Category: Stock Market

The Fortescue Metals Group Ltd (ASX: FMG) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock closed yesterday trading for $28.39. In morning trade on Thursday, shares are swapping hands for $29.01 apiece, up 2.2%.

For some context, the ASX 200 is up 0.4% at this same time.

Atop another 2.4% overnight lift in the iron ore price to US$135.15 per tonne, the Fortescue share price looks to be getting a boost from the company’s quarterly update for the three months to 31 December (Q2 FY 2024).

Fortescue share price gains on near-record iron ore shipments

The Fortescue share price is in the green today after the company reported 48.7 million tonnes (Mt) of iron ore shipments for the quarter.

This brought iron ore shipments to 94.6Mt for the first half of the 2024 financial year (H1 FY 2024). That’s the second highest first half-year shipment in the ASX 200 miner’s history.

Fortescue reported it received an average revenue of US$116/dry metric tonne (dmt) for its Pilbara Hematite (higher grade iron ore).

On the cost front, the miner’s Pilbara Hematite C1 cost (direct cost) was US$17.62/wet metric tonne (wmt) over the three months. This could be offering some tailwinds for the Fortescue share price, as C1 costs were 2% less than the prior quarter.

Other highlights of the quarter included the launch of Fortescue Capital, a green energy investment accelerator platform, which is headquartered in New York City.

And the ASX 200 miner shipped its first product from the Belinga Iron Ore Project in Gabon. That marked the first time Fortescue has exported iron ore from any port outside of Australia.

Turning to the balance sheet, Fortescue’s cash balance was US$4.7 billion at 31 December 2023. That’s up from US$3.1 billion at 30 September 2023.

Total capital expenditure and investments for the quarter came in at US$759 million, bringing total capital expenditure and investments for H1 FY 2024 to US$1.5 billion.

Net debt fell to US$600 million from US$2.2 billion on 30 September 2023.

What did management say?

Commenting on the results that look to be supporting the Fortescue share price today, CEO Dino Otranto said:

We continue to deliver strong operational performance while making tangible progress towards our ambitious decarbonisation and green energy targets…

Demand for Fortescue’s suite of iron ore products remains strong and our entry into the higher-grade segment of the market through Iron Bridge has been well received with our second magnetite shipment during the quarter…

Our energy business marked a significant milestone, with final investment decisions announced for green hydrogen projects in Australia and the USA.

What’s ahead for the ASX 200 miner?

Looking at what could impact the Fortescue share price in the months ahead, the ASX 200 miner maintained its guidance for FY 2024 total shipments of 192Mt to 197Mt.

It expects C1 cost for Pilbara Hematite of US$18 to US$19/wmt, slightly higher than the quarter just past.

Metals capital expenditure is forecast to be in the range of US$2.8 billion to US$3.2 billion.

And Fortescue forecasts energy net operating expenditure of around US$800 million, with capital expenditure and investments of some US$500 million.

Fortescue share price snapshot

With today’s lift factored in, the Fortescue share price is up an impressive 29% over the past 12 months.

Shares have gained 31% over the past three months.

The post Fortescue share price lifts off amid near-record iron ore shipments appeared first on The Motley Fool Australia.

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More reading

• Why this broker thinks you should be selling Fortescue shares
• ASX 200 mining stocks underperforming as Andrew Forrest shutters WA nickel mines
• How I invest and make money from ASX mining shares
• 2024 could be the biggest year in history for the Fortescue share price. Here’s why!
• 3 ASX shares I think are ready for dividend hikes in 2024

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 ResMed Inc (ASX: RMD) share price has come flying out of the gates on Thursday.

In morning trade, the sleep treatment company’s shares are up 6.5% to $28.50.

ResMed share price charges higher on strong update

Investors have been fighting to get hold of the company’s shares today after it delivered a second quarter result well ahead of expectations.

As we covered here earlier, ResMed reported a 12% increase in revenue to US$1.2 billion, a 20% lift in non-GAAP operating profit, and non-GAAP diluted earnings per share of US$1.88.

This was ahead of the consensus estimates of revenue of US$1.15 billion and earnings per share of US$1.78.

Commenting on the strong quarter, ResMed’s CEO, Mick Farrell, said:

Our second-quarter fiscal year 2024 results reflect strong double-digit growth across our combined device, masks and accessories, and residential care software businesses, as well as cost discipline to support an acceleration in profitability.

Broker reaction

The team at Goldman Sachs was pleased with the result. Commenting on its top line growth, the broker said:

1Q24 revenue of $1,163m was up +11% cc, a deceleration from +15% in 1Q24, but +2% ahead of consensus. As was the case in the last quarter, US growth of +9% exceeded once more by a stronger RoW growth of +12%. SaaS grew +24% (in-line), largely reflective of the Medifox Dan contribution, but also organic growth.

Goldman was also pleased with ResMed’s earnings, noting that “EBIT/EPS beat +6%/+4% as gross margins improved further in 2Q (+90bps) and SG&A intensity declines once more.”

And while no guidance was provided, the broker highlights that the company is once again stating its belief that GLP-1s like Ozempic are not a threat but actually a positive. It said:

RMD still provides no guidance as expected. Management continues to argue strongly that GLP-1 impacts are positive for: i) patients entering the funnel; and ii) adherence/resupply rates.

Goldman currently has a buy rating and $32.00 price target on the ResMed share price.

The post ResMed share price jumps almost 7% on stellar quarterly performance appeared first on The Motley Fool Australia.

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More reading

• ResMed shares on watch after smashing Q2 expectations
• 5 things to watch on the ASX 200 on Thursday
• 2 ASX 200 shares to buy in 2024 and hold for the next 10 years
• Experts tip very big returns from these outstanding ASX 200 blue chip shares
• 3 things ASX investors should watch this week

Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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Domino’s Pizza Enterprises Ltd (ASX: DMP) shares are under pressure on Thursday.

In morning trade, the ASX 200 pizza chain operator’s shares are down 22% to $44.67.

Why are Domino’s shares falling?

Investors have been hitting the sell button today in response to a trading update released after the market close on Wednesday.

The ASX 200 share revealed that strong sales growth in Germany, Australia, and New Zealand, as well as a positive operational performance in Europe, have been offset by negative same store sales in Japan, Taiwan, Malaysia and France, which are weighing on the broader business.

This means that same store sales are up 1.3% for the first half, with total sales up 8.8% to $2,139 million.

As for earnings, Domino’s preliminary net profit before tax is expected to be between $87 million and $90 million.

This is down from $104.8 million a year earlier, but higher than the preceding half’s $74.4 million. Though, it is still well short of the consensus estimate of $103 million, which explains why Domino’s shares are taking a beating this morning.

Management advised that it is focused on growing weekly orders and franchisee margins, based on successes in ANZ and Germany, and is moving quickly to apply similar approaches in all markets.

Also weighing on Domino’s shares is management’s removal of its guidance for FY 2024. It said:

With improvements still required in H2 to grow order volumes, Domino’s advises any previous guidance for FY24 performance, de facto or otherwise, is no longer in effect.

Broker response

Goldman Sachs wasn’t impressed with the update, nor was it surprised. The broker said:

DMP is our key out-of-consensus Sell within our ANZ consumer/retail coverage, with below consensus earnings forecasts. This profit downgrade supports our thesis that Japan’s elevated competition post COVID is a more structural headwind. On the back of this, we cut our FY24/25/26 network sales by -4% to -6% and EBIT by -14% to -8%. We now expect FY24 EBIT of A$211mn (+4pct YoY). That said, we increase our FY25e EV/EBIT based SOTP valuation to 22x for ANZ (from 15x), Europe 20x (from 18x), Asia 20x (from 18x) and SE Asia to 18x (from 13x) as we re-base our discretionary coverage to mark-to-market. DMP trades at 40x 2024E P/E vs TP (A$37.5) implied 26x. We expect the market to take this news negatively; reiterate Sell.

The post Why are Domino’s shares sinking 22% today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Domino’s stock: buy, sell or hold?
• Top brokers name 3 ASX shares to buy next week
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises and Goldman Sachs Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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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Liontown Resources Ltd (ASX: LTR) shares have fallen hard this week.

A disappointing update on the Kathleen Valley Lithium Project sent investors to the exits in their droves.

Investors may now be wondering if this is a buying opportunity. Let’s see what Goldman Sachs is saying about the lithium developer.

What is Goldman saying about Liontown shares?

Goldman has been working through the update and appears a touch concerned with the company’s funding predicament following the termination of its $760 million debt package.

Although the broker believes the company can get by on lower funding, how much it requires will come down to where lithium prices trade. It explains:

LTR anticipate working capital/ corporate cost requirements of ~A$150-200mn through ramp up, where on our gradual ramp up profile/spodumene pricing (~US$800/t) we estimate LTR requiring further funding of ~A$200mn (previous target of ~A$460mn in fresh debt). As a downside scenario, a further ~25% decline in our near-term spodumene prices to ~US$600/t would imply a further ~A$300mn may be needed to get to positive FCF in ~CY27, though we expect in this scenario other measures may be utilised to preserve capital (selective/reduced mining, processing ore stockpiles, etc.).

But are its shares a buy?

Goldman is sitting on the fence with its recommendation at present.

Although the broker sees enormous value in Liontown’s shares at current levels, it doesn’t appear willing to put a buy rating on them.

According to the note, it has retained its neutral rating with a target price of $1.45 (from $1.65). This implies potential upside of 54% for investors over the next 12 months. It explains:

Our NAV [net asset value] is down to A$1.36/sh (pre-risking), where LTR is trading at a discount to our revised NAV at ~0.75x and an implied LT spodumene price of ~US$950/t (peer average ~1x & ~US$1,150/t), with a high valuation sensitivity to our LT lithium pricing. However, we see LTR pricing further uncertainty on funding into the possibility of further lithium price declines/volatility, and remain Neutral.

The post Buy, hold, or sell? What is Goldman Sachs saying about Liontown shares? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Why IDP Education, Karoon Energy, Liontown, and Zip shares are falling today
• Here’s the lithium price forecast through to 2027
• Broker tips 70% return for Liontown shares after selloff
• 5 things to watch on the ASX 200 on Tuesday

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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ASX growth stocks are a great option for investors looking to grow their wealth. Compounding can help $5,000 grow into $10,000 in less than eight years.

Over the long-term, shares have returned an average of around 10% per year. That doesn’t mean shares will return 10% this year, 10% next year, and 10% in the following year. It could be a 12% return this year, a return of 5% next year, a decline of 7% and then a return of 20%.

That 10% average return is the end result after all of the wars, pandemics, recessions, politicians and so on. Of course, past performance is not a reliable indicator of future returns.

If we can find investments that perform better than 10% per annum, then our portfolios could grow even quicker. Two of the names I’d put my money towards would be the following ideas.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng is the ASX growth stock I’ve invested the most money toward over the last few months for my own portfolio. I’ve put my money where my mouth is.

This company describes itself as an integrated building services group, with the core business focused on its ability to rebuild and restore a variety of contents after damage by insured events including impacts, weather and fire.

The company did really well in FY23, growing its revenue by 43.2% to $1.28 billion and growing net profit after tax (NPAT) by 64.3% to $62.8 million.

In FY24, it’s expecting to grow its ‘business as usual’ (BAU) revenue by 18.5% to $1 billion and the BAU earnings before interest, tax, depreciation and amortisation (EBITDA) could grow by 20.1% to $113 million.

It’s growing its exposure to catastrophe work, which is helping diversify and grow earnings. In FY23, catastrophe revenue rose by 125.3% to $371 million. There seems to be a growing number of expensive storms, so this may be an unfortunate tailwind for the business in Australia and the US.

I’m particularly excited by the company’s comments that it can expand into other countries. It has recently expanded into New Zealand, and additional markets could expand its growth potential.

Johns Lyng has also chosen to expand into other related areas such as strata/body corp services as well as electrical, gas and fire safety and compliance. These are currently small divisions but offer the potential for defensive and growing earnings. It can make a lot of bolt-on acquisitions in this area.

According to Commsec, the ASX growth stock is valued at 32 times FY24’s estimated earnings.

Vaneck Morningstar Wide Moat ETF (ASX: MOAT)

This is one of my favourite exchange-traded funds (ETFs) because of the investment style, the returns are just an exciting byproduct. I think it’s an ASX growth stock because of how well it has done.

As the name suggests, it’s focused businesses that have a wide economic moat. A moat describes how easy it is for competitors to ‘invade’. We can think of moats as the competitive advantages.

Competitive advantages can come in many different forms, such as patents, brands, cost advantages and so on. Think of businesses like Visa and Mastercard, they have payment networks that are accepted all over the world, and used by customers globally. They are incredibly hard to compete with.

The MOAT ETF only invests in businesses the Morningstar analyst team thinks have a moat and that is almost certainly going to endure for a decade or two.

Businesses are only added to the portfolio if the analysts think the stock is trading at an attractive price compared to what they think is a ‘fair value’.

These are the sorts of businesses that may be able to outperform when markets fall in a recession – stable businesses may seem less worrisome to investors than financial stocks or speculative businesses.

Past performance is not a guarantee of future returns with any ASX growth stock, but the MOAT ETF has returned an average of 16.7% per annum over the last three years.

The post Got $5,000? These are 2 of the best ASX growth stocks to buy right now appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares to buy in 2024 and hold for the next 10 years
• Here are 10 ASX shares I’d buy in 2024
• How I’d create investment cash flow in retirement from ASX ETFs
• Want $1 million in retirement? 3 ASX shares I think could make it happen
• Forget term deposits and get rich with ASX shares the Warren Buffett way

Motley Fool contributor Tristan Harrison has positions in Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has recommended Johns Lyng Group, Mastercard, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Now could be the time to pounce on Wesfarmers Ltd (ASX: WES) shares.

That’s the view of analysts at Goldman Sachs, which have just upgraded the Bunnings owner’s shares.

What is Goldman saying about Wesfarmers shares?

Goldman has been looking at the consumer and housing markets and believes that Wesfarmers is well-positioned to benefit.

In respect to the housing market, the broker said:

More resilient Australian housing outlook with median house prices +8% in CY23 and a further +2%/6% in CY24E/25E, implying higher property transactions/alts & adds to come. We thus raise Bunnings FY24-26e sales by 0-3%, EBIT by +5-13%, with FY24 sales/EBIT to grow +2%/+1%, then accelerate to a +6%/+11% sales/EBIT CAGR in FY25/26 as cost optimizing and digitalization initiatives drive margin expansion.

In addition, Goldman believes that the strong cashflow generated by Bunnings will be able to support other growth opportunities. It adds:

We expect strong A$2.5B-A$3.0B Bunnings annual free cashflow generation to fund new growth platforms including 1) Health and 2) Lithium. With the completion of the SILK Laser acquisition in November 2023, we now expect the Health segment to drive higher growth and profitability from the attractive non-invasive aesthetics industry and switch to a DCF valuation of A$2.2B.

So, with Wesfarmers shares trading at a discount to historical averages, the broker believes that now is the time to invest.

Upgraded to buy

Goldman has upgraded the company’s shares to a buy rating (from neutral) with a price target of $62.90 (from $49.80). This implies potential upside of 9.4% for investors over the next 12 months.

And if you include the 3.3% fully franked dividend yield the broker is forecasting for FY 2024, the total potential return stretches to 12.7%. Goldman summarises:

Our Buy is premised on a buoyant Australian housing market supporting Bunnings resilience and in turn generating strong annual free cashflow of A$2.5B-A$3.0B to fund 2 new high growth and high returns platforms, Health and Lithium, contributing ~9% of EV and enabling FY23-26e group sales/EBIT of ~3%/~8%.

The post Why this broker just upgraded Wesfarmers shares to a buy rating appeared first on The Motley Fool Australia.

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More reading

• 3 no-brainer ASX 300 shares I’d buy right now without hesitation
• Breaking: Wesfarmers share price hits new 52-week high
• I’m buying cheap ASX shares to build my wealth in 2024 and beyond
• Which had the better year in 2023: Telstra, Woodside or Wesfarmers shares?
• The pros and cons of buying Wesfarmers shares right 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 Goldman Sachs Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. 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 Pilbara Minerals Ltd (ASX: PLS) share price was on form on Wednesday.

The lithium miner’s shares rose almost 6% to end the day at $3.46.

The catalyst for this was the release of a second quarter update which revealed that the company continues to generate a decent amount of cash despite battling low lithium prices.

Can the Pilbara Minerals share price keep rising?

The team at Bell Potter has run the rule over the company’s update and appears to have been pleased with what it saw. It commented:

PLS reported December 2023 quarterly spodumene concentrate production of 176kt (BP est. 168kt) and sales of 160kt (BP est. 168kt). An average price of US$1,113/t (SC5.2%) was realised, down 50% qoq, consistent with weaker lithium markets. Higher production and sales volumes drove lower unit costs of A$639/t FOB (15% decrease qoq, BP est. A$647/t). PLS had cash of $2.1b at quarter’s end, following a $758m cash tax payment and $222m of capital expenditure. Cash margin from operations was $176m.

However, the broker believes Pilbara Minerals shares are close to being fully valued now.

As a result, its analysts have reaffirmed their hold rating and $3.60 price target. This implies approximately 4% upside from current levels. It explains:

PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($2.1b net cash at 31 December 2023) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. We also see the potential for PLS to participate in industry consolidation. Our $3.60 12-month forward valuation results in our hold recommendation being retained.

The post Here’s what Bell Potter is saying about the Pilbara Minerals share price appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Is the Pilbara Minerals’ interim dividend at risk of being axed?
• Why Karoon Energy, Kogan, Northern Star, and Pilbara Minerals shares are jumping today
• Pilbara Minerals shares charge higher on rock solid Q2 update
• 5 things to watch on the ASX 200 on Wednesday

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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ResMed Inc (ASX: RMD) shares look set to have a positive session on Thursday.

That’s because Wall Street investors have responded very positively to the sleep treatment company’s quarterly update in after-hours trade.

What’s going on with ResMed shares?

US investors were scrambling to buy the company’s NYSE listed shares after it reported strong top and bottom line growth for the second quarter of FY 2024. Here’s a summary of how ResMed performed:

• Revenue increased 12% to US$1.2 billion (11% on a constant currency basis)
• Non-GAAP gross margin grew 10 bps to 56.9%
• Non-GAAP operating profit up 20%
• Non-GAAP diluted earnings per share of US$1.88
• Quarterly dividend of 48 US cents per share (4.8 US cents for ASX shareholders)

Management revealed that this strong result was driven by double-digit growth across its combined device, masks, and accessories, and residential care software businesses. In addition, cost discipline helped support an acceleration in profitability.

ResMed’s CEO, Mick Farrell, added:

The strong growth in patient flow we’ve seen over the past several quarters has supported ongoing device growth, as well as augmented and accelerated our replenishment programs for sustained mask and accessories growth. Organic growth of our residential care software business in home medical equipment, home health, home nursing, and beyond, catalyzed by strategic acquisitions, continues to deliver and complements our core mask and accessory business growth.

Pleasingly, Farrell is feeling very positive about the company’s outlook. He explains:

As we look ahead, ResMed is well-positioned to lean into leading the expansion and growth of sleep health and breathing health. We are the clear leader in a very large and growing market; I’m excited about ResMed’s future as we focus on delivering for our stakeholders through product innovation, operational excellence, and increasing brand awareness as we progress towards our goal of improving 250 million lives in 2025.

How does this compare to expectations?

The good news for ResMed shares today is that this result was comfortably ahead of the market’s expectations.

The company’s earnings per share of US$1.88 compares favourably with the consensus estimate of US$1.78 per share. In addition, its revenue of US$1.2 billion was approximately US$50 million ahead of estimates.

The post ResMed shares on watch after smashing Q2 expectations appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• 2 ASX 200 shares to buy in 2024 and hold for the next 10 years
• Experts tip very big returns from these outstanding ASX 200 blue chip shares
• 3 things ASX investors should watch this week
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Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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Premier Investments Limited (ASX: PMV) shares are really appealing to me as a long-term investment. Thus, I’m going to talk about some reasons why this stock excites me in this article.

The business is best known for being the owner of a number of different retail brands including Smiggle, Peter Alexander, Just Jeans, Jay Jays, Dotti and Jacqui E.

It also has a sizeable stake in appliance maker Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).

Let’s get into three reasons to really like this business.

International growth

Australia is a great country to do business in, but it has a relatively small population. According to the ABS, the Australian population was 26.6 million at 30 June 2023. There are billions more potential customers outside of Australia, any ASX retailer that is displaying growth initiatives outside of Australia is a very attractive feature because it extends the company’s growth runway.

The company is putting a lot of work into expanding Smiggle and Peter Alexander overseas. In the FY23 result, it said the Smiggle is exploring “compelling opportunities in both existing and potential new markets.” It identified it could grow the Smiggle store count by at least a further 30 in existing markets in the near-term, leveraging the existing team and infrastructure. It’s looking at growing through standalone stores in various markets.

Premier Investments also said it was launching Peter Alexander with a global cross-border e-commerce platform provider to grow the brand across 35 countries. It’s also opening new and larger format stores to “better showcase the wider product offering that has been developed in recent years.”

Keep in mind that Breville is also growing its global presence as well, so Premier Investments is getting indirect international growth exposure through its investment.

All of these elements can help Premier Investments shares.

Strong digital profit margins

Premier Investments has done a very good job of growing its online sales since FY19, being before COVID-19. In FY23, online sales amounted to $324.7 million, which made up 19.8% of total FY23 sales, up from 11.7% in FY19. Online sales of $153.8 million in the second half of FY23 were up 6.3% year over year.

The business said it has made major investments in people, technology, its digital offering and marketing, while “continuing to deliver a world-class platform and customer experience.”

Premier Investments said those investments have enabled the online channel to continue to deliver a “significantly higher earnings before interest and tax (EBIT) margin than the retail store network providing significant operating leverage for future growth.”

This bodes well if online sales growth continues.

Commitment to shareholder returns

The business keeps shareholders in mind with nearly all of the strategic decisions.

It aims to keep the balance sheet in good shape but also pay owners of Premier Investments shares a good dividend each year.

There was a dividend increase in most years over the past decade, which is a good record. The COVID-hit year of 2020 saw a decrease, but the dividend quickly rebounded after that.

In FY24, the business is projected to pay an annual dividend per share of $1.20, according to Commsec, which would translate into a grossed-up dividend yield of 6.2%. That would be a solid yield, given the current economic environment.

The post Premier Investments stock: 3 reasons it’s on my buy watchlist appeared first on The Motley Fool Australia.

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More reading

• Here are 3 top ASX dividend shares to buy now: analysts
• If you invest $10,000 in Premier Investments shares, how much passive income will you receive in 2024?
• ‘Short-term correction’: 2 ASX stocks I’d load up on if the market turns sour
• Here are the top 10 ASX 200 shares today
• 3 of the best ASX retail shares I can find right now, no soft landing required

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 recommended Premier Investments. 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 are a good number of ASX dividend shares on the Australian share market that could be great candidates for income investors.

But which ones do analysts believe you should be buying now? Let’s take a look at three that they are feeling bullish on:

Endeavour Group Ltd (ASX: EDV)

The first ASX dividend share that could be a buy right now is Dan Murphy’s and BWS owner Endeavour.

Goldman Sachs is a big fan of the company and has a buy rating and $6.40 price target on its shares.

The broker highlights its “attractive 16.9x FY24 P/E vs 5.2% EPS 23-26e CAGR for a staple with clear market leading position.”

As for dividends, the broker is forecasting fully franked dividend of approximately 21 cents per share in FY 2024 and 23 cents per share in FY 2025. Based on the current Endeavour share price of $5.46, this equates to yields of 3.8% and 4.2%, respectively.

Orora Ltd (ASX: ORA)

Another ASX dividend share that Goldman likes is packaging company Orora.

It recently looked through the company’s major Saverglass acquisition and liked what it saw. It highlights that the “implied Saverglass valuation offers good risk/reward.”

Goldman has a buy rating and $3.50 price target on Orora’s shares.

In addition, it is forecasting some attractive dividend yields in the coming years. It expects dividends per share of 14 cents in FY 2025 and 15 cents in FY 2025. Based on the current Orora share price of $2.66, this will mean 5.25% and 5.6% yields, respectively.

Premier Investments Limited (ASX: PMV)

A final ASX dividend share that could be a buy is Premier Investments. It is the retail conglomerate that owns a collection of brands such as Just Jeans, Peter Alexander, and Smiggle.

Morgan Stanley is a big fan of Premier Investments and has named it as its top mid cap retail pick. It has an overweight rating and $32.00 price target on its shares.

As for income, the broker is expecting fully franked dividends per share of $1.01 in FY 2024 and $1.06 in FY 2025. Based on the latest Premier Investments share price of $27.67, this equates to yields of 3.65% and 3.8%, respectively.

The post Here are 3 top ASX dividend shares to buy now: analysts appeared first on The Motley Fool Australia.

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More reading

• Buy Endeavour and these ASX dividend stocks
• Analysts say these 3 ASX dividend stocks are buys with big yields
• Goldman Sachs says these blue chip ASX 200 shares are top buys
• Here are the top 10 ASX 200 shares today
• If you invest $10,000 in Premier Investments shares, how much passive income will you receive in 2024?

Motley Fool contributor James Mickleboro has positions in Endeavour 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 recommended Orora and Premier Investments. 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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