services business Airtasker Ltd (ASX: ART), emerging market classifieds investor Frontier Digital Ventures Ltd (ASX: FDV), and online furniture and homewares retailer Temple & Webster Group Ltd (ASX: TPW).

And I’m also backing affordable jewellery retailer Lovisa Holdings Ltd (ASX: LOV) to do well with its global store expansion plan, even though it’s not involved in technology.

The post Could ASX shares turn a $10,000 investment into $2,000,000? appeared first on The Motley Fool Australia.

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More reading

• These ASX growth shares are highly rated by analysts for a reason
• Why I’d buy companies with pricing power to comfortably beat the ASX index
• Here are the 10 most shorted ASX shares
• 3 things ASX investors should watch this week
• Morgans names the best ASX 200 growth shares to buy in May

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Frontier Digital Ventures, Lovisa, Pro Medicus, ResMed, Technology One, Temple & Webster Group, Volpara Health Technologies, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker. The Motley Fool Australia has positions in and has recommended ResMed, Volpara Health Technologies, WiseTech Global, and Xero. The Motley Fool Australia has recommended Frontier Digital Ventures, Lovisa, Pro Medicus, REA Group, 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 S&P/ASX 200 Index (ASX: XJO) investors are crazy for lithium shares. And for good reason. As Global X ETFs head of investment strategy, Blair Hannon notes: “they’ve made a buttload of cash out of lithium”.

The asset management company is behind the Global X Battery Tech & Lithium ETF (ASX: ACDC), as well as other thematic exchange-traded funds (ETFs). Units in the ACDC ETF have nearly doubled in value since floating in 2018.

Among its holdings are shares in ASX 200 lithium producers Pilbara Minerals Ltd (ASX: PLS), Allkem Ltd (ASX: AKE), and Mineral Resources Ltd (ASX: MIN). It also holds stakes in companies involved in the entire lifecycle of lithium, including lithium refiners and battery makers.

It’s perhaps unsurprising then, that Hannon is bullish on the future of lithium. Indeed, he told a recent media event that it’s still “very much early days” for the white metal, continuing:

We haven’t hit the tipping point globally. We’re not even close to it.

So, what might drive revenues of companies involved in the battery-making metal, perhaps including those of the ASX 200 companies producing it? Electric vehicle (EV) adoption is likely to be a major factor.

Are ASX 200 lithium shares at a ‘tipping point’ for revenue growth?

As Hannon points out, Australia has a “box seat” position for lithium supply, thanks to a swath of resources in Western Australia.

That’s reflected on the ASX 200, with many lithium shares calling the index home.

In addition to the three major ASX 200 stocks included in the Global X Battery Tech & Lithium ETF, there are newly-crowned producers Lake Resources N.L. (ASX: LKE), Sayona Mining Ltd (ASX: SYA), and Core Lithium Ltd (ASX: CXO), as well as up-and-coming takeover target Liontown Resources Ltd (ASX: LTR), to name a few.

But Hannon argues that lithium is just part of the solution to the problem. The problem being decarbonisation – a key emerging investing thematic.  

Fortunately for those mining lithium, the metal is an irreplaceable ingredient in battery-powered vehicles. And the globe is moving further and further towards a tipping point in electric vehicle (EV) adoption, according to Hannon.

Global EV sales are forecasted to grow at a compound annual growth rate (CAGR) of 14% between 2022 and 2035 as consumer demand takes off.

As per the rule of supply and demand, ASX 200 lithium shares, as well as stocks involved with other critical materials, could be on track to see their revenue soar in the coming years.

But when might we see it? Well, Hannon reckons a ‘tipping point’ for EV adoption could be when battery-powered vehicles represent 5% of all new car sales.

He points out that EVs reached 5% of car sales in China in 2020. The following year, they surged to represent 16% of sales. A similar pattern was said to have played out in Norway – now the leading nation in EV adoption.

Interestingly, 3.2% of new cars sold in Australia in 2022 were battery-powered. That’s according to data from the Federal Chamber of Automotive Industries.

The post Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues? appeared first on The Motley Fool Australia.

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More reading

• Own Allkem shares? Are you getting a good deal or is Livent the big winner from the merger?
• 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’?
• Could Core Lithium shares make the merger menu next?

Motley Fool contributor Brooke Cooper 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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It certainly has been a great month for Allkem Ltd (ASX: AKE) shares.

Since this time in April, the lithium miner’s shares have hurtled 28% higher to close yesterday’s session at $14.79.

This has been driven largely by news that the company plans to merge with fellow lithium giant Livent Corp (NYSE: LTHM).

Where next for Allkem shares?

The good news is that one leading broker believes there are more gains to come for investors. That’s despite its analysts suggesting that Allkem shareholders might not be getting the better end of the deal.

According to a note out of Bell Potter, its analysts have retained their buy rating with a $19.20 price target. This implies potential upside of 30% for Allkem shares over the next 12 months from current levels.

What did the broker say?

As I mentioned above, the broker feels that Livent shareholders are the big winners from the merger agreement. It said:

Longer term, we don’t believe AKE shareholder’s ownership of NewCo (56%) reflects the company’s stronger earnings profile and dominant upstream position. While we don’t see it as a bad deal for AKE, it looks like a great deal for LTHM through strengthening its upstream capabilities, retaining key executive positions and receiving what we view as a disproportionately large share of NewCo.

Nevertheless, Bell Potter remains positive enough to maintain its buy rating. Particularly given how the US listing is likely to result in a valuation re-rating. It concludes:

AKE is now in-play; we think it is likely the LTHM merger will proceed and are not confident that an interloper will emerge. On a stand-alone basis the company has a strong production and earnings growth profile into what we expect to be an exceptionally strong market for lithium. Combining with LTHM and the NYSE listing could see an earnings multiple uplift. AKE is trading at a slight discount to the implied deal value, which we expect will close if deal certainty improves.

The post Own Allkem shares? Are you getting a good deal or is Livent the big winner from the merger? appeared first on The Motley Fool Australia.

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More reading

• Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues?
• ASX 200 lithium shares: ‘A great opportunity to buy into weakness’?
• Is a slice of Livent worth holding onto Allkem shares?
• 5 things to watch on the ASX 200 on Tuesday
• Brokers name 3 ASX shares to buy now

Motley Fool contributor James Mickleboro has positions in Allkem. 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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While there are plenty of established lithium producers on the ASX, real windfalls can sometimes come from smaller miners.

That’s because the smaller players can currently be in an exploratory stage, when they’re searching for a viable mineral deposit. The share price can be very cheap at this phase because the business is not actually selling any lithium.

Then if they start producing at one of its sites, the stock price can rocket.

Of course, the risk is that the exploration might come to nought.

However, the analysts at Macquarie Group Ltd (ASX: MQG), for one, reckons careful selection of the best junior miners can increase your chances of success.

Production expected in ‘coming months’

The Macquarie team is, at the moment, rather fond of lithium explorer Argosy Minerals Limited (ASX: AGY).

The Motley Fool reported a couple of weeks ago that the analysts put an outperform rating on the lithium miner with an 80 cent share price target.

That’s a mouthwatering 60% upside potential from the Tuesday price of 50 cents.

“Macquarie has been pleased with the progress the company is making with its Rincon lithium project in Argentina,” said The Motley Fool’s James Mickleboro.

“It highlights that the steady run-rate production is expected to be achieved in the coming months.”

As well as the prospect of production starting this year at the Argentinian site, the company has an exploratory project ongoing in Nevada in the US.

Great long-term prospects for lithium 

Over March and April, the Argosy share price endured a 40% fall. But according to The Motley Fool’s Bronwyn Allen, there was no tangible adversity announced from the business that would cause such a plunge.

Thus the current window might present an excellent buying opportunity.

Although lithium prices have cooled off considerably over the past six months, multiple experts tip that the mineral will enjoy hot demand for years to come.

According to Shaw and Partners portfolio manager James Gerrish, lithium batteries have been around for decades, but one particular modern-day phenomenon is driving the current boom.

“It’s the growth in electric vehicles that is driving the demand for this lightweight, high-energy-density input,” he said on Market Matters last week.

“While we cannot see lithium prices re-scaling the 2022 highs for many years, there is still plenty of opportunity.”

The post 60% upside! Macquarie says buy Argosy shares now appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• Why are ASX lithium shares powering higher today as the resource sector bleeds?

Motley Fool contributor Tony Yoo has positions in Macquarie Group. 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 Macquarie 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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These S&P/ASX 300 Index (ASX: XKO) shares are attractive ideas for dividend income right now and could be attractive for many years to come in my opinion.

I think there’s a lot more to determine how good an ASX dividend share is than simply its current dividend yield.

In times of economic uncertainty, it could be even more important that the dividend income keeps flowing because other forms of (investment) income may have come under pressure. Life expenses don’t stop just because the economy is weakening.

The two ASX 300 shares I’m about to tell you about could display very defensive characteristics over the long term.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a variety of farmland across sectors like almonds, macadamias, cattle, vineyards, cotton and sugar.

Food is obviously needed by everyone, so I believe that farmland will be an ultra-long-term asset, as it has been for centuries.

The business aims to increase its distribution each year by 4%, which is stronger than inflation in most years.

There aren’t too many ASX 300 shares that have grown their dividend income each year since 2014, but Rural Funds is one of them.

I think that its built-in rental increases and productivity investments will enable ongoing distribution growth for years to come. It’s currently investing over $20 million in planting macadamia orchards, which is putting the land to a higher and better use (according to Rural Funds).

Its FY23 distribution is forecast to be a total payment of 12.2 cents per unit, which translates into a distribution yield of 6.3%.

I think the business has a very promising future for dividend income to 2030 and beyond.

APA Group (ASX: APA)

APA says that it owns and/or manages and operates a $22 billion portfolio of gas, electricity, solar and wind assets. It has a huge network of gas pipelines around the country, delivering half of the country’s gas usage and connecting various states.

The business continues to invest in expanding its gas assets, which helps unlock more cash flow that can fund higher distributions.

APA believes that gas will play a key role in providing firming for renewables in Australia, though coal currently has a major share in Eastern Australia of around two thirds, according to APA.

A large majority of the ASX 300 share’s revenue is indexed to inflation, so APA is seeing revenue growth thanks to stronger inflation while boosting earnings and cash flow.

It has used the growing profit to pay a distribution which has increased every year for almost 20 years. It’s a pleasing combination for shareholders that APA has been able to invest in more assets and keep growing its dividend income. I think it will still be supplying energy to Australians a few decades from now.

In FY23 it’s expected to pay a distribution of 55 cents per security, which translates into a distribution yield of 5.4%.

The post 2 ASX 300 shares I’d buy for long-term dividend income appeared first on The Motley Fool Australia.

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More reading

• Looking for regular passive income? Here are 3 ASX dividend shares that pay quarterly
• These cheap ASX shares are bargain buys: brokers
• 5 ASX shares I’d buy for a US recession
• Top brokers name 3 ASX shares to buy today
• Here’s why brokers say these ASX dividend stocks with big yields are buys

Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. 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 Apa Group and Rural Funds 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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If one has been investing in ASX 200 shares for long enough, one might come across the phrase ‘sell in May and go away’.

This idiom is built upon the assumption that the months that follow May are typically ones that don’t bode well for ASX shares and the share market. Thus, it’s best to ‘sell in May’, ride out the annual winter storm, and buy back in at a later date. Perhaps this was the inspiration behind Green Day’s ‘Wake me up when September ends’.

Well, as most of us should be aware of, it happens to be right smack bang in the middle of May right now. So should investors take the hint and sell on masse today?

This idiom has been around for a long time. So let’s test it out and see if it measures up by looking at what has happened with the S&P/ASX 200 Index (ASX: XJO) after the month of May in years gone by. Perhaps we can definitely prove if May is indeed the correct time to ‘go to cash’ for a while.

Should ASX 200 investors just ‘sell in May and go away’?

Since May is allegedly the time to sell, we’ll analyse the ASX 200‘s historical performance between 31 May and 30 September. That last date comes from the full expression – ‘sell in May and go away, come back on St. Leger’s Day’. St. Leger’s Day refers to a famous horse race in England, which usually occurs at the end of every September. 

Let’s kick things off. In 2022, the ASX 200 closed at 7,211.2 points on 31 May and recorded a value of 6,474.2 points on 30 September. That certainly would have been a good period to heed the creed. 

On 31 May 2021, the ASX 200 finished up at 7,161.6 points at the end of May. By the end of September, the index was at 7,332.2 points. Not quite as rewarding for the ‘sell in May’ crowd.

2020 saw the ASX 200 round out May at 5,755.7 points, only to rise to 5,815.9 points by 30 September. Again, not a good year to cash out of ASX 200 shares in Autumn.

Pre-COVID 2019 saw a similar result, with the ASX 200 rising from 6,396.9 points to 6,688.3 points between May and September.

Finally, let’s check out 2018. So five years ago, the ASX 200 concluded May at 6,011.9 points, only to rise to 6,207.6 points by the end of September.

So we have just one May out of the past five where it was worth ‘going away’, and four where the adage did not live up to its promise. The results are summarised below:

Year	ASX 200 on 31 May	ASX 200 on 30 September	Gain/Loss
2022	7,211.2	6,474.2	(10.22%)
2021	7,161.6	7,332.2	2.38%
2020	5,755.7	5,815.9	1.05%
2019	6,396.9	6,688.3	4.56%
2018	6,011.9	6,207.6	3.26%

Foolish takeaway

Looking at the data, we can clearly see that the ‘sell in May and go away’ idiom is, to put it scientifically, a load of hot garbage. At least for ASX shares. The reality is that any investor who followed this ‘wisdom’ would have been worse off for four out of the past five years. It just goes to show that there are no easy fixes or ‘get rich quick’ hacks on the share market.

It will be interesting to see what this year’s May to September period throws up for ASX 200 shares. But I certainly won’t be selling anything on 31 May 2023.

The post Should ASX 200 investors sell in May and go away? 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 3 most heavily traded ASX 200 shares on Tuesday
• 4 ASX 200 directors buying and selling their company shares in the past week
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

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.

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Now could be the time to pounce on Qantas Airways Limited (ASX: QAN) shares before they take off.

That’s the view of analysts at Morgans, which see significant potential upside ahead for the airline operator’s shares.

So much so, the broker has the company on its best ideas list and has named it as its preferred pick in the travel sector.

What is Morgans saying about Qantas shares?

According to a recent note, the broker has an add rating and $8.35 price target on the flag carrier airline’s shares.

Based on the current Qantas share price of $6.30, this implies potential upside of almost 33% for investors over the next 12 months.

Why is the broker bullish?

Morgans is bullish on Qantas due to its belief that the company has significant near-term earnings momentum. It explains:

QAN is now our preferred pick of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply.

In addition, the broker highlights that Qantas shares are trading at a meaningful discount to pre-COVID levels despite being a much stronger business now. It adds:

QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

A final reason Morgans is bullish is the company’s positive outlook. It concludes:

The strong pent-up demand to travel post-COVID should result in a healthy demand environment for some time, underpinning further EBITDA growth over FY24/25. QAN’s balance sheet strength positions it extremely well for its upcoming EBITaccretive fleet reinvestment and further capital management initiatives (recently announced a A$500m on-market share buyback at its 1H23 result). There is also likely upside to our forecasts and consensus if QAN achieves its FY24 strategic targets.

The post Why Qantas shares are Morgans’ top pick in the travel sector appeared first on The Motley Fool Australia.

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More reading

• Buyback bender: These ASX All Ords shares can’t get enough of their own stock
• Qantas shares: High-flying potential or grounded expectations?
• Rio Tinto and this ASX 200 share are strong buys: analysts
• Morgans names the best ASX 200 blue chip shares to buy in May
• Is the Qantas share price at risk over the airline’s $12 billion renewal plans?

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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A leading fund manager has identified the ASX share Smartpay Holdings Ltd (ASX: SMP) as a small-cap opportunity.

The Wilson Asset Management (WAM) investment team likes the outlook for the financial technology company, which is one of Australia and New Zealand’s largest independent full-service EFTPOS providers.

Smartpay says it services more than 30,000 merchants with more than 40,000 secure and feature-rich EFTPOS terminals. In New Zealand, it’s the largest direct connector of EFTPOS terminals to Paymark, the central electronic payment processing platform.

Recently, the ASX share provided a trading update so let’s have a look at some of those numbers.

Sales recap

Smartpay said its Australian acquiring transactional revenue for the three months to 31 March 2023 was up 76% year over year, while the Australian total transaction value was up 64% year over year. The company reported consolidated revenue was up 54% year over year.

The business said ts full trans-Tasman network of terminals is now over 46,000.

During the three months to March 2023, it added another 1,200 new transacting terminals in Australia while seeing continued stability in its New Zealand terminal fleet.

Smartpay also reported it has entered into a non-binding letter of intent with its Australian processing partner to “unlock the strategic value” of its NZ fleet of over 30,000 terminals. This provides a path to present its next-generation android terminal and acquiring solution to its NZ customer base.

On the company’s outlook, Smartpay said:

With a strong finish to the 2023 financial year we are now looking forward to the 2024 financial year.

Our recent NPS (Net Promotor Score) surveys have again rewarded our focus on customer experience with Australia at 70 and NZ 49.

We remain committed to the ongoing execution into the Australian opportunity, development of the New Zealand opportunity and leveraging the strategic value of both our New Zealand and Australian businesses.

With preparations underway for the realisation of a truly trans-Tasman payments business, where we will deliver our market leading payments solution and customer experience to our entire network of customers, we look forward with anticipation to the year ahead and beyond.

The Smartpay share price jumped when it reported these numbers on 26 April 2023, as seen on the chart below.

What does WAM think of the ASX share?

The fund manager suggested the ongoing growth of Smartpay “demonstrated its continued success at capturing market share from its key competitors”.

WAM also said that a “shift from their traditional rental model to a transaction acquiring model in New Zealand should be more profitable for the business, however, the company is still in the early stages of exploring this new opportunity”.

The investment team is looking forward to hearing more as the initiative progresses.

In Smartpay’s FY23 half-year result, it saw revenue rise by 68% while earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 119% to $8.1 million. Net profit before tax improved 637% to $2.7 million. The company also saw positive operating cash flow of $10.1 million generated in the half-year period.

The post Why one fund manager is backing this ASX share after 76% revenue growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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With so much economic uncertainty still ahead of us, many ASX small caps are still suffering.

Eleven interest rate rises in the space of a year has forced consumers to close their wallets. This means that the larger businesses with more pricing power and economies of scale have an advantage.

But this year the market has seen some green shoots from the small cap garden bed.

The Celeste Australian Small Companies Fund is a specialist in that field.

The team there noticed three particular ASX shares that had an excellent April, which it is holding onto for further returns:

Political anxiety dissipating

MA Financial Group Ltd (ASX: MAF) shares rallied a whopping 16.7% last month, and have pushed up another 4.8% so far in May.

The finance stock had suffered in the past year due to concerns that Canberra would clamp down on Significant Investors Visa (SIV) entries into Australia. 

The Celeste team noted those worries seem to be passing after a government review.

“Investors’ concerns regarding the future of Significant Investment Visa inflows eased,” read its memo to clients.

“The review noted the relative strength of outcomes of the SIV program relative to the broader Business Innovation and Investment Program.”

MA Financial also pulled off a major takeover deal.

“MAF also announced the acquisition of the d’Albora marina portfolio for $225 million as part of the launch of their new MA Marina Fund,” read the memo.

“The sellers, Balmain Corp, chose to remain invested via the new fund, underwriting the attractiveness of the proposal.”

Cyberattack wasn’t as bad as first thought

Shares for intellectual property services provider IPH Ltd (ASX: IPH) enjoyed a 9.7% climb in April.

A cybersecurity incident had understandably struck fear into investors in March, but the company has since provided “better-than-expected updates” about the intrusion.

“IPH’s investigation found downloaded data was limited to a small number of Spruson & Ferguson clients with most IPH member firms unaffected,” read the Celeste memo.

“Further to this, IPH was able to quickly return to normal operations with key system functionality restored on new network infrastructure.”

Management quantified the financial impact of the security breach at $4.4 million for March and $2 to $2.5 million one-off costs for the current financial year.

A past acquisition has also borne fruit.

“IPH also confirmed Smart & Biggar achieved the full earn-out payment of C$66 million, reflecting strong performance post-acquisition.”

New business is great for the stock price and country

Private health insurer ​​NIB Holdings Limited (ASX: NHF) saw its shares rise 9.5% in April then another 5.7% this month.

Investors are bullish about its recent foray into the National Disability Insurance Scheme (NDIS) industry.

“NIB Holdings purchased Brisbane-based Connect Plan Management and entered into an agreement to purchase All Disability Plan Management,” the Celeste team stated. 

“The company expects to be the plan manager of approximately 50,000 participants by FY25 under their nib Thrive banner.”

NDIS has been under fire in recent months due to media reports of rorting by service providers.

The Celeste analysts believe entry into the industry by a well-established business like NIB is beneficial for disabled Australians.

“Given the increased scrutiny of the NDIS, NIB’s entry into the space should provide a welcome improvement in oversight, controls, and the overall quality of outcomes for participants.”

The post ‘Welcome improvement’: 3 ASX small-cap shares to grab right now appeared first on The Motley Fool Australia.

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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 recommended IPH, Ma Financial Group, and NIB Holdings. 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 looking for options in the mining sector? If you are, you might want to consider the two ASX 200 mining shares listed below.

Both have recently been named as buys by brokers and tipped to provide an attractive combination of capital returns and dividends.

Here’s what you need to know about them:

Mineral Resources Ltd (ASX: MIN)

Morgans remains very positive on Mineral Resources. It is a mining and mining services company which has exposure to lithium, iron ore, and energy.

The broker currently has the company on its best ideas list with an add rating and $103.00 price target. This compares favourably to the latest Mineral Resources share price of $73.39. In addition, its analysts are expecting a $5.59 per share dividend in FY 2024. This equates to a massive 7.9% dividend yield at current prices.

Morgans commented:

MIN is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade. Also helping our investment view is that MIN’s diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. We see MIN’s lithium / iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H’CY23. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.

South32 Ltd (ASX: S32)

Another ASX 200 mining share that has been named as a buy is South32. It is a diversified miner with a portfolio of world class operations across many commodities such as aluminium and copper.

Goldman Sachs is a fan of the company and recently upgraded its shares to a buy rating with a $4.90 price target. This compares favourably to the current South32 share price of $4.06.

In addition, the broker is expecting a 60 cents per share dividend in FY 2024, which would mean a whopping dividend yield of 14.8% for investors.

Goldman Sachs explained its bullish stance. It said:

We upgrade S32 to Buy (from Neutral) on attractive valuation: Trading at ~0.95xNAV (A$4.6/sh) and on an implied TSR of ~29%, and an attractive NTM EV/EBITDA multiple of ~2.1x vs. the sector average of 4.5x. We assume the share buyback continues (at ~US$250mn p.a) and S32 pays out 50% of earnings (40% ordinary, 10% special dividend component) with the FY23 full year result. On our estimates, S32 is on a supportive dividend yield of c. 5% in FY23, increasing to 14% in FY24.

The post Brokers expect big gains and huge dividends from these ASX 200 mining shares appeared first on The Motley Fool Australia.

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More reading

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• Analysts name 2 strong ASX 200 dividend shares to buy

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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