Category: Stock Market

It’s hard to believe we’re two months into 2024 and have already put another earnings season to bed… but, here we are!

For investors, the new year has kicked off quite nicely, with the S&P/ASX 200 Index (ASX: XJO) already up a not-too-shabby 0.98%.

With the hope of keeping the positive returns flowing, we asked our Foolish writers which ASX shares look like top buying opportunities right now. Here is what the team came up with:

6 best ASX shares for March 2024 (smallest to largest)

• IPD Group Ltd (ASX: IPG), $506.56 million
• Global X Battery Tech & Lithium ETF (ASX: ACDC), $589.06 million
• Johns Lyng Group Ltd (ASX: JLG), $1.75 billion
• Flight Centre Travel Group Ltd (ASX: FLT), $4.70 billion
• Woolworths Group Ltd (ASX: WOW), $39.85 billion
• CSL Ltd (ASX: CSL), $138.28 billion

(Market capitalisations as of market close 29 February 2024).

Why our Foolish writers love these ASX stocks

IPD Group Ltd

What it does: IPD Group is an Australian electrical product distributor, serving the country’s electrical equipment needs for more than 70 years. I tend to think of it as the Bunnings of specialised electrical products.

By Mitchell Lawler: There are arguably many demand drivers for electrical equipment in the years to come. Whether it is data centres, electric vehicle infrastructure, or construction growth to meet an increasing population – IPD Group is poised to soak up the expansion. 

After many acquisitions, IPD is quickly becoming a one-stop shop for a diverse range of equipment, including power distribution, power monitoring, industrial motor control, and automation. 

Importantly, the company has demonstrated solid growth in recent years. In the latest half, IPD delivered net profit after tax (NPAT) growth of 22.5% to $9.8 million. 

The high insider ownership among management also gives me confidence that this team is committed to the company’s long-term success.

Motley Fool contributor Mitchell Lawler does not own shares of IPD Group Ltd.

Global X Battery Tech & Lithium ETF

What it does: This exchange-traded fund (ETF) tracks the Solactive Battery Value-Chain Index, which contains stocks for companies involved in battery technology.

By Tony Yoo: Battery materials, especially lithium, have been in a painful funk for 15 months now. But investors could start looking at picking up shares for cheap with a view to the long-term demand for batteries from the electrification of fossil fuel-powered devices. 

Rather than attempting to pick the wild fortunes of individual miners, this ETF provides diversification to invest in the industry as a whole. The transition to a less carbon-intensive future is real and, I believe, will be a long-running theme for years to come.

Motley Fool contributor Tony Yoo does not own units of the Global X Battery Tech & Lithium ETF.

Johns Lyng Group Ltd

What it does: The core service this ASX 200 company provides is restoring buildings and contents after an insured event, such as a fire, storm, or flooding. It also has increasing capabilities and exposure related to catastrophe work.

By Tristan Harrison: The Johns Lyng share price dipped after the company reported its FY24 first-half result. While catastrophe revenue may not have been as strong as some investors wished, it’s not the sort of work that is going to grow consistently year after year – I expect it to be lumpy. And, short-term declines can present opportunities.

Johns Lyng’s ‘business as usual’ (BAU) revenue rose 13.7% to $426.1 million, and its normalised NPAT grew by 15.8% to $25 million, demonstrating operating leverage within the business. Plus, it upgraded revenue guidance for FY24 by 3.5%.

Furthermore, I’m excited by the company’s expansion in the strata industry. Acquiring strata managers can result in more consistent (and growing) revenue and also create synergies with the core business.

I am planning to buy more Johns Lyng shares soon. 

Motley Fool contributor Tristan Harrison owns shares of Johns Lyng Group Ltd. 

Flight Centre Travel Group Ltd

What it does: The ASX 200 company is one of the world’s largest travel agency groups. Flight Centre operates in more than 23 countries, with a corporate travel management network that spans more than 90 countries.

By Bernd Struben: I believe the Flight Centre share price remains materially undervalued over the longer term.

Given the company’s earnings and revenue growth, not to mention its return to profitability, I think it has the potential to eventually retrace to pre-COVID levels of more than $40 a share. That essential doubling in the share price won’t come overnight. But the company is certainly moving in the right direction.

For its half-year results, Flight Centre achieved NPAT of $86 million, up from a net loss of $20 million in 1H FY23. The company also reported a 99% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $189 million.

And we saw the return of the interim dividend, which followed on from the reinstatement of the final dividend in September. Flight Centre trades on a fully-franked trailing yield of 1.4%.

Motley Fool contributor Bernd Struben does not own shares of Flight Centre Travel Group Ltd.

Woolworths Group Ltd

What it does: Woolworths is Australia’s largest supermarket operator. It also owns the Big W brand and has a growing presence in the pet care market.

By James Mickleboro: With the company’s shares trading within sight of a 52-week low, I think now is a great time to invest in this high-quality company. Particularly given its leadership position in a defensive market with high barriers to entry.

In addition, recent weakness in the Woolworths share price means it offers an attractive dividend yield in the region of 3.2%.

Goldman Sachs remains very positive on the company. So much so that it has Woolworths shares on its coveted conviction list with a buy rating and $40.40 price target.

Motley Fool contributor James Mickleboro does not own shares of Woolworths Group Ltd.

CSL Ltd

What it does: CSL is the largest healthcare company in Australia. It has an extensive global plasma collections operation, as well as a world-leading vaccine and blood medicine division. 

By Sebastian Bowen: CSL shares have had a rough time of late. Even though the company reported a very solid earnings report this month, investors still haven’t forgiven CSL for its disappointing heart attack drug trial.

I think this presents an opportunity for CSL shares this March, though. The company is still growing at a healthy pace and has recently hiked its dividend by 12%.

CSL’s plasma collections business remains lucrative and should underpin earnings growth for years to come. I think you could do a lot worse than CSL shares at the recent pricing.

Motley Fool contributor Sebastian Bowen owns shares of CSL Ltd.

The post Top ASX shares to buy in March 2024 appeared first on The Motley Fool Australia.

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More reading

• I’m listening to Warren Buffett and loading up on cheap ASX shares in March
• 1 ASX growth stock down 30% to buy right now
• Why Flight Centre, Fortescue, Kelsian, and Neuren shares are dropping today
• Flight Centre shares plunge 7% despite return of the interim dividend
• Flight Centre share price on watch amid 565% half-year profit surge

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Global X Battery Tech & Lithium ETF, Ipd Group, Johns Lyng Group, and Goldman Sachs Group. The Motley Fool Australia has recommended CSL, Flight Centre Travel Group, Global X Battery Tech & Lithium ETF, Ipd Group, and Johns Lyng 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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The Neuren Pharmaceuticals Ltd (ASX: NEU) share price gained 1.1% to close at $19.36 on Thursday despite encountering some turbulence in late afternoon trading.

Most of the gains occurred at the beginning of today’s session with the stock rising to an intraday high of $19.70 shortly after the open.

The ASX biotech then released its full-year FY23 report about 25 minutes prior to the market close today.

A small drop in the Neuren share price occurred at the time of the news release, but it quickly steadied.

We will see the full market reaction to the report tomorrow.

In the meantime, let’s take a look at the numbers.

Neuren Pharmaceuticals share price steady at market close

Here are the highlights for the full-year FY23:

• Revenue of $231.9 million, up from $14.5 million in FY22
• Profit after tax of $157 million, up from $184,000 in FY22
• Net cash from operating activities of $185 million
• Cash and short-term investments at 31 December 2023 of $228.5 million
• Diluted earnings per share (EPS) of $1.201

Neuren received $231.9 million in revenue after licencing its first drug, Daybue, to US partner Acadia Pharmaceuticals (NASDAQ: ACAD).

This included $59.4 million for the first commercial sales milestone, an upfront $145.7 million under the expanded global licence agreement, and $26.8 million from quarterly royalty income.

Other income included interest income of $5.7 million and foreign exchange gains of $2.4 million.

What else happened in FY23?

The Neuren Pharmaceuticals share price recorded the strongest growth of any ASX 200 stock in 2023.

Neuren shares ripped up the charts, gaining 214% over the 12 months to 31 December.

Most of that gain came on the back of FDA approval and the initial sales success of Daybue, which is a world-first drug treatment for Rett syndrome.

The Neuren share price surged again in December after the company released top-line results from its Phase 2 clinical trial of NNZ-2591 in children with the debilitating Phelan-McDermid syndrome (PMS).

There are currently no approved treatments for PMS. According to the release, a significant improvement was observed by both clinicians and caregivers from treatment during the trial.

What did management say?

Neuren CEO Jon Pilcher said:

2023 delivered a profit of A$157 million, an exceptional US launch of DAYBUE by Acadia, US$100 million up-front from an expanded partnership with Acadia for trofinetide worldwide and outstanding results from the first clinical trial of NNZ-2591 in patients.

Neuren has never been in a stronger position, with substantial ongoing cash flows and a series of value creating catalysts approaching in 2024.

What’s next for Neuren Pharmaceuticals?

Neuren Pharmaceuticals has been under pressure over the past fortnight since a US short-seller released a report describing Daybue as a “flop” amid “horror stories” of side effects among patients.

The short seller’s report was released in the US on 15 February, and Neuren issued a response that failed to stop the Neuren Pharmaceuticals share price crashing by 14.2%.

Ahead of today’s full-year FY23 report, Arcadia announced 4Q FY23 net sales of Daybue worth US$87.1 million in the US. This was at the top end of the company’s guidance range of US$80 million to $87.5 million, following on from net sales of US$67 million in Q3 FY23 and US$23 million in Q2 FY23.

Arcadia also provided full-year 2024 guidance of sales between US$370 million and US$420 million.

However, ASX investors were not pleased and the Neuren Pharmaceuticals share price fell 10.3%.

Neuren Pharmaceuticals share price snapshot

The Neuren Pharmaceuticals share price is down 22% in the year to date.

The post What’s with the Neuren Pharmaceuticals share price today? appeared first on The Motley Fool Australia.

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More reading

• Why Flight Centre, Fortescue, Kelsian, and Neuren shares are dropping today
• Why is this ASX 200 pharmaceuticals stock crashing 15% today?
• Here are the top 10 ASX 200 shares today
• A hot ASX stock with ‘multiple catalysts’ looming is 8% down. Time to buy
• Why Inghams, IAG, Neuren Pharmaceuticals, and Pro Medicus shares are sinking today

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

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

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Motley Fool contributor Sebastian Bowen has positions in Ramsay Health Care. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PolyNovo. The Motley Fool Australia has positions in and has recommended Harvey Norman. 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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Earnings season is a common time of year for ASX 300 company directors to trade shares for their own investment portfolios.

This is because ASX listing rules encourage directors to delay personal trades until shortly after releasing their major financial reports.

It’s a good time to trade because all the latest financial results are on the table for all of us to see.

Go big or go home ASX REIT buy-up

The biggest insider buy so far this earnings season appears to be a $42 million ASX 300 REIT buy-up.

David Di Pilla, the managing director and CEO of the Healthco Healthcare and Wellness REIT (ASX: HCW) bought 31,912,867 shares in the real estate investment trust (REIT) this month.

Di Pilla paid an average price of $1.335. This on-market trade was worth $42.6 million and change.

The ASX 300 REIT explained the trade as follows:

As announced on 2 May 2023, HMC entered into a cash settled total return swap with Macquarie Bank Limited in respect of 31,912,867 units (TRS). HMC has now unwound the TRS and retained exposure to those units by acquiring them directly on market.

The acquisition was approved by HCW unitholders pursuant to Resolution 3 at the HCW Extraordinary General Meeting held on 24 July 2023.

The Healthco Healthcare and Wellness REIT share price was up 1.85%, trading at $1.375 at the close on Thursday.

Other major ASX 300 insider buys in February

Corporate Travel Management Ltd (ASX: CTD)

Founder and managing director Jamie Pherous bought 87,500 Corporate Travel Management shares this month in an on-market trade worth just shy of $1.4 million. He paid an average price of $15.98 for the ASX 300 travel stock. This is the first time Pherous has traded in the travel share in two-and-a-half years.

The Corporate Travel Management share price closed 0.51% higher at $15.92 on Thursday.

ASX Ltd (ASX: ASX)

ASX chair Damian Roche snapped up 10,000 shares in the market operator this month, buying at an average price of $64.363. His total investment was $643,628.

The ASX share price was up 0.94% to $65.75 in afternoon trading.

Nico Resources Ltd (ASX: NC1)

Nico Resources non-executive chair Peter Cook invested $300,000 in purchasing two million shares in the ASX 300 nickel miner. He paid an average price of 15 cents apiece. Nickel was added to the Critical Minerals List this month amid a massive and growing supply coming out of Indonesia, where China is funding the rapid development of mines.

The Nico Resources share price closed 2.86% higher at 18 cents.

IGO Ltd (ASX: IGO)

IGO managing director and CEO Ivan Vella purchased 41,500 IGO shares on-market at an average price of $7.274 this month. This investment in the nickel and lithium producer totalled $301,852. IGO chair Michael Nossal also upped his holdings by 25,000 shares, paying an average price of $7.234 per share or $180,840 in total.

The IGO share price was down 2.46% to $7.94 at the close on Thursday.

Whitehaven Coal Ltd (ASX: WHC)

Non-executive director Michael McCormack bought 30,000 Whitehaven shares this month in an on-market trade worth just over $214,000. He paid an average of $7.144 for the ASX 300 coal stock.

The Whitehaven share price closed 1.57% lower at $6.92 on Thursday.

The post $42 million tops the most notable ASX 300 insider buys this earnings season appeared first on The Motley Fool Australia.

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More reading

• 3 ASX dividend shares to buy for a passive income boost
• Here are the top 10 ASX 200 shares today
• 4 directors are buying the dip on this ASX lithium stock
• I’d buy these great ASX growth shares in March
• 25 ASX 200 shares with ex-dividend dates next week

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Corporate Travel Management. 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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Brokers are expecting good things from two S&P/ASX 300 Index (ASX: XKO) shares, judging by today’s rating and price target upgrades.

A price target is where a broker thinks a share price could be in 12 months from today. The higher the target, the more the brokers expect the company to deliver in terms of share price growth. Of course, there’s no guarantee any share price will rise a certain amount in 12 months – it might not rise at all.

Having said that, let’s look at two of the ASX 300 shares that brokers are more optimistic about.

Boss Energy Ltd (ASX: BOE)

Broker Bell Potter raised its rating on the energy company to a speculative buy with a price target of $6.34.

At the current Boss Energy share price, that implies a possible rise of around 30% from here.

As reported by my colleague James Mickleboro, Bell Potter said this about the ASX uranium share:

Our valuation is reduced slightly to $6.34/sh (previously $6.41/sh) on changes to our corporate expenditure and associated earnings. With the recent sell-off in BOE we have decided to move to a Speculative Buy (from Speculative Hold) in-line with our ratings structure.

Uranium fundamentals continue to support our thesis being 1) advancement in Nuclear energy across the globe (60 reactors currently under construction) filtering through to a growing demand for U3O8 and 2) a lack of near-term supply as producers exited the market post Fukushima.

The recent acquisition of a 30% interest in the Alta Mesa joint venture, diversifies BOE’s operations and revenue streams, making BOE one of only two geographically diversified uranium producers in CY24.

Thanks to a $62.3 million gain on its “investment in uranium and financial assets”, Boss Energy was able to report an accounting net profit of $57.6 million in the FY24 first-half result, up from a loss of $2.4 million in the prior corresponding period.

The ASX 300 share also announced it has passed another critical milestone in the development of its Honeymoon project, with the start of commissioning the first ion-exchange circuit within the processing plant. The business added it had seen successful modification and refurbishment of the re-agent systems.

Those achievements mean Honeymoon is now running 24 hours a day, seven days a week, accelerating its push towards production and ramp-up.

In the past year, the Boss Energy share price has risen by 90%.

APM Human Services International Ltd (ASX: APM)

The broker Jefferies has raised its price target on the ASX 300 share to $1.80. That would be a rise of around 12% from the current APM Human Services International share price.

Yesterday, the business reported its FY24 first-half result and announced it had received an enlarged bid from CVC of $2 per share, which was 25% higher than the $1.60 per share bid.

Jefferies’ price target is roughly halfway between the current price and the bid price.

However, there’s no guarantee there will be a binding bid submitted, though CVC has been granted a four-week exclusivity period until 27 March 2024. The offer is conditional on several elements, including due diligence, debt financing and regulatory approvals.

Since the start of 2024, the APM share price has risen close to 30%.

The post These 2 ASX 300 shares were just upgraded by brokers appeared first on The Motley Fool Australia.

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More reading

• Bell Potter just upgraded this ASX uranium stock
• APM share price leaps 16% on enhanced takeover bid and results
• Why APM, DroneShield, EOS, and NextDC shares are charging higher
• How ASX uranium shares like Paladin are ‘in a great position to capitalise’
• Why A2 Milk, APM, Boral, and Reliance Worldwide shares are pushing higher today

Motley Fool contributor Tristan Harrison has positions in APM Human Services International. 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 APM Human Services International. 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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Top broker Goldman Sachs reckons US big pharma stock Eli Lilly And Co (NYSE: LLY) has the credentials to replace electric vehicle producer Tesla Inc (NASDAQ: TSLA) in the Magnificent Seven.

That’s a pretty big call, but then again, Eli Lilly’s GLP-1 diabetes and obesity drugs are a pretty big deal.

Why could this US stock replace Tesla in the Magnificent Seven?

Just as electric vehicles have been a game changer in car manufacturing, GLP-1 drugs are a game changer in healthcare and the fight against the global epidemics of Type 2 diabetes and obesity.

Eli Lilly is the second-mover in the GLP-1 space. It has followed Novo Nordisk (NYSE: NVO), the Danish pharmaceutical company that invented the more well-known GLP-1 drugs, Ozempic and Wegovy.

But before we go any further, let’s recap who the Magnificent Seven are.

The club comprises seven of the largest US tech stocks by market capitalisation that have led market returns in recent years. All of them are involved in large technology-driven global growth trends.

They are Apple Inc, Amazon.com Inc, Alphabet Inc, Meta Platforms Inc, Microsoft Corp, Nvidia Corp, and Tesla Inc.

The chart below shows their share price percentage growth rate over the past two years.

Who is Eli Lilly?

US stock Eli Lilly is a major pharmaceutical company founded by Colonel Eli Lilly 150 years ago.

Eli Lilly’s diabetes drug is called Mounjaro. Its obesity drug, Zepbound, is simply a larger dose of the same ingredient in Mounjaro, which is tirzepatide.

Tirzepatide is a GIP and GLP-1 receptor agonist, so it activates both GIP (glucose-dependent insulinotropic polypeptide) and GLP-1 (glucagon-like peptide-1) hormone receptors.

This is what makes Eli Lilly’s products different to the GLP-1 products of its first-mover rival.

Novo Nordisk manufactures the world-renowned diabetes drug Ozempic and its obesity equivalent, Wegovy. The key ingredient in both drugs is semaglutide, which is a GLP-1 receptor agonist only.

Ozempic has the first-mover advantage in the GLP-1 space. The United States Food and Drug Administration approved Ozempic in December 2017, and then Wegovy in June 2021.

The FDA approved Eli Lilly’s Mounjaro for diabetes in May 2022 and Zepbound in November 2023.

While Ozempic and Wegovy are the most well-known GLP-1 brands, Zepbound is a significant threat given it is more effective for weight loss.

In clinical trials, Zepbound delivered an average of 21% weight loss over 72 weeks in patients with obesity, but without diabetes, at the highest dose.

This compares to a 15% to 16% average weight loss over 68 weeks in patients with obesity or overweight, but no diabetes, taking Wegovy.

The future of GLP-1s and these US stocks

Most experts agree the runway for obesity drugs, in particular, is enormous. Novo Nordisk estimates there are 988 million adults and children globally living with obesity. On top of that, there are 483 million people living with Type 2 diabetes. (Obesity is a common precursor to Type 2 diabetes.)

The astounding effectiveness of these drugs is why both US stocks have shot the lights out in recent times.

The chart below shows the percentage growth of each US stock over the past two years. As you can see, Eli Lilly has produced better share price growth.

Eli Lilly shares closed last night at $757.64, up about 202% over the past two years.

Novo Nordisk shares closed at $121.54, up 137% over the same timeframe.

Back to the Magnificent Seven…

All of this excitement over GLP-1s is why Goldman Sachs analyst Chris Shibutani reckons Eli Lilly may be either the 8th magnificent US stock or a replacement for Tesla in the Magnificent Seven.

As reported on TipRanks, Shibutani says:

While LLY has traditionally not been discussed as part of the Mag-7 club given it’s not a Tech stock, we believe it is now well-established in the narrative of companies contributing to a major technological development that could have large societal ramifications.

The analyst notes a rotational preference for Eli Lilly over the electric vehicle maker in recent times.

We note that recent price action between LLY and TSLA, for example, has been exhibiting a clear rotational preference for LLY as the increasingly favored name between these two mega-cap compounders.

This is because Tesla is “between two major growth waves”. Meantime, Eli Lilly is “entering a powerful new product cycle” after the US FDA approved Zepbound in November.

He added:

It may not be surprising to see this rotation continue, in our view, as mutual-funds continue to right-size their LLY positions.

Shibutani said the US healthcare stock “screens better” than Tesla on several metrics, including valuation, stock price growth, and catalysts.

He cites studies that Eli Lilly is undertaking on obesity-related outcomes. The first study relates to sleep apnea, which is often caused by obesity.

Due in March, the results of that study will be of particular interest to Resmed CDI (ASX: RMD) investors.

Resmed, which makes CPAP machines used by sleep apnea sufferers, took a more than 30% hit to its share price last year as excitement grew over GLP-1s.

Resmed CEO Mick Farrell sought to allay investors’ concerns by explaining that the total addressable market for sleep apnea was huge at 1.4 billion by 2050. But he said the company did expect GLP-1s to take away 200 million of that.

Of the 19 analysts covering the US big pharma stock on TipRanks, 16 say Eli Lilly shares are a buy. Three say hold.

Of the 34 analysts covering Tesla shares, 12 say buy, 17 say hold, and five say sell.

The post Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven appeared first on The Motley Fool Australia.

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More reading

• Buy and hold these ASX ETFs for 10 years or more
• Why Tesla stock tanked in January
• Stock-split watch: Is Tesla next?
• Tesla stock has tanked 27% in 2024: Is it time to buy the dip?

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. 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 Bronwyn Allen has positions in Novo Nordisk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Goldman Sachs Group, Meta Platforms, Microsoft, Nvidia, ResMed, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Novo Nordisk and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, and Nvidia. 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 materials sector has been a weak spot within the Australian share market during 2024 so far. Dragging the sector down nearly 11% year-to-date, many ASX mining shares have succumbed to softening commodity prices.

Still, the entire sector cannot be painted with one brush. Each commodity faces its own set of conditions impacting supply and demand, and thus its price.

For example, the price of lithium has wilted away amid a softening appetite for EVs. In contrast, energy-dense uranium has flown to new heights as nuclear energy finds a growing place in the energy transition. This is evidence of how different commodities — and their associated ASX mining shares — can perform in dissimilar ways.

So, what are experts heralding as the next outcast and outperformer in the ASX mining sector?

Bleak outlook for an industry on life support

When mines are getting shuttered and companies are chasing government assistance, it’s usually a fair sign that the situation is not good.

Australia once held the title of fifth-largest nickel producer in the world two short years ago. But those were different times. A time when the battery metal reached US$48,000 per tonne. That price is now a distant memory in 2024, with nickel fetching US$17,000 per tonne today.

The culprit? Indonesia ramped up nickel production to an enormous 1.8 million tonnes last year — accounting for half the world’s nickel supply. Not only is there a lot more nickel on the market from Indonesia, but it’s also at a price that others are incapable of achieving.

In turn, BHP Group Ltd (ASX: BHP) had to write down the value of its nickel assets on 15 February. An unnerving US$2.5 billion was erased from the carrying value of the company’s nickel assets in Western Australia.

According to Sam Berridge of Perennial Funds Management, these troubling conditions could continue. The portfolio manager expects the flood of cheap supply to continue, noting a real concern that nickel prices could be at risk amid new battery chemistries that do not contain nickel.

Although a diversified materials miner, BHP Group has seen its share price weaken 13% since the high nickel prices in 2022. Meanwhile, despite operating in Indonesia, Nickel Industries Limited (ASX: NIC) has suffered a 57% fall in its share price.

Nickel Industries reported record gross profits today for FY23. However, net profit after tax (NPAT) declined 16% to $176.2 million.

Which ASX mining sector could prosper?

It’s not all dark clouds in the Aussie mining sector. Another metal that is critical in the electrification trend is copper. Analysts believe the conductive metal won’t need to weather an oversupply like nickel anytime soon.

Ben Cleary of Tribeca expects copper to be in a supply deficit for most of the decade citing costs as a deterrent from new supply.

In addition, much of the world’s supply is centred in Chile and Peru. These jurisdictions are susceptible to interruptions. For instance, 600,000 tonnes of copper production was canned last year between strikes at the Las Bambas mine and a government-enforced closure of the Cobre Panama mine.

Another commodity expert, Daniel Hynes of ANZ, reckons US$10,000 per tonne of copper is on the cards this year. Currently, a tonne of copper goes for US$8,474, suggesting an 18% upside.

ASX mining companies with copper exposure include BHP, Rio Tinto Ltd (ASX: RIO), Sandfire Resources Ltd (ASX: SFR), and 29Metals Ltd (ASX: 29M).

The post One ASX mining sector at risk of more pain, and one ready to soar! appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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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Fortescue Metals Group Ltd (ASX: FMG) shares are down 2.1% in afternoon trade on Thursday.

At the time of writing, shares in the S&P/ASX 200 Index (ASX: XJO) mining stock are changing hands for $25.46 apiece.

Longer-term shareholders won’t have much to complain about, though.

As you can see in the chart below, shares in the ASX 200 miner remain up a healthy 15% over the past 12 months. And that’s not including the two fully franked dividends.

Fortescue paid out a final dividend of $1 per share on 28 September.

Eligible passive income investors can expect the interim dividend of $1.08 per share to land in their bank accounts on 27 March. Fortescue shares traded ex-dividend yesterday, 28 February.

That equates to a full-year payout of $2.08 per share. Or a fully franked trailing yield of 8.2% at the current share price.

So, how are some ASX passive income investors earning a yield of 21.6%?

A supercharged yield from Fortescue shares

The answer has to do with timing.

Now, timing the market is no easy feat. Very few investors will get this right with significant consistency. And picking the bottom for ASX stocks in any particular cycle often comes down more to luck than skill.

With that said, there are times when leading ASX 200 stocks, like Fortescue shares, have been unreasonably hammered due to factors outside of their control. Factors that are likely to fade away in time, offering investors attractive entry points before the wider market shakes off its fear and sends the stock rebounding.

As legendary investor Warren Buffett says, “Be greedy when others are fearful.”

An opportune time to have exhibited this greed was during the early months of the global pandemic.

As uncertainty swept across the world in 2020, Fortescue shares, like most all stocks, were heavily sold off by a cadre of fearful ASX investors.

On 27 March 2020, this sell-down saw the ASX 200 mining stock close the day trading for $9.60 a share.

Passive income investors who swallowed their fear and bought in at that bargain price will be earning the same dividends from Fortescue as every other shareholder.

Meaning these brave investors are earning a fully franked yield of 21.6% from their Fortescue shares.

Not to mention they’ve enjoyed a four-year share price gain of 165%!

The post A 22% yield on Fortescue shares? Here’s how these passive income investors achieved it! 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 Zip Co Ltd (ASX: ZIP) share price has been staging a quiet, but rather remarkable recovery in recent months. It was only back in October that the buy now, pay later (BNPL) share was trading for around 26 cents.

Today, those same shares are worth 94 cents each, up an extraordinary 263% in roughly four months.

So some Zip shareholders are certainly celebrating this lucrative run. But perhaps not as many as there should be.

Last October, which turned out in hindsight to be unfortunate timing, Zip undertook what’s known as a ‘small shareholding sale facility’. This involved a share buyback of any shareholder who, at the time, owned under $500 worth of Zip shares.

These programs are often undertaken by companies that have experienced a massive drop in share prices. This, at the time, included Zip. At that point, the company had seen its sales fall more than 97% between February 2021 and October 2023.

The purpose of a small shareholding sale facility is to reduce the regulatory burden of the company by removing large numbers of investors who only have small sums invested in the stock.

Zip ruffles feathers with small share sales

The problem was this was an ‘opt-out’ program, rather than an ‘opt-in’ one. Zip itself stated in December that 69,669 out of 78,000 eligible small shareholders had not opted out of the program and thus had their shares sold.

According to a report from the ABC, there are more than a few would-be Zip shareholders who had their holdings stripped because they failed to opt-out. These investors are now feeling ripped off, given the subsequent Zip share price recovery.

One former shareholder told the ABC this:

I don’t think there is any justifiable reason a small shareholding sale facility like this should ever be anything but OPT-IN… I think it’s unethical to ever sell someone’s shares without their explicit consent.

Making matters worse for these investors, Zip’s management was heavily buying shares around the same time smaller investors were having their stock bought back. ASX filings show that Zip chair Diane Smith-Gander and board member Meredith Scott purchased 111,111 and 35,607 shares respectively on 28 September.

That’s not something that many of Zip’s smaller shareholders reportedly appreciated.

Another former Zip investor was quoted as stating:

In my opinion they should know that the timing of their share purchases don’t look great, given they were executed two days before a prohibited trading period and six days before the announcement of the small shareholding sale facility…

From an optics perspective, I personally think they look terrible. However, in terms of timing the market, they couldn’t have done better.

Of course, Zip hasn’t done anything illegal here. The company is perfectly entitled to conduct a small shareholding sale facility. And its management is welcome to buy shares of their own company outside the restricted periods.

Zip itself told the ABC this:

It was an initiative that was a few months in the planning and… we had a very large register that was very costly to maintain… It [the small shareholding sale facility] was largely a cost-driven exercise. The directors have complied with the shareholding policy or the share purchasing policy of the company and again that was disclosed to market at that time.

But many of Zip’s former shareholders have taken their complaints to the Australian Securities and Investments Commission (ASIC). ASIC’s response didn’t let Zip entirely off the hook:

ASIC has not observed any non-compliance but believes there is room for entities to more clearly articulate the action required by those identified as holding small shareholdings should they wish to retain their shares.

The Zip share price is up 4.97% today at 96 cents a share.

The post Shares sold: Why Zip is under fire from its own shareholders appeared first on The Motley Fool Australia.

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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 positions in and has recommended Zip Co. 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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If you want to receive the next Lovisa Holdings Ltd (ASX: LOV) dividend, then you will need to be quick.

That’s because the rapidly growing fashion jewellery retailer’s shares will be going ex-dividend soon.

When a company’s shares go ex-dividend, it means the rights to the dividend are settled.

As a result, buying shares on or after that day will lead to you missing out on pay day. Instead, the seller of the shares will be the one getting a paycheck.

The Lovisa dividend

As a reminder, earlier this month Lovisa released its half-year results and reported an 18.2% increase in revenue to $373 million and a 12% lift in net profit after tax to $53.5 million.

This strong growth was underpinned by its global expansion, with 74 stores opening during the half to take the total to 854 by the end of December.

This allowed the Lovisa board to increase its 30% franked interim dividend by almost 32% to 50 cents per share.

Based on the current Lovisa share price of $31.87, this equates to a reasonably attractive 1.6% dividend yield for investors.

When is pay day?

Investors won’t have long to wait until this dividend is paid.

Lovisa’s shares are scheduled to go ex-dividend for the 50 cents per share distribution next week on Tuesday 5 March.

After which, the company is planning to make its payment to eligible shareholders the following month on 18 April.

Should you invest?

Most brokers appear to believe that Lovisa’s shares are trading above or about fair value following a strong run over the last 12 months.

For example, Morgan Stanley has an overweight rating and $32.50 price target on its shares and Bell Potter has a buy rating and $30.70 price target on them. These price targets are both broadly in line with where its shares trade today.

The post Should you buy Lovisa shares before they go ex-dividend? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. 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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