Category: Stock Market

When looking for ASX stocks to buy, investors are understandably doing so in an optimistic mood.

And that’s why often they concentrate on the potential for upside during analysis more than the downside risks.

However, IML portfolio manager Daniel Moore pointed out how sport shows that reducing errors is crucial.

“Novak Djokovic is, probably, the GOAT [greatest of all time] of tennis. Does he hit more winners than other top players? No, not particularly. But he makes fewer mistakes.”

Last January, on his way to winning the Australian Open, Djokovic hit 20% more winners than his opponents. But it was the fact that his opposition hit 40% more unforced errors than The Joker that propelled him to the trophy.

“Novak’s low error count is a key part of his incredible, enduring success. It might not make him popular, but it makes him a winner,” Moore said on the IML blog.

“Don Bradman, the GOAT of cricket, only hit 6 sixes throughout his storied career – if you don’t hit it in the air, you can’t get caught out.”

This is how you evaluate downside of an ASX stock

So how do you check the downside of ASX stocks before you buy them?

Moore laid out six checks that his team performs:

• Cyclicality of earnings
• Balance sheet
• Management track record
• Financial accounts
• Regulatory risk
• Valuation

Cyclicality refers to whether the earnings are currently on the way up or down. 

Balance sheet and financial accounts sound similar, but are distinct items to check.

The former is whether the business can “withstand a downturn in the economy or might it need to raise equity and so dilute the investments of current shareholders”.

The latter is the question of how transparent management is with its reporting.

“Are there any concerning issues buried deep in the accounts?”

Moore added that the best investors are the ones who can control their “emotions and biases” as much as analytical ability.

“A lot of avoiding big losses is ensuring that you are in control of your own emotions, that you don’t get caught up in the hype. That you don’t fall for fads or FOMO.”

The post 6 ways to check if an ASX stock could lose you money appeared first on The Motley Fool Australia.

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More reading

• Morgans says these ASX dividend shares are buys this month
• Have Core Lithium shares finally reached a bottom now?
• 3 high-yield ASX shares for considerable passive income (7%-plus dividends!)
• History suggests snubbing the ASX 200 at record highs could be a costly mistake — here’s why
• How ASX shares vs. property performed in January

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

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If you’re on the lookout for ASX dividend shares to buy in February, then read on!

That’s because listed below are two top options that Morgans is feeling bullish on.

Here’s what the broker is saying about them:

Healthco Healthcare and Wellness REIT (ASX: HCW)

The first ASX dividend share that Morgans is positive on is the Healthco Healthcare and Wellness REIT.

This real estate investment trust has a focus on hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties.

This is a nice spot to be in as these properties are relatively defensive and usually in demand whatever is happening in the economy.

Morgans believes the company is well-placed to pay big dividends in the coming years. It is forecasting dividends per share of 8 cents in both FY 2024 and FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.35, this will mean dividend yields of 5.9%.

Morgans has an add rating and $1.67 price target on them.

Universal Store Holdings Ltd (ASX: UNI)

Morgans also thinks that this youth fashion retailer could be an ASX dividend share to buy.

It likes the Universal Store, Perfect Stranger, and Thrills owner due to its positive growth outlook. In addition, its analysts think the company’s shares are “undervalued at a single digit FY25 P/E.”

Another positive is that Morgans is forecasting some big fully franked dividends. It had pencilled in dividends per share of 26 cents in FY 2024 and 29 cents in FY 2025. Based on the current Universal Store share price of $4.16, this will mean yields of 6.25% and 7%, respectively.

Morgans has an add rating and $4.55 price target on its shares.

The post Morgans says these ASX dividend shares are buys this month appeared first on The Motley Fool Australia.

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More reading

• Buying ASX retail shares? You’ll want to see these numbers
• Get a big income boost from these high-yield ASX dividend stocks
• 2 excellent ASX dividend shares I’d buy with $3,000
• Brokers name 3 ASX dividend shares to buy now
• 2 ASX dividend shares to buy next week

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

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There’s no getting away from the fact that Core Lithium Ltd (ASX: CXO) shares have been on an absolute horror run of late.

On Thursday the lithium miner’s shares closed the day at 19.5 cents.

This means that they have lost approximately 83% of their value since this time last year.

To put that into context, a $10,000 investment a year ago would now be worth ~$1,700.

And to recoup those losses, Core Lithium’s shares would need roughly recover by almost 500%. That’s certainly a tall order.

Furthermore, one leading broker believes that its shares haven’t even bottomed yet.

Where next for Core Lithium shares?

According to a recent note out of Goldman Sachs, its analysts have a sell rating and 14 cents price target on its shares.

This implies further downside potential of approximately 28% for investors from current levels.

Goldman thinks Core Lithium’s shares are still expensive despite the huge decline over the last 12 months. It said:

We rate CXO a Sell on: (1) Valuation, trading at a premium on ~1.4x NAV and an implied LT spodumene price of ~US$1,300/t (peer average ~0.9x & ~US$1,070/t), with the lowest average operating FCF/t LCE on a more moderated/deferred production ramp up with risk of deferred mine restart, (2) Potential resource growth/ development now likely longer dated, (3) Ongoing production/development funding risk.

It also worth noting that the broker has updated its earnings estimates to reflect the weak out look for lithium prices.

It is now forecasting the following for EBITDA through to FY 2028:

• $58 million in FY 2024
• $4 million in FY 2025
• $17 million in FY 2026
• $56 million in FY 2027
• $105 million in FY 2028

Overall, it looks likely to be a tough few years for Core Lithium.

In light of this, the broker thinks investors should be buying IGO Ltd (ASX: IGO) shares for their lithium exposure. You can read about that recommendation here.

The post Have Core Lithium shares finally reached a bottom now? appeared first on The Motley Fool Australia.

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More reading

• Where will the bottom be for the scorched lithium price?
• Uh oh! Does this spell more bad news for ASX 200 lithium shares?
• These are the 10 most shorted ASX shares
• Core Lithium shares dive 5% on exploration update
• Core Lithium share price soars 5% as production increases and costs fall

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.

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Reliable and ideally high-yield passive income is the primary goal of income investors, and ASX 200 shares deliver a respectable long-term average dividend yield of about 4%, plus some franking.

But in today’s era of 5.75% savings rates, that just ain’t good enough!

We need to pick some higher-yield ASX shares if we want to beat the no-risk return rate, not to mention stay ahead of inflation, which is currently 4.1% per annum (but falling).

We reviewed the 2024 consensus dividend forecasts for a variety of ASX shares on CommSec to uncover three high-yield options for your consideration.

3 high-yield ASX shares tipped to pay 7% dividends or more

Fortescue Ltd (ASX: FMG)

As published on CommSec, the consensus forecast annual dividend for this ASX 200 mining giant this year is $2.134 per share. This is higher than the 2023 dividend of $1.75 and the 2022 dividend of $2.07.

You can thank high iron ore prices for that!

Let’s see how this translates for ASX income investors purchasing $10,000 worth of Fortescue shares. Based on the current price (at the time of writing) of $29.51, that buys 338 Fortescue shares for $9,974.38.

If we multiply 338 by $2.134, we get a total annual dividend of $721.29. The gross dividend, including 100% franking, equals $1,030.42.

That brings your total gross dividend yield to 10.33%, making this a considerably high-yield share in 2024.

That leaves the savings and inflation rates in the (Pilbara) dust!

Westpac Banking Corp (ASX: WBC)

The consensus forecast annual dividend for Westpac shares in 2024 is $1.424 per share. This is a tad higher than the 2023 dividend of $1.42 and the 2022 dividend of $1.25.

Now for our case study.

Our passive income investors purchase $10,000 worth of this ASX 200 bank share. They pay the current Westpac share price of $23.72, giving them 421 shares at a total cost of $9,986.12.

If we multiply 421 by $1.424, we get a total annual dividend of $599.50. The gross dividend, including the 100% franking, equals $856.43.

That’s a total gross yield of 8.58%, meaning this high-yield share also beats today’s savings and inflation rates.

Ampol Ltd (ASX: ALD)

The consensus forecast annual dividend for Ampol shares this year is $1.995 per share. This is down on the 2023 dividend of $2.50 but higher than the 2022 dividend of $1.61.

Investors who buy $10,000 worth of this ASX 200 energy share at the current price of $36.62 would end up with 273 Ampol shares. Total cost: $9,997.26.

If we multiply 273 by $1.995, we get a total annual dividend of $544.63. The gross dividend, including the 100% franking, equals $778.05.

That brings your total gross dividend yield to 7.78%.

Boom. Ampol is another high-yield dividend share that beats the savings and inflation rates of today.

The post 3 high-yield ASX shares for considerable passive income (7%-plus dividends!) appeared first on The Motley Fool Australia.

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More reading

• Better buy: Westpac or CBA shares?
• 2 ASX 200 dividend shares to buy in 2024 for dependable passive income
• Westpac ordered to pay $10 million after ‘unconscionable conduct’
• Breaking! NAB shares (and CBA) just hit a new 52-week high
• $30 each? Here’s why the Fortescue share price just hit a new all-time high

Motley Fool contributor Bronwyn Allen has positions in Westpac Banking Corporation. 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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It was a historic day for the S&P/ASX 200 Index (ASX: XJO) yesterday, eclipsing its former record high. The benchmark index trotted upwards to a fresh ceiling of 7,682.30, adding to a smashing three-month stretch for Aussie investors.

The milestone is met with great joy for those who have already jumped aboard the wealth-making equity train. However, the accomplishment might be interpreted differently by people still on the sidelines hoping to take the plunge into stocks.

Like a good pair of R.M. Williams leather boots, waiting for a discount may lead to paying a higher price at a later date.

Unfortunately, the mind can sometimes be bad at understanding value. We tend to only perceive value as a price lower than what we’ve seen before. We assume a new high price represents poor value, even though it might still be a good deal for the product or service.

Let’s make use of history for a more informed interpretation.

ASX 200 at record high, is the market overvalued?

History can be a great teacher. Still, it is important to remember that past performance is not an indicator of future performance. However, it can give us a better picture of what is possible under similar conditions.

Since 1980, the Australian share market has seen its fair share of crashes. But, like clockwork, Australia’s collection of the top 200 listed companies has driven the index to new heights time and time again.

As shown above, once the ASX 200 surpasses its previous record high, the index often marches onwards.

For example, the market tripled in value after clawing back from the damaging 1981 crash. Likewise, Aussie investors relished a 55% gain beyond the freshly set record high that followed the 1987 implosion.

On the flip side, if an investor sold $10,000 worth of shares at the September 1987 high and waited for the index to return to its former high, they’d have missed out on $23,859 in gains to date — excluding the accumulation of dividends.

The reality is that if history repeats itself, there’s rarely a ‘bad time’ to invest, given a long enough time horizon.

Data from prominent exchange-traded fund (ETF) provider Vanguard Australia demonstrates this well. If you had invested at any point in the last 30-odd years, the chance of making a gain within a year was 79%. If the investment period is expanded to 10 years — suddenly, the chance of making a positive return is 100%.

A tactic to remove the guesswork

Price is only one variable of the value equation. A $500 pair of boots that last 10 years offers better value than a $300 pair of boots that fall apart after five years. In other words, the record high of the ASX 200 is meaningless in terms of value without knowing what you’re getting for the price.

Although the price-to-earnings (P/E) ratio of the ASX 200 is at its highest level in two years, it’s still well below the multiples seen around 2016 and 2017. Furthermore, despite those elevated multiples, the ASX 200 continued to climb amid increasing company earnings, as shown below.

So, how does one know when the right time to plunge into shares is? Run to the antique shop and hope to find a crystal ball with magical powers… I’m joking, of course.

The honest answer is there’s no accurate and reliable way of knowing when to buy to avoid a crash. Here’s the kicker, though — if you’re investing for long enough, you’ll likely encounter it regardless.

My approach is to implement dollar-cost averaging. Not only does it remove the stress of investing at a temporary high, but it also benefits a portfolio during crashes by buying more shares for the same amount of money.

This method of buying on a consistent cadence means less time sweating over what a record high for the ASX 200 means and more time enjoying life.

The post History suggests snubbing the ASX 200 at record highs could be a costly mistake — here’s why appeared first on The Motley Fool Australia.

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More reading

• After 8 days of gains and a record high why is the ASX 200 tumbling today?
• 5 things to watch on the ASX 200 on Thursday
• These were the best performers on the ASX 200 in January
• Here are the top 10 ASX 200 shares today
• 3 big questions about the Australian stock market in 2024

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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Shares vs. property: It’s an age-old debate as to which investment is best, and if you happen to own both and want to monitor the monthly performance of each, we’ve got you covered.

The latest data from CoreLogic reveals the median Australian house price increased by 0.5% in January. That’s up on December’s 0.4% rise but down from the 0.7% growth seen in November.

CoreLogic research director Tim Lawless said house values continued to rise faster than unit values. The price gap between the house and apartment medians rose to a record high of 45.2% in January.

Despite high interest rates and cost-of-living pressures, Lawless said property sales volumes remained elevated due to strong migration (518,000 people net in 2023) and an extremely tight rental market likely incentivising renters to buy.

Recent data from the Bureau of Statistics backs this up. The number of loans written for first-home buyers increased by 20% over the 12 months to November 2023.

Shares vs. property price growth in January

Here is how shares vs. property performed in terms of price growth in the month of January.

Property market	Median house price	Price growth in January	12-month price growth
Sydney	$1,400,630	0.2%	12.5%
Melbourne	$948,041	(0.4%)	3.8%
Brisbane	$875,991	1%	13.3%
Adelaide	$763,606	1.3%	8.6%
Perth	$691,100	1.6%	15.6%
Hobart	$700,810	(0.5%)	(1.1%)
Darwin	$578,741	0.5%	(0.2%)
Canberra	$967,864	0%	1%
Regional New South Wales	$739,067	0.2%	2.4%
Regional Victoria	$598,608	0%	(1.7%)
Regional Queensland	$615,169	0.3%	8.6%
Regional South Australia	$398,915	0.4%	9.6%
Regional Western Australia	$477,690	0.8%	8.2%
Regional Tasmania	$528,046	(0.6%)	(0.2%)
Regional Northern Territory	$446,345	1.8%	(4%)

Source: CoreLogic

Top 5 risers of the ASX 200 in January

The S&P/ASX 200 Index (ASX: XJO) appreciated by 1.18% in January.

According to CommSec data, these ASX 200 shares below were the top risers of the month.

ASX 200 share	Share price growth in January
Boss Energy Ltd (ASX: BOE)	38.21%
Megaport Ltd (ASX: MP1)	38.15%
Paladin Energy Ltd (ASX: PDN)	31.47%
Alumina Limited (ASX: AWC)	28.73%
Elders Ltd (ASX: ELD)	19.26%

Source: CommSec

Check out how ASX shares vs. property performed in 2023 here.

The post How ASX shares vs. property performed in January appeared first on The Motley Fool Australia.

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More reading

• These were the best performers on the ASX 200 in January
• Top ASX shares to buy in February 2024
• Here are the top 10 ASX 200 shares today
• If you’d put $40,000 in this ASX uranium stock 5 years ago, you’d have $600,000 now
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen has positions in Alumina. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Elders and Megaport. 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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BHP Group Ltd (ASX: BHP) stock and two other ASX mining giants are on watch in 2024, but for differing reasons.

Let’s take a look at the 12-month share price targets on three popular ASX mining stocks, and the outlook for the commodity prices relevant to each of these companies.

BHP Group Ltd (ASX: BHP)

The BHP stock price is $47, down 0.57% at the time of writing on Thursday. Goldman Sachs has a 12-month price target of $50.50 on BHP shares.

BHP mines iron ore, copper, metallurgical coal, and nickel. It’s also developing a potash operation.

In a recent report, Goldman said iron ore (62% Fe) averaged US$120 per tonne (pt) in 2023, steady on 2022. The broker estimates an average price of $US110 pt in 2024 and US$95 pt in 2025.

Copper averaged US$3.85 per pound (pp) in 2023, down from US$4 pp in 2022. The broker estimates US$4.17 in 2024 and US$4.76 in 2025.

Semi-soft (SSCC) coal averaged US$195 pt in 2023, down from US$287 pt in 2022. Goldman estimates US$168 pt in 2024 and US$130 in 2025.

Nickel averaged US$9.74 pp in 2023, down from US$11.66 in 2022. Goldman estimates US$7.26 pp in 2024 and $US7.03 pp in 2025.

Potash averaged US$500 pt in 2023, up from US$359 pt in 2022. The broker anticipates an average of US$450 pt in 2024 and US$463 pt in 2025.

Goldman maintains its buy rating on BHP stock, explaining:

We are Buy rated on: (1) Attractive valuation, but at a premium to RIO; o (2) GS bullish copper and met coal; (3) Optionality with +US$20bn copper pipeline and improved production growth; (4) Robust FCF, but still below RIO. We continue to believe that BHP’s major opportunity is growing copper production in Chile at Escondida and Spence, and growing copper production and capturing synergies in South Australia between Olympic Dam and the previous OZL assets.

Rio Tinto Ltd (ASX: RIO)

The Rio Tinto share price is $131.96, down 0.72% today. Goldman has a 12-month share price target of $141.80 on Rio Tinto stock.

Rio Tinto’s main commodities are iron ore, copper, aluminium and lithium.

According to Goldman’s report, aluminium averaged US$1.02 pp in 2023, down from US$1.23 pp in 2022. The broker estimates an average price of US$1.13 pp in 2024 and US$1.27 pp in 2025.

Lithium carbonate averaged US$32,694 pt in 2023, down from US$63,232 in 2022. The broker anticipates an average price of US$12,847pt in 2024 and US$11,000 pt in 2025.

The broker has a buy rating on Rio Tinto shares, explaining:

We are Buy rated on: (1) compelling relative valuation vs. peers, (2) attractive FCF and Div yield (expect 75% payout for final div), (3) strong production growth in 2024-2025 of 5-6% CuEq driven by the ramp-up of the Oyu Tolgoi UG copper mine & a recovery at Escondida and Bingham, (4) potential for FCF/t improvement in the Pilbara, and (5) high margin low emission aluminium.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is $3.51, down 1.27% on Thursday. Goldman has a 12-month price target of $2.95 on this pure-play ASX lithium share. Pilbara Minerals shares haven’t traded below $3 since August 2022.

The lithium market is currently oversupplied, and this continues to weigh on lithium commodity prices. The lithium carbonate price fell another 1% in January and is down about 80% over 12 months.

Demand for electric vehicles (EVs) globally is stalling, which is affecting demand for batteries and raw lithium. Goldman notes that while Chinese EV sales and battery output continue to rise, a phase-out of subsidies and supply chain normalisation have weighed on the pace of growth.

As such, the GS commodity team expect the lithium market to be in a 202kt surplus in 2024 (17% of global demand) and continue to expect prices to trade deeply into the cost curve to balance the market.

But EVs still have a big future in our decarbonising world. So, Pilbara Minerals is a stock to watch in 2024 because, at some point, it may become a fantastic buy-and-hold opportunity for the long term.

For now, Goldman has a sell rating on Pilbara Minerals stock. This is primarily due to valuation, as the broker explains:

We see near-term FCF continuing to decline on lithium prices and 1. increasing growth spend, where we see PLS spending ~A$0.85bn on P1400, taking total capex spend from FY24E to FY28E on current and P1400 expansions to ~A$3bn, ~A$0.9bn ahead of consensus which already prices further expansion.

Furthermore, we see PLS’ net cash declining to ~A$1bn (though still a relatively strong position vs. some peers and defensive into a declining lithium price), where with the stock trading at a premium to peers and relatively expensive on fundamentals.

The broker adds that an anticipated doubling in production over five years with further optionality is “more than priced in”.

The post BHP stock and more: 3 ASX commodity titans to watch in 2024 appeared first on The Motley Fool Australia.

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More reading

• Where will the bottom be for the scorched lithium price?
• Got $15,000? How I’d invest for a bulletproof ASX passive-income portfolio
• Uh oh! Does this spell more bad news for ASX 200 lithium shares?
• Why the dividends from BHP shares could surge in 2024
• Top 5 most profitable ASX large-cap shares of 2023

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

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Woodside Energy Group Ltd (ASX: WDS) shares are joining in the broader market sell-down today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock could be facing some additional pressure from a 1.4% overnight drop in the Brent crude oil price. Brent slid to US$81.72 per barrel, amid news of swelling crude production in the United States.

Woodside shares closed yesterday trading for $32.41. In afternoon trade on Thursday, shares are swapping hands for $32.09 apiece, down 1%.

The ASX 200 is also down 1% at this same time.

That’s the latest price action for you.

Now, here’s why Woodside shares are making news this week.

What’s putting Woodside shares in the news

In an Australian first, Woodside announced that it has joined the United Nations Environment Programme (UNEP) Oil & Gas Methane Partnership 2.0 (OGMP 2.0).

The program provides a measurement-based reporting framework to help improve the accuracy and transparency of methane emission reporting.

Oil and gas production comes with significant methane emissions, which has previously seen Woodside shares targeted by activists.

Commenting on the development, Woodside CEO Meg O’Neill said, “Woodside is pleased to extend our leadership in minimising methane emissions by being OGMP 2.0’s first Australian member. “

She added that, “As part of our methane strategy, Woodside is striving for near-zero methane emissions on operated assets by 2030.”

OGMP 2.0 program manager, Giulia Ferrini said, “We are thrilled to welcome Woodside to the Partnership as its first member company in Australia.”

According to Ferrini:

This is a valuable step towards expanding methane accountability and transparency across the industry and the region. As customers, investors and governments demand stronger methane performance, we hope Woodside’s commitment will inspire others to join OGMP 2.0 and adopt a high standard of emissions reporting and management.

Woodside said it has four key pillars to its methane reduction plan:

• Developing a high-integrity measured dataset
• Striving for near-zero methane emissions
• Transparent reporting
• Leadership through advocating and collaborating with others

The company noted its 2022 methane emissions were “around 0.1% of our production by volume, well below the Oil and Gas Climate Initiative (OGCI) methane intensity target of below 0.2%”.

Woodside shares are down 10% over the past 12 months and up 2% so far in 2024.

The post Australian first: Why Woodside shares are making news this week 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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It’s been quite a sobering day on the ASX boards so far this Thursday. After yesterday’s fresh new all-time highs, investors are taking a breather, with the S&P/ASX 200 Index (ASX: XJO) currently nursing a chunky loss of 1.2%. But let’s talk about the ASX news coming out from Santos Ltd (ASX: STO) shares.

To start things off, it’s worth noting that Santos shares are currently being punished even more than the broader market. The ASX 200 oil and gas producer is currently down by a hefty 1.46% at $7.74 a share.

To be fair, this isn’t too different from what some other ASX energy shares are doing. Woodside Energy Group Ltd (ASX: WDS) shares have lost 1.34% so far today. Karoon Energy Ltd (ASX: KAR) is down 0.92%, while Beach Energy Ltd (ASX: BPT) has lost 0.3%.

But Santos seems to be the punching bag this Thursday. Perhaps a new announcement out of the company is responsible.

What’s making ASX news today with this energy stock?

Enthusiastic Santos stakeholders may recall that last year, Santos reached an agreement with Kumul Petroleum Holdings. Kumul agreed to purchase the 2.6% stake in PNG LNG that Santos owns.

On 29 December, Santos told investors that Kumul had paid $250 million into an escrow account as a part payment for this deal. It also revealed that Kumul had secured the additional funds needed to complete this purchase by 31 January.

Well, today, the company gave investors an update. Here’s what was said:

Santos and Kumul have agreed an amendment to the Sale Agreement where Kumul has taken an effective interest in the Santos entity that holds the 2.6 per cent sale interest. Kumul has paid US$352 million to Santos (equivalent to a ~1.6 per cent interest) on 31 January 2024 to allow partial completion of the transaction.

The amendment provides additional time for Kumul to pay the remaining purchase price of US$241 million. Until final completion, Santos retains control of the entity holding the 2.6% and in order to assist with purchase of the remaining interest, future project distributions associated with the interest sold to Kumul will be applied to acquiring the remaining interest

As such it seems that this deal isn’t quite ‘home and hosed’ just yet.

Perhaps the instability, for want of a better phrase, that is revolving around this yet-to-be-completed deal is what is weighing on Santos shares today.

It’s certainly possible, although, as we discussed earlier, Santos really isn’t straying too far out of the broader energy ballpark when it comes to its share price losses.

Santos share price snapshot

Today’s share price losses don’t take too much away from what has been a rather lucrative 12 months for the company. Even after today’s falls, the Santos share price remains up 9.94% over the past 12 months.

At the present levels, the company is offering a trailing dividend yield of 3.23%.

The post Here’s why Santos shares are making ASX news on Thursday 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 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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From mid-2021 through to November 2022, the lithium price rise was nothing short of meteoric.

Investors who bought S&P/ASX 200 Index (ASX: XJO) lithium shares like Pilbara Minerals Ltd, (ASX: PLS) Core Lithium Ltd (ASX: CXO) and Liontown Resources Ltd (ASX: LTR) near the beginning of that cycle and sold near the end will have banked some eye-popping gains.

The Core Lithium share price, as one example, soared more than 560% over that 18-month period.

But, as you’re likely aware, the lithium price then headed the other direction.

And just as quickly.

The price for spodumene, a lithium rich mineral, has collapsed by more than 85% over the past 12 months. Spodumene 6% (meaning it contains at least 6% lithium) is now trading below US$1,000 per tonne, down from around US$7,600 per tonne in January 2023.

With the lithium price in freefall, ASX 200 lithium stocks have seen their previously soaring share prices hammered.

And the miners have been taking steps to conserve cash amid plunging revenues.

In January, Core Lithium announced it was temporarily halting mining operations at its Finniss lithium project.

Meanwhile, Liontown has chosen to delay the expansion of its Kathleen Valley lithium project.

And Pilbara Minerals, which delivered its first two dividends in 2023, is looking at suspending those payouts in 2024.

With that in mind, when can investors in ASX 200 lithium shares like Core Lithium, Pilbara and Liontown expect to see a bottom in the scorched lithium price?

What’s ahead for the lithium price?

Investors hoping for a rapid turnaround in spodumene prices are likely to be disappointed.

Bank of America senior commodities strategist Michael Widmer noted (quoted by The Australian Financial Review), “We are concerned that lithium has not yet found a bottom.”

Widmer slashed his forecast for spodumene prices in 2024 by 63% to US$650 per tonne. He reduced his forecast for 2025 to US$1,438 per tonne, down from his previous expectations of US$2,188.

That would see the lithium price continue to slide this year before rebounding above current levels in 2025.

Goldman Sachs recently released a more bearish forecast for 2025, though the broker is slightly more optimistic about its outlook for 2024.

Goldman expects spodumene prices of US$1,175 per tonne in 2024, which it then forecasts will fall to US$800 per tonne in 2025.

Why is Bank of America bearish on the near-term outlook for spodumene?

Commenting on why he expects the lithium price to fall further in 2024, Widmer said, “Operators have been reluctant to curtail production, the project pipeline is well filled, and we continue to expect very high surpluses. This should keep the pressure on prices for now.”

He added that, “Western producers keep pushing ahead on expectations that lithium demand will expand thanks to [government] policies.”

Those include the Inflation Reduction Act in the United States and potential tax incentive extensions for lithium producers in Australia.

On the demand side, a global slowdown in the growth rate of EV sales isn’t helping the lithium price turn around either.

According to Widmer (quoted by the AFR):

Further investigation reveals a dichotomy in the EV market: the premium market has moved towards electrification, while mass-market adoption lags. This divergence is mostly driven by pricing, but EV prices are unlikely to converge with [internal combustion engines] in the near term… EV production keeps expanding, albeit at a slower pace.

So, when can investors in ASX 200 lithium shares expect the lithium price to run higher again?

Keep an eye on those production scalebacks.

“Eventual announcements of lithium production cuts will be key to a price rebound,” Widmer said.

The post Where will the bottom be for the scorched lithium price? 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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