Category: Stock Market

The CSL Limited (ASX: CSL) share price is up 1.4% in early afternoon trade at $304.58 per share.

The global biotechnology company is outpacing the S&P/ASX 200 Index (ASX: XJO) today, with the benchmark index having only just clawed its way back into the green, up 0.1%.

That’s today’s price action for you.

Now, here’s why this fund manager is bullish on the CSL share price moving forward.

A defensive ASX 200 share in volatile times

Speaking to Livewire, Blake Henricks, portfolio manager at Firetrail Investments said CSL fits the bill as a defensive ASX 200 share likely to remain resilient despite any future market volatility.

“It’s large, it’s liquid, it’s healthcare. So to me, it ticks all the defensive boxes. It’s in a defensive growth category,” he said.

CSL’s plasma business operates one of the largest plasma collection networks in the world.

Which is a core reason why Henricks sees growth ahead for the CSL share price:

I think what’s really important is, the tougher the economy gets, the lower one of their key costs goes. And that’s the plasma collection. This is where they pay donors to give blood and they turn that into plasma. The higher unemployment goes, the more people want to give plasma and the costs come down. On that basis, it’s really attractive as a defensive. 

Henricks acknowledged that some investors may be put off by the high price-to-earnings (P/E) ratio. At the current CSL share price, that’s just over 40 times.

But that P/E ratio is backwards looking. Meaning it’s based on CSL’s share price today and on its earnings over the past financial year.

Henricks believes those earnings are set to increase, bringing the P/E ratio sharply lower:

2023 is already written. 2024, the earnings are looking very strong in our view, and you’re seeing it in a mid to high-20s P/E. They expense all their R&D. It’s a very well-run business. And for a defensive, I can’t go past it.

How has the CSL share price performed longer-term?

Over the past five years, the CSL share price has gained 109%, compared to a 21% gain posted by the ASX 200 over that same period.

The post CSL share price ‘ticks all the defensive boxes’: fundie appeared first on The Motley Fool Australia.

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More reading

• ‘Over 100% gain next year’: Expert picks 3 best ASX shares for 2023
• 3 ASX shares to combat the next market dip: experts
• I’d aim for $1 million in retirement buying just 10 ASX 200 shares
• Why this could be a ‘powerful driver of sector dominance’ for CSL shares: Wilsons
• Here’s what Citi is saying about the CSL share price

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 positions in and has recommended CSL Ltd. 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 Qantas Airways Limited (ASX: QAN) share price is in the green today.

Qantas shares are climbing 0.65% today and are currently trading at $6.20. However, in earlier trade, the airline‘s shares jumped 1.3% to $6.22. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.03% in the green.

Let’s take a look at what could be impacting the Qantas share price.

What’s going on?

Qantas shares are outperforming other ASX travel shares on the market today. The Flight Centre Travel Group Ltd (ASX: FLT) share price is 0.38% in the red, while Webjet Limited (ASX: WEB) shares are descending 0.4%.

In news today, Qantas Frequent Flyer has launched thousands of points planes to coastal cities in the summer.

More than 3,000 flights will be turned into “points planes” where every seat can be booked as a classic flight reward.

The destinations include Byron Bay, Hamilton Island, Broome, Whyalla, Kangaroo Island and the Gold Coast.

Qantas states this is the “biggest ever release” of points plane flights. Qantas Loyalty CEO Olivia Wirth said:

While strong demand and higher fuel prices have seen the price of airfares for all airlines increase off historic lows over the past 18 months, the points required to book these seats haven’t increased in years.

Analysts at UBS have recently maintained a buy rating and lifted the price target on the Qantas share price to $7.60.

The broker was impressed with Qantas’ profit guidance update last week. The airline is forecast to deliver an underlying profit between $1.35 billion and $1.45 billion in the first half of the financial year.

Qantas share price snapshot

The Qantas share price has soared 26% in the past year, while it has climbed 5% in the last week.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed nearly 0.05% in the past year.

The company has a market capitalisation of about $11.7 billion based on its current share price.

The post Why is the Qantas share price smashing the ASX 200 on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• The Qantas share price is flying again. Why this fundie is concerned
• Top brokers name 3 ASX shares to buy next week
• Own Qantas shares? Guess what the airline is being accused of now
• 3 ASX 200 shares on the coveted Goldman Sachs conviction list
• Why is the Qantas share price having such a top run this week?

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. 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 Rio Tinto Ltd (ASX: RIO) dividend is one of the most popular options out there for income investors.

And it certainly isn’t hard to see why!

According to CommSec data, based on the Rio Tinto share price at the time, the mining giant’s shares have provided investors with above-average dividend yields over each of the last four financial years. Here are the yields:

• FY 2018 – 9.7%
• FY 2019 – 6.6%
• FY 2020 – 5.4%
• FY 2021 – 14.2%

So far in FY 2022, which ends 31 December, Rio Tinto has declared an interim dividend of approximately $3.84 per share. On a trailing twelve-month basis, this brings its dividends to $10.47 per share.

Based on the current Rio Tinto share price of $105.93, this represents a trailing 9.9% dividend yield.

Can Rio Tinto’s 9.9% dividend yield be sustained?

Rio Tinto is one of the world’s largest miners and has exposure to a number of commodities. However, there’s no getting away from the fact that iron ore is its biggest contributor to earnings.

In light of this, iron ore price strength (or weakness) has a big impact on its earnings and ultimately the dividends it is able to pay out.

In FY 2021, iron ore EBITDA came to US$27.5 billion thanks to an average iron ore price of US$160 a tonne. That represents approximately 73% of its underlying EBITDA of US$37.7 billion for the period.

Unfortunately, the iron ore futures price is currently fetching US$93.04 a tonne. And while it hasn’t traded at this level for the whole of FY 2022, the average price received is still likely to be down meaningfully for the year.

This has been driven by softening demand in China following long lockdowns driven by its zero-COVID policy. And with COVID cases soaring again, demand looks likely to remain subdued in the near term. Particularly given the ongoing property crisis in China, which is a sector that consumes significant amounts of iron ore.

Dividend cut incoming

In light of the above, a note out of Goldman Sachs reveals that it expects Rio Tinto’s iron ore EBITDA to fall by over a third to US$17.7 billion in FY 2022. A similarly sharp decline in group EBITDA to US$26.3 billion is also expected.

Unsurprisingly, given this earnings weakness, the Rio Tinto dividend looks unsustainable at FY 2021’s levels and a dividend cut is expected.

Goldman Sachs is forecasting the Rio Tinto dividend to come to US$4.80 per share for FY 2022. This equates to $7.20 in local currency at current exchange rates. Based on the latest Rio Tinto share price, this implies a full year dividend yield of 6.8% for investors.

While certainly not as great as FY 2021 or its trailing yield, the Rio Tinto dividend yield still remains among the biggest on the Australian share market.

Goldman Sachs also sees room for the miner’s shares to rise further with its buy rating and $114.70 price target.

The post Can the Rio Tinto dividend maintain its high yield of 9.9%? appeared first on The Motley Fool Australia.

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More reading

• Rio Tinto share price dips amid ‘important agreement’
• Brokers name 3 ASX shares to buy today
• Does an investment in Fortescue shares provide the ‘healthiest’ ASX exposure to iron ore?
• 3 reasons this fundie is still bullish on ASX mining shares
• The Rio Tinto share price is trading at a ‘compelling’ level: broker

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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When ASX shares take a big fall, it’s worth keeping an eye on what management is doing.

Any big selling action among the company directors tends to indicate they have a negative view on where the share price is heading.

Conversely, when directors go on a buying spree, they likely believe the company is undervalued.

Which brings us to the ASX share that’s dropped 75.8% in 2022 and just saw a director snap up 500,000 shares.

Namely, Electro Optic Systems Holdings Ltd (ASX: EOS).

Bargain hunting executive

On 4 January, the defence and space systems company was trading for $2.34. Today the ASX share is swapping hands for 57 cents, up 1.8% in intraday trading.

Last Thursday, the Electro Optic share price was right around 60 cents.

Indeed, Garry Hounsell, the newly appointed independent chair of EOS, paid 60.4 cents per share for his 500,000 allotment on Thursday. Or about $302,000.

If Hounsell had bought the same number of shares at the beginning of 2022, it would have cost $1.17 million.

If the company can turn its fortunes around, this executive may have scooped up a bargain.

Why has this ASX share nosedived in 2022?

The Electro Optic share price has struggled in the face of operational challenges and stiff competition from global powerhouses.

The ASX share’s satellite communications segment is up against challengers including Apple’s satellite-connected handsets and Elon Musk’s Starlink. Talk about some major rivals.

In its delayed half-year results for the six months ending 30 June (not released until 8 September), the company reported a 45% decline in revenue to $53.8 million. And its net loss after tax leapt to $99 million, up from $11.7 million in the prior corresponding period.

The ASX share has lost 22% since recommencing trade on 8 September following the release of those results.

The post This ASX share is down 76% in 2022, and a director just scooped up 500,000 of them appeared first on The Motley Fool Australia.

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More reading

• What you need to know about next week’s iShares S&P 500 ETF (IVV) stock split
• 3 ultra-popular stocks billionaires have been busy selling
• Did Fortescue just lose out on this multi-billion dollar green hydrogen project?
• Why is the Lake Resources share price heading down stream today?
• Is China responsible for decimating your ASX 200 lithium shares?

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 positions in and has recommended Electro Optic Systems Holdings Limited. 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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Stock splits, while popular in the United States, are a relatively rare occurrence for ASX shares. Perhaps it’s our lack of $2,000 shares which, until recently, were sported by both Amazon.com Inc and Alphabet Inc (parent company of Google). Or perhaps it’s just a cultural preference. But what is even rarer is an ETF stock split.

Exchange-traded funds (ETFs) technically don’t have shares. Instead, investors buy units of ETFs. That’s because they are buying into a trust, not a company.

But, just like shares, units can get expensive over time as well. And just like with a share, an ETF provider can order a stock split of its units.

That’s exactly what is happening with the iShares S&P 500 ETF (ASX: IVV) very soon.

S&P 500 ETF to undergo stock split

The iShares S&P 500 ETF is one of the most popular international ETFs on the ASX. It invests in a portfolio tracking the S&P 500 Index. This is the most dominant index representing the US market. It’s also the most widely tracked index in the world.

Everyone who’s anyone in the US markets can probably be found in the S&P 500. Apple, Amazon and Alphabet are all there. As are Ford, Microsoft, Coca-Cola, Tesla, and McDonald’s.

Yet today, one unit of the iShares S&P 500 ETF will cost an ASX investor $598.65 – no mere chunk of change. By comparison, one unit of the Australian-focused iShares Core S&P/ASX 200 ETF (ASX: IOZ) will only set an investor back $29.18 right now.

But this is about to change. Last week, BlackRock, the ETF provider behind these two funds, announced a stock split for the iShares S&P 500 ETF. This will be a 15:1 split, which will see each unit of the ETF become 15 units.

This will have the effect of lowering the cost of one unit by a factor of 15 times, with all unitholders getting 15 times as many shares as they currently own in compensation.

So if an investor owns a single share of the iShares S&P 500 ETF today, valued at $598.65, they will own 15 units, each worth $39.91, following the split. Overall, the investor won’t see either an increase or decrease in their overall position.

IVV or IVVDB?

The last day that units of the iShares S&P 500 ETF will trade on a pre-split basis will be 6 December. Trading will then commence the following day on a post-split basis.

However, this ETF will temporarily use the ticker code IVVDB while trading on a deferred settlement arrangement from 6 December onwards. The ETF will only return to its old code of IVV and to normal trading on 13 December.

So if you own units of the iShares S&P 500 ETF, get ready to own a lot more at a far lower unit price.

The post What you need to know about next week’s iShares S&P 500 ETF (IVV) stock split appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Amazon, Apple, Coca-Cola, McDonald’s, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and iShares Trust – iShares Core S&P 500 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

You might not realize it, but two weeks ago marked one of the most important data releases of the quarter. November 14 was the last day for money managers and wealthy individuals with at least $100 million in assets under management to file Form 13F with the US Securities and Exchange Commission.

A 13F lets Wall Street professionals and everyday investors have a look under the hood to see what the brightest minds on Wall Street bought, sold, and held in the most recent quarter. Even though 13Fs have their flaws — they’re at least six weeks old by the time they’re filed, meaning additional trades may have been made — they can help investors identify the companies and trends garnering the attention of top money managers.

Although most billionaire money managers have used the 2022 bear market as an opportunity to buy high-quality companies at a discount, others haven’t been able to run to the exit quickly enough. What follows are three ultra-popular stocks billionaires have been busy selling.

Tesla

There’s arguably no stock billionaires sold more aggressively during the third quarter than electric-vehicle (EV) manufacturer Tesla (NASDAQ: TSLA). All told, five billionaire money managers pressed the sell button, including Jim Simons of Renaissance Technologies, Jeff Yass of Susquehanna International, Philippe Laffont of Coatue Management, Ken Griffin of Citadel Advisors, and Israel Englander of Millennium Management. Simons reduced his fund’s stake by 99.9%, while the four other billionaire fund managers reduced their stakes by 16% to 55%.

Why run for the exit? One reason may be the realization that Tesla isn’t immune to the cyclical challenges facing the auto industry. Tesla has historically been valued at a nosebleed premium to legacy automakers on the notion that it’ll outpace these stalwarts in the sales and profit-growth department. However, COVID-related supply chain disruptions, especially in China, coupled with historically high inflation and a weaker US and global economic outlook, bode poorly for near-term EV sales.

Perhaps an even bigger downside catalyst is Tesla’s own CEO Elon Musk. Although Musk is a visionary who’s been largely credited with helping Tesla become one of the world’s largest publicly traded companies, he’s also become a significant liability for the company. Aside from the significant distraction of operating social media site Twitter, a large number of promises regarding the debut of new vehicles or innovations have failed to come to fruition. Tesla’s valuation is very much dependent on Musk’s visions becoming reality.

On the bright side, Tesla is profitable on a recurring basis, and the ramp-up at its two new gigafactories (Berlin, Germany, and Austin, Texas) should allow production and sales to quickly scale. But maintaining its North American market share will undoubtedly prove difficult as legacy automakers and newer players scale their own EV operations.

Walt Disney

Disneyland may be the “Happiest Place on Earth,” but Walt Disney (NYSE: DIS) has been nothing short of a frowny face for billionaire investors. During the third quarter, billionaires Ole Andreas Halvorsen of Viking Global Investors, Simons of Renaissance Technologies, and Ray Dalio of Bridgewater Associates, all sold shares. In particular, Halvorsen and Dalio completely exited their respective fund’s positions in Disney.

The about-face we’ve witnessed in Disney stock can likely be explained by two factors. First, the company still hasn’t put its operating issues tied to the COVID-19 pandemic into the rearview mirror. China’s zero-COVID strategy continues to hamper Disney’s theme-park operations. Additionally, traditional moviegoing hasn’t come close to achieving its pre-pandemic level.

The other issue is that Walt Disney’s streaming services are racking up some jaw-dropping losses as they scale. While direct-to-consumer revenue rose 8% in the company’s fiscal fourth quarter (ended Oct. 1, 2022), the segment’s operating loss nearly doubled to $1.5 billion.  Poor operating performance is not something Disney shareholders are used to.

However, the subscriber figures at Disney+ (164.2 million) have ramped up incredibly fast, and the company appears confident the segment will turn the corner to profitability by the end of fiscal 2024.

What’s more, Walt Disney has exceptional pricing power and the ability to engage consumers like no other media company. In short, these billionaire sellers may ultimately regret their decision.

Meta Platforms

The third ultra-popular stock billionaires were busy selling in the third quarter is social media behemoth Meta Platforms (NASDAQ: META). Billionaires Stephen Mandel of Lone Pine Capital, Griffin of Citadel Advisors, and Simons of Renaissance Technologies, all slashed their stakes in Meta by multiple millions of shares from the sequential second quarter.

Perhaps the biggest knock against Meta is a weakening macroeconomic outlook for the US and global economy. Advertising is one of the first spending categories to be hit when the winds of recession begin blowing. Given that Meta generates 98% of its revenue from advertising, its top and bottom line are directly impacted by economic weakness.

Another plain-as-day concern billionaires have about Meta is CEO Mark Zuckerberg’s exorbitant spending on the metaverse — the 3D virtual world that allows users to interact with each other and their environment. Reality Labs, the company’s metaverse operations, recorded $1.4 billion in sales through the first nine months of 2022, but racked up a jaw-dropping $9.4 billion in losses.  Worse yet, spending is expected to increase in 2023. The end result has been reduced free cash flow and lower quarterly profits.

But as with Walt Disney, I’m skeptical of the skeptics. Meta owns four of the most popular social media assets on the planet (Facebook, Facebook Messenger, WhatsApp, and Instagram) and should benefit from strong pricing power during extended periods of economic expansion.

Furthermore, Meta is sitting on a healthy net cash pile totalling nearly $32 billion. The company has levers it can pull if it wants to boost its free cash flow. The point being that Meta Platforms’ operating model is so dominant, and its balance sheet so flush with cash, it has the financial flexibility to make aggressive investments in the metaverse. After all, the metaverse could be the next multitrillion-dollar opportunity.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 ultra-popular stocks billionaires have been busy selling appeared first on The Motley Fool Australia.

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• Why Tesla stock popped today
• Down more than 50% from their highs, are Tesla and these other EV stocks buys for 2023?
• Why Tesla shares hit a 2-year low today
• Why Tesla stock could have 930% upside: expert

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. Sean Williams has positions in Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Meta Platforms, Inc., Tesla, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Meta Platforms, Inc. and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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A major ASX 200 company has just been selected as preferred partner for a green hydrogen project, and it’s not Fortescue Metals Group Limited (ASX: FMG).

Woodside Energy Group Ltd (ASX: WDS) has been chosen to move forward to the development stage on this multi-billion dollar project.

Fortescue shares are flat at the time of writing and fetching $19.04. Woodside shares are down 2% today and currently trading at $36.21. For perspective, the S&P/ASX 200 (ASX: XJO) is currently down 0.01%.

Fortescue misses out to Woodside

Meridian Energy Ltd (NZE: MEL), with the support of the Ngāi Tahu people, has chosen Woodside for the development stage of the Southern Green Hydrogen project in New Zealand.

A final investment decision on the project will be made after the development stage. The green hydrogen plant is set to cost about $4.5 billion dollars.

Fortescue, through its subsidiary Fortescue Future Industries (FFI), was on the shortlist of development partners for the project, Stuff NZ reported in February.

Fortescue has a plan to achieve carbon neutrality by 2030, and sees green hydrogen as a key to this goal.

However, Woodside has been chosen after a competitive bidding process. Commenting on the news, Woodside CEO Meg O’Neill said:

We are pleased to have been selected as the preferred partner for the proposed SGH project. Woodside brings the technical skill and operations experience to develop this project at pace to meet customer demand for hydrogen, which we expect to grow in the energy transition.

We look forward to working with Meridian and Mitsui to potentially offer this important customer solution both domestically and globally.

Mitsui & Co., Ltd (TYO: 8031) is also in talks to join the project to develop the market for ammonia offtake. Mitsui has the largest share of ammonia imports into Japan.

Woodside, Meridian and Mitsui will look to commence front-end engineering design for the project, subject to commercial arrangements.

Share price snapshot

The Woodside share price has soared 70% in the past year, while Fortescue shares have climbed 8%.

For perspective, the ASX 200 has lost 0.23% in the last year.

The post Did Fortescue just lose out on this multi-billion dollar green hydrogen project? appeared first on The Motley Fool Australia.

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More reading

• Woodside share price tumbles 5% on FY23 guidance
• Up 30% in a month, why the Fortescue share price could have further to run: fundie
• Why is the Woodside share price tanking today?
• Where will Fortescue shares be in 5 years?
• Would this side of Woodside put you off buying its shares?

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 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 Lake Resources N.L. (ASX: LKE) share price is trading lower on Tuesday afternoon.

At the time of writing, the lithium developer’s shares are down 2% to 92 cents.

This means the Lake Resources share price has now fallen almost 13% since this time last week.

Why is the Lake Resources share price falling?

The weakness in the Lake Resources share price on Tuesday could have been driven by a flurry of tweets from a short seller prior to the company’s annual general meeting this morning.

Research firm J Capital is currently shorting the lithium share partly on the belief that Lake’s DLE technology isn’t going to work as planned and will “still use large amounts of water and produce toxic waste.”

Its analysts also recently alleged that an announcement regarding potential funding from the UK Export Finance (UKEF) was not all it seemed. The research firm commented:

We made a Freedom of Information Act (FOIA) application to the UK government to verify Lake Resources’ (Lake) claim that it has “confirmed” funding from UK Export Finance (UKEF). These documents seem to reveal that Lake has made statements that are incorrect about the expression of interest (EOI) from UKEF. UKEF says that Lake is just at the start of the application process.

Last night, J Capital posed a series of questions for Lake to answer at the annual general meeting.

The majority related to doubts over the DLE demonstration plant’s performance, the UKEF funding, and proposed offtake agreements with Hanwa and Ford. In respect to the latter, its analysts highlight that Hanwa and Ford no longer feature in presentations. They also don’t feature in today’s annual general meeting presentation.

No response

Lake’s chair, Stuart Crown, didn’t acknowledge J Capital’s tweets in his annual general meeting address. He just focused on the future and reiterated his belief that the future is bright for Lake. Crow commented:

The year ahead, whilst challenging, I suspect will be the company’s most formative year yet as we move toward financing and construction phase of the Kachi project and continued development of other projects. I look to the coming year with great anticipation and pride as a founding shareholder as your company strives to become one of the world’s significant suppliers of high purity lithium products.

The post Why is the Lake Resources share price heading down stream today? appeared first on The Motley Fool Australia.

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• Why are ASX lithium shares getting slammed again on Monday?
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• Why has the Lake Resources share price tumbled 11% in 10 days?
• 5 ASX lithium shares to buy: brokers

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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S&P/ASX 200 Index (ASX: XJO) lithium shares have taken a beating over the past week.

Here’s how the big lithium stocks have tracked since last Wednesday’s opening bell:

• Core Lithium Ltd (ASX: CXO) shares are down 12.6%
• Allkem Ltd (ASX: AKE) shares are down 10.5%
• Pilbara Minerals Ltd (ASX: PLS) shares are down 9.6%
• IGO Ltd (ASX: IGO) shares are down 11.5%

That sees the ASX 200 lithium shares trailing far behind the benchmark index, which has slipped a more modest 0.3% over the week.

So, what’s going on?

Is China responsible for pressuring ASX 200 lithium shares?

There are three broad reasons analysts are pointing to China for dampening the outlook for lithium prices and hence pressuring ASX 200 lithium shares.

First, Chinese authorities are continuing to enforce the nation’s COVID zero policies. And with new infections in China soaring to record levels, investors are concerned a new wave of lockdowns could slow economic growth in the world’s most populous nation.

Second, a growing number of Chinese citizens are fed up with what are now years of restrictions on their movements. And in recent days, unprecedented protests have erupted across a number of cities.

With China counting as the world’s largest EV manufacturer and a voracious consumer of lithium, this has dimmed the shorter-term outlook for lithium demand and seen investors selling some of their ASX 200 lithium shares.

Commenting on that impact, Colin Hamilton, managing director for commodities research at BMO Capital Markets, said (quoted by Bloomberg):

The Covid situation in China continues to weigh on metal markets, with record cases again announced over the weekend, together with the widely reported protests. We expect the renewed lockdowns to hurt market confidence into year-end, and thus delay some raw materials purchases over the coming month.

The third headwind blowing from the Middle Kingdom

The third headwind blowing from China and pressuring ASX 200 lithium shares is a slowdown in the nation’s EV sales.

EV sales in 2022 have to date almost doubled the number sold in 2021. But that trend looks to be reversing.

According to Bloomberg data, EV registrations in October were down more than 20% month on month.

The pullback is likely related to the winding back of Chinese government subsidies for EVs, which are meant to be phased out this year. And this comes amid news that Chinese battery manufacturers may have “overproduced” in recent months, meaning a temporary reversal of the supply and demand dynamics.

Susan Zou, Shanghai-based analyst at Rystad Energy, said (quoted by Bloomberg):

It’s likely for lithium prices to face some small correction until early next year. Battery makers need to destock while EV manufacturers are about to meet their annual targets. Meanwhile, they face elevated costs for raw materials and traditionally weaker consumption in the first quarter of the year.

All this is not to say that lithium prices, or the ASX 200 lithium shares, are likely to crash.

According to analysts at Morgan Stanley:

We see the near-term lithium market remaining tight, supporting lithium prices. However, we note that there is likely to be some price pullback when underlying demand for EVs starts to weaken sequentially, and industry players may become more cautious about placing orders and building inventory.

How have ASX 200 lithium shares tracked over a year?

Investors who bought into any of the ASX 200 lithium shares we mentioned above a year ago will still be sitting on some outsized gains, despite the recent sell-off.

Since this time last year, the Allkem share price is up 40%; IGO shares have gained 43%; the Pilbara share price has leapt 82% higher; and Core Lithium shares are up 145%.

The post Is China responsible for decimating your ASX 200 lithium shares? appeared first on The Motley Fool Australia.

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More reading

• Why did the Sayona Mining share price have a tough run today?
• Here are the 3 most heavily traded ASX 200 shares on Monday
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s no secret that inflation has been one of, if not the, biggest concern for ASX investors in 2022. Rising prices have dominated headlines all through this year. Not to mention rising interest rates.

Inflation was once famously described by the legendary investor Warren Buffett as a “gigantic corporate tapeworm”, taking its pound of flesh from all companies in the economy.

In our brave new world of high inflation, conventional wisdom has led investors towards consumer staples shares, such as Woolworths Group Ltd (ASX: WOW), as an inflation hedge. The theory goes that companies like Woolies sell us life essentials. Even though prices are rising, we all need to eat, drink, and keep our houses running.

As such, we’ll all keep shopping at Woolworths and other consumer staples businesses, and pay the rising costs of those essentials. That’s how the theory goes anyway.

We’ve seen more than a few brokers and ASX experts double down on this logic in recent times too. Earlier this month, my Fool colleague looked at broker Citi’s buy rating on Woolworths shares.

This broker reckons Woolies can climb to $39.50 a share over the next 12 months, thanks in large part to “a return to predictable spending patterns”.

But another ASX expert reckons this optimism is misplaced.

Is Woolworths an overrated share when it comes to inflation?

Blake Henricks of Firetrail Investments recently spoke to Livewire about inflation and sectors he’s avoiding because of it. Interestingly, Henricks named supermarkets which, of course, is dominated by Woolies.

Here’s some of what he had to say on why this sector doesn’t quite shape up as an inflation beater:

Supermarkets is a great defensive sector to invest in that benefits from inflation. And if you run a simple model you say, ‘Well, as inflation comes through, the basket goes up. If you hold gross margin percentages flat, gross profit dollars grow and therefore this great earnings growth happens with inflation.’

But the reality is margins are determined by competition and competitive dynamics. And that competitive framework isn’t really changing at the moment. It’s very stable, it’s very good, but our view is that supermarkets aren’t going to be huge winners from inflation. To date, that’s been proven to be true because they’ve struggled to pass through some of those costs and we haven’t seen big earnings upgrades.

And the multiples are fairly extended because people are gravitating towards those defensive sectors. So if there’s one I’d call out, it’d be supermarkets as a controversial loser from inflation.

So there you go, Woolworth is not the inflation slayer that some might initially assume, at least according to this ASX expert.

Only time will tell which ASX experts have made the right call here.

In the meantime, the current Woolworths share price of $35.12 (at the time of writing) gives this ASX 200 consumer sales share a market capitalisation of $42.56 billion, and a dividend yield of 2.62%.

The post Looking to buy Woolworths shares as an inflation hedge? Read this first appeared first on The Motley Fool Australia.

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• Battle of the dividends: Do Woolworths shares pay more than Coles?
• Almost ready to retire? Here’s why I’d buy Coles shares for dividends
• Use the ASX 200 market correction to retire early. Here’s how
• If you bought $15,000 worth of Woolworths shares this year, here’s how much dividend income you’d have
• Markets are nervous. Why waiting to buy these ASX 200 shares could prove expensive

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

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