Category: Stock Market

ASX mining shares are capable of producing strong returns if we buy them at a good price.

Certainly, many resource prices are cyclical because of changing supply and demand.

But when sentiment and demand is low, it can be a good time to invest. Conversely, when resource prices are high, it might be worth considering if it’s wise to wait for a better price.

With that in mind, I think the following three ASX mining shares are worth investing in after the latest changes in their share prices.

Mineral Resources Ltd (ASX: MIN)

Mineral Resources is one of the most interesting resource businesses in my opinion. It’s a leading mining services business but it is also aiming to grow both its iron ore and lithium production.

It is sometimes called the cheapest ASX lithium miner on the ASX. Mineral Resources also wants to become a top five hydroxide producer, with “full vertical integration – [a] pit to battery manufacturer”.

The ASX mining share is also working on its transition to becoming a large, low-cost iron ore producer, with a goal of reaching more than 90 mt per annum in a few years.

In FY24, it could generate $16 of earnings per share (EPS), putting it at under six times FY24’s estimated earnings, according to Commsec. It may also pay an annual dividend per share of $6, translating into a potential grossed-up dividend yield of 9.6%.

Aeris Resources Ltd (ASX: AIS)

This is a relatively small company that is predominately a copper miner. However, it also produces gold, zinc, and silver.

Aeris is working on the Stockman project in Victoria, which will unlock another source of production and cash flow for the business. This is a copper and zinc project.

The business is working hard on cost management while aiming to increase its production over time. It continues to spend millions on exploration to try to find its next project.

In FY24, this ASX mining share could generate 15 cents of EPS, which would put the Aeris share price at under five times FY24’s estimated earnings, according to Commsec.

I don’t think the market is fully appreciating how much profit this company could generate in the next few years. It could also turn into a good dividend payer at this share price.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price has recovered most of the ground that it lost at the end of 2022.

I think the ASX lithium share has demonstrated enough over the last few months to justify the excitement.

It’s still generating a lot of cash flow. At the end of December 2022, it finished with a huge cash balance of $2.2 billion.

Profitability is very strong. In the three months to 31 December 2022, it saw production rise 10% quarter over quarter to 162,151 dry metric tonnes (dmt). The average realised sales price was up 33% quarter over quarter to US$5,668 per dmt. The unit operating cost was down 5% quarter over quarter to A$579 per dmt.

I like the company’s plans to increase its lithium production and also gain exposure to more of the lithium value chain. I’d have preferred to buy it at a cheaper price, but I still think it has long-term potential with how many electric vehicles are expected to be produced.

Based on Commsec estimates, Pilbara Minerals shares are valued at under eight times FY24’s estimated earnings.

The post 3 top ASX mining shares I’d dig into and buy in February appeared first on The Motley Fool Australia.

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More reading

• Buy Pilbara Minerals and this ASX dividend share: experts
• These are the best ASX 200 mining shares to buy now: Morgans
• 3 ASX 200 lithium stocks that leapt beyond 20% in January
• Can buying Pilbara Minerals shares today create long-term wealth?
• Dividend forecasts: 3 ASX 200 shares with 6%+ yields

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

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The Zip Co Ltd (ASX: ZIP) share price is down almost 80% over the last 12 months. It has fallen more than 90% from its peak in 2021.

There are several other ASX growth shares that suffered a heavy sell-off over the last 12 or so months, such as Xero Limited (ASX: XRO) and Megaport Ltd (ASX: MP1). But, the buy now, pay later (BNPL) industry seems to have been hit particularly hard.

We could point to a number of things that have happened. The key culprit seems to be the higher interest rates.

Higher rates have changed the game

The Reserve Bank of Australia (RBA) has increased the interest rate by 300 basis points (3.00%) since the start of last year.

One big impact of that is how much fewer investors are valuing the growth of ASX growth shares because the risk-free return (cash and government bonds) is higher.

Warren Buffett, one of the world’s greatest investors, once explained why changing interest rates can have such an impact:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

But, higher interest rates also impact the profitability of Zip as well.

Not only had Zip been reporting a falling cash transaction margin – it was 3.8% in FY20 and 2.3% in FY22 – but more expensive interest costs could flow through the business. If its margins are lower, it won’t make as much money in the future as previously planned.

But, the business does have a medium-term cash transaction margin range target of between 2.5% to 3%.

Can the Zip share price recover?

Zip has acknowledged it’s facing multiple problems. Management has also pointed to people having less for discretionary spending because of inflation, as well as the potential for increased regulatory requirements.

On the interest rate side, Zip has pointed to a few different things. First, accelerated capital recycling underpinned by “product construct”. Second, its performance with customers’ balances supports its ‘Master Trust’ AAA rating in Australia. Finally, Zip noted the “robust two-sided revenue model provides pricing flexibility to maintain margins.”

Zip pointed out it’s a licensed credit provider in Australia and “well-placed to adapt to change”, and that it’s supportive of fit-for-purpose regulation.

For Zip shares to recover back to above $6 from under 70 cents could take a lot of underlying growth.

But, the company thinks that it can grow a lot further.

It thinks that buy now, pay later (BNPL) can grow over 2x between 2021 to 2025. Zip thinks the core addressable market in Australia, New Zealand and the US is technically $11.7 trillion, with the BNPL, with the BNPL penetration only being around 2% of that.

While the growth rate in percentage terms has slowed, Zip continues to grow at an impressive double-digit rate. In the second quarter of FY23, its revenue rose 12% to $188 million and transaction volume jumped 22% quarter over quarter to $2.7 billion.

If it can keep increasing its cash transaction margin, ensure bad debts stay relatively low and keep growing revenue, then Zip can keep rising in my opinion. But, there’s a long way to go for the Zip share price to reach $7. However, I do think $1 is possible in the next year or two if the underlying performance keeps improving.

The post Can the Zip share price ever recover? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• If I buy $1,000 of Zip shares now, what could my returns be this year?
• Avoid my biggest mistake in investing: fund manager
• The Zip share price: Has it bottomed out?
• Why Coronado Global, Mincor, OFX, and Zip shares are dropping today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport, Xero, and Zip Co. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended 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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The Commonwealth Bank of Australia (ASX: CBA) share price has put on a stellar performance over the last five years.

It’s gained 45.8% in that time. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has lifted just 29%.

Today, CBA shares trade for $111.15 each – mere cents off their all-time high of $111.43 hit on Friday.

Glancing to the past, however, an investor could have bought 65 CBA shares for $5,000 in February 2018, paying $76.25 apiece and walking away with nearly $44 in change.

That holding would now be worth $7,224.75. But what about the big four bank’s dividends?

Let’s consider the total return those invested in the ASX 200 bank share have likely seen over the last five years.

All the dividends CBA shares have offered since 2018

Here are all the dividends on offer from CBA shares over the last half-decade:

CBA dividends’ pay date	Type	Dividend amount
September 2022	Final	$2.10
March 2022	Interim	$1.75
September 2021	Final	$2
March 2021	Interim	$1.50
September 2020	Final	98 cents
March 2020	Interim	$2
September 2019	Final	$2.31
March 2019	Interim	$2
September 2018	Final	$2.31
March 2018	Interim	$2
Total:		$18.95

As the chart above shows, CBA shares have each yielded $18.95 in passive income since early 2018.

That means a 65-share-strong parcel probably would have handed an investor $1,231.75 in dividends over that time – bumping the potential return on investment (ROI) to a notable 70.6%.

And that’s before we consider the compounding benefits those dividends may have brought had they been reinvested, perhaps through the bank’s dividend reinvestment plan (DRP).

Not to mention, the franking credits attached to each of the bank’s offerings during that time. Certainly, they may have brought some shareholders extra benefits come tax time.

Right now, CBA shares trade with a 3.46% dividend yield.

The post If you stocked up on $5,000 of CBA shares 5 years ago, here’s how much dividend income you’ve made appeared first on The Motley Fool Australia.

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More reading

• 3 of the safest ASX 200 dividend stocks in Australia
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• ASX 200 investors are selling off CBA shares! What should I do?
• Top ASX dividend shares to buy in February 2023
• 5 ASX 200 shares smashing new 52-week highs on Wednesday

Motley Fool contributor Brooke Cooper 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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One of the main attractions of investing in stocks is how easy it is to receive passive income from ASX dividend shares without having to do any work.

Once we own the shares and have directed where we want the dividends to be paid, we can just watch the dividends roll into the bank account.

Some businesses on the ASX have been going for decades. Having strong and stable operations means they can reward shareholders with dividend payments regularly each year.

While dividends aren’t guaranteed, I think the three ASX dividend shares I’m going to talk about are likely to keep paying good dividends for a very long time.

Telstra Group Ltd (ASX: TLS)

Telstra is the largest telecommunications business in Australia, and it has been known for paying a decent dividend yield since the GFC.

I am confident Australia will continue to use telecommunications beyond the foreseeable future. Indeed, they may become even more integral.

The capabilities of 5G could mean that the technology may replace the fixed cables of the NBN as a household’s preferred way to connect to the internet at some point. If it could win over households, this would be a very useful boost for Telstra’s profit margin.

Telstra’s profit outlook seems more positive these days as the telco works on lowering costs and increasing revenue, as well as diversifying its operations. Expectations of a higher profit have meant the ASX dividend share has started to increase its dividend.

According to Commsec, the grossed-up dividend yield in FY23 could be 5.8%.

Macquarie Group Ltd (ASX: MQG)

Macquarie is the most impressive bank on the ASX, in my opinion. It’s an investment bank, not just a bank in the lending and savings accounts business.

It has a number of divisions, including asset management. This provides it with a consistent source of solid earnings. Macquarie also has a commodities and global markets (CGM) division which has been making a bucketload of money amid the volatility in energy markets over the last 12 months.

The ASX dividend share generates more than two-thirds of its earnings away from Australia and New Zealand. As such, it’s a global business.

Its ability to invest and grow anywhere, across a number of financial segments, gives me confidence it can weather any downturn and perform in the long term. One example is its leading role in financing green energy developments.

According to Commsec, Macquarie could pay a grossed-up dividend yield of around 4% in FY23.

Metcash Ltd (ASX: MTS)

Metcash is a diversified business that has three segments. It supplies independent supermarkets, such as IGAs, around Australia. Metcash supplies a number of independent liquor retailers like Cellarbrations, The Bottle-O, IGA Liquor, Thirsty Camel, Duncans, and Porters Liquor.

The business also has a hardware division, which owns the brands Mitre 10, Home Timber & Hardware, and Total Tools.

COVID-19 seems to have changed the way some people shop, with more people preferring their local supermarkets and liking what they’re seeing. The company’s food revenue continues to grow, liquor is performing well, and hardware has started FY23 strongly.

With hardware now generating the largest part of the company’s profit, I think the business has more growth potential.

The ASX dividend share has committed to a dividend payout ratio of 70% of underlying net profit after tax (NPAT).

According to Commsec, Metcash could pay an annual dividend of around 22 cents in FY23, translating into a grossed-up dividend yield of 7.6%.

The post 3 ASX dividend shares for lazy investors appeared first on The Motley Fool Australia.

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More reading

• Top ASX value shares to buy in February 2023
• Top brokers name 3 ASX shares to buy next week
• Here’s how I’d start building a second income this February, for $30 a week
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool Australia has recommended Metcash. 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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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues its long run as the most shorted ASX share after its short interest rose gain to 14.2%. Short sellers appear to believe that the market is too optimistic on Flight Centre’s revenue margins.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest remain flat at 12.7%. Valuation concerns may be weighing on this betting technology company’s shares.
• Megaport Ltd (ASX: MP1) has seen its short interest remain at 9.8%. Short sellers will have been pleased to see this network as a service provider’s shares crash last week after a disappointing quarterly update. Operational trends were far weaker than expected.
• Sayona Mining Ltd (ASX: SYA) has 9.2% of its shares held short, which is down week on week once again. Short sellers appear to be targeting Sayona and other lithium shares on the belief that lithium prices have peaked.
• Core Lithium Ltd (ASX: CXO) has short interest of 9%, which is down slightly week on week. Goldman Sachs believes this lithium developer’s shares are vastly overvalued compared to peers.
• Liontown Resources Ltd (ASX: LTR) is another lithium share being targeted by short sellers. It has short interest of 7.8%, which is up week on week. Lithium price concerns and project cost blow outs may be behind this.
• Lake Resources N.L. (ASX: LKE) has 7.2% of its shares held short, which is down week on week. J Capital has gone public with why it is shorting this lithium developer. It has concerns over its DLE technology and project funding.
• ARB Corporation Limited (ASX: ARB) has entered the top ten with short interest of 6.9%. A soft start to FY 2023 and uncertainty in the US market appear to be behind this.
• Zip Co Ltd (ASX: ZIP) is back in the top ten with short interest of 6.9%. Short sellers may believe the market is being too optimistic on Zip’s profitability target.
• Brainchip Holdings Ltd (ASX: BRN) has rejoined the top ten with short interest of 6.7%. Yet another disappointing quarterly performance from this meme stock appears to have given short sellers even more confidence in their bearish views.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Core Lithium: An ASX 200 share to buy in February? 
• Brokers name 3 ASX shares to buy now

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 ARB Corporation, Betmakers Technology Group, Megaport, and Zip Co. The Motley Fool Australia has recommended ARB Corporation, Betmakers Technology Group, Flight Centre Travel Group, 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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With the ASX share market starting to rebound, I think it’s a great time to be looking at ASX shares with good growth potential.

Inflation seems to be peaking in the US and Australia. Although it’s still a long road to a low and healthy inflation rate, progress has been made and this could be a positive thing for investors and shares.

I think the ASX tech shares that have been hit hard but have impressive financials are ones to get excited about. Their long-term outlooks seem very compelling.

Xero Limited (ASX: XRO)

The Xero share price is up by 17% since the start of the year. But, it’s still down around 47% from November 2022.

This ASX tech share provides accounting software for business owners, accountants, bookkeepers, and the like.

With the business still growing, I think the much lower valuation is far more appealing. With a gross profit margin of 87%, any growth the business achieves adds value to Xero.

In the FY23 first-half result to 30 September 2022, the number of subscribers increased 16% to almost 3.5 million, average revenue per user (ARPU) grew 13% to $35.30, and operating revenue surged 30% to $658 million.

Thanks to the growth in the financial measures I just mentioned, Xero’s annualised monthly recurring revenue (AMRR) had reached $1.48 billion at September 2022, suggesting that some growth is already baked in for the next 12 months.

I think it won’t be too long until the Xero share price gets back to above $90 as investor sentiment returns.

Volpara Health Technologies Ltd (ASX: VHT)

This is one of my favourite ASX healthcare shares. It provides software that enables advanced breast screening analysis, with a focus on risk for the patient. Volpara also has operational software for medical professionals to improve their workflow and efficiency.

In the company’s half-year result for the six months to 30 September 2022, it said that 40.5% of US women who had breast screenings had at least one Volpara product applied on their images and data.

Its HY23 gross profit margin was almost 92% – so this is another example of where revenue growth can be a very useful thing for the company’s financials.

In the three months to 31 December 2022, Volpara saw record quarterly cash receipts of NZ$11.2 million. This was an increase of 42% in constant currency terms and enabled the business to achieve its first positive net cash flow quarter on record.

Since the start of 2023, Volpara shares have soared an impressive 49%. Despite that, the ASX share is still down by around 35% since October 2022. With the progress the business is making, I think there’s more to come in the next few years.

The post Sitting on cash? These 2 ASX shares are great buys today but won’t be forever appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• These could be the best ASX 200 growth shares to buy: analysts
• I’m listening to Warren Buffett and buying ASX shares on sale
• Why Centuria Office, Deep Yellow, Newcrest, and Xero shares are racing higher today
• Xero share price jumps 9% to four-month high

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

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If you’re looking for dividend shares to buy to boost your passive income, then you may want to look at the two listed below.

Here’s why analysts at Goldman Sachs rate these growing ASX dividend shares highly:

Universal Store Holdings Ltd (ASX: UNI)

The first ASX dividend share that has been tipped as a buy is Universal Store. It is a growing retailer focused on youth fashion through the Universal Store and Thrills brands.

Goldman Sachs is a fan of the company due to the company’s exposure to younger consumers, which it expects to continue spending in 2023. It explained:

We believe the young Australian consumer is uniquely resilient to inflationary and broader economic pressures given (1) a high proportion live at home; (2) more than two-thirds are working; (3) high and increasing minimum wage entitlements and; (4) a heavy skew towards discretionary spending.

In respect to dividends, the broker is expecting fully franked dividends of 27.2 cents in FY 2023 and 29.9 cents in FY 2024. Based on the latest Universal Store share price of $5.87, this equates to yields of 4.6% and 5.1%, respectively.

Goldman Sachs currently has a buy rating and $7.55 price target on its shares.

Woolworths Limited (ASX: WOW)

Another ASX dividend share that Goldman Sachs thinks investors should buy is Woolworths.

Its analysts are positive on the retail giant due to its strong market position, customer loyalty, and omni-channel advantage. It explained:

We are Buy rated (on Conviction List) on the stock as we believe the business has one of the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as pass through any cost inflation to protect its margins, beyond market expectations.

As for dividends, Goldman is forecasting fully franked dividends of $1.02 per share in FY 2023 and $1.13 per share in FY 2024. Based on the current Woolworths share price of $36.51, this will mean yields of 2.8% and 3.1%, respectively.

Goldman currently has a conviction buy rating and $41.20 price target on the company’s shares.

The post Buy these growing ASX dividend shares for passive income: Goldman appeared first on The Motley Fool Australia.

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More reading

• Analysts name 2 strong ASX 200 shares for a retirement portfolio
• Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season
• Experts say these ASX dividend shares are top buys right now
• ASX shares investors rejoice! RBA says inflation has now peaked
• Here are the top 10 ASX 200 shares today

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

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After a brutal 2022, it’s no surprise investors are still anxiously obsessed with inflation, interest rates and geopolitics.

But the team at QVG Capital is urging investors to forget all that, because there is only one thing that matters this year.

“2023 will be all about earnings,” stated a QVG memo to clients this week.

“We think future returns will be dictated by earnings. Worrying about rates and valuation, risks fighting the last war.”

The secret sauce for buying stocks right now

To demonstrate how critical earnings are, the QVG analysts took the example of OFX Group Ltd (ASX: OFX).

The share price for the currency exchange tanked 18% in just one week in January after its latest financial results.

“The update showed softness in the consumer portion of OFX’s revenues,” read the memo.

“Even minor misses, such as OFX Group [last] month, will be punished.”

The QVG team’s secret sauce in buying ASX shares this year is to seek out businesses that have a very specific set of attributes.

“We believe the job to be done then is to own the relatively small number of companies run by motivated insiders that produce growing free cash flows,” read the memo.

“If we are right on our earnings forecasts on the durable growers and pay a low enough price for the through-the-cycle cyclical growers, then 2023 ought to look a lot different to 2022.”

Two ASX shares set to grow earnings

Two examples of such ASX companies expanding their cash flows and earnings are Imdex Limited (ASX: IMD) and Hub24 Ltd (ASX: HUB).

Imdex, in fact, has the opposite month to OFX, enjoying a 13.1% boost in its share price after a well-received quarterly update.

The mining technology provider also has an acquisition in progress.

“Imdex announced a large capital raise to fund the acquisition of a complementary Norwegian business called Devico. 

“Devico is a higher margin, higher growth business than Imdex and increases the skew of earnings to higher intellectual property drilling tools from more commoditised drilling fluids.”

The QVG team admitted Imdex was not usually its cup of tea, but the current tailwinds were too hard to resist.

“We typically have little interest in commodity-exposed businesses, given their low through-cycle returns,” the memo read.

“However, Imdex is atypical in this regard. Its products have significant intellectual property, can sustain above-industry growth rates and also sustain above-industry returns on capital.”

As for Hub24, its share price remains flat for the year, but QVG absolutely loved the inward flows update released last month.

“We were — quietly — bracing ourselves for a soft flows number, given investor sentiment was awful in the December quarter and seemed to deteriorate as the quarter went on,” read the memo.

“As it turned out, Hub24 added $2.8 billion of net inflows – a great effort and one that looked even better when Netwealth Group Ltd (ASX: NWL) and Praemium Ltd (ASX: PPS) subsequently released their flows.”

This market positioning will serve them well in the coming years, according to QVG analysts.

“Part of our thesis on HUB is that they’ll grow earnings faster than revenues in the future as they benefit from scale.”

The post Fund reveals the type of ASX shares to buy for 2023, with 2 examples appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• Why Coronado Global, Mincor, OFX, and Zip shares are dropping today
• Which ASX fintech stock is hot to buy right now?
• Why HUB24, Lovisa, Redbubble, and Warrego shares are sinking today

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 Hub24, Imdex, Netwealth Group, Ofx Group, and Praemium. The Motley Fool Australia has positions in and has recommended Hub24, Imdex, and Netwealth Group. The Motley Fool Australia has recommended Ofx Group and Praemium. 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 All Technology Index (ASX: XTX) has incredibly rocketed 14.8% upwards in less than five weeks this year.

But if you’re looking to ride this wave, you still need to be selective about which ASX technology shares to buy.

With much economic gloom and more interest rate rises to come, investors still need to back businesses that have solid long-term prospects, rather than speculative cash burners.

With this in mind, the team at Elvest this week mentioned two tech shares in a memo to clients that are going places and are likely to reward investors for years to come:

‘Materially benefit Aussie Broadband’s margins’

The Aussie Broadband Ltd (ASX: ABB) share price has gained 15% so far this year, which the Elvest analysts attributed to NBN Co’s newly proposed wholesale pricing plans.

“Under the proposal, subject to ACCC approval, NBN Co will reduce wholesale prices for ultra-high speed tiers, where Aussie Broadband specialises.”

The Victorian company has risen to take an almost 7% share of the NBN market, admirably playing against far bigger telcos with much deeper pockets.

Aussie Broadband markets itself as a premium provider, admitting it’s not the cheapest but boasting of an all-Australian call centre and superior broadband speeds.

NBN Co’s new pricing scheme will be a huge boost to the business and its investors once it passes all the bureaucratic steps.

“The changes will materially benefit Aussie Broadband’s margins, assuming rational industry pricing thereafter.”

The Aussie Broadband share price has halved since April last year.

ASX company ‘demonstrably adding value’

Digital lotteries retailer and software maker Jumbo Interactive Ltd (ASX: JIN) has also enjoyed a happy new year.

The stock price has risen 6% since the champagne popped on new year’s day.

According to the Elvest team, the company signed a big client contract during January.

“Jumbo Interactive announced a six-year extension of its software licence agreement with leading charity operator Mater during the month,” read the memo.

“This continues a highly successful partnership between the two groups, with Jumbo Interactive demonstrably adding value for one of Australia’s most prominent healthcare focused charities.”

Despite its software operations, Jumbo’s involvement in the lotteries sector seems to have kept it somewhat shielded from the broader tech sell-off.

The stock has lost just 16.7% over the past 12 months.

Lotteries are seen to be a defensive business that provides reasonably consistent earnings through different parts of the economic cycle.

With Australia and the world expected to suffer from an economic slowdown, this defensive quality could once again come into play.

The post Tech’s back! Fund names 2 ASX shares to ride the resurgence appeared first on The Motley Fool Australia.

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More reading

• Morgans names the best ASX growth shares to buy in February
• Here are 2 excellent ASX growth shares to buy now: experts

Motley Fool contributor Tony Yoo has positions in Aussie Broadband. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband and Jumbo Interactive. The Motley Fool Australia has recommended Aussie Broadband and Jumbo Interactive. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a strong note. The benchmark index rose 0.6% to 7,558.1 points.

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

ASX 200 expected to rise

The Australian share market looks set to rise slightly on Monday despite a poor finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% higher this morning. On Wall Street, the Dow Jones was down 0.4%, the S&P 500 fell 1%, and the NASDAQ dropped 1.6%.

Oil prices sink

It could be a tough start to the week for ASX 200 energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices sank on Friday. According to Bloomberg, the WTI crude oil price was down 3.3% to US$73.39 a barrel and the Brent crude oil price fell 2.7% to US$79.96 a barrel. Oil prices fell on recession concerns.

Newcrest a takeover target?

The Newcrest Mining Limited (ASX: NCM) share price will be one to watch today amid speculation that the gold miner could be a takeover target. According to the AFR, Newcrest is rumoured to have received an early stage offer from a North American giant. Barrick Gold and Newmont are thought to be the likely suitors.

Janus Henderson downgraded

The Janus Henderson Group (ASX: JHG) share price surged higher on Friday following the release of the fund manager’s quarterly update. The team at Bell Potter now believe that its shares are close to being fully valued and have downgraded them to a hold rating with a $43.81 price target. It said: “The 12% rise in the share price since the results announcement means the expected return on the shares comes down to 10.3%, which under our ratings structure means the recommendation moves to HOLD (from buy).”

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult start to the week after the gold price dropped on Friday. According to CNBC, the spot gold price fell 2.8% to $1,876.6 per ounce. A robust US jobs report sparked fears that the Federal Reserve might have to remain aggressive with its rate hikes.

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

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More reading

• Top ASX value shares to buy in February 2023
• Which ASX 200 shares are rebounding fastest in 2023?
• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023
• Morgans names 2 high yield ASX dividend shares to buy this month
• Why is the Newcrest share price fizzling out on Friday?

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

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