Category: Stock Market

Commonwealth Bank of Australia (ASX: CBA) shares were under pressure on Thursday.

The banking giant’s shares ended the day over 2% lower at $117.09.

Investors were hitting the sell button in response to the bank’s third quarter update.

CBA reported a 1% decline in operating income for the three months ended 31 March. This reflects one less day in the quarter and slightly lower net interest margins due to continued competitive pressures and customers switching to higher yielding deposits.

This ultimately led to Australia’s largest bank reporting an unaudited statutory net profit after tax of $2.4 billion. This is down 3% on the first half average and 5% on the prior corresponding period.

Also weighing on CBA shares were its rising arrears. While its balance sheet remains strong, CBA’s arrears increased across home loans, credit cards, and personal loans. This was largely blamed on cost of living pressures.

Has this pullback created a buying opportunity for investors or should they stay clear of the big four bank? Let’s find out.

Are CBA shares good value or overvalued?

The team at Goldman Sachs has been looking over the result and was reasonably impressed, noting that its profits are run-rating ahead of second-half expectations. The broker said:

Cash profit from continuing operations in 3Q24 of c. A$2.4 bn was down 3% vs. 1H24 quarterly average and run-rating c. 4% ahead of what was implied by our prior 2H24E forecasts largely due to outperformance on the BDD charge. PPOP was in line with expectations.

However, unfortunately this still doesn’t justify the significant premium that CBA shares trade at compared to the rest of the big four banks. Goldman adds:

While CBA’s volume momentum in housing lending has improved and BDDs charges remain benign, we do not believe this justifies the extent of its valuation premium to peers, and note the 52% 12-month forward PPOP premium it is currently trading on versus peers (ex-dividend adjusted), compared to the 24% 15-year average.

In light of this, the broker has reiterated its sell rating with an improved price target of $82.61 (from $81.98). Based on the current CBA share price of $117.09, this implies potential downside of approximately 30% for investors over the next 12 months.

The broker then concludes:

Coupled with i) a business mix that leaves it more exposed to the current competitive environment, and ii) while CBA has historically done a good job in balancing investment and productivity, we do not think it can escape elevated FY24E cost pressures given heightened inflation; we reiterate our Sell recommendation.

The post Do CBA shares justify their ‘valuation premium’ following the bank’s Q3 update? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why are CBA shares sliding following the bank’s quarterly update?
• CBA share price on watch following $2.4b third quarter profit
• 5 things to watch on the ASX 200 on Thursday
• Are CBA shares a buy or a sell ahead of Thursday’s update?

There are plenty of quality ASX dividend shares to choose from on the Australian share market.

But which ones are buys?

Three that have been tipped as best ideas by analysts at Morgans in May are listed below. Here’s why they could be worth a look:

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

The first ASX dividend share to look at according to Morgans is coal terminal operator Dalrymple Bay Infrastructure. It has an add rating and $3.03 price target on its shares.

The broker notes that the lack of appetite from ESG-focused investors means its shares are trading on low multiples and offering big yields. It said:

While DBI faces coal-related ESG headwinds, we think the stock may be attractive to income-oriented investors given its attractive cash yield (21.5 cps DPS guidance for the 12 months to June 2024). Furthermore, its CPI-linked and high margin revenues and numerous risk mitigants are enticing attributes for investors looking for a defensive element to their portfolios. Potential share price catalysts are value accretive organic capital investment and takeover potential.

Morgans expects dividend yields of 7.6% in FY 2024 and 7.8% in FY 2025.

QBE Insurance Group Ltd (ASX: QBE)

Morgans believes that QBE would be a great option for income investors. It has an add rating and $17.96 price target on its shares.

This bullish view is due largely to its attractive valuation, rate increases, and cost reductions. The broker explains:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Its analysts are forecasting partially franked dividend yields of 5.6% in FY 2024 and 6.1% in FY 2025.

Woodside Energy Group Ltd (ASX: WDS)

The broker also has this energy giant’s shares on its best ideas list with an add rating and $36.00 price target.

Its analysts think Woodside could be an ASX dividend share to buy thanks to its quality earnings and recent share price weakness. They said:

A tier 1 upstream oil and gas operator with high-quality earnings that we see as likely to continue pursuing an opportunistic acquisition strategy. 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.

Morgans is forecasting fully franked dividend yields of 4.4% in FY 2024 and then 5.6% in FY 2025.

The post Morgans names the best ASX dividend shares to buy in May appeared first on The Motley Fool Australia.

More reading

• Where I’d invest $7,000 in ASX dividend stocks right now
• Woodside share price smashes benchmark as government demands ‘more gas!’
• 5 things to watch on the ASX 200 on Thursday
• Woodside shares are down 17% in 6 months. Is now the right time to buy?
• Morgans names the best ASX 200 stocks to buy in May

Motley Fool contributor James Mickleboro has positions in Woodside Energy 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 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.

Looking for some welcome extra passive income from ASX dividend stocks?

Well then, you really are living in the lucky country.

The ASX offers a range of high-quality dividend stocks you may wish to add to your portfolio.

And unlike many international exchanges, like stock markets in the United States, many ASX-listed companies pay franked dividends. That can come in quite handy when it comes time to pay the ATO its pound of flesh each year.

If I had a spare $7,000 to invest right now, I’d lean towards buying larger companies listed on the S&P/ASX 200 Index (ASX: XJO). ASX 200 dividend stocks tend to have less volatile share price moves than their smaller peers. And many have lengthy track records of delivering reliable passive income to their shareholders.

I’d also prefer companies that pay franking credits. And I’d aim to invest in ASX dividend stocks that I believe will grow their payouts over the time they’re in my portfolio without sacrificing share price growth.

With $7,000 to invest, I’d likely only buy two stocks right now to get a decent exposure without burning too much on brokerage fees.

You’ll notice both these companies operate in distinctly different sectors. Over time, I’d look to build up my income portfolio to 10 or so stocks for some proper diversification.

With that said…

Two ASX dividend stocks I’d buy now for passive income

The first ASX dividend stock I’d buy for passive income now is ASX 200 bank stock Australia and New Zealand Banking Group Ltd (ASX: ANZ).

ANZ reported its half-year results on Tuesday.

The big four bank’s cash profit was down 1.0% year on year to $3.55 billion. However, management pleased shareholders by raising the interim dividend by 2.5%. That came in at 83 cents per share, franked at 65%.

The good news is there’s still time to grab that payout. Though not much!

ANZ shares will trade ex-dividend on Monday. Meaning if I want to bank that passive income, I’d need to own shares at market close today. I can then expect to be paid on 1 July.

Atop the interim dividend, ANZ paid a partly franked final dividend of 94 cents per share on 22 December.

This equates to a full-year payout of $1.77 per share.

At yesterday’s closing price of $28.79, that works out to a yield (partly trailing, partly pending) of 6.15%.

Which brings us to the second ASX dividend stock I’d buy now with my spare $7,000, ASX 200 oil and gas stock Woodside Energy Group Ltd (ASX: WDS).

Woodside’s dividends have come down over the past 12 months amid lower energy prices. The company was also struggling with regulatory approvals for its massive offshore Scarborough Energy Project.

But Scarborough is now proceeding to plan again, and the oil price is firming up.

The outlook for share price and income growth from this ASX dividend stock also improved yesterday. That followed Federal Resources Minister Madeleine King’s strong support for the long-term role of Australian gas in providing jobs and energy and helping the nation and its trading partners through the global energy transition.

As for the past 12 months, Woodside paid an interim dividend of $1.243 per share on 28 September and a final dividend of 91.7 cents per share on 4 April, both fully franked.

At yesterday’s closing price of $28.10, this ASX dividend stock trades on a fully franked trailing yield of 7.69%.

The post Where I’d invest $7,000 in ASX dividend stocks right now appeared first on The Motley Fool Australia.

More reading

• Woodside share price smashes benchmark as government demands ‘more gas!’
• 5 things to watch on the ASX 200 on Thursday
• Woodside shares are down 17% in 6 months. Is now the right time to buy?
• Analysts give their verdict on ANZ shares: Should you buy?
• Morgans names the best ASX 200 stocks to buy in May

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.

On Thursday, the S&P/ASX 200 Index (ASX: XJO) ran out of steam and sank deep into the red. The benchmark index fell 1% to 7,721.6 points.

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

ASX 200 poised to rebound

The Australian share market looks set to end the week on a positive note thanks to a strong session on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 19 points or 0.25% higher this morning. On Wall Street, the Dow Jones was up 0.85%, the S&P 500 rose 0.5%, and the NASDAQ was 0.3% higher.

Oil prices rise

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a good finish to the week after oil prices edged higher overnight. According to Bloomberg, the WTI crude oil price is up 0.8% to US$79.60 a barrel and the Brent crude oil price is up 0.7% to US$84.19 a barrel. Oil prices have been pushing higher since the US revealed lower than expected stockpiles.

Life360 results

The Life360 Inc (ASX: 360) share price will be one to watch when the location technology company releases its first quarter update. Last month, the company revealed that it had delivered record numbers during the quarter. This includes increasing its global monthly active users (MAU) by 4.9 million to 66.4 million. However, it didn’t reveal what impact this had on its revenue and earnings. That will be unveiled with today’s update.

Gold price rises

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a very good session after the gold price surged higher overnight. According to CNBC, the spot gold price is up 1.3% to US$2,352.9 an ounce. This was driven by the release of US jobs data, which was supportive of rate cuts.

Sell CBA shares

Goldman Sachs has run the ruler over the Commonwealth Bank of Australia (ASX: CBA) quarterly update. Unfortunately, the broker has seen nothing to change its mind that the banking giant’s shares are overvalued at current levels. It has reiterated its sell rating with an improved price target of $82.61. It said: “While CBA’s volume momentum in housing lending has improved and BDDs charges remain benign, we do not believe this justifies the extent of its valuation premium to peers.”

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
• Here’s where the ASX 200 will finish the year: AMP
• Why are CBA shares sliding following the bank’s quarterly update?
• CBA share price on watch following $2.4b third quarter profit
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Life360. 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.

ASX small-cap shares have a history of being volatile, but it’s also the place where we can find the major winners of tomorrow. After everything that’s happened recently, is this the right time to hunt for hidden gems?

Names like Altium Limited (ASX: ALU), Pro Medicus Ltd (ASX: PME) and REA Group Ltd (ASX: REA) were all very small businesses over a decade ago. Now they’re all multi-billion dollar companies. Not every company will turn out as successful as that, but the small end of the market can be an exciting hunting ground.

Difficult environment for ASX small-cap shares

The market has faced a lot of disruption and volatility over the last two or so years because of elevated inflation and higher interest rates.

Fund manager Monash Investors has suggested over the last two years it has taken the market longer than usual to reward stocks that experience a (positive) step change in their outlook. This is because of a lower risk tolerance due to the “upward momentum in inflation and interest rates“.

In this situation, Monash Investors said, the ASX large-cap stocks have tended to do well because of their “strong balance sheets, more stable businesses and better share market liquidity“.

Inflation has supposedly largely benefited the revenue growth and profits of large companies, which are “more likely than small companies to have the pricing power to pass on inflationary pressures to preserve, or even grow, their margins”.

Is this the time to invest?

Monash Investors certainly thinks so, commenting:

However, now that inflation is moderating and the market is anticipating interest rate cuts, we are moving into a much more favourable environment for small caps. Looking forward the large cap stocks generally have modest growth outlooks, while the headwinds to small cap growth are abating. If history is any guide to the future, investors will increasingly look to invest in the smaller end of the market.

Some of the positions that appeared to be in the Monash Investors Sml Companies Trust (Hedge Fund) (ASX: MAAT) portfolio within the last couple of months included Johns Lyng Group Ltd (ASX: JLG), Credit Corp Group Limited (ASX: CCP), Austin Engineering Ltd (ASX: ANG), NRW Holdings Limited (ASX: NWH) and Monadelphous Group Ltd (ASX: MND).

I recently wrote two articles, here and here, about ASX small-cap shares that I thought (and still think) look like excellent longer-term opportunities for investors. I’ve already bought two of them for my portfolio.

The post Is it time to start buying up ASX small-cap shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• This ASX 200 stock crashed 12% in April. Is it now on the rebound?
• 2 under-the-radar ASX growth shares I just bought for my investment portfolio
• Here are the top 10 ASX 200 shares today
• 1 ASX stock to consider buying that could be the next Brickworks

Motley Fool contributor Tristan Harrison has positions in Altium and Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Johns Lyng Group, Pro Medicus, and REA Group. The Motley Fool Australia has recommended Johns Lyng Group, Pro Medicus, and REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Telstra Group Ltd (ASX: TLS) shares have been a popular pick for dividend income for a while. There are plenty of reasons why this could be the best time to invest for years.

The ASX telco share is best known for its mobile network, but the business has a few other segments that also seem appealing to me. Before I get to that, let’s look at the dividend credentials of Telstra.

Growing dividend

The NBN transition was a difficult period for Telstra and its dividend, with the dividend and profit taking a hit.

However, now that the business is through that challenging change, it’s seeing regular profit growth and dividend increases. That’s what I want to see from a good ASX dividend share, particularly in this period of elevated inflation – dividend growth can offset higher expenses in our personal lives.

The Telstra interim dividend was increased by 5.9% to 9 cents per share. This translates into an annualised grossed-up dividend yield of 7%, which is materially more than what anyone can get from a savings account at the moment.

Estimates on Commsec suggest it could pay a grossed-up dividend yield of 7.4% in FY25 and 7.8% in FY26.

Infrastructure and data

I think there is one key factor that will help Telstra continue to deliver profit growth and dividend growth for the foreseeable future. It’s the ongoing growth of subscriber numbers – it seems many people are attracted to the telco’s market-leading network reliability and coverage. That helps attract subscribers and allows the business to keep investing in its network, keeping it at the number one spot.

There are two other promising areas that I’ll point to for the future of Telstra shares.

The first is that it is working on growing its wireless home broadband offering. If it can get more people using this 5G-powered broadband, Telstra will be able to capture a lot of the margin that is currently going to the NBN. Higher profit margins could help grow the net profit after tax (NPAT).

Another very promising development is the massive amount of data that is being used and processed in Australia (eg AI). That data has to get into Australia somehow, and Telstra owns a significant amount of subsea cable. Telstra is also investing in its own fibre network for extra capacity between capital cities. The huge growth of data centres could lead to more demand that Telstra carries through its networks, which is likely to be a boost for earnings over the long term.

I think the Telstra share price is compelling for the company’s defensive nature. According to Commsec, Telstra shares are valued at 17x FY26’s estimated earnings. I think it’s a very good time to invest for the long-term.

The post Are Telstra shares a top buy for dividend income? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Why Telstra shares could be dirt cheap in May
• 3 safe ASX dividend shares to own for the next 10 years
• 5 things to watch on the ASX 200 on Wednesday
• What does the latest 3G news mean for Telstra shares?

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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX All Ords Index (ASX: XAO) may have closed 1% lower yesterday, but it’s up 2.1% for the year so far.

If you’re looking for new stocks to add to your portfolio, Andrew Tang, an equities strategist at the brokerage firm Morgans, has you covered.

Tang has outlined his four best ideas for investors looking for new ASX All Ords shares this month.

Which 4 ASX All Ords shares should you buy in May?

These are brand-new picks for the broker and leverage two trends in the Australian economy.

As Tang explains:

Reviewing our coverage of residential developers, real estate credit providers and building materials businesses, the consistent theme is that Australia is on the cusp of a significant building boom, with record immigration levels and population growth exacerbating an already chronic housing undersupply issue.

The latest population data from the Australian Bureau of Statistics shows the Australian population grew by 659,800 people, or 2.5%, over the 12 months to 30 September.

Net overseas migration, at 548,800 people, accounted for the bulk of this increase. Natural increase — that’s births minus deaths — accounted for 111,000 new people.

The total population as of 30 September was 26,821,557.

That’s a lot of people to house and feed, which leads us to Tang’s four top ASX All Ords share picks for May.

Broker Morgans says buy now…

Maas Group Holdings Ltd (ASX: MGH)

This company is an ASX All Ords small-cap share in the industrials market sector.

Tang says:

Although the residential division remains impacted by an uncertain interest rate environment, the investment thesis for MGH remains mostly unchanged, in that ‘infrastructure spend in the regions drives job creation and residential housing demand’.

MGH’s vertically integrated model allows the business to capture margin through the whole supply chain and control costs, where possible.

The Maas Group share price closed at $4.31, down 1.6% yesterday but up 10.5% year to date.

Qualitas Ltd (ASX: QAL)

This company is an ASX All Ords small-cap share in the real estate sector.

Tang says:

Industry fundamentals and operational excellence sees continued growth in 1H24, with FUM growth of 41% (yoy) and Fee Earning FUM increasing 25% (yoy), leaving ~$2.1bn of dry powder to underpin future earnings growth in a sector that is experiencing increased demand, all while banks continue to retreat from the space.

The Qualitas share price was trading 2.13% higher at $2.40 at yesterday’s close and up 2.56% in the year to date.

Cedar Woods Properties Limited (ASX: CWP)

Fellow real estate sector stock Cedar Properties is also an ASX All Ords small-cap.

Tang explains his second ASX property stock pick:

CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP’s exposure to lower priced stock in higher growth markets sees further potential to drive earnings.

On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.

The Cedar Woods share price closed yesterday at $4.60, down 1.71%, and is 7.8% lower in the year to date.

Coles Group Ltd (ASX: COL)

A household name, Coles is an ASX All Ords large-cap share in the consumer staples sector.

Tang says:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL.

While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

The Coles share price was $16.28, down 0.18% at the close yesterday and up 1.11% in the year to date.

The post Looking for ASX All Ords shares to buy? Top broker reveals 4 best ideas this month appeared first on The Motley Fool Australia.

More reading

• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost
• 3 safe ASX dividend shares to own for the next 10 years
• Bell Potter names more of the best ASX 200 stocks to buy
• Top brokers name 3 ASX shares to buy next week
• 5 ASX dividend shares to buy next week

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

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PEXA Group. The Motley Fool Australia has recommended A2 Milk, Aub Group, and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX tech stock Integrated Research Limited (ASX: IRI) blew investors’ minds with a 53.75% share price gain on Thursday to close the session at 62 cents.

The share price explosion followed the release of the company’s FY24 trading update.

Integrated Research provides performance management and analytics for IT infrastructure, payments, and communications companies.

Not only did the company report a 93% jump in earnings before interest, taxes, depreciation, and amortisation (EBITDA) over the 10 months ending 30 April, it also upgraded its full-year guidance.

Let’s take a look at the details.

ASX tech stock skyrockets on major financial boost

For the 10 months ending 30 April, Integrated Research reported $59.1 million in total contract value (TCV), up 8% on the previous corresponding period (pcp).

Between February and April, the company secured $8.4 million in new business, including six new customers, mainly in the Americas.

The renewal portfolio continues to perform well with 98% net revenue retention. Unaudited revenue for the period is $61.4 million, an increase of 11% on the pcp.

The company said it had contained cost increases to help deliver a massive 93% boost to EBITDA at $13.9 million.

Full-year 2024 results to ‘materially exceed’ last year

Integrated Research is now guiding FY24 TCV of $75 million to $84 million. This compares to $68.5 million for FY23.

The company expects revenue in the range of $76 million to $85 million. This compares to $69.8 million for FY23.

It anticipates EBITDA of between $18 million to $25 million. This is well above the $12.1 million EBITDA reported for FY23.

Commenting on the market update, CEO John Ruthven said:

We are pleased with our YTD performance and field execution, particularly in securing several key new Collaborate customer wins.

The changes we have made to our sales leadership team and go-to-market approach over the last 12-18 months are starting to bear fruit.

As we progress through May and June, we anticipate a strong finish to the financial year.

ASX tech stock share price snapshot

The Integrated Research share price has risen 70.8% in the year to date. This is a stunning outperformance on the S&P/ASX 200 Information Technology Index (ASX: XIJ), which is up 22.7%

Over the past 12 months, the ASX tech stock has soared 53.75% while the index lifted 43.7%.

That annual gain is equal to today’s stunning one-day increase for the Integrated Research share price.

The company now has a market capitalisation of $69.84 million.

The post ASX tech stock up 54% on positive trading update appeared first on The Motley Fool Australia.

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• These 2 ASX 200 stocks just received broker upgrades!
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• This ASX 200 stock hasn’t cut its dividend for 121 years
• Woodside share price smashes benchmark as government demands ‘more gas!’

Motley Fool contributor Bronwyn Allen 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.

Brokers have upgraded these two S&P/ASX 200 Index (ASX: XJO) stocks after recent positive updates from both businesses.

Sometimes a business announcement is positive for a company and can make the current share price cheap. A decline of the share price can also open up value in the minds of some investors.

Let’s look at which two ASX 200 stocks have just been upgraded.

Perpetual Ltd (ASX: PPT)

The broker Bell Potter has put a buy rating on Perpetual shares after the business announced the sale of its wealth management and corporate trust businesses via a scheme of arrangement for A$2.175 billion in cash.

In Bell Potter analysts’ eyes, the sale was a “positive”, according to reporting by The Australian, with the broker saying the decline was “short-signed”.

The expectations for this sale were reportedly between $1.5 billion and $1.9 billion. Bell Potter said:

More to the point, we had assumed that our top of range $1.9bn sale, would incur a $480m tax liability, which may not be the case.

The newspaper reported Bell Potter’s analysis showed the ASX 200 stock’s deal was a demerger rather than a straightforward sale. The Australian reported:

…a new head company was being created and the asset management unit would be demerged and returned to shareholders who would receive the KKR sale proceeds minus the transaction costs and repaid debt.
Bell Potter said questions on tax and transaction costs missed the point.

Goodman Group (ASX: GMG)

Macquarie’s price target on Goodman shares has hiked by 4.4% to $36.37.

A price target is where a broker thinks the share price will be trading in 12 months from now. Therefore, Macquarie suggests Goodman shares could rise by more than 8% in the next year.

Why the positivity? Goodman just released its FY24 third-quarter update.

The ASX 200 stock reported, as at 31 March 2024, it had $12.9 billion of development work in progress (WIP) across 82 projects. Data centres under construction currently represent approximately 40% of WIP. In the latest quarter, it completed $0.8 billion of developments, with 96% of year-to-date completions committed. The business now has a $80.5 billion total property portfolio.

Goodman’s rental performance continues to be strong, with 4.9% like-for-like net property income growth on properties in its partnerships.

The good performance enabled the business to increase its FY24 operating earnings per security (EPS) growth to 13%.

The post These 2 ASX 200 stocks just received broker upgrades! appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

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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 positions in and has recommended Goodman 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.