Category: Stock Market

South32 Ltd (ASX: S32) shares are trading at $3.33 on Friday, up 0.3% for the day so far.

This diversified ASX 200 mining share has been on a bit of a tear of late.

South32 shares have risen 15.22% over the past 13 trading days.

As the chart below shows, South32 shares closed at $2.89 apiece on 26 March.

That wasn’t far off the stock’s 52-week low of $2.75, which it reached on 21 February.

Had you put $10,000 into South32 shares 13 days ago, they’d be worth $11,522.40 now.

So, many of us missed a nice little buy-the-dip opportunity there.

But not to worry.

One top broker reckons it’s not too late to buy South32 shares.

Here’s why.

Should you buy South32 shares?

Top broker Goldman Sachs has a buy rating on South32 shares with a 12-month price target of $3.80.

That implies a potential 14% upside for investors who buy the ASX mining stock today.

In a new note last week, Goldman said South32 shares have a net asset value (NAV) of $3.80. The NAV measures the value of a company’s assets less its liabilities, divided by the number of shares outstanding.

Goldman said that South32 and Rio Tinto Ltd (ASX: RIO) look undervalued on a price-per-NAV basis compared to the two biggest mining shares, BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG).

The broker noted that South32 has reported reduced Australian manganese production and sales in CY24 against increased low-grade 37% manganese pricing.

This may go some way to explaining why the broker has reduced its earnings per share (EPS) estimate for FY24 from 13 cents per share to 10 cents per share.

But don’t worry about that, because the future looks bright.

Goldman is estimating a three-fold increase in EPS the very next year.

For FY25, Goldman expects EPS of 31 cents per share, rising to 36 cents per share in FY26.

Why does Goldman Sachs say buy?

In addition to viewing the South32 share price as undervalued, Goldman is also bullish on copper, aluminium and metallurgical coal and South32 mines all three of them.

Goldman explains:

Buy rated on: (1) Improving FCF in 2H FY24: GS are bullish copper, aluminium, and met coal (~65% of S32 NTM EBITDA) in CY24E. (2) Attractive valuation trading at ~0.8xNAV on our estimates plus potential +A20cps upside based on recently announced sale of the Illawarra metallurgical coal operation to Golden Energy and Resources (GEAR) and M Resources for a total consideration of up to US$1.65bn (~A52cps), assuming the transaction completes as planned in 1H FY25; …

Looking ahead, Goldman expects South32 to report a fall in net debt to approximately US$500 million by the end of June.

That’s well below South32’s net debt target of US$1 billion to US$1.5 billion through the cycle.

As a result, the broker reckons South32 may announce the resumption of its on-market share buyback at about US$250 million per annum when the miner releases its FY24 results.

The broker also expects an improving dividend yield from 2% in FY24 to 6% in FY25, assuming South32 pays its minimum dividend payout ratio of 40% of earnings.

Goldman also predicts upside potential from various base metal growth projects.

The broker said:

… there are numerous growth projects/options that should provide long dated base metals growth; Sierra Gorda brownfields (4th milling line & oxide projects), battery grade manganese sulphate from the Clarke deposit at Hermosa + the Peake copper prospect, and copper/gold/cobalt from the Ambler Metals JV in Alaska.

The post Up 15% in 13 days, is it too late to buy South32 shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices
• Here are the top 10 ASX 200 shares today
• Why is the South32 share price having such a cracker run today?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Bronwyn Allen has positions in BHP Group and South32. 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.

from The Motley Fool Australia https://ift.tt/0YAlvWc

There’s no holding back the rocketing gold price of late, which has proven to be excellent news to investors in S&P/ASX 200 Index (ASX: XJO) gold stocks.

The yellow metal gained again overnight, trading at new all-time highs of more than US$2,387 per ounce. It’s since retraced a touch, at US$2,383 per ounce.

As you’d expect, a series of new record highs for the gold price has seen investors snapping up ASX 200 gold stocks. And it’s seeing the sector strongly outperform again today.

In early afternoon trade on Friday, the ASX 200 is down 0.3%. The S&P/ASX All Ordinaries Gold Index (ASX: XGD), on the other hand, is up a welcome 1.7% at this same time.

Here’s how these top ASX 200 gold stocks are tracking today:

• Northern Star Resources Ltd (ASX: NST) shares are up 0.9%
• Newmont Corp (ASX: NEM) shares are up 0.3%
• De Grey Mining Ltd (ASX: DEG) shares are up 2.6%
• Ramelius Resources Ltd(ASX: RMS) shares are up 1.9%
• Gold Road Resources Ltd (ASX: GOR) shares are up 1.8%
• Evolution Mining Ltd (ASX: EVN) shares are up 1.5%
• Bellevue Gold Ltd (ASX: BGL) shares are up 2.3%

That’s some solid outperformance on a day when the benchmark index is going backwards.

But if you think that’s something, have a look at the past month’s returns.

One month ago the gold price stood at US$2,158 per ounce, some 10% below current levels.

Over that same month:

• Northern Star shares have gained 10.1%
• Newmont shares have gained 13.5%
• De Grey Mining shares have gained 4.4%
• Remelius Resources shares have gained 26.1%
• Gold Road shares have gained 15.3%
• Evolution Mining shares have gained 22.6%
• Bellevue Gold shares have gained 25.2%

For some context, the ASX 200 has gained 1.1% over this same period.

Here’s what’s driving the gold price to yet another new record high.

Gold price in uncharted territory

It appears the gold price is getting a lift today from modestly lower-than-expected inflation data out of the United States overnight.

After the US consumer price index (CPI) data came in hotter than consensus expectations on Wednesday, the March producer price index (PPI) for final demand increased by 2.1%, below consensus expectations of 2.2%.

This looks to have again increased confidence that the US Fed will begin cutting interest rates over the coming months.

Gold, which pays no yield itself, tends to perform better in low and falling-rate environments.

Commenting on the gold price moves in response to the latest US inflation data, Nicky Shiels, head of metals strategy at MKS PAMP said (quoted by Bloomberg):

The PPI is enough to provide some relief to the hot CPI print yesterday. Overall, US bonds are trading as though Fed rate hikes are coming while gold is trading as though the Fed remains in rate cutting mode, so any dovish print going forward is fuel to accelerate the established bull trend.

The yellow metal is also enjoying support from strong ongoing central bank buying.

And gold’s haven status has come to the fore as investors seek a safe store of wealth amid rising geopolitical tensions in the Middle East and Eastern Europe.

The post Gold price smashes record highs again adding more shine to ASX 200 gold stocks 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’);
})()

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why Computershare, Core Lithium, Northern Star, and Vulcan Energy shares are storming higher
• Northern Star share price tumbles on difficult quarter
• Is it too late to get on board the ASX gold train?

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.

from The Motley Fool Australia https://ift.tt/78ljGOs

There could be some big returns on offer in the healthcare sector for Australian investors according to analysts.

For example, the three ASX 200 healthcare stocks listed below have all been named as buys by analysts and tipped to deliver double-digit from current levels.

Here’s what they are saying about them:

CSL Ltd (ASX: CSL)

The first ASX 200 healthcare stock that could be a buy is CSL. It is the biotechnology giant behind the CSL Behring plasma therapies business, the CSL Seqirus vaccines business, and the CSL Vifor iron deficiency and nephrology business.

Macquarie is feeling very bullish about the company due to the positive medium term outlook for CSL Behring’s immunoglobulins. As a result, earlier this week, it upgraded the company’s shares to an outperform rating with an improved price target of $330.00. This implies potential upside of 17% for investors over the next 12 months.

But its shares may not stop there. It is also worth noting that Macquarie sees scope for CSL’s shares to rise beyond $500 within three years.

ResMed Inc. (ASX: RMD)

Over at Morgans, its analysts think that ResMed would be a great option for investors looking for healthcare exposure. ResMed is the global leader in sleep disorder treatment solutions.

This is a great area of the market to be in given the huge addressable market. It has previously been estimated that 1 in 5 people suffer from sleep apnoea. However, the vast majority of these sufferers are undiagnosed. This gives ResMed a huge growth runway even with the emergence of weight loss wonder drugs.

In fact, Morgans’ analysts recently stated that they “see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers.”

Morgans has an add rating and $32.82 price target on its shares. This suggests potential upside of 13% for investors.

Telix Pharmaceuticals Ltd (ASX: TLX)

Finally, the team at Bell Potter think that Telix could be an ASX 200 healthcare stock to buy. It is the radiopharmaceuticals company behind the increasingly popular Illuccix prostate cancer imaging agent.

Its analysts believe Telix is well-positioned for growth over the coming years and are forecasting revenue increasing from $502.5 million in FY 2023 to $993.7 million in FY 2026. The broker is also expecting its EBITDA to grow at an even quicker rate. It has pencilled in EBITDA of $211.1 million in FY 2026, which compares favourably to FY 2023’s EBITDA of $58.4 million.

This morning, the broker reiterated its buy rating and $14.50 price target on the company’s shares. This implies potential upside of approximately 13% from where its shares trade today.

The post 3 ASX 200 healthcare stocks that could deliver big returns for investors 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’);
})()

More reading

• 3 unexpected ASX shares owned by top-performing fund managers
• 5 things to watch on the ASX 200 on Friday
• Why are so many top fundies overweight on CSL shares?
• Can the CSL share price really reach $500 in just 3 years?
• Why two brokers have named this ASX 200 stock as a best buy

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

from The Motley Fool Australia https://ift.tt/FgCS3LV

It turns out everyone loves ASX dividends! I mean, who would have thought it? Most ASX investors enjoy a good dividend payment for the same reasons any of us like to see labour-free passive income drop into our pockets.

Most of the time, ASX dividends are used to pay bills, buy more ASX dividend shares, or (less admirably) a big night out.

But today, we’ve got a reminder that dividends can be used as a dealmaker too.

One of the biggest deals currently sitting on the ASX is the takeover attempt on ASX 200 construction materials company Boral Ltd (ASX: BLD) by Seven Group Holdings Ltd (ASX: SVW). Seven has been after Boral for years now, with the two playing a fairly vigorous game of corporate cat and mouse.

Seven has amassed a stake in Boral of almost 80% over the past year or two but wishes to seal the deal with a full takeover.

Before today, the most recent development was the rejection last month of Seven’s full takeover offer of 0.1116 Seven shares, as well as $1.50 in cash, for every Boral share owned. As we covered at the time, this valued Boral at approximately $6.07 a share.

Boral rejected this offer last month, citing concerns that the offer “does not represent appropriate value for minority shareholders”.

But it appears that a fresh offer from Seven has finally clinched Boral’s approval. The secret ingredient, or sauce, if you will? ASX dividends.

ASX dividends clinch Seven-Boral deal

In an ASX release this morning, Seven detailed an improved offer for Boral shares to 0.116 Seven shares, and a buffed-up $1.70 in cash per share. That $1.70 in cash includes a provision that will see Seven pay all shareholders, existing and new, a special dividend worth 30 cents per share, fully franked, upon completion of the deal.

Boral has also announced that it will pay a fully-franked dividend of 26 cents per share to investors, as well as potentially conducting a $350 million share buyback program on Boral’s remaining outstanding stock.

If Boral pays out this dividend, Seven has said that its cash offer per share will reduce to $1.44 per share to reflect this.

In light of these new dividend proposals, as well as the reality that Seven controls nearly four-fifths of Boral’s stock, Boral has finally consented to the deal and recommended shareholders vote in favour of it. Here’s some of what the company said:

[Boral] believes that the SGH [Seven Group Holdings] Offer represents the most attractive outcome available to Boral Shareholders, particularly when measured against the risks of remaining as a minority shareholder now that SGH has a total interest of 78.8% in Boral.

Accordingly, the [Boral Bid Response Committee] unanimously recommends that Boral Shareholders ACCEPT the SGH Offer or sell their Boral Shares on-market.

So it appears that a slew of new ASX dividends has finally won the day for Seven, and Boral’s ASX future now looks limited.

The Boral share price is up 1.82% in response today to $6.14 a share, while the Seven share price is flat at $40.03.

The post Which ASX companies are deploying dividends to secure a $1.9 billion deal? 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’);
})()

More reading

• 5 things to watch on the ASX 200 on Friday
• Boral share price falls after rejecting Seven Group takeover

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.

from The Motley Fool Australia https://ift.tt/4VHdaBb

BHP Group Ltd (ASX: BHP) shares will be on watch next week.

That’s because the mining giant will be releasing its hotly anticipated quarterly update.

Ahead of the release on Thursday 18 April, let’s take a look at what the market is expecting from the Big Australian.

What is expected from BHP?

According to a note out of Goldman Sachs, it is expecting BHP to have a reasonably solid quarter.

For example, copper production is expected to come in at 457kt for the three months. This is up 4.1% on the previous quarter and 12.5% year on year. It is also largely in line with the consensus estimate of 459kt.

Also expected to increase quarter on quarter is metallurgical coal production. Goldman expects BHP to report production of 7.3Mt for the three months. This would mean an increase of 27% on the previous quarter and 5.8% on the same period last year. Goldman’s estimate is also ahead of the consensus estimate of 6.8Mt.

For nickel, the broker is forecasting production of 17.6kt for the period. This will be down 10.2% on both the prior corresponding period and year on year. It is also well short of the consensus estimate. That is 19.8Mt, which implies modest growth on previous periods.

Finally, let’s now take a look at iron ore, which is of course the biggest contributor to BHP’s earnings.

Unfortunately, Goldman believes that the miner’s iron ore shipments will be short of expectations for the quarter. It has pencilled in shipments of 66.8Mt for the three months, which is down 5% from the previous quarter and largely flat year on year. The consensus estimate for iron ore shipments is 70.2Mt.

Are BHP shares in the buy zone?

Interestingly, despite predicting below consensus iron ore shipments and nickel production, Goldman Sachs is one of the more bullish brokers out there.

Its analysts currently have a buy rating and $49.20 price target on BHP’s shares. This implies potential upside of 8.3% for investors from current levels.

In addition, the broker is forecasting fully franked dividend yields of 4.8% and 4.2% in FY 2024 and FY 2025, respectively.

Combined, investors buying at current levels would generate a total return beyond 12% over the next 12 months if Goldman Sachs is on the money with its recommendation.

This means that a $20,000 investment could be in excess of $22,400 this time next year if all goes to plan.

The post Own BHP shares? Here’s your quarterly update preview 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’);
})()

More reading

• Here are the iron ore and lithium price forecasts through to 2027
• How BHP stock could unseat the world’s top copper producer
• Why top brokers say Rio Tinto stock is a better buy than BHP
• In this bull market, where are the bargain buys to be found?
• The BHP share price is down 12% in 2024. What’s next for the iron ore price?

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.

from The Motley Fool Australia https://ift.tt/ofKa9bq

The S&P/ASX 200 Index (ASX: XJO) stock IDP Education Ltd (ASX: IEL) has suffered significantly over the past year, dropping by 40%, as we can see in the chart below. Despite this significant fall, UBS thinks the education and language testing business can recover and deliver a 50% share price rise.

Of course, just because a share price is predicted to rise a large amount doesn’t mean it’s guaranteed to happen.

In this article, I’ll look at why UBS sees an opportunity with the IDP Education share price and how much it thinks profit can grow.

Potential headwinds

UBS acknowledged that changes in government policies in Canada — such as a tightening of spousal visas — created uncertainty for the education provider in FY24 and FY25.

We have previously covered some of the other issues in Canada, which the ECP Growth Companies Fund investment team explaining as follows:

IDP Education underperformed as the Canadian government opened up its SDS immigration visa requirements to 4 new English language tests, increasing competition for IDP’s IELTS [International English Language Testing System] business.

It is uncertain how much market share IELTS could lose over the next few years, however market estimates point to an 8% to 15% EPS impact.

UBS also pointed to UK news that suggests a “potential tightening of study work rights.”

In Australia, we’ve just heard that international student fees are going to increase, according to reporting by the Australian Financial Review. This comes after new measures were announced to stop non-genuine students.

UBS said these countries were “targeting the problem of non-genuine students”. However, the broker thinks IDP’s competitors are more exposed to these changes, which could result in some offsetting market share benefits for IDP, or potential “consolidation”.

The broker noted that the UK could implement further changes, though there has already been a tightening of restrictions on students’ ability to bring in independents.

Any tightening announcement should be the “last major piece of negative regulatory news”, though any US changes could “impact the growth angle”.

Despite these headwinds, UBS thinks the ASX 200 stock may generate net profit after tax (NPAT) of $162 million in FY24, $179 million in FY25 and $226 million in FY26.

Ongoing profit growth?

The broker has forecasted that the IDP Education net profit could continue to grow in FY27, with NPAT of $271 million, and then reach $312 million in FY28.

Based on UBS’ profit estimates, the IDP Education share price is valued at 28x FY24’s estimated earnings, 26x FY25’s estimated earnings, 20x FY26’s estimated earnings, 17x FY27’s estimated earnings and 15x FY28’s estimated earnings.

Despite the challenges IDP Education is facing, it’s pleasing to see the business predicted to see steadily growing profit, which is usually a very supportive driver of pushing the share price higher.

According to the projections, the dividend could also increase each year between FY24 and FY28, but I’m not going to focus on that because the IDP Education share price performance could be the key factor in total shareholder returns.

IDP Education share price target

UBS currently has a share price target of $25.30 on the company. A price target tells us where the broker thinks the share price will be in 12 months.

At the current IDP Education share price, the price target implies it could rise 54%. That would be a big return – even half that would probably outperform the ASX share market quite nicely.

The post Top broker tips one of the ASX 200’s worst performers of the past year to surge 50% 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’);
})()

More reading

• 5 things to watch on the ASX 200 on Friday
• Why I’d buy this ASX 200 stock (even if we’re heading for a market crash)
• Here are the top 10 ASX 200 shares today
• Shares vs. property: What $100 invested in 1926 is worth now
• 5 things to watch on the ASX 200 on Thursday

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 Idp Education. The Motley Fool Australia has recommended Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/Ju8n7SW

NextDc Ltd (ASX: NXT) shares have gotten plenty of attention this week.

The S&P/ASX 200 Index (ASX: XJO) tech stock entered a trading halt yesterday, after closing on Wednesday at $16.71 a share. Shares are expected to resume trading on Monday.

The trading halt preceded NextDC’s announcement of a massive $1.32 billion capital raising.

The funds will be raised via a 1 for 6 entitlement share offer. New shares will be issued for $15.40 apiece. Or almost 8% below where NextDC shares closed on Wednesday.

The $1.32 billion will help NextDC expand its operations to meet the record demand it’s experiencing for its data centre services.

CEO Craig Scroggie said, “NextDC continues to see significant growth in demand for its data centre services underpinned by powerful structural tailwinds.”

Scroggie said that amid this strong demand growth, “We have decided to bring forward the development and fitout of key assets in Sydney and Melbourne to ensure we are able to meet this growth in demand.”

Which brings us to nuclear power.

NextDC shares need power

The rapid rise of artificial intelligence (AI) looks set to match or even dwarf the impact of the internet in the 1990s and 2000s.

But AI doesn’t live in a real cloud. Instead, it requires an ever growing amount of computing power, which is increasingly housed in massive data centres.

And in a world intent on weening itself off of fossil fuels while still struggling to provide reliable baseload power with renewables, that poses a potential growth obstacle for NextDC shares.

Which has Scroggie casting his eye on nuclear energy.

“We need power, we need transmission networks, we need green energy, we need more solar, we need more wind and, frankly, we need nuclear,” he said (quoted by The Australian Financial Review).

Scroggie added:

We have to find net zero power options that are capable of supporting energy needs when the sun is not shining and the wind is not blowing and batteries [are] not going to cut it.

And the new generation of data centres required to support our AI co-pilots (or soon-to-be pilots) requires a lot more juice.

According to Scroggie, the new data centres NextDC is planning to support AI will use 10 times as much energy as current facilities.

“We’re going from general purpose computing to high-performance computing. That will see a generational change both in the scale and the density of computers,” he said.

Indeed, having the right ESG credentials on its data centres could offer NextDC shares a significant boost.

As JP Morgan analyst Bob Chen pointed out (quoted by The AFR):

One thing that is also important here is the customers of these data centres, typically your global cloud service providers like Microsoft, Amazon, Google, also have an ESG mandate and are increasingly preferring operators that can source green energy.

The post Own NextDC shares? Here’s why the company is spruiking nuclear power 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’);
})()

More reading

• Up 16% in 2024! Are ASX tech shares now overvalued?
• What’s happening with the NextDC share price following today’s $1.3 billion announcement?
• The best ASX shares to buy with $1,000 right now
• 5 ASX 200 shares for trying to build wealth after 50
• 3 ASX growth shares to supercharge your investment portfolio returns

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.

from The Motley Fool Australia https://ift.tt/3BVX6C2

The Woodside Energy Group Ltd (ASX: WDS) share price is under pressure again on Friday.

In morning trade, the energy producer’s shares are down 1.5% to $30.12. This latest decline means that its shares are down 16% over the last six months.

As a comparison, the ASX 200 index is up approximately 10% over the same period.

This means that the Woodside share price is underperforming the benchmark index by a sizeable 26%.

While this is disappointing, one leading broker believes this could be a buying opportunity. Especially after the oil price hit US$90 a barrel this month.

What is the broker saying?

The team at Wilsons believes the underperformance in the its share price is largely due to lower prices of liquid natural gas. It notes:

Australian energy stocks have lagged behind the price of Brent crude oil (in Australian dollars) and global oil majors so far this year (2024). This underperformance is likely due to lower prices for liquid natural gas (LNG) from Japan and Korea (JKM), which have fallen ~15% year-to-date. […] WDS has a larger share of its LNG production uncontracted. This exposes WDS more to gas price swings than STO, which has a higher proportion of contracts indexed to the rising oil price. This difference in contracting strategies explains WDS’s recent underperformance.

However, Wilsons remains positive on LNG demand over the medium term. This is thanks largely to the Asian energy transition. It explains:

From a bigger picture perspective, the LNG supply-demand dynamic remains attractive over the medium term. Gas demand in non-OECD Asia is expected to almost quadruple by 2040, driven by the combination of population growth, economic progress and industrialisation in the Asian markets. LNG is set to be a key component of the energy transition across Asia.

And with LNG supply growth expected to be limited in the coming years, this bodes well for prices moving forward. The broker adds:

Meanwhile, supply growth will be relatively limited over the next few years and Russian gas supplies will likely remain to some extent excluded from the European market. […] Therefore, the softness in the global gas market is seasonal rather than structural and the outlook is still positive.

Woodside share price undervalued

Overall, Wilsons believes that the current Woodside share price is undervalued based on current oil prices. So much so, it has named the company as its preferred pick in the Australian energy sector. It named five reasons for its bullish view:

1. Australian oil and gas stocks are an opportunity at current levels. 2. Earnings upgrades will flow through if the oil price continues to remain elevated. For example, WDS should see 15% FY24 earnings per share (EPS) upside at spot oil. 3. The LNG market will recover, boosted by demand coming from Asia over the next few years. 4. WDS is now trading at implied oil prices from ~$70/bbl. This is attractive considering our base case that the oil market will remain tight over this decade. 5. WDS trades well below global peers on an earning-to-value/ earnings before interest, taxes, depreciation and amortization (EV/EBITDA) basis.

The post Broker says Woodside share price weakness is a buy opportunity 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’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• Buy Coles and these ASX dividend stocks now
• How ASX 200 energy stocks could soon enjoy US$100 oil prices

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.

from The Motley Fool Australia https://ift.tt/CyZ0agb

The Star Entertainment Group Ltd (ASX: SGR) share price is sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) casino operator closed yesterday trading for 55 cents. In morning trade on Friday, shares are swapping hands for 53 cents apiece, down 2.4%.

For some context, the ASX 200 is down 0.5% at this same time.

This comes following the release of Star’s third quarter trading update for the three months ending 31 March (Q3 FY24).

Read on for the highlights.

What happened during the quarter?

The Star Entertainment share price is dropping after the company reported a 4.6% year on year decline in net revenue. Net revenue for the quarter came in at $419.2 million, down from $439.5 in Q3 FY 2023.

Management said that revenue from Star’s Premium Gaming Rooms (PGRs) slid across all of its properties during the quarter. The Star Sydney PGR revenue was down 19.3%; the Star Gold Coast PGR revenue was down 20.0%; and Treasury Brisbane PGR revenue was down 28% from Q3 FY 2023.

The revenue slide was softened by strong performance across the company’s Main Gaming Floor (MGF) segment, which increased at all Star’s properties. MGF revenue increased 5.4% at the Star Sydney; revenue was up 4.6% at the Star Gold Coast; and revenue increased by 6.4% at Treasury Brisbane compared to Q3 FY 2023.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) of 37.9 million were down 11.5% from $42.9 million reported in the prior corresponding period.

And while losses improved year on year, the Star Entertainment share price is still under pressure with the company reporting a net loss after tax of $6.8 million for the three months. That compares to a net loss after tax of $49.7 million in Q3 FY 2023.

On the cost front, operating expenses dropped 4.2% year on year.

However, Star has been increasing investment in its risk, controls and transformation teams to strengthen the control environment. This sees operating expenses up $1.8 million on the monthly run-rate from the first half of FY 2024.

Operating expenses in the first half of FY 2024 average $90.3 million per month. In Q3 FY 2024 this increased to a monthly average of $92.1 million.

Management said they “will continue to exercise cost control with a focus on making the appropriate investment in improving the control environment”.

Looking ahead, Star said that negotiations for the sale of assets including the Treasury Casino, Hotel and car park “are progressing well”.

The company also reported that the phased opening of Queen’s Wharf Brisbane in August 2024 remains on track.

Star Entertainment share price snapshot

The Star Entertainment share price is down 55% over 12 months. The past month showed some signs of recovery, with shares up 1% over the month.

The post Star Entertainment share price tumbles alongside sinking revenues 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’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Could Star Entertainment shares be next in line to catch a takeover bid?
• 5 things to watch on the ASX 200 on Monday
• My top high-risk, high-reward ASX shares to buy in March

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.

from The Motley Fool Australia https://ift.tt/CqnXgMK

Origin Energy Ltd (ASX: ORG) shares are on the slice on Friday morning.

In early trade, the energy giant’s shares are down almost 1% to $9.47.

Why are Origin shares falling?

Investors have been selling the company’s shares on Friday after broad market weakness offset the announcement of a strategic acquisition.

According to the release, Origin has entered into an agreement with Virya Energy to acquire its Yanco Delta Wind Farm.

The Yanco Delta Wind Farm is one of the largest and most advanced wind and energy storage projects in New South Wales. It is in the State Government-designated South West Renewable Energy Zone (REZ), and consists of a 1.5 GW wind farm and a 800 MWh battery. The project is strategically located next to key transmission infrastructure.

Origin notes that the acquisition will accelerate its strategy to expand renewable energy and storage in its portfolio.

‘Highly strategic’

Origin’s CEO, Frank Calabria, highlights that the acquisition is highly strategic and represents a big step forward in the journey to transition Origin’s portfolio to cleaner energy. He commented:

Yanco Delta is a large-scale, advanced and therefore highly strategic wind development project. With the key planning and regulatory approvals secured, and with significant plans for supporting infrastructure and transmission in place, the acquisition of Yanco Delta represents a major step forward in our journey to transition Origin’s portfolio to cleaner energy.

Origin has made rapid progress in building out a portfolio of renewable and storage projects at varying stages of development, and Yanco Delta represents a unique opportunity to bring a material volume of renewable energy supply into the market relatively quickly, to help meet the needs of our customers.

How much is Origin paying?

Origin is paying a total of up to $300 million for the Yanco Delta Wind Farm. This consideration consists of an upfront payment of $125 million and an additional variable payment of up to $175 million conditional on the project achieving certain development milestones.

The purchase price and development expenditure prior to commencement of construction will be funded from Origin’s corporate debt facilities. Completion of the acquisition remains subject to conditions which are typical for transactions of this nature.

Mr Calabria concludes:

Strategically located in the South West REZ, Yanco Delta is a quality wind resource that provides benefits of scale. We look forward to working closely with the local community and other stakeholders and bringing Origin’s expertise and track record in developing large scale energy projects to progress this project to construction.

Origin shares are up 14% over the last 12 months.

The post Origin shares fall despite ‘highly strategic’ $300m renewable energy acquisition 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’);
})()

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Here are the top 10 ASX 200 shares today
• $19 billion in ASX dividends is being paid out this week. Are you getting your share?
• $2.1 million! Who are the highest paid ASX 200 directors?
• How will falling electricity prices impact ASX energy shares like AGL?

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.

from The Motley Fool Australia https://ift.tt/IpgxeiO