Category: Stock Market

The BHP Group Ltd (ASX: BHP) share price dropped around 5% in the final two trading days of last week and it’s down around 10% from the end of January 2023 to now. So is the S&P/ASX 200 Index (ASX: XJO) mining share a good buying opportunity at its current price?

As the ASX’s biggest company, what happens with the business can have an outsized impact on the ASX and perhaps even Australia.

As with a number of the ASX’s blue chips, the main insights we get into the company’s performance are through its half-year results, full-year results, and perhaps annual general meetings (AGM).

But with BHP, and other ASX 200 mining shares, investors also get operational mining updates every three months.  

We heard last week about BHP’s operational performance for the three months to 31 March 2023.

The numbers

In that quarterly update, copper production grew 10% year over year to 405.9 kt. Iron ore production was flat at 59.8 mt. Metallurgical coal production was down 13% to 6.9 mt. Energy coal production increased 53% to 3.9 mt. At the same time, nickel production went up 5% to 19.6 kt.

While the business achieved strong numbers for iron, copper, and nickel, the quarter also included the death of a BHP worker who died in a rail incident in February.

Progress with the acquisition

BHP noted that shareholders of copper miner OZ Minerals Limited (ASX: OZL) recently voted “overwhelmingly” in favour of BHP’s takeover offer.

The management of BHP is now focused on integrating the OZ Minerals business as it builds an “internationally competitive copper business in South Australia and incorporating West Musgrave into its nickel options in Western Australia”.

Searching for more growth

The comments made by BHP CEO Mike Henry were promising regarding BHP’s expansion investment efforts and the outlook for resources from both China and India:

We are pursuing growth options in copper and nickel globally – we aim to have up to 10 drill rigs on the ground at Oak Dam in South Australia in the next few months and have seen promising results from a potential new copper prospect in Arizona. In Canada, we signed $260 million (CAD) in new contracts with Indigenous suppliers in March, and construction of the Jansen potash project is on track.

Recent engagements with customers in China and India have reaffirmed our positive outlook for commodity demand, with China’s economic rebound and solid momentum in India’s steelmaking growth helping to offset the impact of slowing growth in the US, Japan, and Europe.

Is the BHP share price a buy?

BHP has proven itself as one of the best in the world at what it does. The ASX 200 mining share has made huge profits over the last few years and paid big dividends.

It’s tricky to say what the iron ore price will do next. Chinese entities obviously want to pay a lower price, but it could rise in the short term if the Chinese economy recovers strongly from COVID-19 impacts.

As such a large business, it’s harder for a new project or acquisition to ‘move the needle’ for BHP. It’s hard for the business to deliver outperformance when it’s so big.

I do like the growing exposure to nickel and copper, while potash could be a useful addition once the Canadian Jansen project is operational.

The BHP share price has dropped 5% since my bearish view on the company. It’s a bit better now, but I’d prefer it to be cheaper before saying it’s a good price to buy in at — perhaps under $40. But, due to its size, I think there are other ASX mining companies that could be better opportunities.

The post Are BHP shares a buy following the ASX 200 miner’s latest update? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• What is this broker saying about the BHP share price following the miner’s update?
• Which ASX 200 share has quietly risen 11% in a month?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Passive income plan: I’d invest $100 a week in ASX 200 shares to earn $7,500 of annual dividends

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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There are plenty of options for investors to choose from in the ASX 200 banking sector. But as far as analysts at Citi are concerned, investors should be loading up on ANZ Group Holdings Ltd (ASX: ANZ) shares.

The broker recently named ANZ as its top pick in the sector and sees some big returns ahead for investors.

Why ANZ shares?

According to the note, the broker believes that ANZ shares are the best option in the sector right now due to the bank’s stronger than expected performance in FY 2023 and its institutional business.

In respect to its performance, the broker believes that ANZ’s first-quarter update suggests that it is performing above the market’s expectations. It said:

ANZ’s 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings.

A key driver of this could be its institutional business, which the broker believes is performing particularly well in the current environment. It adds:

Institutional lending momentum continued and accelerated in the Dec qtr, which we expect was driven by more available liquidity and pricing vs debt markets. ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

Big returns

The note reveals that Citi has a buy rating and $27.25 price target on the bank’s shares.

Based on the current ANZ share price of $24.33, this implies potential upside of 12% over the next 12 months.

And with Citi forecasting fully franked dividends of $1.66 per share in FY 2023, which equates to a 6.8% yield, the total return on offer with ANZ shares stretches to almost 19%.

All in all, this could make it worth considering ANZ if you’re looking for banking sector exposure after recent weakness.

The post Why ANZ shares are Citi’s ‘top pick’ in the ASX 200 banking sector appeared first on The Motley Fool Australia.

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More reading

• Passive income plan: I’d invest $100 a week in ASX 200 shares to earn $7,500 of annual dividends
• These are the best ASX 200 bank shares to buy: brokers
• Which is the best ASX 200 bank share to buy today?
• Here’s the ANZ dividend forecast through to 2025
• Passive income seekers: Experts say these ASX dividend shares are buys

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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There are a lot of blue chip ASX 200 shares to choose from on the Australian share market.

To narrow things down, I have picked out a couple of blockbusters that brokers are particularly positive on.

Here’s what you need to know about them:

Breville Group Ltd (ASX: BRG)

This kitchen appliance manufacturer could be an ASX 200 blue chip share to buy.

That’s the view of analysts at Goldman Sachs, who believe that Breville is well-placed for growth over the coming years. In fact, the broker is forecasting double-digit earnings growth despite the tough economic environment. It explained:

[We] expect BRG will continue to execute on GP margin expansion. We remain supportive of BRG’s characteristics as a high quality name in a secular growth category and believe they will be able to demonstrate revenue and EBIT CAGR of 7.6% and 11.1% over FY22-25.

Goldman has a buy rating and $22.70 price target on its shares. This compares to the latest Breville share price of $20.30.

Goodman Group (ASX: GMG)

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

Thanks to the success of its integrated own+develop+manage strategy, it has delivered strong returns to investors over the last decade.

The good news is that analysts at Citi believe that this strong form can continue. It commented:

GMG’s 1H23 result highlighted the extent of tailwinds still existing for industrial property which make for a strong earnings growth outlook not just this year but into multiple years in the future. […] We believe GMG will continue to outperform given its high-quality exposure and strong earnings growth potential in an uncertain macro environment.

Citi has a buy rating and $24.00 price target on Goodman’s shares. This compares to the latest Goodman share price of $19.10.

The post Strengthen your ASX portfolio with these blue chip blockbusters: analysts appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares this week
• Buy these ASX 200 shares for huge returns: brokers
• Goldman Sachs says these ASX growth shares are market-thumping buys
• Invest like Warren Buffett and buy and hold these ASX shares: experts
• These are the 10 most shorted ASX shares this week

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

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It’ll be an action-packed week for investors in ASX shares.

Here are the three things to keep an eye on, according to eToro market analyst Josh Gilbert:

1. Australian quarterly inflation numbers

The Australian Bureau of Statistics will release the consumer price index figures for the March quarter.

Gilbert reckons this will have a huge impact on what the next interest rate move will be after it was kept steady in April.

“The pause in interest rates may be short-lived if this reading comes in hotter than the market expects, as it did in Q4 2022 at 7.8%.

“The monthly inflation indicators are a good reading for the RBA but don’t give the complete picture with a maximum of 73% weight of the overall CPI basket, meaning this reading could provide more surprises.”

Experts are expecting inflation to be at 7% with a resurgence in immigration fueling demand for goods and services, and therefore inflation.

“After plenty of scrutiny over the last week, Philip Lowe and the board’s next move will be more important than ever, and the latest reading on inflation will be the focus for investors next week.”

2. Two ASX 200 giants to provide quarterly updates

The market will watch with interest as lithium miner Pilbara Minerals Ltd (ASX: PLS) and Coles Group Ltd (ASX: COL) reveal their latest numbers and outlook.

Pilbara has been an S&P/ASX 200 Index (ASX: XJO) favourite among investors after it cashed in on high lithium prices in the first half of this financial year.

“In 2023, lithium prices have fallen dramatically, with question marks over EV demand and an end to some government subsidies globally,” said Gilbert.

“However, the key will be the increase in production, which should be outlined next week and help offset falling lithium prices.”

Shares for supermarket giant Coles have outperformed the market so far this year, rising more than 10.8%.

“Investors were rewarded earlier this year with an increased dividend, and they will be hoping that another solid update can come next week.”

With many Australians feeling the pinch on cost of living, they are tending to spend more at the supermarket compared to eating out.

“In an uncertain economic environment, investors are looking for a defensive stock and given its essential business model, Coles is just that,” said Gilbert.

“So [this] week will see if the company is still firing on all cylinders.”

3. Big tech report their earnings

Over in the US, many of the tech behemoths that are popular with Australian investors are announcing their latest figures this week.

According to Gilbert, this includes Alphabet Inc (NASDAQ: GOOGL), Amazon.com Inc (NASDAQ: AMZN), Microsoft Corp (NASDAQ: MSFT) and Meta Platforms Inc (NASDAQ: META).

The NASDAQ-100 (NASDAQ: NDX) has already risen 19% this year, so these results could prove quite the catalyst.

“Their earnings will be critical to justify their valuations,” said Gilbert.

“Last quarter saw resilient earnings, which will be needed again to support Big Tech’s performance so far in 2023.”

Meta’s results on Thursday will be especially interesting, as the stock has rocketed a phenomenal 79% since the start of the year.

“With advertising budgets dwindling, Meta’s earnings are expected to decline 27% year-over-year, but the focus will likely be on cost control after recent job cuts and broader scrutiny over other operating expenses to support profitability.”

The post 3 things ASX investors should watch this week appeared first on The Motley Fool Australia.

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More reading

• Analysts say Pilbara Minerals and this ASX dividend share are buys
• Building wealth through dividend investing: 5 ASX shares to boost your income
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo has positions in Alphabet and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Meta Platforms, and Microsoft. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Alphabet, Amazon.com, and Meta Platforms. 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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Small cap ASX shares can often surge higher and faster than their larger cap rivals for a whole bunch of reasons.

They may be in an earlier stage of their business life cycle, meaning market share could be rising very quickly. Or the industry that they are in could be fairly new.

Or the companies could be offering more innovative products and services compared to the incumbents.

This potential is especially relevant now after 18 months of underperformance from small-cap stocks. Investors have fled to safety of large caps while inflation, interest rates and wars make them anxious.

Here is a pair of small-cap ASX shares that the team at IML are loving at the moment:

8 of 9 analysts reckon this stock is a buy

Automotive parts provider GUD Holdings Limited (ASX: GUD) has already enjoyed a handsome 25.4% increase in its share price so far in 2023.

The IML analysts put this down largely to the first half performance.

“The result was underpinned by a strong performance from its core wear and tear business, while the recently acquired APG delivered a slight improvement in underlying earnings with a positive outlook on the back of an improving supply of new vehicles,” read their memo to clients.

Despite the spectacular rise, a buying opportunity still exists.

“The stock still trades at a very attractive price of 12 times FY ‘24 earnings, with a yield of 5%, reflecting the very low expectations implied by the market prior to the result.”

The wider professional community largely agrees with the IML team.

According to CMC Markets, eight out of nine analysts currently rate GUD shares as a buy.

Taxis are still going gangbusters

With the rise of ridesharing apps, taxi companies such as A2B Australia Ltd (ASX: A2B) may not be in vogue.

But that hasn’t stopped the A2B share price from rocketing an amazing 43.3% year to date.

A couple of recent catalysts really pleased the market, according to the IML analysts.

“It reported a strong result in February with revenue up 22% and driver volumes recovering from the disruptions caused by COVID,” read the memo. 

“Then in March A2B reported it had sold its Alexandria, Sydney property for a price of $78m which was a strong outcome in a softening property market.”

The IML analysts reckon that a nice gift could be coming for A2B investors after that real estate sell-off.

“The sale should result in a sizable, fully-franked special dividend being paid to shareholders by the end of this calendar year.”

That’s in addition to the usual 3.17% dividend yield that A2B is already paying out.

The post ‘Very attractive price’: 2 small-cap ASX shares to buy before they rocket further appeared first on The Motley Fool Australia.

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More reading

• Why I think it’s a great time to start buying ASX growth shares
• Analysts say Pilbara Minerals and this ASX dividend share are buys
• 5 things to watch on the ASX 200 on Monday
• What is this broker saying about the BHP share price following the miner’s update?
• Top brokers name 3 ASX shares to buy next week

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

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The ASX share market has been through loads of volatility over the last couple of years. But, this could be a great time to invest in ASX growth shares in my opinion.

We want to be able to buy good businesses at the lowest possible price. But, those prices don’t usually stick around for long, so if we want to try to beat the market then I think it’s important to jump on the opportunities while they’re still there.

Why I think it’s time to buy ASX growth shares

The share market went through uncertainty as interest rates shot higher and inflation caused widespread impacts.

Many ASX growth shares got smashed during 2022, such as Xero Limited (ASX: XRO), Johns Lyng Group Ltd (ASX: JLG), ARB Corporation Ltd (ASX: ARB), Pinnacle Investment Management Group Ltd (ASX: PNI), Australian Ethical Investment Ltd (ASX: AEF) and Seek Ltd (ASX: SEK).

All of those business valuations are still lower than they were 18 to 24 months ago.

Warren Buffett, one of the world’s greatest and wisest investors, once said:

Be fearful when others are greedy and greedy when others are fearful.

He also said in 2001:

To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.

Plenty of businesses are facing uncertain shorter-term conditions. There’s higher wages, higher materials costs, higher financing costs and so on.

But, I don’t believe this will be the situation forever. Inflation may well have peaked in places like Australia and the US, which is what the central banks want to see. But, the next question is how long it will take for inflation to return to 3% or lower. I’ll point out that there are warning signs that inflation could continue at a higher-than-desired level. But, that’s not enough to stop me from investing.

I think that many of the ASX growth shares that I’ve mentioned, and plenty I haven’t named, are good long-term opportunities.

Despite the uncertainties, businesses are continuing to invest and many of them are continuing to grow revenue and hopefully grow earnings.

Economic conditions may worsen during this year as interest rate rises impact households and perhaps consumer-facing businesses. But share prices and GDP don’t necessarily move together.

Which opportunities I’d buy

If I had to narrow the list of names that I mentioned down to three, I’d choose Xero, Pinnacle and Johns Lyng.

I like that Xero is now choosing to become more profitable and focus a bit more on displaying its operating leverage.

Australian Ethical’s funds under management (FUM) have suffered amid the market turmoil. But, an end to asset declines and the benefit of the Christian Superannuation members joining could be a longer-term boost for FUM. In the latest quarterly update, for the three months to March 2023 saw an increase of FUM by $400 million.

Johns Lyng is achieving a lot of profit growth and could benefit from the increasing number of expensively damaging natural hazard events.

But, I’m also optimistic about some other businesses that are heavily involved with using technology in their offering, such as Temple & Webster Group Ltd (ASX: TPW) and Volpara Health Technologies Ltd (ASX: VHT).

The post Why I think it’s a great time to start buying ASX growth shares appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Brokers say these ASX growth shares could generate big returns for investors
• Why ASX tech shares are so much more attractive than US stocks
• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• Here are the top 10 ASX 200 shares today

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 ARB Corporation, Australian Ethical Investment, Johns Lyng Group, Pinnacle Investment Management Group, Temple & Webster Group, Volpara Health Technologies, and Xero. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group, Volpara Health Technologies, and Xero. The Motley Fool Australia has recommended ARB Corporation, Australian Ethical Investment, Johns Lyng Group, Seek, 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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Are you looking for dividend shares to buy this week? If you are, then the two listed below could be worth checking out.

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

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share that has been named as a buy is HomeCo Daily Needs.

HomeCo Daily Needs is a property investment company that focuses on convenience-based assets across neighbourhood retail, large format retail, and health and services.

The team at Morgans is bullish on the company due to the resilience of its cashflows, its huge development pipeline, and favourable trends. The latter includes the “accelerating click & collect trends.”

In respect to dividends, the broker is forecasting dividends per share of 8.3 cents in FY 2023 and 8.4 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.19, this will mean dividend yields of 7% and 7.1%, respectively.

Morgans has an add rating and $1.50 price target on HomeCo Daily Needs’ shares.

Pilbara Minerals Ltd (ASX: PLS)

Another ASX dividend share that has been named as a buy is Pilbara Minerals. It is one of the world’s largest lithium miners with some world class operations in Western Australia.

Although lithium prices have pulled back recently, they are still materially higher than the company’s cost of production. This means it is still printing money right now, which bodes well for dividends.

For example, Citi expects this to lead to fully franked dividends per share of 25 cents in FY 2023, 16 cents in FY 2024, and 21 cents in FY 2025. Based on the latest Pilbara Minerals share price of $4.02, this equates to yields of 6.2%, 4%, and 5.2%, respectively.

Citi has an outperform rating and $4.60 price target on Pilbara Minerals’ shares.

The post Analysts say Pilbara Minerals and this ASX dividend share are buys appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why did Pilbara Minerals shares charge higher today?
• Here are the top 10 ASX 200 shares today

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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a disappointing note. The benchmark index fell 0.4% to 7,330.4 points.

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

ASX 200 expected to fall

The Australian share market looks set to fall on Monday following a poor finish to last week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 8 points or 0.1% lower this morning. In the United States, the Dow Jones, S&P 500, and NASDAQ all rose 0.1%.

Oil prices rise

It could be a positive start to the week for ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) after oil prices rose on Friday. According to Bloomberg, the WTI crude oil price was up 0.65% to US$77.87 a barrel and the Brent crude oil price rose 0.7% to US$81.66 a barrel. Oil prices rose on Friday following the release of strong economic data in the euro zone and Britain.

BHP rated neutral

Goldman Sachs is sitting on the fence with its recommendation for BHP Group Ltd (ASX: BHP) shares following the miner’s quarterly update. The broker has retained its neutral rating on the Big Australian’s shares with a slightly improved price target of $50.50. It said: “BHP reported a slightly weaker than expected Mar Q operating result with copper, met coal and nickel production all below GSe, whereas Iron ore production and shipments were above GSe but below Visible Alpha Consensus Data.”

Gold price tumbles

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough start to the week after the gold price tumbled on Friday night. According to CNBC, the spot gold price dropped 1.25% to $1,994.1 per ounce. This was caused by growing US rate hike bets.

Brickworks named as a buy

The Brickworks Limited (ASX: BKW) share price is good value according to analysts at Morgans. This morning, the broker has retained its add rating on the building materials company’s shares with a $26.10 price target. It said: “Brickworks recently presented to the Morgans network. Overall, the presentation was positive, with management pointing to an incrementally improved outlook for the Australian residential housing market (and in turn the Australian brick business.”

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

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

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The BHP Group Ltd (ASX: BHP) share price had a tough finish to the week.

A falling iron ore price and the release of a mixed quarterly update put pressure on the mining giant’s shares.

This means it is now trading at $45.02, which is approximately 13% lower than the 52-week high it reached earlier this year.

What did analysts say about the update?

Analysts at Goldman Sachs have been looking over the miner’s update and note that it was a touch weaker than expected. The broker said:

BHP reported a slightly weaker than expected Mar Q operating result with copper, met coal and nickel production all below GSe, whereas Iron ore production and shipments were above GSe but below Visible Alpha Consensus Data.

Goldman also highlights that there were a few changes to its guidance, but they are all broadly in-line with expectations. It adds:

There were several guidance updates, which were all broadly in-line with our modeled estimates including lower copper guidance at Escondida and nickel production at Nickel West, unit costs in the Pilbara and Escondida tracking to the top end, and Pampa Norte and Olympic Dam copper at the top end.

Is the BHP share price in the buy zone?

Although Goldman sees plenty of value in the BHP share price at the moment, it has decided to keep its powder dry with its recommendation.

According to the note, the broker has retained its neutral rating with a slightly improved price target of $50.50 (from $50.40).

Based on the current BHP share price, this implies potential upside of 12.2% for investors over the next 12 months.

Goldman also estimates that its shares offer fully franked dividend yields of 6.8% in FY 2023 and 5.3% in FY 2024, bringing the total potential return into the high teens.

It highlights that BHP’s free cash flow yield is lower than rival Rio Tinto Ltd (ASX: RIO), which it prefers, and suspects it could stay this way due to higher capex expectations. It said:

[F]rom a FCF/DPS perspective, BHP is trading on a FCF/DPS yield of c. 8%/7% & 7%/5% in FY23 & FY24, below Buy-rated RIO (on CL) on 10%/7% & 7%/6%. We see BHP’s minerals capex increasing to US$10bn by mid-decade (above peer RIO at US$9-10bn), which could increase to ~US$11-12bn if the acquisition of OZL is successful.

The post What is this broker saying about the BHP share price following the miner’s update? appeared first on The Motley Fool Australia.

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

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Allkem Ltd (ASX: AKE)

According to a note out of Morgans, its analysts have retained their add rating on this lithium miner’s shares with a trimmed price target of $14.70. Morgans was reasonably pleased with Allkem’s quarterly update, noting that its Olaroz production came in ahead of expectations. And while lithium prices are expected to fall meaningfully in the coming quarter, it notes that prices are still well ahead of its long term expectations. The Allkem share price ended the week at $11.75.

Santos Ltd (ASX: STO)

A note out of Macquarie reveals that its analysts have retained their outperform rating on this energy producer’s shares with an improved price target of $9.95. Macquarie was pleased with the company’s performance during the last quarter. This has reinforced its view that the company’s shares are undervalued at the current level. The Santos share price was fetching $7.16 at Friday’s close.

Xero Limited (ASX: XRO)

Analysts at Goldman Sachs have retained their conviction buy rating on this cloud accounting platform provider’s shares with a slightly boosted price target of $126.00. Goldman has been looking into app data and believes that Xero is performing at least in line with expectations. In light of this, it remains positive and continues to believe that its shares are trading at a level that makes for an attractive entry point into a compelling global growth story. The Xero share price ended the week at $91.87.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Brokers say these ASX growth shares could generate big returns for investors
• Brokers name 3 ASX shares to buy now
• Should lithium investors buy the dip in the Allkem share price?
• Why ASX tech shares are so much more attractive than US stocks
• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?

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

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