Category: Stock Market

A couple of ASX 200 shares have released updates this week to very different receptions.

One impressed the market and saw its shares launch higher, the other disappointed investors and led to its shares sinking deep into the red.

Goldman Sachs has been running the rule over the updates and while not overly impressed with one of them, still believes both ASX 200 shares are in the buy zone right now.

Let’s take a look at what the broker is saying about them:

IDP Education Ltd (ASX: IEL)

This language testing and student placement company is the one that disappointed the market. The ASX 200 share sank 7.5% after warning about recent changes to regulatory settings.

It advised that a more restrictive policy environment in its key destination countries is reducing the size of the international student market. This has negatively impacted testing and student placement volumes during the second half. As a result, IDP Education is guiding to flat earnings in FY 2024.

Commenting on the update, Goldman said:

IEL’s trading update was soft, but should help investors better frame the earnings base for FY25 as the impacts of regulatory tightening measures become clearer.

The broker has now reduced its earnings forecasts for the coming years and expects its earnings to bottom in FY 2025. After which, Goldman believes its growth will resume.

Despite this weak near term outlook, the broker feels that its shares are undervalued. It said:

Overall we now expect FY25 EBIT of A$222mn, -4% vs FY24E, and cut FY24/25/26E EBIT -9%/-17%/-17% with IEL trading on 23x FY26E P/E, even assuming a modest FY26E recovery, though we acknowledge uncertainty remains on the CY25 CA cap and AU university placement caps.

Goldman now has a buy rating and $21.75 price target on its shares. This implies potential upside of approximately 50% for investors.

Treasury Wine Estates Ltd (ASX: TWE)

This wine giant’s shares charged higher this week after it reaffirmed its guidance for FY 2024 and spoke positively about its opportunity in North America.

In respect to the former, management continues to expect mid-high single digit EBITS growth for the year. It also advised that work to assess the future operating model for the company’s global portfolio of Premium brands is continuing with an update expected in August.

Goldman was impressed with this update and believes its growth is about to accelerate. It said:

In FY22-24e, we expect the company to deliver sales/EBITS/EPS CAGR of 4.0%/12.0%/8.7%, while from FY24-26e, we expect this to accelerate to ~7%/13%/12% respectively. All of this is against a moderately declining growth environment in US/China wine.

In light of the above, the broker has reiterated its buy rating on the ASX 200 share with an improved price target of $13.40. This suggests a potential return of 11% before dividends and almost 15% including them. Goldman concludes:

Our valuation multiple and methodology are unchanged. Our 12m TP of A$13.40/sh (from A$13.00/sh) implies 15% TSR and we reiterate Buy given positive delivery of the strategy reset as well as attractive double-digit EPS growth at an attractive valuation. The stock is trading at 1yr fwd P/E of 20x. The key catalyst for the stock will now be its June 20 Business Update focused on China.

The post Goldman Sachs names 2 ASX 200 shares to buy now appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• 3 ASX 300 shares just rerated by leading brokers
• Why Core Lithium, IDP Education, Seek, and Skycity shares are sinking today
• 2 ASX All Ords shares crashing 13% and 21% today on big news
• 2 excellent ASX shares to buy and hold for a decade

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

Choosing the right ASX stock or stocks to buy for an investment portfolio is a tricky process. With so many options on the Australian stock market to choose from, many new investors can get overwhelmed and pick the wrong shares to start with. Or even worse, they may decide the whole investing thing isn’t for them after all, and keep their cash in the bank. But if I had $1,000 to put into a new ASX stock today, there’s only one I would choose. It would be the Vanguard Australian Shares Index ETF (ASX: VAS).

The Vanguard Australian Shares ETF is the largest index fund on the ASX. it offers investors a simple deal: invest in this exchange-traded fund (ETF) and immediately gain access to a portfolio of ASX shares that almost perfectly reflect the largest 300 stocks on the ASX, weighted by market capitalisation.

Those 300 shares include everything from Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Woolworths Group Ltd (ASX: WOW) to Telstra Group Ltd (ASX: TLS), AGL Energy Ltd (ASX: AGL) and Harvey Norman Holdings Limited (ASX: HVN).

You are effectively getting everything the Australian share market has to offer, the whole shebang. Miners, banks, energy stocks, consumer discretionary shares, real estate investment trusts (REITs), consumer staples companies, healthcare businesses… everything.

Why I would recommend the VAS ETF to any ASX investor today

This, in my view, makes VAS a great investment for almost anyone. Whether you’re an investing veteran or share market novice, this ASX stock can be a great addition to any portfolio.

For one, you are getting an investment that has historically given back a decent return over many decades. As of 30 April, VAS has averaged an ASX return of 8.97% per annum since its market inception in 2009. That includes both capital growth and dividends.

Speaking of dividends, VAS is an ASX investment that also has significant dividend income potential. Since this index fund holds the 300 largest shares on the ASX within its portfolio, it receives any dividends that these companies pay out. VAS passes these on to its ASX investors in the form of quarterly dividend distributions.

At recent pricing, the Vanguard Australian Shares ETF is trading on a trailing dividend distribution yield of 3.84%. This comes partially franked too, seeing as most of the dividends coming out of the ASX 300 come with at least some franking credits attached.

So with this VAS ETF, ASX investors can get instant diversification, a decent history of capital growth, and solid dividend income prospects all in one investment. For these reasons, I think VAS is a perfect place for any ASX investor to put $1,000 in spare cash today.

The post The ultimate ASX stock to buy with $1,000 right now appeared first on The Motley Fool Australia.

More reading

• Buy these ASX ETFs for income in June
• Top ASX shares to buy in June 2024
• Buying ASX shares, rentvesting and co-ownership: How young Australians are achieving home ownership
• Does Vanguard Australian Shares Index ETF (VAS) pay fully franked dividends?
• 5 ASX ETFs that could be great long-term buys

Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Vanguard Australian Shares Index ETF. 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 Harvey Norman and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Woodside Energy Group Ltd (ASX: WDS) shares have been having a tough time this year.

Due largely to falling oil prices, the energy giant’s shares are thoroughly underperforming the market.

For example, since the start of 2024, the Woodside share price has lost approximately 13% of its value. As a comparison, the ASX 200 index is up 3% over the same period.

But given that Woodside is widely regarded as one of the highest quality companies in the global energy space, is this underperformance your cue to load up on its shares?

Let’s see what analysts are saying about the company and its shares right now.

Should you load up on Woodside shares?

A number of brokers see significant value in the company’s shares at the current level.

For example, even Macquarie, which has a neutral rating on its shares, has a price target of $32.00, implying 18% upside for investors over the next 12 months.

Elsewhere, Morgan Stanley recently put an overweight rating and $35.00 price target on Woodside’s shares. This suggests that they could rise by almost 30% between now and this time next year.

And over at Morgans, its analysts see even more value on offer. The broker has an add rating and $36.00 price target, which implies potential upside of 33% for investors from current levels.

In addition, Morgans is forecasting a 4.6% dividend yield in FY 2024, boosting the total potential return to almost 38%.

The broker believes that recent share price weakness has created an opportunity for investors to buy a high quality ASX stock at a great price. It said:

WDS’s share price has been under pressure in recent months from a combination of oil price volatility and approval issues at Scarborough, its key offshore growth project. With both of those factors now having moderated, with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions.

Increasing our conviction in our call is the progress WDS is making through the current capex phase, while maintaining a healthy balance sheet and healthy dividend profile. WDS still has to address long-term issues in its fundamentals (such as declining production from key projects NWS/Pluto), but will still generate substantial high-quality earnings for years to come.

All in all, this could make it a great option for investors. Especially those that are wanting exposure to the energy sector.

The post Should you load up on Woodside shares? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Are headwinds brewing for ASX 200 energy shares?
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Woodside share price tumbling on Tuesday?
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. 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.

Given June is upon us, so too is tax time… along with the moons and Ferris wheels. It’s natural for Australians to be thinking about any dollars they can save when they lodge their next tax return at this time of year. To indulge this admirable pursuit today, let’s talk about how building a bigger superannuation fund can help you save on your taxes.

As we discussed earlier, the superannuation retirement system in Australia is a grand bargain of sorts. In exchange for giving up control of the portion of our pay packets that end up in our super funds, the Federal Government gives us many lucrative tax breaks to encourage us to pad out our retirement funds.

Most of us would be aware that most contributions to superannuation are taxed at a 15% flat rate. Any earnings generated from super investments are also taxed at 15%. And once we enter the pension phase of our retirements, in many cases earnings can be enjoyed tax-free.

Of course, you’ll need to check with a tax professional to see what your personal circumstances might allow. You also might want to talk to a financial adviser about whether making extra super contributions might be the wisest course of action compared to paying down your mortgage or investing outside of super, for instance.

But those are the general rules for superannuation.

This means that for most Australians, contributing any extra funds above the mandatory 11% superannuation guarantee can automatically result in paying less in taxes.

Reduce your taxes using superannuation this tax time

According to the Australian Taxation Office (ATO), there are two kinds of contributions you can make to your super fund. Those are concessional contributions and… (you guessed it) non-concessional contributions.

Put simply, a concessional contribution is one that you can claim as a tax deduction. A non-concessional contribution is not eligible for that claim.

However, the good old days are no longer with us. Australians are no longer entitled to put as much cash as they want into super. At least without paying full taxes.

According to the ATO, the current cap on conventional contributions into one’s super fund is $27,500 per annum (including the 11% super guarantee). From 1 July this year, it will rise to $30,000. This means most Australians can only claim deductions of up to $27,500 in super contributions this tax time. That includes what your employer is required to pay you, of course.

However, you may be able to contribute more if you didn’t hit the cap in previous years.

The cap for non-concessional contributions is $110,000, but it will rise to $120,000 on 1 July. If you contribute more than this, you might have to pay extra taxes.

So, how much would someone be able to save in taxes from an extra contribution to their super fund?

As an example, let’s say someone who earns $100,000 per year before tax wants to make an extra superannuation contribution to save money at tax time.

This person would have already seen $11,000 taken out of their pay packets for their super fund.

But according to the MoneySmart website, our worker could save up to $5,692 in taxes if they were prepared to contribute an extra $10,000 to their super fund.

Foolish takeaway

Of course, all of this is just general advice. Everyone’s personal circumstances will be different. As such, it’s vital to check with a tax professional or financial adviser before making any big decisions when it comes to your super fund.

But super is a legitimate and potentially lucrative way to save some extra dollars this tax time. So make sure to check if you can do just that before 1 July.

The post Building a bigger superannuation fund could reduce your tax bill in FY24 appeared first on The Motley Fool Australia.

More reading

• Goldman Sachs names 2 ASX 200 shares to buy now
• The ultimate ASX stock to buy with $1,000 right now
• Should you load up on Woodside shares?
• 5 things to watch on the ASX 200 on Friday
• Guess who just slapped a buy rating on BHP shares?

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.

On Thursday, the S&P/ASX 200 Index (ASX: XJO) had another good session and stormed higher. The benchmark index rose 0.7% to 7,821.8 points.

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

ASX 200 to rise again

The Australian share market looks set to end the week on a positive note despite a relatively poor session on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 17 points or 0.2% higher this morning. On Wall Street, the Dow Jones was up 0.2%, but the S&P 500 was flat and the NASDAQ was down 0.1%.

Oil prices climb

It looks like ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a good finish to the week after oil prices charged higher overnight. According to Bloomberg, the WTI crude oil price is up 2% to US$75.59 a barrel and the Brent crude oil price is up 1.9% to US$79.89 a barrel. Traders were buying oil after the European Central Bank cut interest rates.

Buy Treasury Wine shares

The Treasury Wine Estates Ltd (ASX: TWE) share price could be good value according to analysts at Goldman Sachs. In response to its North America and guidance update, the broker has reiterated its buy rating with an improved price target of $13.40. Goldman commented: “We reiterate Buy given positive delivery of the strategy reset as well as attractive double-digit EPS growth at an attractive valuation.”

Gold price rises again

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a positive finish to the week after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.7% to US$2,392.7 an ounce. Rate cut optimism appears to have given the precious metal a boost and lifted it to a two-week high.

Life360 shares make Wall Street debut

Life360 Inc (ASX: 360) shares will be in focus today when they return from their trading halt. The location technology company halted its shares yesterday as it completed its Nasdaq IPO. Life360 listed on Wall Street at US$27.00 per new share. However, the company’s debut was relatively subdued, with its shares ending the session exactly where they started it. Management stated that it “views the Offering and increased exposure to U.S. investors as a natural next-step in its growth.”

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

More reading

• Here are the top 10 ASX 200 shares today
• Guess what new trend is taking off amid the soaring gold price
• Life 360 shares halted ahead of Nasdaq IPO
• 3 ASX 300 shares just rerated by leading brokers
• Why Genesis Minerals, Lovisa, Northern Star, and SRG Global shares are rising today

Motley Fool contributor James Mickleboro has positions in Life360 and Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Life360. The Motley Fool Australia has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares have just found a new bull.

And according to the broker, investors should be snapping up the Big Australian’s shares before it’s too late.

Who is bullish on BHP shares?

The broker in question is Goldman Sachs.

According to a note out of the investment bank, its analysts have reinstated coverage on the miner with a buy rating and $49.00 price target.

Based on the current BHP share price of $44.05, this implies potential upside of 11.2% for investors over the next 12 months.

But that isn’t the end of the returns. Goldman is forecasting fully franked dividend yields of 4.9% in FY 2024 and then 4.3% in FY 2025.

This stretches the total potential 12-month return from BHP shares to around 16%.

Why should you invest?

Goldman has named a few reasons why it thinks investors should be picking up the mining giant’s shares today. One is its attractive valuation. It said:

BHP is currently trading at ~6.0x NTM EBITDA (25-yr average EV/EBITDA of 6.6x), a slight premium to RIO on ~5x; both are trading at ~0.9xNAV. Over the last 10 years, BHP has traded at a ~0.5x premium to global mining peers. We believe this premium can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore where BHP maintains superior FCF/t vs. peers).

The miner’s exposure to copper is another reason to invest according to the broker. It adds:

We remain bullish on copper and expect BHP to generate US$6.8bn in copper EBITDA in FY24 (27% of EBITDA) and almost doubling to US$11.5bn in FY25 (41% of EBITDA) due to ongoing supply side challenges and increasing demand.

In addition, Goldman highlights that the company has a significant growth opportunity in copper despite its recent failure to acquire Anglo American (LSE: AAL). It said:

We continue to believe that BHP’s major opportunity is growing copper production in Chile at Escondida and Spence, and growing production and capturing synergies in South Australia between Olympic Dam and the previous OZL assets. We think BHP has a competitive edge in copper heap leaching and believe it can potentially fill ~200ktpa of spare cathode capacity by 2030 and possibly the full ~315ktpa spare capacity by 2035.

Overall, this could make BHP shares a great option for investors that are looking for some mining sector exposure for their portfolio this month.

The post Guess who just slapped a buy rating on BHP shares? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why is the BHP share price tumbling on Wednesday?
• 5 things to watch on the ASX 200 on Tuesday
• The BHP share price crushed the benchmark in May. Here’s how
• Here’s the average wealth of Aussies who manage their own superannuation

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.

The All Ordinaries Index (ASX: XAO) is up 10.31% since this time last year, with one ASX All Ords stock doing plenty of the heavy lifting.

12 months ago, you could have picked up shares in this company for $4.62 apiece. At market close yesterday, those same shares were trading for $6.31, up a whopping 36.58% in a year.

But let’s not forget those dividends.

Over the course of the year the ASX All Ords stock pleased passive income investors by dolling out 69.5 cents a share in fully franked dividends.

Adding that to yesterday’s closing price, the accumulated value of the company’s shares is up 51.6% in 12 months, with some potential tax benefits from those franking credits.

Any guesses?

If you said Yancoal Australia Ltd (ASX: YAL), go to the head of the virtual class.

Here’s what’s been going right for investors in the ASX All Ords coal stock.

How has this ASX All Ords stock been smashing the benchmark?

Yancoal shares first popped onto most investors’ radars in 2022.

That came as thermal coal prices surged to all-time highs following Russia’s invasion of Ukraine. And it saw the ASX All Ords stock surge 133.1% in 2022.

Since then, coal prices have returned to earth. But that hasn’t stopped Yancoal from booking impressive profits and building up a serious cash pile.

Despite focusing on its mine recovery plans in 2023, Yancoal increased its output each quarter. And Q4 2023 marked the highest rate of production for the miner in three years.

Over the full year the ASX All Ords stock reported $7.8 billion in revenue and $3.5 billion of operating earnings before interest, taxes, depreciation and amortisation (EBITDA).

That saw the company book an enviable $1.8 billion after-tax profit, which helps explain the market-beating 11.01% dividend yield.

As for 2024, the first quarter of the year saw Yancoal boost its cash holdings by $260 million. That saw the ASX coal miner holding $1.66 billion in cash as at 31 March.

Since that time Yancoal will have dipped into its cash holdings to pay out the $429 million final dividend. Eligible shareholders will have seen their portion of that passive income hit their bank accounts on 30 April.

And the second half of the year is looking promising for the ASX All Ords stock.

Commenting on that outlook back in April, Yancoal CEO David Moult said, “Yancoal continues to generate robust cash inflows. The AU$180 per tonne price realised [in Q1] was roughly double the cash operating cost we are targeting this year.”

The post Guess which ASX All Ords stock has rocketed 37% in a year AND pays an 11% dividend yield! appeared first on The Motley Fool Australia.

More reading

• 2 high-yield ASX shares I’d buy now for dividends
• How the Yancoal share price soared 36% in a year and what to expect next
• If I invest $5,000 in Yancoal shares today, how much income will I receive in 2025?
• How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years!
• Here’s how the ASX 200 market sectors stacked up last week

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

Are you looking for some promising ASX shares that have taken a hit recently? The S&P/ASX 200 Index (ASX: XJO) has whipsawed sideways in the last three months, opening up the window for some potential bargains.

Investors might find it useful to know that fund managers are eyeing three beaten-up stocks: Telstra Corporation Ltd (ASX: TLS), Worley Ltd (ASX: WOR), and Cettire Ltd (ASX: CTT).

Let’s dive into why these shares are catching the attention of savvy investors.

Telstra might be an undervalued ASX share

Telstra shares have dropped 18% in the past year, swapping hands at $3.55 apiece at the close of trading on Thursday. The telco giant recently announced plans to cut 2800 jobs, causing shares to dip further in late May.

Some fund managers believe this presents a buying opportunity. Allan Gray chief investment officer Simon Mawhinney noted the fund liked Telstra at its current valuations.

“I think this is one of the first times in 10 or 15 years that you’ve been able to buy Telstra at a not unreasonable price”, he told The Australian Financial Review. The reporting notes Allan Gray has owned the ASX share since Q1 this year.

Goldman Sachs also has a buy rating on Telstra, with a price target of $4.25 per share, according to my colleague James. The broker forecasts dividends of 18 cents per share in FY 2024 and 18.5 cents per share in FY 2025.

Is Worley a diamond in the rough?

Worley shares have seen a bumpy ride in 2024. They are currently trading at $14.53 apiece, down 17% since January 1. In April, the company’s largest shareholder, Sidara, offloaded its 19% stake in the firm, causing shares to drop sharply.

Despite this, fund managers see plenty of upside in this engineering giant. Hamish Tadgell from SG Hiscock believes that Worley is well-positioned to benefit from the projected increase in global energy investment, given its “global scale and competitive advantages”.

“We continue to believe the business remains very well leveraged to benefit from the projected four-fold increase in global energy investment and decarbonisation projects…,” he said. As quoted by the AFR:

In a lower-growth environment, and where increased spending on transitioning to lower-emissions energy technologies seems an undeniable trend in an uncertain world, we believe Worley has a strong earnings outlook…”

As my colleague Tristan reported recently, Sequoia Wealth Management also rates Worley a buy. It says the company plans to grow profit margins through automation and AI as a potential tailwind.

Why fundies are betting on this ASX share

Online luxury fashion retailer Cettire has slipped nearly 22% into the red this year to date and is currently trading at $2.29 per share. On 20 March this year, it closed at $4.33. Investors have punished this stock in 2024.

Despite recent concerns surrounding its selling practices last month, fund managers like Phil King’s Regal Partners have been increasing their stakes in the company.

Regal bought an additional 4 million shares since March. Meanwhile, fellow fundie Cat Rock Capital also purchased nearly 5 million shares throughout April-May, the AFR reported.

Foolish takeaway

All three ASX shares — Telstra, Worley, and Cettire — have faced challenges but are catching the eyes of fund managers because of their potential upsides.

Whether it’s Telstra’s dividend growth, Worley’s positioning in the energy transition, or Cettire’s growth prospects, analysts see some compelling reasons to consider these beaten-up stocks for your portfolio.

The post 3 beaten-up ASX shares fundies love right now appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares set for dividend increases this year
• Are Telstra shares now a brilliant bargain?
• ‘Undervalued’: 3 ASX 300 shares to buy following significant share price falls
• Buy Rio Tinto and these ASX dividend stocks for 5%+ yields
• Here is the earnings forecast through to 2026 for Telstra shares

Motley Fool contributor Zach Bristow 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 Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Legendary American investor Peter Lynch, who managed Fidelity Magellan Fund from 1977 to 1990, boasted an average annual return of 29%.

He wrote two bestsellers — One Up On Wall Street and Beating the Street — in which he advocated a pragmatic approach to investing, focusing on understanding one’s own assets.

A lesser-known fact about him is that he has a great sense of humour. In his speech in 1997, Peter Lynch wittily shared what he thought were the investment mistakes people should avoid.

These points are still valuable to any investor after nearly two decades. I have summarised three mistakes highlighted by Lynch below with some examples relevant to ASX investors.

This stock has fallen (risen) so much and can’t go lower (higher)

Known as ‘anchoring bias’ in psychology, investors tend to rely heavily on the first piece of information, such as the purchase price of a stock, when making decisions. However, this can be a costly mistake.

The historical share price movement is not a guide for its future direction. Over the long term, the share price typically follows a company’s business performance, regardless of its past share price trajectory.

The good news is that the opposite is true, too. When the stock price has risen so much, it doesn’t necessarily mean it’s time to sell as long as the company’s fundamentals are going strong. Pro Medicus Limited (ASX: PME) is a prime example of this, as my colleague James highlighted in this article.

Don’t worry about the stocks that you missed

Speaking of Pro Medicus, are you disappointed that you haven’t bought the shares yet? For that matter, have you missed the artificial intelligence (AI) plays, including Nvidia Corp (NASDAQ: NVDA), which just became a US$3 trillion company?

Do not worry. Peter Lynch suggests there’s always another good opportunity. Keep calm and carry on with your stock research. You only need a handful of big winners in your lifetime to live comfortably. You don’t need to own every single winner in the stock market.

Take investing legend Warren Buffett as an example. He, too, has made some investment mistakes in his career. For instance, his purchase of Berkshire Hathaway Inc Class B (NYSE: BRK.B), a then-failing textile company, was initially a mistake until he transformed it into a successful conglomerate.

However, his remarkable success in investing in Coca-Cola Co (NYSE: KO), Moody’s Corp (NYSE: MCO), and Apple Inc (NASDAQ: AAPL) more than compensated for any missteps, earning him immense fame and wealth.

Don’t buy the second-best company in a sector

Like any purchase in life, Lynch recommends buying the very best company in one sector. There’s a reason why the market leader is what it is, and it usually takes more resources and energy for the market followers to catch up with the winner.

While most market leaders are naturally large-cap companies, this doesn’t necessarily refer to the size of the company. Market leaders could be mid-cap companies excelling in their niches on a global scale.

For example, DroneShield Ltd (ASX: DRO) has built its unique market position in the counter-drone industry. As my colleague Zach highlighted, the company is now eyeing the potential for a five-year pathway to $300 to $500 million a year in its revenues.

This is a 10-fold increase from its 2023 revenue of $55 million.

These timeless investing insights and wisdom hold true today and still have the power to teach us to become better investors.

The post Peter Lynch says to avoid these 3 investing mistakes appeared first on The Motley Fool Australia.

More reading

• Why DroneShield shares are making headlines again on Thursday
• 2 excellent ASX shares to buy and hold for a decade
• Here are the top 10 ASX 200 shares today
• Up 260% in 2024, this ASX All Ords stock just hit another all-time high
• Can Berkshire Hathaway stock keep outpacing the S&P 500?

Motley Fool contributor Kate Lee has positions in Moody’s and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, DroneShield, Moody’s, Nvidia, and Pro Medicus. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, Nvidia, and 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 searching for retirement portfolio options this month, then you may want to look at the quality ASX shares listed below.

Here’s why these shares could be top options for retirees:

CSL Limited (ASX: CSL)

When you’re building a retirement portfolio, it is always a good idea to focus on quality. And there are few higher quality businesses out there than CSL.

It is one of the world’s leading biotechnology companies. Its three businesses, CSL Behring, CSL Seqirus and CSL Vifor, provide lifesaving products to patients in more than 100 countries.

In addition, the company reinvests in the region of 12% of its sales back into research and development (R&D) activities each year. This means that it has an R&D pipeline filled to the brim with some potentially lucrative and life-saving therapies and vaccines.

Macquarie currently has an outperform rating and $330.00 price target on its shares.

Transurban Group (ASX: TCL)

Another ASX share that could be a top option for a retirement portfolio is Transurban.

It is the toll road company behind the Linkt, Expresslane, A25 Smart Link platforms, and roads including CityLink, Cross City Tunnel, AirportlinkM7, and 95 Express Lanes.

Its network provides invaluable time savings to commuters. And with population growth putting more cars on the roads, its network is arguably going to become even more important in the future. Combined with inflation-linked price increases, this bodes well for its long term growth.

The team at Citi sees a lot of value in its shares at current levels and is forecasting above-average dividend yields (4.9%+) in the coming years.

It has a buy rating and $15.50 price target on them.

Woolworths Limited (ASX: WOW)

Another ASX share that could be a buy for a retirement portfolio in June is Woolworths. It is the retail giant behind the Woolworths supermarket chain, Countdown supermarkets in New Zealand, and Big W.

It could be a good option due to its high quality business, market leadership, and defensive qualities. It also offers positive exposure to inflation, which could make it a top pick in the current environment.

Analysts at Goldman Sachs are very positive about Woolworths. So much so, the broker has it on its conviction list. It likes the supermarket giant due to its digital and omni-channel advantage, which it expects to drive further market share and margin gains.

The broker has a buy rating and $39.40 price target on its shares.

The post 3 of the highest quality ASX shares to buy for a retirement portfolio appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goldman Sachs Group, Macquarie Group, and Transurban Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.