Category: Stock Market

The Kogan.com Ltd (ASX: KGN) share price is sinking on Tuesday.

In morning trade, the ecommerce company’s shares are down 6% to $4.07.

This follows the release of Kogan’s half year update this morning.

Kogan share price drops on half year update

• Gross sales down 32.5% to $471.1 million
• Gross profit down 42% to $62.9 million
• Record loss before interest and tax of $31.3 million
• Active customers down 18.4% to 3,323,000

What happened during the half?

For the six months ended 31 December, Kogan reported a 32.5% decline in gross sales to $471.1 million.

This reflects a 35.7% decline in Kogan Marketplace sales, a 41% reduction in Exclusive Brands sales, a 49.2% fall in third-party brands sales, and a 9.1% drop in Mighty Ape sales.

Things were even worse for its earnings, with gross profit falling 42% to $62.9 million and its loss before interest and tax increasing to $31.3 million. Management advised that this was driven by its soft top line performance along with significant discounting to clear through the bulk of excess inventory.

One small positive is that Kogan’s inventory position is improving. It finished the period with inventory in-warehouse 39% lower than at the end of June. Management notes that it has now cleared through the bulk of its excess inventory. As a result, it is expecting margins to improve in the second half.

Management commentary

Kogan’s under-fire founder and CEO, Ruslan Kogan, didn’t comment on the company’s abject performance during the half. However, he revealed that he remains positive on the future despite the current economic environment. He said:

The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders. We’ve been growing Kogan.com for more than 16 years now, so we’ve been through many cycles and we know that when customers are watching their costs carefully, ecommerce becomes even more important. Since Kogan.com launched out of a garage in 2006, we’ve been obsessed with making the most in-demand products and services more affordable. We are proud to be making that possible for our millions of customers and the growing base of loyal Kogan First Subscribers.

As you can see above, the Kogan share price is now X over the last 12 months.

The post Kogan share price sinks on record half-year loss 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 positions in and has recommended Kogan.com. The Motley Fool Australia has positions in and has recommended Kogan.com. 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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Telstra Group Ltd (ASX: TLS) shares have started 2023 in a reasonably positive fashion.

Since the start of the year, the telco giant’s shares have risen 2.5%.

The good news, though, is that one leading broker believes that this is only the start of greater gains.

Telstra shares tipped to rise

According to a note out of Morgans this morning, its analysts have reiterated their add rating and $4.60 price target.

Based on the current Telstra share price of $4.08, this suggests that its shares could rise almost 13% over the next 12 months.

In addition, Morgans continues to forecast a 16.5 cents per share fully franked dividend in FY 2023. This equates to a 4% dividend yield, boosting the total potential return to approximately 17%.

‘Some healthy options that are underappreciated’

Morgans has been looking at Telstra’s healthcare business, Telstra Health, and believes it has “some healthy options that are underappreciated.” It commented:

Telstra Health combines MedicalDirector (medical practice management software), PowerHealth (hospital management software) and Telstra’s existing e-Health businesses. It helps healthcare providers and governments digitally connect the health, aged care and social service systems by enabling the seamless flow of information across the continuum of care.

Telstra Health resembles Enterprise Resource Planning / accounting firms like TNE, OCL and XRO. It provides the core business software and processes. This means long-duration (sticky) customers but also means sales cycles and software implementations can take years to complete. Peers trade on high multiples reflecting impressive delivery and characteristics of defensiveness and growth.

The broker notes that the business currently generates $250 million of sticky revenue and is aiming to double this by FY 2025. If successful, it believes it could add $50 million in earnings by then. It adds:

Telstra Health generates ~$250m revenue now and is targeting $500m by FY25, which requires a 26% revenue CAGR. Today it’s broadly cash flow breakeven. Based on peer benchmarking and some broad assumptions we think Telstra Health could generate ~$50m of EBIT by FY25.

All going to plan Telstra Health could be worth ~$1.5bn /11cps for TLS shareholders on our estimates. While not material, we think it is underappreciated.

The post Telstra shares: ‘Some healthy options that are underappreciated’ appeared first on The Motley Fool Australia.

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More reading

• ‘Fierce competitor’: Expert names 2 big brand ASX shares ready to take off in 2023
• How much profit could Telstra shares make in 2023?
• Telstra share price is ‘undervalued’ right now: broker
• Telstra shares: Here are the dividend forecasts for 2023 and 2024
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 positions in and has recommended Telstra 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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Sure, 2022 might be the year when interest rates rose at a breakneck pace. But 2023 is when consumers and businesses will really feel the pinch.

That’s because any changes in central bank rates take a while to cascade into the real world, then even longer for that to have an impact on household budgets and company earnings.

The team at Firetrail reckons ASX-listed businesses will have to deal with a double-whammy this year.

“As we enter 2023, businesses continue to grapple with inflationary cost pressures, but now have the accompanying issue of a slowing demand environment,” read its memo to clients this week.

“As the lagged impact of central bank rate tightening filters through the economy and conditions get tougher, only the best businesses will navigate effectively.”

Weak companies will “be under pressure”, warned the Firetrail analysts.

“For 2023, consensus is expecting 10% growth in earnings per share for the S&P/ASX 200 Index (ASX: XJO) ex-resources,” read the memo.

“In talking to companies and doing our own analysis, we believe that will prove too optimistic.”

Yes, this is a pretty pessimistic assessment of the state of play. But fortunately, the Firetrail team reckons it has successfully looked past “the short-term noise” to identify “significant medium-term upside”. 

Let’s go overweight on health

One sector that they’re bullish on is healthcare.

In fact, the Firetrail Australian High Conviction Fund is now “substantially overweight” in that industry through three particular ASX shares:

• CSL Limited (ASX: CSL)
• Resmed CDI (ASX: RMD)
• Ramsay Health Care Ltd (ASX: RHC)

“The defensive nature of healthcare is an attractive feature supporting all three companies,” read the memo.

“However, our high conviction in these names is derived from our bottom-up work.”

Resmed scored a huge win about 18 months ago when major competitor Koninklijke Philips NV (AMS: PHIA) was forced to recall its CPAP machines due to safety issues.

Unfortunately, the company was not able to take full advantage in 2022.

“ResMed has been hamstrung due to a global semiconductor shortage. The chip shortage has prevented ResMed from being able to supply the soaring demand of customers,” read the Firetrail memo.

“As chip shortages ease, which is happening right now, we believe 2023 calendar year earnings will beat expectations.”

‘The ultimate defensive’

In 2022, CSL saw a recovery in plasma collection rates, but the effects of that have not yet made it to the balance sheet.

“Plasma collections flow through to earnings with a lag, which suggests 2023/24 will be strong years for earnings.”

The Firetrail team called CSL shares “the ultimate defensive”. 

“The cost of collecting plasma tends to run counter to the economic cycle. Tougher economic conditions lead to an increase in donors, typically at lower cost.”

Private hospital operator Ramsay hasn’t yet fully returned to pre-COVID activity levels, but the Firetrail team is banking on a 2023 comeback.

“Ramsay will likely deliver above-trend growth in 2023/24 as the surgery backlog is addressed,” read the memo.

“Nursing shortages and wage negotiations are placing pressure on Ramsay’s expenses line. However, the recent contract negotiation with BUPA illustrates that Ramsay is now flexing its muscles to offset these higher costs.”

The Firetrail analysts conceded all three healthcare stocks are trading on price to financial year 2023 earnings ratios of greater than 30. 

But the team is forecasting that 2025 earnings will be 35% to 40% higher for the trio.

“On a three-year view, the healthcare stocks provide growth, relative earnings certainty, and valuation upside. An attractive trifecta in a tough environment.”

The post 3 ASX shares to buy in the hottest sector for 2023: Firetrail appeared first on The Motley Fool Australia.

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More reading

• Stocked up on $1,000 of Santos shares 10 years ago? If so, here’s how much dividend income you’ve earned
• 5 things to watch on the ASX 200 on Tuesday
• 3 excellent ASX 200 growth shares with major upside potential: analysts
• Here are the top 10 ASX 200 shares today
• 3 things Scott Phillips is most excited about investing in 2023

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

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The S&P/ASX 200 Index (ASX: XJO) has returned to form in 2023.

Since the start of the year, the benchmark index has risen almost 6%.

Investors have been piling back into the market amid optimism that inflation is cooling.

In light of this, tomorrow’s inflation data release could have a big impact on the performance of the ASX 200 index.

What is expected from Wednesday’s inflation reading?

According to the latest weekly economic report from Westpac Banking Corp (ASX: WBC), its team is expecting Australian fourth quarter inflation to be the peak. It explained:

Westpac is forecasting 1.5% rise in the December quarter boosting the annual pace 0.1ppt to 7.4% which is our forecast peak in the annual pace of inflation for the current cycle.

This will be a slower increase than what was seen in the third quarter of 2022, which the bank believes will prove to be the biggest quarterly increase in this cycle. It adds:

The reasons behind the step down from 1.8%qtr print in Q3 are the ongoing moderation in pace of price increases for food, clothing& footwear, new dwellings and household contents & services.

Where is inflation heading in 2023?

The good news is that the bank believes that inflation will then cool materially over 2023.

So much so, it expects headline inflation to be as low as 3.7% at the end of the year.

We are forecasting the annual pace of headline inflation to ease back to 3.7%yr by end 2023.

What does this mean for interest rates?

Unfortunately, Westpac doesn’t believe the pain is over for borrowers.

It expects the Reserve Bank of Australia to take the cash rate from 3.1% currently to a peak of 3.85% by the middle of the year. This is likely to mean a series of hikes in the coming months.

The post Everything you need to know about Wednesday’s Australian inflation data release appeared first on The Motley Fool Australia.

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• How much profit could Westpac shares make in 2023?
• This could crash the earnings season party for ASX 200 bank shares: Macquarie
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Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 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 last decade has likely disappointed those invested in Santos Ltd (ASX: STO) shares.

If one were to have poured $1,000 into the S&P/ASX 200 Index (ASX: XJO) energy stock in January 2013, they likely would have walked away with 94 shares and $8 change, having paid $10.55 apiece.

Today, that parcel would be worth just $691.84. The Santos share price closed Monday’s session at $7.36 – 30.2% lower than it was 10 years ago.

For comparison, the ASX 200 has gained around 54% in that time.

But have the oil and gas giant’s dividends made up for its stock’s poor performance? Let’s take a look.

How much have Santos shares paid in dividends since 2013?

Here are all the dividends those invested in Santos shares have received over the last decade:

Santos dividends’ pay date	Type	Dividend amount
September 2022	Interim	10.9 cents
March 2022	Final	11.8 cents
September 2021	Interim	7.7 cents
March 2021	Final	6.3 cents
September 2020	Interim	2.9 cents
March 2020	Final	7.6 cents
September 2019	Interim	8.9 cents
March 2019	Final	8.6 cents
September 2018	Interim	4.8 cents
March 2016	Final	5 cents
September 2015	Interim	15 cents
March 2015	Final	15 cents
September 2014	Interim	20 cents
March 2014	Final	15 cents
September 2013	Interim	15 cents
March 2013	Final	15 cents
Total:		$1.695

As the chart above shows, the last decade has been a wild ride for Santos dividends.

The company paid out as much as 20 cents per share between 2013 and 2015, after which a change in its dividend framework saw it paying out at least 40% of its underlying net profits, subject to business conditions. The energy giant then forewent offering dividends for much of 2016, 2017, and 2018 as it worked to reduce debt.

Ultimately, those invested in Santos shares have received a total of approximately $1.695 per security over the last decade. That leaves our figurative investor having realised $159.33 of passive income over the life of their holding.

Meaning, even considering dividends, those who invested in Santos shares in January 2013 are still 14.2% in the red.

Though, it’s worth mentioning most of Santos’ dividends in that time have been fully franked, potentially allowing investors to realise additional benefits at tax time.

Right now, Santos shares are trading with a 3.09% dividend yield.

The post Stocked up on $1,000 of Santos shares 10 years ago? If so, here’s how much dividend income you’ve earned appeared first on The Motley Fool Australia.

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More reading

• Broker names 2 high yield ASX 200 dividend shares to buy now
• Looking to energise returns with this pocket of undervalued ASX shares in 2023
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• 3 things Scott Phillips is most excited about investing 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 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 is no doubt 2022 was a turbulent year with war, inflation, and interest rate rises.

Unfortunately, many experts are expecting more volatility to follow this year, with the Russia-Ukraine conflict dragging on and inflation still raging.

In such uncertain times, it might be worth retreating from the smaller, riskier plays and relying on the old favourites that Australian consumers might stick with through a downturn.

Catapult Wealth portfolio manager Tim Haselum this week named two ASX shares to buy that precisely fit that bill.

‘We like its outlook’

As the leading telecommunications company in Telstra Group Ltd (ASX: TLS), its shares should be more pleasurable to own.

But it has been a bane in many investors’ portfolios for decades now.

Sure, it pays out a reasonable 3.3% dividend yield, but its capital growth has been anaemic, even for the most patient long-term investor.

Over the past five years, the Telstra share price has only grown 11.7%.

Haselum, though, feels like the telco giant has turned a corner and is worth picking up right now.

“Asset sales have reduced debt,” Haselum told The Bull.

“It increased its dividend and forecast earnings growth should be met.”

The portfolio manager labelled Telstra “a fierce competitor”.

“The company has forecasted total income of between $23 billion and $25 billion in fiscal year 2023,” he said.

“We like its outlook.”

Many of Haselum’s peers agree with him. According to CMC Markets, eight out of the 11 analysts that cover the stock currently rate it as a buy.

Pounce on this one when it dips

Regardless of whether the unemployment rate is rising or if the economy is slipping into recession, people have to eat.

That’s why during turbulent times, many may find supermarket giant Woolworths Group Ltd (ASX: WOW) a comforting investment.

In addition to a handy 2.64% dividend yield, the Woolworths share price has gained almost 50% over the past five years — through COVID-19 and the inflation surge. 

Haselum reckons it is at a particularly interesting time to buy in right now.

“Several disruptions and abnormal costs during the past two years appear to be ending,” he said.

“We expect COVID-19 costs to continue falling.”

The supermarket chain has “a strong balance sheet“, he added. 

“The shares also appeal for their defensive qualities. Any price weakness represents a buying opportunity, in our view.”

Other professionals are somewhat divided on Woolworths shares. Nine out of 16 analysts surveyed on CMC Markets rate the stock as a buy, while five think it a hold, and two are even suggesting a strong sell.

The post ‘Fierce competitor’: Expert names 2 big brand ASX shares ready to take off in 2023 appeared first on The Motley Fool Australia.

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More reading

• How much profit could Telstra shares make in 2023?
• Telstra share price is ‘undervalued’ right now: broker
• Telstra shares: Here are the dividend forecasts for 2023 and 2024
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 2 high-dividend shares to buy today for early retirement

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra 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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If you’re looking for dividend shares to buy for your income portfolio, then it could be worth checking out the two named below.

These two ASX 200 dividend shares have been rated as buys by analysts at Morgans. Here’s what they are saying about them right now:

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that has been tipped as a buy by Morgans is insurance giant QBE.

The broker is very positive on the company’s outlook. It expects “QBE’s earnings profile to improve strongly over the next few years” thanks to strong rate increases and further cost-out benefits.

Morgans also highlights the company’s robust balance sheet and believes its shares are “relatively inexpensive.”

As for dividends, the broker expects QBE to pay a 76 cents per share dividend in FY 2023 and then an 85 cents per share dividend in FY 2024. Based on the latest QBE share price of $13.49, this equates to yields of 5.6% and 6.3%, respectively.

Morgans currently has an add rating and $15.05 price target on its shares.

Santos Ltd (ASX: STO)

Another ASX 200 dividend share that could be a buy is Santos.

It is a leading energy producer with a collection of high quality operations across several regions.

Morgans believes the company could be a top option in the current environment. This is thanks to its “growth profile and diversified earnings base,” which the broker believes leaves Santos “well placed to outperform against a backdrop of a broader sector recovery.”

In addition, Morgans highlights the company’s strong cash flow generation and believes Santos “is positioned to flex its cash dividends and buybacks.”

It expects this to lead to fully franked dividends of 28 US cents (40 Australian cents) per share in FY 2023 and 30 US cents (42.7 Australian cents) per share in FY 2024. Based on the current Santos share price of $7.36, this will mean yields of 5.4% and 5.8%, respectively.

Morgans has an add rating and $8.75 price target on its shares.

The post Broker names 2 high yield ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Looking to energise returns with this pocket of undervalued ASX shares in 2023
• 5 things to watch on the ASX 200 on Tuesday
• Own Santos shares? Here’s why the ASX 200 company’s net-zero plan is taking heat
• 5 things to watch on the ASX 200 on Monday
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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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The technology space has been hit heavily amid higher interest rates. But I think there are some leading ASX exchange-traded funds (ETFs) that could be exciting opportunities for a tech rebound.

When something falls by 50% from $100 to $50, it only needs to get back to $75 to generate a 50% return from that low starting valuation of $50.

I don’t think interest rates are going to go back below 2% for the foreseeable future, perhaps for the rest of the decade. But, technology valuations now seem much more reasonable, so I think some of the beaten-up tech ETFs could perform well over the next year or two.

Betashares Cloud Computing ETF (ASX: CLDD)

The Betashares Cloud Computing ETF unit price has fallen around 45% since November 2021. The idea of this ETF is to give investors exposure to the cloud computing trend. Betashares explains:

Cloud computing has been one of the strongest-growing segments of the technology sector, and given much of the world’s digital data and software applications are still maintained outside the cloud, continued strong growth has been forecast.

A growing number of different services can now be provided online, giving the ASX ETF growing diversification. Looking at the biggest holdings, these are some of the largest positions: Coupa Software, Sinch, Five9, Workiva, Workday, Shopify and SPS Commerce.

With the collective valuations of the companies involved now much lower, I think this group of businesses could rebound nicely if investor pessimism starts fading when interest rates stop rising.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The Betashares Nasdaq 100 ETF is another one that has fallen heavily – it’s down around 30% since November 2021.

I think this ETF is invested in some of the highest-quality businesses in the world, they are global leaders in what they do. I’m talking about names like Apple, Microsoft, Alphabet, Amazon.com, Nvidia, PepsiCo, Costco, Cisco Systems, Intuitive Surgical and Moderna.

Interest rates have soared in the US to try to bring inflation under control in the country. An economic downturn may be on the cards. But, I don’t think the outlook will always look this pessimistic, particularly when thinking about the long-term. I think this ASX ETF has an attractive future ahead.

When share prices drop heavily, there may be an important negative influencing event going on in the world. But that’s when I think investors should become more optimistic about investing and making long-term returns. Be greedy when others are fearful, as the saying goes.

There won’t be many times when the Betashares Nasdaq 100 ETF drops by 30%, so I think this could be a good time to invest and then be patient after that.

The post 2 ASX ETFs I’d buy for a tech rebound in 2023 appeared first on The Motley Fool Australia.

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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, Cisco Systems, Costco Wholesale, Five9, Intuitive Surgical, Microsoft, Nvidia, Shopify, Workday, and Workiva. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna and has recommended the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, 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, Nvidia, and Workday. 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 AGL Energy Limited (ASX: AGL) share price has gone through a lot of pain since April 2017, dropping by over 70%. It has fallen over 60% since the start of the COVID-19 pandemic.

That’s a shocking fall considering the utilities sector is usually thought of as a defensive sector with consistent cash flow and typically solid dividends.

Shareholders have seen their shares sink in value over time.

But, with a plan now in place to decarbonise and re-energise the business, could the company be a good turnaround opportunity for contrarian investors?

Bumpy road ahead

AGL’s new CEO Damien Nicks was recently talking to The Australian about the job that the energy business faces in the years ahead. He became the chief financial officer of AGL in August 2018.

The company will reportedly need to find $20 billion of funding to achieve its decarbonisation plans, install 12GW of renewable energy generation and end coal usage.

Speaking to The Australian, Nicks said:

There are going to be bumps on the road. This is not going to necessarily be a purely smooth ride for the whole market. But for us it’s about having clarity about how we deliver. We’ve got deep plans over the next seven years to 2030. And we’ll continue to refine those plans, and then continue refining those plans out to 2035 as well.

There are going to be challenges, but we need that co-ordinated approach across the market, not just AGL. It needs to be co-ordinated and that’s what we’re driving particularly hard. And that’s where we can play that leadership role.

Earnings recovery expected for AGL shares

AGL said in its recent annual general meeting (AGM) that it’s “well positioned from FY24 to benefit from sustained higher wholesale electricity pricing as historical hedge positions progressively roll-off”.

In FY23 it’s looking to reduce its sustaining capital expenditure by more than $100 million compared to FY23. It’s also hoping for guiding underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $1.25 billion to $1.45 billion, while underlying net profit after tax (NPAT) guidance to be between $200 million to $320 million.

Using Commsec numbers, it’s projected to generate 39 cents of earnings per share (EPS). This puts the AGL share price at around 20 times FY23’s estimated earnings.

Then, EPS could jump to 91 cents in FY24 and $1.27 in FY25. This would translate into forward price/earnings (P/E) ratios of 8 and 6 respectively.

Is the AGL share price a buy?

Talking about the task ahead for the energy company and the new CEO, major investor VanEck’s Jamie Hannah said:

He has a massive job ahead. From staffing to financing to the roll out of the new initiatives and to the changes to the company and winding down of existing assets. If you wrote down all the things that they need to achieve over the next five years, it’s a somewhat overwhelming task. So he’s not going to be able to do it himself. Obviously, he just needs to set the agenda. And make sure he gets the right staff.

I don’t know how he’s going to go on something this big. But I don’t think he’s the wrong person for the role. He certainly knows the company and knows what it can achieve. So I’m more than happy to give him a fair chance at this and see how he performs.

According to analyst opinions collated by Commsec, there are six buy ratings and four hold ratings, with no sell ratings. It may well be a decent contrarian ASX share idea for brave investors.

The post ‘Massive job ahead’: Should you buy AGL shares now or wait? appeared first on The Motley Fool Australia.

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More reading

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• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) and ASX shares have already made a flying start to 2023. As of yesterday’s share market close, the ASX 200 has gained an impressive 7.4% over the year to date.

After 2022’s full-year loss of 5.5%, it’s certainly a pleasing change of pace to see the ASX 200 start the year with such optimism.

But 2023’s strong showing thus far doesn’t mean there aren’t still cheap shares out there to find.

One area that might be worth taking a dive into is ASX energy shares. That’s according to one ASX expert, anyway.

Looking for undervalued ASX shares in 2023? Try cooking with gas

ASX mining resources and energy shares were some of the only places to hide from the market’s poor showing last year. In fact, many had stellar years.

Just take the BHP Group Ltd (ASX: BHP) share price. BHP shares rose almost 10% last year, defying the gloom that infected the broader market. Rio Tinto Limited (ASX: RIO) shares fared even better, giving investors a share price return of more than 16%.

But that’s nothing compared to ASX coal share Whitehaven Coal Ltd (ASX: WHC). Whitehaven shares gave investors a spectacular return of 165% last year, not including dividends.

Expert investor Aaron Binsted saw the writing on the wall for these sectors. Binsted is an Australian equities portfolio manager at Lazard Asset Management. Lazard’s Select Australian Equity fund was one of the best-performing managed funds in 2022, returning 26.34% for investors last year.

According to reporting in the Australian Financial Review (AFR) this week, Lazard went in hard on resources and energy sources in 2020 and 2021, which helped to drive the fund’s stellar returns last year.

Binsted reckons, “This energy crisis has been brewing for a long time”. In 2020, he recalls saying, “If you’re not overweight energy now, you never will be. It was absolutely against the consensus of the time.”

Back in 2020, he favoured oil shares like Woodside Energy Group Ltd (ASX: WDS), but in 2023, he’s looking to gas, largely due to the “superior cashflow generation” on offer:

Most people’s long-run numbers [for LNG prices] are probably in the $US7 to $US8 mark. No one’s got that in their valuations for the equities…

We are in a world that’s short energy, while a bit over 80 per cent is coming from fossil fuels, and governments are saying, ‘give us more energy, but don’t invest in fossil fuels’. It’s very hard to make up that gap from fossil fuels at the moment…

We can only assume Binsted is still looking at Woodside shares (Woodside is also a gas producer), as well as other gas stocks such as Santos Ltd (ASX: STO), Karoon Energy Ltd (ASX: KAR) and Beach Energy Ltd (ASX: BPT).

The post Looking to energise returns with this pocket of undervalued ASX shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• Why Whitehaven Coal shares could ‘continue rewarding’ ASX 200 investors in 2023: expert
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Should I buy ASX mining shares now or not?
• Own Santos shares? Here’s why the ASX 200 company’s net-zero plan is taking heat

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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