Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) mining shares have been through plenty of turmoil over the last 12 months. So will 2023 turn out to be a great year?

No one can truly know what’s going to happen next. Resource prices are notoriously difficult to predict, which subsequently makes it tricky to forecast how ASX 200 mining shares are going to perform.

There are a number of different miners within the ASX 200 including the iron ore miners of BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), and Mineral Resources Ltd (ASX: MIN).

Mineral Resources also has lithium operations. Other ASX 200 lithium shares include Pilbara Minerals Ltd (ASX: PLS), IGO Ltd (ASX: IGO), Allkem Ltd (ASX: AKE), and Sayona Mining Ltd (ASX: SYA)

Gold miners also have plenty of representation with names like Newcrest Mining Ltd (ASX: NCM), Evolution Mining Ltd (ASX: EVN), Perseus Mining Limited (ASX: PRU), and De Grey Mining Limited (ASX: DEG).

There is also exposure to commodities like copper, nickel, and other minerals within the ASX 200.

What’s the outlook for ASX 200 mining shares?

For iron ore, things are looking a lot brighter than a few months ago. As the biggest buyer of iron ore, China’s move to end COVID lockdowns may be a boost for iron demand as economic activity starts normalising.

China is enacting more initiatives to support its troubled real estate sector. A stronger construction industry could mean higher demand for steel/iron ore.

A recovery of activity in China could also mean more demand for things like copper, nickel and possibly lithium, particularly if decarbonisation investment is ramped up across the country.

Lithium miners have been through enormous volatility over the past year. Their performance in 2023 could be decided by the movement of the lithium price. A report by KPMG suggests there is enormous demand ahead for lithium if the world is to move away from the combustion engine by 2050, requiring two billion electric vehicles.

I recently covered some expert thoughts on the gold sector, which suggest the gold outlook for 2023 is improving.

Foolish takeaway

I’m not sure where the share prices of the ASX 200 mining shares will end up at the end of 2023, but I think that with the strengthening of prices for a number of commodities, it’s looking good for short-term profitability and dividends.

However, I think it’d make more sense to buy resource businesses when the outlook is weakening and sentiment is low. So, for now, I’d be happy to wait on the sidelines to give myself a better chance of capital gains.

The post Will 2023 be a golden year for ASX 200 mining shares? 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?
• What’s the outlook for ASX 200 gold shares in 2023?
• Could ASX 200 gold shares provide a safe haven for investors in 2023?
• ‘Correction is overdone’: broker upgrades Pilbara Minerals shares to buy
• If you invested $1,000 in Fortescue shares 10 years ago, here’s how much dividend income you’ve pocketed

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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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Woolworths Group Ltd (ASX: WOW) shares could be trading at a very attractive level.

That’s the view of analysts at Goldman Sachs, which have the retail conglomerate on their coveted conviction list.

What is the broker saying about Woolworths shares?

According to the note, the broker sees significant value in the Woolworths share price at the current level.

Its analysts have a conviction buy rating and $41.70 price target on its shares. This implies potential upside of 23% for investors over the next 12 months.

And to sweeten the deal further, the broker is expecting a fully franked $1.02 per share dividend in FY 2023.

This represents a 3% dividend yield, which stretches the total potential return to approximately 26%.

Solid growth ahead

Although Woolworths had a softer than expected start to FY 2023, the broker remains positive on the future and believes it is well-positioned for solid growth over the coming years.

So much so, it feels the level of growth it is forecasting means that Woolworths shares deserve to trade on higher multiples. It commented:

Despite a noisy and softer 1Q23, we remain confident that WOW is the superior operator within AU supermarkets with a clear growth pathway to deliver ~3% sales and ~9% NPAT FY22-25e CAGR. WOW is trading at 22.1x FY24E P/E vs our TP implied 27.8x and historical average of 23.2x, providing a value entry point to a quality player in our view.

This growth is expected to be driven partly by its high level of customer loyalty and omni-channel advantage. Goldman 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.

All in all, the broker appears to believe this makes Woolworths a blue chip to buy in 2023.

The post Buy Woolworths shares for 23% upside AND dividend income: Goldman appeared first on The Motley Fool Australia.

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More reading

• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
• Build a strong portfolio in 2023 with these ASX 200 blue chip shares: experts
• Woolworths shares have fallen to pre-pandemic levels. Time to buy?
• Top brokers name 3 ASX shares to buy
• Buy these growing ASX 200 dividend shares in 2023: experts

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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Gold has been a silent winner as an investment in recent months. As recently as early November, the yellow metal was asking under US$1,650 an ounce. Today, that same ounce of gold will set an investor back around US$1,880. That’s a gain worth close to 14% in just over two months 

That looks pretty good against ASX shares, seeing as the S&P/ASX 200 Index (ASX: XJO) has ‘only’ risen by around 4% over the same period.

The high US$1,880s is the most expensive gold has traded at since May last year, making it an 8-month high for the precious metal.

While gold has done well these past two months in particular, ASX gold miners have also captured the gains. Just take Northern Star Resources Ltd (ASX: NST) shares. They are up more than 30% in the beginning of November, as you can see below:

We see a similar story with Newcrest Mining Ltd (ASX: NCM) and Gold Road Resources Ltd (ASX: GOR) share prices. The diversified VanEck Gold Miners ETF (ASX: GDX) has also risen by roughly 28% since 3 November.

As my Fool colleague Bernd reported last month, the recent rise in the gold price could have something to do with central banks around the world, particularly the People’s Bank of China, dramatically boosting their bullion stores.

So after this stellar performance over the back end of 2022, what’s next for gold? Will 2023 be even better for gold prices?

Will gold glitter in 2023?

Well, gold is a rather unique asset. Higher demand for the precious metal is often attributed to fears over economic stability, geopolitical tensions and fears over inflation.

As such, gold is often thought of as a defensive or hedging asset. These factors could well influence the yellow metals’ pricing this year.

And if central banks continue to increase their appetites for bullion, this could also keep gold prices high.

However, one ASX expert who doesn’t think gold has much room for improvement is RBC Capital Markets.

As my Fool colleague Tristan reported on this morning, RBC has just lifted its 2023 price target for gold by 1% to US$1,735, well below the current price of US$1,880.

RBC also predicts that gold will slide down to US$1,700 an ounce by 2024 and as low as US$1,600 over a longer-term horizon.

Probably not exactly what gold bugs would like to hear. But we shall have to wait and see what’s really in store for gold going forward.

The post The gold price is trading at 8-month highs. What’s next in 2023? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ASX 200 gold shares in 2023?
• Could ASX 200 gold shares provide a safe haven for investors in 2023?
• 5 things to watch on the ASX 200 on Wednesday
• Mineral mania: 5 ASX 200 mining shares smashing new highs on Monday
• 5 things to watch on the ASX 200 on Monday

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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It certainly has been a difficult period for Pilbara Minerals Ltd (ASX: PLS) shares.

Since peaking at $5.66 in November, as you can see below, the lithium miner’s shares have crashed lower.

This has been driven by concerns that lithium demand could be softening, which could weigh on prices.

Broker upgrades Pilbara Minerals shares

One leading broker that believes Pilbara Minerals shares have been oversold since November is Citi.

According to a note released this morning, the broker has upgraded the lithium miner’s shares to a buy rating with a $4.70 price target.

Based on where its shares are currently trading, this implies potential upside of 21% for investors over the next 12 months.

What did the broker say?

Citi believes that the “correction is overdone” and has created a buying opportunity for investors. It commented:

PLS has pulled back ~30% since November against weaker-than-expected— albeit still growing—EV sales and anticipated battery supply chain destocking. In our view, the correction is overdone and we upgrade PLS to Buy from Neutral with an unchanged A$4.70/sh target price.

And while the broker acknowledges that investors may be unsure about entering the lithium industry right now. It believes lithium prices could remain at higher levels for longer than expected.

All in all, it expects this to lead to Pilbara Minerals generating bucketloads of cash in FY 2023 and FY 2024. The broker said:

We acknowledge investor hesitation against a commodity backdrop that may have peaked however i) spot spodumene prices may hold at +US$7000/t for longer than the market expects and ii) PLS is pricing in an undemanding US$1600/t SC6 on our estimates. The pullback provides an opportunity for investors to gain exposure to a high quality, pure-play lithium stock with low jurisdictional risk and a derisked growth profile. We expect PLS to make more cash in FY23/24 than any other stock in our gold/metals coverage universe. We model first franked dividend in 2HFY23. MarQ23 news flow: P1000 and Calix calcination (midstream product) FID.

The post ‘Correction is overdone’: broker upgrades Pilbara Minerals shares to buy appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Could higher global EV sales boost ASX 200 lithium shares?
• Down 11% in a month, should I buy the dip in Pilbara Minerals shares?
• 2 ASX 200 lithium shares with dividend yields over 7%. Say, what?
• 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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking to boost your passive income this year, then you may want to look at the shares listed below.

These ASX shares have been tipped to pay their shareholders very attractive dividends in 2023. Here’s what you need to know about them:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share that has been named as a buy is Accent.

The footwear and youth apparel retailer could be a top option for investors according to Goldman Sachs.

The broker believes that Accent’s numerous retail brands are well-placed in the current environment due their strong market position and exposure to younger consumers. Goldman expects the latter to continue spending as normal in 2023 due to a rise in the minimum wage and lower exposure to rising interest rates.

The broker expects this to lead to fully franked dividends of 10.2 cents per share in FY 2023 and 11.4 cents per share in FY 2024. Based on the current Accent share price of $1.78, this will mean yields of 5.7% and 6.4%, respectively.

Goldman has a buy rating and $2.20 price target on the company’s shares.

South32 Ltd (ASX: S32)

Another ASX dividend share that has been named as a buy is South32.

Morgans is very positive on this mining giant, which owns a diverse collection of operations that provide exposure to commodities including aluminium, copper, manganese, and nickel.

Its analysts like South32 due to its “clear exposure to a recovery scenario for China growth” and its portfolio transformation and strong balance sheet. It sees the latter as “supporting potential for further M&A.”

As for dividends, Morgans is expecting South32 to pay fully franked dividends per share of 23 cents in FY 2023 and 21.6 cents in FY 2024. Based on the current South32 share price of $4.45, this will mean yields of 5.15% and 4.9%, respectively.

The broker has an add rating and $5.30 price target on South32’s shares.

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

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Looking to buy South32 shares? Here are the key dates to watch in 2023
• 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 recommended Macquarie 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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Often the best wisdom from professional investors arises when they discuss ASX shares that have plunged in their portfolio, not the ones that have risen.

That’s because the analysts explain why they chose to retain or sell those stocks.

And if they are keeping the faith then it’s a great tip for other investors to buy, especially as the price has been discounted.

The portfolio managers at Elvest Fund, in a recent memo to clients, mentioned two S&P/ASX 200 Index (ASX: XJO) shares exactly in that situation.

Discounted stock despite great outlook 

The share price for construction products player Brickworks Limited (ASX: BKW) was down 1% in December, which the Elvest team felt didn’t justify “a positive update”.

“Brickworks announced expectations to deliver a record half-year result in its property division,” read the memo.

“Not long after delivering a strong FY22 result, Brickworks expects to grow its net property trust asset base by $450 million to $2.2 billion in the first half of FY23.”

As well as producing goods, Brickworks has substantial investments in real estate and fellow ASX-listed company Washington H Soul Pattinson and Co Ltd (ASX: SOL).

“Over the medium term, we see property underwriting Brickworks’ current market cap, leaving substantial residual value within its 26% stake in Washington H Soul Pattinson, as well as the building products division.”

The Brickworks share price has dropped 7.1% over the past year, leaving a dividend yield of 2.75%. 

According to CMC Markets, three out of five analysts that cover the stock recommend it as a buy. The remaining two rate Brickworks as a hold.

The reason why this travel stock is struggling and why it’ll surge again

Christmas fortunes for Corporate Travel Management Ltd (ASX: CTD) were opposite, with the share price dropping 10.9% over December.

In fact, the stock has plunged almost 30% over the past 12 months.

If you visit any airport in Australia at the moment, it’s obvious to see from the lengthy queues the travel industry is going gangbusters.

So what gives?

“Corporate Travel Management declined on news of leisure travel swamping airline capacity and therefore limiting availability for corporate travellers.”

But that just means more upside, as far as the Elvest team is concerned.

“As capacity returns, which we believe will occur over the next 12 to 24 months, so too will corporate travel, albeit in the midst of a challenging economic environment,” read the memo.

“Corporate Travel Management is attractively priced assuming recovery of pre-COVID activity over the coming years.”

Elvest’s peers broadly agree, with nine out of 12 analysts currently surveyed on CMC Markets recommending Corporate Travel shares as a buy.

The post ‘Attractively priced’: Why fund is excited by these 2 ASX 200 shares appeared first on The Motley Fool Australia.

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More reading

• Could ASX 200 travel shares be set for a major boost in 2023?
• How ASX dividend shares can solve retirement income needs
• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy now
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Tony Yoo has positions in Corporate Travel Management and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Betashares Nasdaq 100 ETF (ASX: NDQ) saw a very heavy fall in 2022. Of the big ASX exchange-traded funds (ETFs), it was one of the worst performers, dropping around 30%.

For investors who don’t know, this fund owns some of the largest US businesses. Indeed, it’s invested in 100 of the largest non-financial businesses listed on the NASDAQ. The NASDAQ is a US-based stock exchange, home to many tech companies.

Looking at the fund’s holdings list, these are some of its biggest positions: Microsoft, Apple, Amazon.com, Alphabet, Nvidia, Tesla, Meta Platforms, PepsiCo, and Broadcom.

Why was 2022 so tough?

Collectively, technology shares had a rough time last year. The combination of high inflation and rising interest rates has had quite an effect on valuations. Not only can inflation hurt profitability through rising costs, it can also prompt central banks to lift interest rates in a bid to take some demand out of the economy.

So why do interest rates matter so much? Legendary investor Warren Buffett once said:

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.

In 2022, the US Federal Reserve took the interest rate from around 0% to above 4%, and more increases are expected in 2023.

Over the year, the Microsoft share price dropped almost 30%, the Apple share price fell 27%, the Amazon share price sank almost 50%, the Alphabet share price declined almost 40%, and the Tesla share price was whacked 65%.

Will 2023 be any better for the Betashares Nasdaq 100 ETF?

As a group of businesses, I think it’s likely to be another volatile year as things go up and down as optimists and pessimists drive the action.

As to whether it’s a positive year or not, I think will come down to two main elements.

First, interest rates. It seems that the US Federal Reserve collectively thinks that the interest rate will reach 5.1%, based on individual members’ expectations.

There’s also the risk that the interest rate could stay at that 5% mark for longer than the optimists are hoping for. Theoretically, share price valuations are meant to take into account not just the current interest rate, but where it will be in the coming years as well.

The boss of the US Federal Reserve, Jerome Powell, has promised to “keep at it until the job is done”, so I wouldn’t expect interest rate cuts any time soon. If the market is not taking this commitment fully into account, then it could be another tough year.

The other main element could be the actual profitability performance of the businesses in the Betashares Nasdaq 100 ETF.

Analysts are regularly assessing how much profit they expect businesses to make in 2023. If economic conditions are worse for a business than expected, its share price could take a dive. But, on the other hand, if profit performs better than expected, the share price could jump amid all the negativity. I think there will be a bit of both within the ETF’s portfolio of companies.

Foolish takeaway

I think the Betashares Nasdaq 100 ETF can end up higher come December 2023. Sentiment may fall during the year, particularly if quarterly profit numbers start being disappointing. However, by the end of the year, I think interest rate rises will have paused and this will give investors some certainty, as well as interest rate cuts getting closer, whenever they happen.

The post The Betashares Nasdaq 100 ETF (NDQ) crashed 30% in 2022. Are things looking up? appeared first on The Motley Fool Australia.

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More reading

• 2 super ETFs for ASX investors to buy in 2023 and hold for a decade
• $300 a month in these 3 ASX shares could make you a millionaire by retirement
• 3 excellent ETFs for ASX investors to buy in January
• 3 reasons to buy the BetaShares Nasdaq 100 ETF (NDQ) before 2023
• 2 high quality ETFs for ASX beginner investors to buy in 2023

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor 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 Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) ended its winning streak with a small decline. The benchmark fell 0.3% to 7,131 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set to rebound on Wednesday following a solid night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 27 points or 0.4% higher this morning. In late trade on Wall Street, the Dow Jones is up 0.4%, the S&P 500 is up 0.55%, and the Nasdaq is 0.8% higher.

Oil prices rise

It could be a good day for energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) after a decent night for oil prices. According to Bloomberg, the WTI crude oil price is up 1.4% to US$75.68 a barrel and the Brent crude oil price has risen 1.25% to US$80.65 a barrel. Optimism over Chinese demand boosted prices.

Norwest rejects MinRes takeover

After the market close on Tuesday, Mineral Resources Ltd (ASX: MIN) was dealt a blow in its quest to acquire Norwest Energy NL (ASX: NWE). Norwest has released its target statement and advised that its directors unanimously recommend that shareholders reject the offer. Mineral Resources has offered one share for every 1,367 Norwest shares. This currently values the offer at 6.2 cents per share.

Iron ore price rises

It could be a positive session for mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) on Wednesday after the iron ore price charged higher. The steel-making ingredient is up 3.1% to US$121.95 a tonne amid hopes that China’s reopening will lead to an increase in demand for the base metal.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.1% to US$1,879.7 an ounce. Gold is trading near a new eight-month high.

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

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More reading

• Broker reveals ASX 200 share with earnings expected to halve
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These 3 ASX 200 lithium shares outperformed all others in 2022
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023

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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Two ASX 300 retail shares are a buy but another may fall slightly, according to analysts at Macquarie.

The broker rates Lovisa Holdings Ltd (ASX: LOV) and Premier Investments Ltd (ASX: PMV) as buys, while City Chic Collective Ltd (ASX: CCX) is rated neutral.

Let’s take a look at the outlook for these three ASX retail shares.

Will retail shares bounce back?

Macquarie analysts have placed an outperform rating on the Lovisa share price with a $27 price target. It also rates Premier Investments as outperform with a $29 price target. Premier Investments has a portfolio of retail brands including Portmans, Just Jeans, and Peter Alexander.

The Macquarie team likes retailers with scale, strong balance sheets, and market-leading brands, with youth consumers well positioned in today’s economic environment, the Australian Financial Review reported.

Lovisa shares fell 0.29% on Tuesday to close at $24.21 each. Macquarie’s price target of $27 implies an upside of 11.5%. In November, Lovisa reported global store sales in the first 19 weeks of FY23 to date were up 16.1% on FY22. The company also reported it had opened 47 new stores.

Premier Investments shares dropped 5.19% on Tuesday to close at $24.85. Macquarie’s price target of $29 implies a 16.7% upside based on the current share price.

In early December, the company reported global sales in the first 17 weeks of 1H23 had soared 24.9% compared to pre-Covid 1H20 sales. The company also reported record sales during the Black Friday trading week.

However, looking at the bigger picture for retail, analysts at Macquarie are concerned about online sales traffic in the current economic environment, commenting (courtesy of AFR):

December website traffic data remains weak as retailers continue to cycle tough COVID comps. Online activity continues to moderate from elevated levels seen over CY20-21.

With this in mind, Macquarie has placed a neutral rating on City Chic Collective with a 42-cent price target, noting the company’s website traffic fell 8.9% in the “first weeks of December”, the publication reported.

City Chic shares fell 3.37% in Tuesday’s trade to close at 43 cents apiece. On 20 December, City Chic reported global year-to-date revenue was down about 7% compared to the prior corresponding period. However, it was up 38% on FY21.

Meanwhile, the latest ANZ-Roy Morgan Consumer Confidence data, released today, shows consumer confidence lifted 4.9 points last week to 87.4. ANZ senior economist Adelaide Timbrell said:

This was the first new year’s jump in confidence since 2018.

Share price snapshot

The Lovisa share price has soared nearly 32% in the last year.

Premier Investments shares have declined 11% in the past 52 weeks.

Citi Chic Collective shares have plunged 91% in the past year.

The post 2 ASX 300 retail shares to buy right now, and one to avoid: Macquarie appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Monica O’Shea 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 Lovisa. The Motley Fool Australia has recommended Lovisa 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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Many blue chip companies are trading on what would be considered ‘cheap’ earnings multiples following a tough year for S&P/ASX 200 Index (ASX: XJO) shares.

Nealy 15% of companies included in the Aussie benchmark index now have a price-to-earnings (P/E) ratio below 10. However, one broker is concerned that there is possibly a good reason for the steep discount on a staple of the materials industry.

Holding the title of the second-lowest P/E ratio in the benchmark — at 3.1 times earnings — shares in BlueScope Steel Limited (ASX: BSL) might look like a golden opportunity. Though, the team at Ord Minnett begs to differ based on its forecasts.

Tailwinds fade in a slowing economy

Share market investors and a single-digit P/E ratio can be like moths to a flame. The attraction is in the chance of investing in a company that is potentially mispriced. This strategy falls apart when the underlying fundamentals continue to erode, resulting in what is called a ‘value trap‘.

According to the analysts at Ord Minnett, BlueScope Steel might have the makings of a value trap right now. This is largely based on their estimates that the steel giant will experience significant reductions in its earnings this year and through to FY25.

Specifically, Ord Minnett analysts expect that rising interest rates will squash steel demand. This paired with the absence of monetary stimulus and an easing of supply disruptions will see BlueScope earnings fall off a cliff.

In FY23, the team forecast BlueScope’s earnings before interest and tax (EBIT) to fall from $3.79 billion to $1.6 billion. From there, EBIT is expected to slide further — descending to $1 billion by FY25.

Commenting on the forecasted future direction of BlueScope earnings, the Ord Minnett team wrote:

We do not believe this negative earnings profile is reflected in BlueScope Steel’s stock price, trading at a premium of more than 20 per cent to our fair value estimate.

In December, Fitch Ratings revealed its expectations for metals prices across the world to weaken in 2023. Likewise, a mill source informed S&P Global Commodity Insights of their view of further weakness, stating:

China’s steel demand is likely to continue falling in 2023 due to slowed demand both home and abroad, so the commissioning of these new steel projects will put a lot of pressure on the market trends, if most steel makers do not put their production under control.

Where could this ASX 200 share end up?

The BlueScope Steel share price has already fallen by 18.4% over the last year, but Ord Minnett anticipates further downside.

In light of forecasts for its earnings to more than halve, the team has set its price target on this ASX 200 share to $13 per share. This would suggest there’s still another 26.5% worth of space left for BlueScope to tumble from its current $17.69 position.

The steel giant’s 52-week low is $14.74.

The post Broker reveals ASX 200 share with earnings expected to halve 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
• These 3 ASX 200 lithium shares outperformed all others in 2022
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth

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

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