Category: Stock Market

The Fortescue Metals Group Ltd (ASX: FMG) share price managed to do very well in March 2023 compared to the S&P/ASX 200 Index (ASX: XJO).

Shares in the ASX mining company lifted by more than 5% last month, while the ASX 200 dropped by 1%.

Considering Fortescue’s large market capitalisation of $69.25 billion as of Monday’s close of trade, that’s a fair amount of outperformance.

There are two different things that may explain why the miner was such a standout performer for the month.

Why the ASX 200 declined

The ASX 200 is dominated by two industry segments – mining and ASX bank shares.

If one of those sectors sees a negative performance over the month, then it can hurt the overall ASX share market’s return.

Looking at the ASX bank returns in March 2023, shares in ANZ Group Holdings Ltd (ASX: ANZ) and the National Australia Bank Ltd (ASX: NAB) dropped a hefty 7% and 7.6%, respectively. Meanwhile, the Westpac Banking Corp (ASX: WBC) share price fell 3.9%, and the Commonwealth Bank of Australia (ASX: CBA) was down 2.3%.

While other ASX 200 sectors had their own impacts on the index, banking shares were leading contributors to the month’s decline amid the problems for Silicon Valley Bank (SVB) and Credit Suisse.

What helped the Fortescue share price outperform?

Reporting season was in February 2023, so it wasn’t the result that was the main headline news for the company over March.

The ASX mining share went ex-dividend at the end of February 2023, so that wasn’t a major factor either.

The iron ore share price was largely flat over the month, though the commodity did increase as the month ended.

Fortescue’s strong finish to the month occurred after an update regarding its Iron Bridge project update.

The company advised that the first production for its Iron Bridge project had been revised to the second half of April 2023.

Fortescue said the project continued to make “significant progress while managing the impacts of weather on activity at the site and associated infrastructure”.

It also said that commissioning activities were “well progressed on dry processing line A”, and water commissioning of the wet plant was “near completion”.

Fortescue added that the entire steel concentrate and return water pipelines had been welded and buried and that the Canning Basin raw water pipeline was completed and undergoing final testing.

The iron ASX share also said that water commissioning has commenced on line A at the concentrate handling facility at Port Hedland.

The miner reminded investors that it would produce 22 million tonnes per year of “high grade 67% of Fe magnetite concentrate”.

Fortescue share price snapshot

Since the start of 2023, the Fortescue share price has climbed by 8%. The ASX 200 has lifted by 4% in the year to date.

The post Why did the Fortescue share price smash the ASX 200 in March? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Monday
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• 2 ASX 200 mining directors buying up their company shares in the past week
• Why did the Telstra share price beat the ASX 200 in March?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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 recommended Westpac Banking. 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 current year is bearing a lot of similarities to 2019, so it pays to see which ASX shares were successful three years ago.

That’s the opinion of Wilsons equity strategist Rob Crookston, who recalled that the economy slowed in 2019, just as it is doing now. 

But no real downturn or recession came along that year.

“In a similar vein, our base case remains that [this year] the US and domestic economy can avoid a recession, but a slowdown appears likely,” he said in a memo to clients.

Both the US Federal Reserve and the Reserve Bank of Australia (RBA) cut interest rates in 2019 after seeing their economies losing vigour.

“While the motives for cuts this year will be different, the market is now pricing cuts to the Fed and RBA after a fall in confidence in the global banking system,” said Crookston.

“We believe some easing later in 2023 for the Fed, and late 2023 or early 2024 for the RBA is plausible.”

Back to the future: How to position your 2023 portfolio

So if the current situation is so similar to three years ago, how has Wilsons positioned its portfolio?

According to Crookston, his team currently favours growth stocks.

“One of our key portfolio overweights is to growth, with a preference for non-cyclical growth such as healthcare, tech, and stocks like IDP Education Ltd (ASX: IEL) and Lotteries Corporation Ltd (ASX: TLC),” he said.

“We see these stocks, like in 2019, to be key beneficiaries of lower rates/bond yields and a slowdown in economic growth.”

That doesn’t mean cyclical growth won’t also benefit from a cut in interest rates.

“Nine Entertainment Co Holdings Ltd (ASX: NEC) should benefit from lower rates and improving housing market sentiment owing to its 60% ownership of online housing classified Domain Holdings Australia Ltd (ASX: DHG),” said Crookston.

“Macquarie Group Ltd (ASX: MQG) and James Hardie industries PLC (ASX: JHX) will likely rerate when rates fall, while earnings prospects would improve on investment banking and US housing respectively.”

The major difference between 2023 and 2019 is the current impact of high inflation.

Crookston warned that is a critical filter to apply when picking ASX growth shares at the moment.

“We believe the best defence against persistent cost inflation is pricing power,” he said.

“High quality companies with resilient customer demand through the cycle and dominant market positions operating in attractive industry structures are best placed to protect their margins by raising prices.”

The post Why ASX shares in 2023 are eerily similar to 2019 (and what you should do) appeared first on The Motley Fool Australia.

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More reading

• This ASX share’s halved in 5 years, but I’m still sticking with it
• These ASX 200 shares just plunged. Which one’s the bargain?
• Here are the top 10 ASX 200 shares today
• Morgans says these are some of the best blue chip ASX 200 shares to buy now
• Is right now a once-in-a-decade opportunity to buy ASX 200 bank shares?

Motley Fool contributor Tony Yoo has positions in Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Idp Education and Nine Entertainment. 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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You want your portfolio to perform better than the market, right?

If not, then you might as well just buy passive ETFs and be done with it. The whole point of owning a basket of company-specific stocks is because you want better returns than the average.

So if that’s the case, then there is no point in buying ASX shares that everyone has. If you’re just buying the 100 biggest stocks then that is the market.

Somewhere within the portfolio, it could be an idea to hold some more obscure stocks that make your investment different to what everyone else is doing.

With that spirit in mind, here are a couple of buy suggestions:

‘Well positioned’ company in defensive industry

Capitol Health Ltd (ASX: CAJ) is a diagnostic imaging services provider, in a sector that still sees demand during tougher economic times.

Sequoia Wealth senior wealth manager Peter Day was a fan of what he saw during reporting season.

“First half 2023 revenue of $98.1 million was up 3.4% on the prior corresponding period,” Day told The Bull.

“In the near term, we forecast a recovery in face-to-face general practitioner consultations as a catalyst for improving imaging volumes.”

The more than 17% drop in the share price so far this year is not putting off Day.

“We believe Capitol Health is well positioned relative to peers given strong specialist recruitment and exposure to recovery locations in Victoria.”

Capitol Health shares currently pay out a dividend yield of 3.8%.

Higher inflation is actually good for this business

Steadfast Group Ltd (ASX: SDF) is also lucky enough to be in an industry that doesn’t suffer too much through tougher parts of the economic cycle.

“Steadfast has the biggest general insurance broker network in Australasia,” Seneca Financial Group investment advisor Tony Langford told The Bull.

Accordingly, the stock price has risen 22.6% over the past 12 months.

But Langford, who rates Steadfast as a buy, believes there’s more to come.

“Underlying net profit after tax and amortisation of $111.1 million in the first half of fiscal year 2023 was up 18.8% on the prior corresponding period,” he said.

“Expect higher inflation to lead to increasing insurance premiums and higher commissions.”

Steadfast shares currently pay out a dividend yield of around 2.3%.

The post 2 ASX shares to buy that no one talks about appeared first on The Motley Fool Australia.

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More reading

• 2 ‘recession-resistant’ ASX 200 shares to start a strong portfolio: expert
• 2 ASX 200 shares to rocket from same booming industry: expert

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 positions in and has recommended Steadfast Group. The Motley Fool Australia has positions in and has recommended Steadfast 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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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.6% to 7,223 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to rise again on Tuesday following a solid start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 15 points or 0.2% higher. In the United States, the Dow Jones was up 1% and the S&P 500 rose 0.4%, but the NASDAQ fell 0.3%.

Oil prices jump

Energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have good session after oil prices jumped. According to Bloomberg, the WTI crude oil price is up 6.3% to US$80.45 a barrel and the Brent crude oil price is up 6,3% to US$84.93 a barrel. Oil prices surged higher on Monday after OPEC announced a surprise production cut.

RBA meeting

It is the first Tuesday of the month, which means the Reserve Bank of Australia will be meeting to discuss the cash rate. According to the latest cash rate futures, the market is pricing in a 100% probability of rates remaining unchanged at 3.6%. Should the central bank do anything else, expect a reaction from the ASX 200 index.

Gold price pushes higher

It could be a decent day for gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.85% to US$2,003 an ounce. A softer dollar and concerns over the impact of OPEC’s production cut on economic growth boosted the precious metal.

Sonic named as a buy

The Sonic Healthcare Limited (ASX: SHL) share price could be in the buy zone according to analysts at Morgans. This morning, the broker has retained its add rating with an improved price target of $37.80. It said: “We believe SHL has turned the corner on the pandemic and is in a strong position, with solid base business growth and effective cost outs, along with Covid-19 testing (at some level) and ample liquidity for capital management and M&A.”

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

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• Leading brokers name 3 ASX shares to buy today
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• Why did the Telstra share price beat the ASX 200 in March?
• 5 things to watch on the ASX 200 on Monday

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 Sonic Healthcare. 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 ASX 200 dividend shares to buy? If you are, you may want to check out the two buy-rated shares listed below that have been tipped to provide attractive yields.

Here’s what you need to know about these ASX dividend shares today:

Elders Ltd (ASX: ELD)

This agribusiness company could be an ASX 200 dividend share to buy right now.

That’s the view of analysts at Goldman Sachs, which believe that recent share price weakness has created a buying opportunity for investors. The broker highlights that “the fundamentals of this company remain unchanged, and strong in our view.” It also believes that “ELD is very well positioned to grow through the cycle.”

The broker has a conviction buy rating and $18.40 price target on the company’s shares at present.

As for dividends, Goldman is forecasting fully franked dividends per share of 53 cents in FY 2023 and 57 cents in FY 2024. Based on the current Elders share price of $8.51, this will mean yields of 6.2% and 6.7%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another ASX 200 dividend share that could be in the buy zone is Telstra.

Analysts at Morgans are very positive on the telco giant due to its successful turnaround via the T22 strategy, its new growth strategy, the recently approved restructure, and positive industry conditions.

The broker highlights that “telco has the strongest tailwinds in a decade with an increasingly rational market, price rises across the majors and the criticality of telco increasingly recognised.”

In respect to dividends, Morgans is expecting Telstra to pay fully franked 17 cents per share dividends in both FY 2023 and FY 2024. Based on the current Telstra share price of $4.22 this equates to yields of 4%.

Morgans has as an add rating and $4.70 price target on the company’s shares.

The post Brokers say Telstra and this ASX 200 dividend shares are buys appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• Why did the Telstra share price beat the ASX 200 in March?
• For $400 in monthly passive income, buy 28,236 shares of this ASX 200 stock
• The latest Telstra dividend is being paid today. Here’s the lowdown

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Elders. 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 ended up being a top day for the S&P/ASX 200 Index (ASX: XJO) during Monday’s session. By the close of trading, the ASX 200 had risen by a healthy 0.63% at 7,223 points. But one ASX exchange-traded fund (ETF) did even better than that. Yes, the Vanguard MSCI  Index International Shares ETF (ASX: VGS) had a great day, finishing up at $99.70 a unit, a market-beating rise of 1.24%. 

But that’s not all. This ETF also hit a new 52-week high this morning, climbing to the inherently pleasing mark of exactly $100 per unit.

That’s the Vanguard International Shares ETF’s new 52-week high. It’s also the highest this ETF has traded at since February 2022.

So why has this ETF cracked a new high today, and beat the ASX 200 in the process?

Well, this ETF doesn’t have a lot to do with ASX shares at all. The Vanguard International Shares ETF is an index fund. But one that tracks the MSCI World ex-Australia Index. This index represents more than 1,500 individual shares that hail from most of the advanced economies around the world.

You’ll find shares from the United Kingdom here, as well as from Canada, Europe, Japan, Hong Kong, Singapore and Israel, amongst others. But it is the United States and its companies that really dominate this ETF, with almost 70% of the portfolio weighting.

Its largest holdings are the likes of Apple, Microsoft, Alphabet, Amazon.com and Tesla.

So to explain why the Vanguard International Shares ETF hit a new high today, these are the companies we should look to for an explanation.

Why did the Vanguard International Shares ETF hit a new 52-week high today?

And lo and behold, the US markets had a cracking session on Friday night (our time). The S&P 500 Index (SP: .INX) rose by 1.44% for a start. And many of this ETF’s top holdings had an even better time. For example, Apple shares were up 1.56%, Alphabet’s Class A shares rose by 2.8%, and Tesla stock rocketed by an impressive 6.24%.

So with numbers like that coming in for many of this ETF’s top holdings, it was always going to have a happy day today.

The Vanguard MSCI Index International Shares ETF is now up a healthy 9.49% year to date:

The post Why did the Vanguard MSCI Index International Shares ETF just hit a new 52-week high? appeared first on The Motley Fool Australia.

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More reading

• Keen to pocket the next Vanguard MSCI Index International Shares ETF dividend? Read this
• Zip share price dips amid Apple’s BNPL US launch
• No savings? Drip-feed $500 a month into ASX shares and aim to retire in comfort
• 3 fantastic ETFs for ASX investors to buy in April
• Why I think the Vanguard MSCI Index International Shares ETF (VGS) is a buy for any portfolio

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon.com, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, Microsoft, Tesla, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, and Vanguard Msci Index International Shares ETF. 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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What a start the S&P/ASX 200 Index (ASX: XJO) is having to this week’s trading today. After giving investors a five-out-of-five week of gains last week, the ASX 200 has again lifted this Monday. This has led to the ASX 200, and the exchange-traded funds (ETFs) that track it, higher by around 0.5%. But one ASX ETF is doing far better than that. 

The VanEck Morningstar Wide Moat ETF (ASX: MOAT) has had a very pleasing year in 2023 so far, rising by almost 15.5% year to date and hitting several new all-time record highs along the way. The latest high has come just today.

At the time of writing, Wide Moat ETF units are trading at $111.49 each, up 1.64% so far. But earlier this morning, this ASX ETF hit a high of $111.89 per unit. That’s both this ETF’s new 52-week high and all-time high.

So why has this ETF outperformed the ASX 200, both today and over the year so far?

Well, the Wide Moat ETF is not an ETF that invests in ASX shares, despite being listed on our ASX share market. Instead, it is an actively-managed fund that tracks a basket of only US shares. Not just any US shares though. To qualify for this ETF’s investment universe a company must display characteristics of a ‘wide moat’.

A moat is a concept popularised by the legendary investor Warren Buffett. It refers to the intrinsic competitive advantage (or advantages) that most of the best companies in the world possess. This advantage is anything that helps a company fend off its competition (hence the moat).

It could be a strong and powerful brand, like the ones that Apple or Coca-Cola possess. It could be a cost advantage in an industry, perhaps best illustrated by the cheap groceries that Woolworths Group Ltd (ASX: WOW) can offer.

Another example would be possessing an asset that others are willing to pay to use, due to a lack of alternatives. The simplest example of this kind of moat would be the toll roads that Transurban Group (ASX: TCL) owns and operates.

Wide Moat ETF lifts to new all-time ASX high

The Wide Moat ETF attempts to bandle a collection of companies together in its portfolio that all possess indications of a moat. Some of its top holdings include names like Meta Platforms, Adobe, Boeing, Walt Disney and Buffett’s own Berkshire Hathaway.

So the performance of the US markets at the end of last week probably explains why this ETF is at another new all-time high today. Last Friday, the S&P 500 Index (SP: .INX) rose by an impressive 1.44%. Apple did even better, rising by 1.56%. Meta stock was up almost 2%, and Disney shares by more than 2%.

So it’s not hard to see why the value of this ETF is also rising today.

The Wide Moat ETF does have a rather impressive history of delivering returns to its investors. As of 28 February, the fund has returned an average of 15.1% per annum over the past five years, and 14.65% per annum since its inception in 2015:

The VanEck Morningstar Wide Moat ETF charges a management fee of 0.49% per annum.

The post It’s another day, another all-time high for this Buffett-esque ASX ETF appeared first on The Motley Fool Australia.

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More reading

• No savings? Drip-feed $500 a month into ASX shares and aim to retire in comfort
• How to make passive income for life with just $5 a day
• Market beating returns and big yields: 2 ASX ETFs to buy next week
• 3 high quality ETFs for ASX investors to buy after the market selloff
• 3 reasons not investing at all could be riskier than trying to invest

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 Sebastian Bowen has positions in Adobe, Apple, Berkshire Hathaway, Boeing, Coca-Cola, Meta Platforms, VanEck Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe, Apple, Berkshire Hathaway, Meta Platforms, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $420 calls on Adobe, long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, short January 2024 $430 calls on Adobe, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe, Apple, Berkshire Hathaway, Meta Platforms, VanEck Morningstar Wide Moat ETF, and Walt Disney. 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 S&P/ASX 200 Index (ASX: XJO) is kicking off the trading week on another positive run so far this Monday. After a phenomenal week last week which saw the ASX 200 rise for five days in a row, it looks like investors are in the mood to keep the party going today. At the time of writing, the Index has lifted by another 0.5% to around 7,215 points.

So time now to dig a little deeper into the shares that are dominating today’s market moves and topping the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Monday

Telstra Group Ltd (ASX: TLS)

First up today is the ASX 200 telco Telstra. So far this Monday, a decent 10.2 million Telstra shares have been phoned home. There hasn’t been any fresh news from the company this session. But that hasn’t stopped the Telstra share price from having a stunning day.

The telco hit a new 52-week high of $4.24 a share this morning but is now sitting flat at $4.22 a share at present. It’s this new 52-week high that is probably why we are seeing Telstra on this list today.

Pilbara Minerals Ltd (ASX: PLS)

From TLS to PLS. Next up is the ASX 200 lithium leader Pilbara Minerals. At this point of today’s trading, a hefty 23.05 million Pilbara shares have been exchanged on the markets. We haven’t heard much out of Pilbara today either.

But that hasn’t stopped investors from signalling out this company’s shares for some market-defying punishment today. Investors don’t seem in the mood of making time for lithium stocks, judging by Pilbara’s shares taking a nasty 2.8% so far to $3.83 each. It’s this sizeable loss that has probably resulted in Pilbara’s high volumes.

Sayona Mining Ltd (ASX: SYA)

Our final ASX 200 share worth taking stock of this Monday is another lithium company in Sayona Mining. A whopping 38.42 million Sayona shares have changed hands as it currently stands today. This looks like a very similar situation to that of Pilbara.

As an ASX 200 lithium share, Syaona is also bucking the market today with a hefty loss. In this shares’ case, we are looking at a rather depressing 3.9% sell-off, putting Sayona down to 20 cents a share. It’s this dive in value that is probably behind these elevated trading figures.

The post Here are the 3 most heavily traded ASX 200 shares on Monday appeared first on The Motley Fool Australia.

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More reading

• Could this further cloud the outlook for ASX 200 lithium shares?
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• Why Austal, Netwealth, Perseus, and Pilbara Minerals shares are dropping
• These are the 10 most shorted ASX shares this week
• Why did the Telstra share price beat the ASX 200 in March?

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra 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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S&P/ASX 200 Index (ASX: XJO) lithium shares counted amongst the hottest stocks to have in your portfolio through much of 2022.

That’s because the rapid growth in EVs and the lithium-ion batteries that power them saw the demand for lithium outpace new supply to the market. Which in turn saw the price of the battery-critical metal notch all-time highs back in November.

As you’d expect, that was good news for investors in the big lithium stocks.

Yet, 2023 has seen the leading ASX 200 lithium shares fall back to earth. As new supplies are hitting the market, with further increases forecast, lithium prices have roughly halved since November’s peak.

Despite a big surge amongst most lithium companies last Tuesday – spurred by US-based lithium giant Albemarle Corporation’s (NYSE: ALB) takeover proposal of Liontown Resources Ltd (ASX: LTR) – the blue-chip lithium stocks are vastly trailing the benchmark over the past month.

The ASX 200 is down 0.8% since this time last month.

Here’s how these ASX 200 lithium shares have performed over that same period:

• Pilbara Minerals Ltd (ASX: PLS) shares are down 8.7%
• Core Lithium Ltd (ASX: CXO) shares are down 9.9%
• Allkem Ltd (ASX: AKE) shares are down 5.3%
• IGO Ltd (ASX: IGO) shares are down 9.1%
• Mineral Resources Ltd (ASX: MIN) shares are down 10.4%

With that in mind, the latest compromise in the European Union’s energy transition plan could throw up some fresh headwinds for the stocks down the road.

Could this further cloud the outlook for ASX 200 lithium shares?

With a population north of 445 million people and a GDP of some US$16 trillion, the EU’s world-leading charge to carbon-neutral transportation is being closely watched by the rest of the world.

Among the recent proposals that were exciting for ASX 200 lithium shares was a law that would ban the sale of new internal combustion engine (ICE) vehicles in the EU by 2035.

EVs, mostly lithium powered, were the most likely candidates to take their place.

But EU negotiators ran into a roadblock with Germany and Italy. The two member nations argued new cars should also be allowed to run on e-fuels.

These combustion engines would then be fuelled via a process that takes carbon dioxide out of the air and hydrogen out of water using renewable energy sources. While the vehicles do emit carbon dioxide when running, this is balanced by what was taken from the air in creating the e-fuel.

Now, as Reuters reports, the European Commission has caved to the demands and will create a new category for vehicles that run on e-fuels post-2035. They have yet to determine how to prevent those vehicles from tapping into conventional petrol.

To be clear, this is unlikely to upend ASX 200 lithium shares in the short to medium term. Especially as e-fuels remain a niche product and are not yet available on a commercial level or at a competitive price.

But the EU’s about-face on the legislation does highlight the reality that there is a large range of alternative ways to power the world’s vehicles into the future. And lithium-ion batteries are only one of them.

Diversify your investments accordingly.

The post Could this further cloud the outlook for ASX 200 lithium shares? appeared first on The Motley Fool Australia.

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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.

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The Accent Group Ltd (ASX: AX1) share price has started the week strongly.

In afternoon trade, the footwear focused retailer’s shares are up 2% to $2.42.

This latest gain means this ASX 300 share is now up 45% since the start of the year.

Can this ASX 300 share keep rising?

The good news for investors is that one leading broker believes that this ASX 300 share still has plenty of room to climb higher from current levels.

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating with an improved price target of $3.10.

Based on the current Accent share price, this implies potential upside of 28% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends per share of 15 cents in FY 2023. This boosts the total potential return by a further 6.2% to beyond 34%.

Earnings potential better than you think

Goldman is bullish on this ASX 300 share due to its belief that the market is underestimating its earnings potential. It also highlights that its target demographic is less likely to be impacted by rising rates. The broker commented:

We believe the market is underestimating the full earnings potential of AX1’s business, which comprises an attractive distribution business, a set of vertically owned brands, and a portfolio of strong retail banners. We see AX1 as well protected from a potential slowdown in discretionary spend given its exposure to a younger consumer and performance footwear.

In respect to its earnings potential, the broker highlights its store roll out opportunity and potential market share gains. It adds:

The business is yet to achieve its full earnings potential, in our view, notwithstanding a strong recovery post lockdowns. Key sources of incremental upside will be: (1) store roll out in key banners; (2) market share gains among key distributed brands; and (3) vertical product margin upside from a growing mix of apparel. We believe this can be unlocked through the more focused execution strategy prioritising core banners/brands with increased ROIC hurdles (~30%) and improved product execution, particularly in apparel.

Overall, Goldman believes this will underpin EBIT of $170.6 million by FY 2025, which is up $62.3 million from FY 2021 and 12.7% ahead of consensus estimates.

This could make Accent one to consider if you’re looking for exposure to retail sector.

The post Don’t underestimate the earnings potential of this ASX 300 share: Goldman Sachs 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 recommended Accent 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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