Category: Stock Market

When it comes to safe-haven assets, investors often think of gold as king. But the yellow metal comes with an opportunity cost.

That’s why I think S&P/ASX 200 Index (ASX: XJO) blue-chip shares could be a better safety net. Let’s explore.

What is a safe-haven asset?

A safe-haven asset is typically an investment that offers respite from market volatility. No doubt, then, plenty of investors have considered snapping up one or two in recent times.

The ASX 200 had a rollercoaster ride in 2022, ultimately ending the year 5% lower than it started. Looking further back, the index crashed in 2020 before roaring to a new all-time record high in mid-2021. If your stomach had been lurching through that time, you’re not alone.

Indeed, investor moves to protect hard-earned cash may have helped drive the price of gold higher in recent months. The metal is trading at US$1,936.30 an ounce today, as per CNBC. That’s around its highest point since April 2022.

But, while investing in gold might bring fewer risks than buying some stocks, it generally doesn’t provide the growth ASX 200 shares can. Nor does it pay dividends.

Fortunately, there is a middle ground for risk-averse investors. And that is ASX 200 blue-chip shares.

Why are blue-chip shares a ‘safer’ buy?

Blue-chip shares tend to offer sturdy balance sheets, competitive advantages, and greater brand recognition than their peers. They are also often industry leaders with a long track record of strong performance.

Such characteristics generally mean they can push through hard times without as much damage as, say, growth shares might experience. They can also provide capital growth and dividends, both of which can act as an inflation hedge.

Thus, they can provide a safe haven from much of the market’s volatility. Though, no investment can be guaranteed to provide either growth or downside protection.

Market watchers will likely recognise such blue-chip shares as investment banking giant Macquarie Group Ltd (ASX: MQG), big four bank Westpac Banking Corp (ASX: WBC), and conglomerate behind such retailers as Bunnings and Kmart, Wesfarmers Ltd (ASX: WES).

They each demonstrate many of the qualities of blue-chips and boast valuations of between $56 billion and $83 billion.

Why not both?

But why can’t a risk-averse investor have both? Of course, one can always hold both ASX 200 blue chips and gold.

They can also invest in the gold mining giant Newcrest Mining Ltd (ASX: NCM). Newcrest boasts a $20.5 billion market capitalisation and tends to rise and fall alongside the price of the yellow metal since its earnings are tied to the commodity.

The post Forget gold! ASX 200 blue-chip shares could be the new safe-haven asset appeared first on The Motley Fool Australia.

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More reading

• How much profit could Wesfarmers shares make in 2023?
• 5 things to watch on the ASX 200 on Wednesday
• Does Telstra sell bonds to ASX retail investors?
• Everything you need to know about Wednesday’s Australian inflation data release
• How much profit could Westpac shares make in 2023?

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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Macquarie Group and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has come under pressure on Wednesday after a higher than expected inflation reading. In afternoon trade, the benchmark index is down 0.2% to 7,476.2 points.

Four ASX shares that aren’t letting that hold them back today are listed below. Here’s why they are charging higher:

Accent Group Ltd (ASX: AX1)

The Accent share price is up 9% to $2.09. This follows the release of a strong trading update from the footwear retailer this morning. Accent revealed that total sales for the first half were up 33% over the prior corresponding period to $825 million. This is expected to lead to half year earnings before interest and tax (EBIT) in the range of $90 million to $92 million, up from $30.3 million a year earlier.

Iluka Resources Limited (ASX: ILU)

The Iluka share price is up 2.5% to $11.03. Investors have been buying this mineral sands producer’s shares following the release of its fourth quarter and full year update. Iluka reported production of 157,000 tonnes for the fourth quarter, taking its full year production to 679,400 tonnes. And while its production and sales volumes were both lower year over year, stronger prices led to revenue growing 16.3% to $1,727.4 million.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is up a further 5% to 94.2 cents. Investors have been buying this department store operator’s shares following the release of a trading update this week. Myer revealed that for the five months to December 31, it delivered total sales growth of 24.8%. Management expects this to lead to the company reporting a first half profit of $61 million to $66 million. The latter will be double last year’s half year profit.

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price is up almost 1.5% to $13.78. This appears to have been driven by a bullish broker note out of Goldman Sachs this morning. Goldman has named the company as its top pick in the insurance sector and has initiated coverage with a buy rating and $16.67 price target. It believes QBE’s shares are trading at an attractive level compared to historical levels, particularly given its strong capital position and improving outlook.

The post Why Accent, Iluka, Myer, and QBE shares are charging higher today appeared first on The Motley Fool Australia.

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More reading

• Consumer spending defies logic as inflation rages higher, locking in yet another interest rate hike in February
• 3 ASX 200 resources shares on the move following quarterly updates
• Accent Group share price jumps 11% on strong sales update
• 7 reasons to buy QBE shares: Goldman Sachs
• Why Block, Codan, Latin Resources, and Myer shares are storming higher

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

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S&P/ASX 200 Index (ASX: XJO) copper shares could be in for some healthy tailwinds in 2023 as the price of the red metal is widely tipped to keep marching higher. 

That would certainly be good news for investors in blue-chip copper stocks like Sandfire Resources Ltd (ASX: SFR) and Oz Minerals Ltd (ASX: OZL).

What’s happening with the copper price?

The copper price topped US$10,600 in March last year before sliding to lows of US$7,200 in July as soaring inflation and rising interest rates temporarily took the shine off the industrial metal.

2023 has seen the copper price march steadily higher, helping lift the prospects of ASX 200 copper shares.

Year-to-date copper has gained more than 12%, currently trading for US$9,315 per tonne.

That’s helped propel the Sandfire Resources share price to a 20% gain so far in 2023.

Oz Minerals is a bit of a different story, due to the ongoing takeover process with BHP Group Ltd (ASX: BHP).

With BHP seeking to acquire Oz Minerals via a scheme of arrangement for a cash price of $28.25 per share, the ASX 200 copper share has been trading in a fairly narrow band over the past weeks.

Forecast outperformance could boost ASX 200 copper shares in 2023

Copper is already off to a strong start in 2023.

And according to the latest MLIV Pulse survey, reported by Bloomberg, professional and retail investors alike have pegged copper as “the most likely commodity to outperform when compared to oil, corn and gold”.

Part of that investor bullishness comes from copper’s widespread use in construction activities, with China’s reopening from its zero-COVID forecast to boost demand for the metal.

Copper, a highly conductive metal, is also a vital element in EVs and the broader global march towards electrification.

Goldman Sachs head of commodities research Jeff Currie is among the analysts who believe the copper price will continue to increase in 2023, which would offer support for ASX 200 copper shares.

According to Currie:

Our target end of year is US$11,500…but longer term, we are in line with Trafigura, we see US$15,000 a tonne. You know, there’s a structural imbalance in these markets. You are likely to see peak copper supply in 2024.

The post Investing in ASX 200 copper shares? Here’s the outlook for the red metal in 2023 appeared first on The Motley Fool Australia.

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More reading

• Does the Vanguard Australian Shares ETF’s unique structure deliver better returns than the ASX 200?
• Did you buy $1,000 of Bank of Queensland shares 10 years ago? Here’s how much dividend income you’ve made
• 10 types of ASX companies that can grow even if the economy tanks
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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 past four months or so have been especially lucrative for ASX investors. The ASX 200 dropped below 6,400 points in September last year. But since then, the Index has risen by more than 15%. That includes the impressive rally of 7.4% that the ASX 200 has enjoyed since the start of 2023.

As such, most ASX-based index funds have risen by a similar amount over the past four months. But one ASX exchange-traded fund (ETF) has almost tripled this gain. It’s the VanEck Gold Miners ETF (ASX: GDX).

This ETF isn’t too hard to figure out. As its name implies, it invests in a portfolio of gold mining shares sourced from around the world. More than half of its holdings come from Canada. But the United States, Australia, South Africa, China, the United Kingdom, and Peru are also present in this ETF.

Some of the VanEck Gold Miners ETFs’ top holdings include Newmont Corp, Barrick Gold Corp, Franco-Nevada Corp, and our own ASX gold shares Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST).

Overall, this ETF currently holds 49 individual gold shares within it.

But let’s get down to performance.

ASX gold ETF smashes the market’s returns

So back in late September 2022, the VanEck Gold Miners ETF hit a new 52-week low of $33.72 per unit.

But today, this ETF is trading at $46.84 per unit at the time of writing. That’s a good 38.9% above where it was back in late September. That’s close to triple the gains of the broader market:

So why has this ETF been such a winner for investors of late?

Well, again, it’s not too obscure. Gold itself has been on a bit of a tear recently. Back in late September last year, the precious metal was asking around US$1,630 per ounce. Today, you’ll have to hand over almost US$1,940 for that same ounce of yellow metal.

Gold miners have relatively fixed costs. As such, their profits can increase exponentially when gold rises in price. That’s why miners tend to be viewed as a more leveraged way to gain exposure to gold.

To illustrate, the VanEck Gold Miners ETF rose 38.9% over the past four months, but an ASX ETF tracking the price of gold itself – the BetaShares Gold Bullion ETF (ASX: QAU) – is ‘only’ up by 17.5% over the same period.

So that’s why the VanEck Gold Miners ETF has been such a winner for investors of late. However, this ETF is still down by around 23% from the highs of over $60 per unit that we saw back in 2020.

The post Meet the ASX ETF up 40% in 4 months appeared first on The Motley Fool Australia.

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More reading

• The gold price is trading at 8-month highs. What’s next in 2023?

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has dropped into the red following the release of a higher than expected inflation reading. At the time of writing, the benchmark index is down 0.25% to 7,471.7 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Best & Less Group Holdings Ltd (ASX: BST)

The Best & Less share price is down 7% to $1.96. Investors have been selling this discount retailer’s shares following the release of a disappointing trading update. Although the retailer reported a 13% jump in half year revenue, it expects to record a first half profit after tax of $13.7 million. This will be down 32% over the prior corresponding period due to significant margin pressure.

Evolution Mining Ltd (ASX: EVN)

The Evolution Mining share price is down almost 4% to $3.28. A number of brokers have responded negatively to this gold miner’s quarterly update. One of those was Ord Minnett, which has downgraded Evolution’s shares to a hold rating with a $3.20 price target. It was a touch underwhelmed with the company’s performance during the December quarter.

Mineral Resources Ltd (ASX: MIN)

The Mineral Resources share price is down 4% to $92.57. This follows the release of the mining and mining services company’s quarterly update. Although Mineral Resources reported a strong increase in lithium shipments, its iron ore shipments fell quarter on quarter. The company also revealed that its Mt Marion expansion has been delayed.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 13.5% to 77 cents. Investors have been hitting the sell button after the gold miner delivered another disappointing quarterly update. For the three months ended 31 December, the company delivered gold production of 60,976 ounces at an all-in sustaining cost of A$2,666 per ounce. The latter is higher than the A$2,591 per ounce it received for its gold during the period.

The post Why Best & Less, Evolution, Mineral Resources, and St Barbara shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Why is this ASX All Ords gold share crashing 16% today?
• Mineral Resources share price tumbles as lithium business takes off
• 5 things to watch on the ASX 200 on Wednesday
• Guess which four ASX 200 lithium shares charged higher today
• 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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1) It has been a flying start for the ASX so far in 2023, with the AFR reporting the S&P/ASX 200 Index (ASX: XJO) is “off to the best start in at least 30 years.”

Quite remarkably, given all we’ve been through over the past two “covid” years – particularly the pandemic itself, high inflation and sharply higher interest rates – the ASX 200 index is trading within a whisker of its all time highs.

It’s in sharp contrast to the beatings handed out to growth shares, particularly in the US, with the Nasdaq Composite Index (NASDAQ: .IXIC) down over 16% in the last 12 months.

Australian investors can thank our lucky stars the ASX 200 index has a hefty weighting to commodities – particularly oil and coal – helping propel the Whitehaven Coal Ltd (ASX: WHC) share price 246% higher these past 12 months, with the Woodside Energy Group Ltd (ASX: WDS) share price 50% higher over the same period.

2) Most of the heavy lifting has already been done by central banks as they’ve undertaken one of the most aggressive periods of sustained interest rate hikes in history in the fight against rampant inflation.

All eyes now are on the economy, and whether the landing will be hard or soft.

So far so good for the optimists, with consumers continuing to spend even as they face sharply higher mortgage repayments as low fixed rate deals roll off this year and next.

A trading update from shoe retailer Accent Group Ltd (ASX: AX1) said “trade has continued to be strong through November and December” with sales above expectations. Admittedly against softer “covid” trade last year, Accent total sales are up 39% for FY23, a stunning performance for a somewhat discretionary retailer.

Not surprisingly, the Accent Group share price is up 9% to $2.09 in Wednesday morning trade. Accent shares trade at around 15 times forward earnings and on a forecast fully franked dividend yield of around 5%… not cheap if consumers start putting their hands in their pockets later this year. 

3) Consumer behaviour has me baffled. Given the coming interest rate shock, given consumer confidence is deeply pessimistic and given the falling house prices, I’d have thought people would be battening down the hatches, preparing for tough times ahead.

But no. Revenge spending post covid carries on, not this time on the stock market and online shopping, but on shoes, restaurants and travel. 

With most working-age Australians never having experienced a “proper” recession, coupled with low unemployment and a high savings rate, consumers are partying now and worrying about tomorrow when it comes. 

Helping too are superannuation balances, hardly moved for many Australians despite the macroeconomic ructions felt here and around the world. 

She’ll be right mate.

4) Before today, some economists were predicting/hoping the Reserve Bank of Australia would hold interest rates at the upcoming February meeting. 

Deloitte Access Economics said there is an “everest of evidence” to suggest that the Reserve Bank should hold the rate next month.

“Australia’s consumer-led recovery is rapidly running out of road, with the combination of falling house prices, rising interest rates, high inflation, low levels of consumer confidence, and negative real wage growth expected to combine to see spending growth decelerate markedly over coming months,” said Deloitte’s Stephen Smith on Investor Daily. 

Just like I was saying…

Except, today’s inflation print came in hot after headline inflation of 7.8%, comfortably ahead of expectations.

Cue the ASX 200 index going into a sharp reverse and Australian bond yields spiking higher. Cue also a locked-in 25 basis point rise in the cash rate in February. 

Inflation is not done with yet. 

Just when you thought we’re through the worst, there could be pain ahead for equity investors, and more pain for interest-rate sensitive growth shares.

5) Speaking of pain, uber-bear Jeremy Granthan is quoted on Bloomberg as saying the popping of the bubble in US stocks is far from over and investors shouldn’t get too excited about a strong start to the year for the market.

The 84-year old money manager says the S&P 500 Index (SP: .INX) could decline as much as 20% from current levels, adding…

“There are more things that can go wrong than there are that can go right. There’s a definite chance that things could go wrong and that we could have basically the system start to go completely wrong on a global basis.”

According to one poster on Twitter, the last time Jeremy Grantham was bullish was 2009 and by January 2010 he was already calling the market a bubble. 

The post Consumer spending defies logic as inflation rages higher, locking in yet another interest rate hike in February appeared first on The Motley Fool Australia.

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More reading

• Accent Group share price jumps 11% on strong sales update
• Woodside share price rises on record FY22 production and revenue
• 5 things to watch on the ASX 200 on Wednesday
• Looking to energise returns with this pocket of undervalued ASX shares in 2023
• Why Whitehaven Coal shares could ‘continue rewarding’ ASX 200 investors in 2023: expert

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

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The Liontown Resources Ltd (ASX: LTR) share price is in the green today, up 0.65% to $1.55 at the time of writing.

Liontown chair Tim Goyder is likely quite pleased. Five days ago, he picked up an extra $1.5 million worth of Liontown shares in on-market trades. And he got them for a great price, too.

While the average price paid is not revealed in the ASX lodgement from the company, the trades took place on 20 January. On that day, the highest price Liontown shares traded at was $1.465. Its lowest price was $1.28 and its closing price was $1.375. The shares dived after a market announcement.

Goyder purchased one million shares directly on-market. There was a further 145,000 Liontown shares purchased indirectly, also on-market, in the name of his wife, Linda Goyder, and related entities.

If we assume he paid the highest price of the day, he’s sitting on a tidy five-day profit of $127,500 at today’s current price.

But that’s a drop in the bucket when we consider that Goyder owns more than 162.5 million shares directly. And that excludes the hundreds of millions of shares he holds in his family trust and superannuation fund, too.

What’s the lesson for investors?

The lesson for ordinary investors here is the confidence that this sort of insider investment inspires.

Goyder wouldn’t have so much personal wealth tied up in Liontown shares if he didn’t think the future was bright.

This is despite Liontown being unlikely to post a profit in 2023, as my colleague Brooke reported yesterday.

It’s also unlikely that Goyder and his wife would be putting $1.5 million of their own money in now if Goyder thought the ASX lithium share price was overvalued either.

In fact, broker Bell Potter reckons there’s a potential 80% upside to be had over the next 12 months alone given its share price target of $2.81 on Liontown.

Goyder is a well-known mining entrepreneur with more than four decades of experience. He has founded and run several ASX-listed companies over the years, including Chalice Mining Ltd (ASX: CHN).

He retired as Chalice Mining chair after 15 years at the helm in 2021.

In addition to being chairperson of Liontown, Goyder is currently the chair of DevEx Resources Ltd (ASX: DEV).

He is also a non-executive director of Minerals 260 Ltd (ASX: MI6) as well as the unlisted clean energy technology company, entX Limited.

What’s the latest news from this ASX lithium share?

Goyder’s purchases occurred on the same day as Liontown’s latest price-sensitive update.

As my Fool colleague James reported, the update was about Liontown’s Kathleen Valley Lithium Project in Western Australia.

The update revealed that construction is going to cost more than previous estimates. This is partly because the company has optimised the plant capacity design to increase the initial throughput rate by 20% to 3Mtpa.

In its announcement, the company said this would enable it “to take advantage of strong short and medium-term forecast lithium pricing”.

The project remains on track for its first production in mid-2024.

The post Which ASX lithium share executive just invested $1.5 million in his company? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Will Liontown Resources post a profit in 2023?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday

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

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The S&P/ASX 200 Index (ASX: XJO) was in the green today right up to 11.30am AEDT. Then the benchmark index tumbled 0.6% in a matter of minutes.

That came right after the Australian Bureau of Statistics (ABS) released its inflation data for the December quarter.

As you’d expect by the fall in the ASX 200, those inflation figures came in higher than market expectations.

What did the ABS report?

The ABS revealed that the Consumer Price Index (CPI) increased 1.9% in the December quarter, bringing the annual inflation rate to 7.8%.

That’s significantly higher than economists’ consensus forecasts of a 1.6% quarterly increase and 7.6% annual inflation rate. And ASX 200 investors are responding by hitting the sell button today, following a remarkably strong run for the benchmark index so far in 2023.

Commenting on the data, ABS head of prices statistics Michelle Marquardt said:

This is the fourth consecutive quarter to show a rise greater than any seen since the introduction of the Goods and Services Tax (GST) in 2000. The increase for the quarter was slightly higher than the quarterly movements for the September and June quarters last year, both 1.8%.

The 7.8% year-on-year increase in the CPI was predominantly driven by a 17.8% increase in new dwelling prices, a 19.8% increase in the cost of domestic holiday travel and accommodations, and a 13.2% increase in the price of automotive fuel.

Why is the ASX 200 under pressure today?

As mentioned up top, the latest inflation figures have come in higher than the market had priced in. And that’s seeing some selling action on the ASX 200 as we head into the lunch hour.

The higher figures matter because it’s now more likely that investors can expect another interest rate hike from the Reserve Bank of Australia (RBA).

In an effort to bring inflation back under control, the RBA has already instituted eight consecutive monthly interest rate increases. That commenced with the 0.25% lift on 4 May, which brought the official cash rate to 0.35%.

Today the cash rate stands at 3.10%. And ASX 200 investors are on tenterhooks as to the central bank’s next decision when the board meets on Tuesday, 7 February.

With inflation still running hot, the odds of the RBA taking a pause in its tightening path have grown far slimmer.

“Inflationary pressures have not peaked as expected, so we can expect rate hikes to continue or even increase,” ASX equities analyst at Stake, Dylan Zhang, said.

“It’s likely we’ll see a 25bps hike at the next RBA meeting, but a 50bps hike is not unthinkable,” he added.

The post ASX 200 tumbles as inflation surprises to the upside appeared first on The Motley Fool Australia.

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

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The St Barbara Ltd (ASX: SBM) share price is having a day to forget on Wednesday.

At the time of writing, ASX All Ords gold share is down 16% to 75 cents.

As you can see below, this latest decline means the St Barbara share price is now down 42% since this time last year despite a recent rebound.

Why is this ASX All Ords gold share being hammered today?

Investors have been hitting the sell button today after St Barbara released yet another abject quarterly update.

According to the release, for the three months ended 31 December, the company delivered gold production of 60,976 ounces at an all-in sustaining cost of A$2,666 per ounce.

This represents a disappointing mix of lower production and higher costs quarter on quarter. For example, compared to the first quarter, production was down 4.3% and its ASIC was up 7.1%.

And with St Barbara commanding a realised gold price of A$2,591 per ounce for the period, it was costing the ASX All Ords gold share more to mine the precious metal than it received from customers.

Another cause for concern is the company’s balance sheet. St Barbara ended the period with total debt owing of C$80 million and A$50 million on its syndicated facility. This compares to its cash balance of just $38 million.

Outlook

Shareholders will no doubt be hoping that the company’s proposed merger with Genesis Minerals Ltd (ASX: GMD) to form Hoover House will be the start of better things.

Hoover House will be one of Australia’s leading gold houses, with a production target of +300,000 ounces per annum, a long-life, high quality asset base and substantial potential for organic growth.

The merger is expected to unlock substantial, near-term synergies for both sets of shareholders, as well as resetting the combined entity’s corporate support model.

Overall, the merger is expected to either defer or eliminate ~A$400 million of capital expenditure, reducing near-term execution risk and funding requirements.

The post Why is this ASX All Ords gold share crashing 16% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 are many ASX shares vying for a position in my portfolio at any single point in time. Companies that exhibit impressive revenue growth, sell incredibly valuable products/services, and are leaders in their fields.

However, as amazing as these businesses might be, many fail to meet one of the most important hurdles … the right price. More specifically, a price that is accommodative to the errors we all will inevitably make from time to time as investors.

The margin of safety is one of the most important investing principles, yet I rarely hear it discussed. This is despite it being one of the few things that can be controlled as a small shareholder. Several years of returns can be engulfed by paying too high of a price for even quality companies.

Below are three ASX shares that I believe are exceptional businesses, but trade on exceptionally high valuations.

I’d buy these ASX shares if the price was right

Objective Corporation Limited (ASX: OCL)

Objective Corp is possibly my favourite company on this list, making it into my top 10 picks for 2023. The company provides a broad range of software solutions to both the public and private sectors.

Thirty-six years on from its inception and Objective Corp is still delivering 20% year-on-year earnings growth. Another enticing trait is the company’s rock-solid balance sheet, with no debt and $63.8 million in cash. Not to mention it is founder-led by Tony Walls, who holds an ownership stake of more than 65% in the company.

Unfortunately, the price-to-earnings (P/E) ratio of around 73 times offers little in the way of a margin of safety. Even if Objective’s revenue grows at 20% over the next five years, most of that appears to be priced in. I’d happily add this ASX share to my portfolio if the price was more in the ballpark of $8 to $9.

Currently, it trades at $14.80.

Polynovo Ltd (ASX: PNV)

This is a company I had held previously in my portfolio but decided to remove it due to its deteriorating balance sheet.

Polynovo leverages its proprietary polymer technology for wound treatment and burns. Impressively, the company’s revenue has been growing at a 62% clip in the last year, reaching $41.9 million. Though, expansion to new markets and customers is still in the early stages.

Furthermore, Polynovo has recently undertaken a $30 million institutional placement, fortifying its balance sheet once more. Though, the business is still loss-making.

The rapid revenue growth is alluring, but the industry can be competitive. For example, Avita Medical Inc (ASX: AVH) offers a burn treatment of its own that comes in a spray-on form.

Given that Polynovo is yet to prove its profitability, I’m personally holding out for a share price below $1.30. At present, shares in this ASX medical company are fetching $2.50 apiece.

CSL Limited (ASX: CSL)

I’d assume I’m not alone in dreaming of owning a piece of this Australian biotech beast.

CSL is a company that probably needs no introduction. Its expansive portfolio of intellectual property puts it on the world stage of healthcare expertise — covering antibodies, clotting agents, and HPV and flu vaccines.

The company’s medical technology is hard to replicate and is usually protected by law, leading to profit margins above 20%. Additionally, the management team has demonstrated exceptional ability in making accretive acquisitions over the years.

Nonetheless, at an earnings multiple of 39 times FY25 forecast earnings for the company, CSL’s valuation is a bit difficult for me to swallow. I’d personally love to add CSL to my portfolio at a price below $200 compared to its current $295.

The post 3 ASX shares I dream of owning at the right price appeared first on The Motley Fool Australia.

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More reading

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• 3 of the best ASX 200 shares to buy in 2023: Bell Potter
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• If I invest $10,000 in CSL shares now, what could my return be this year?
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical, CSL, Objective, and PolyNovo. The Motley Fool Australia has recommended Avita Medical. 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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