Category: Stock Market

Revenge, apparently, is the new black.

Are you ready to take a little revenge on the stock market???

Sounds kinda aggressive, huh?

And a little… unhinged?

Fair enough… but stick with me.

See there have been a lot of reports in the news over the past few weeks (and I noticed a couple just in the last 24 hours) about ‘revenge’.

The first, was a huge jump in sales at Super Retail Group Ltd (ASX: SUL) – 15% growth in the first half, if you don’t mind – from what the company’s CEO describes as ‘revenge spending’ – the idea that, after all of the disruptions and restrictions of the past few years, we’re letting the purse strings loose and buying up big.

The second, was ‘revenge travel’ that’s seeing airlines regularly at or near capacity (and which has, in large part, driven Qantas Airways Limited (ASX: QAN)’s share price 45% higher over the past six months).

Virgin’s private equity owner, Bain Capital, is apparently – and not surprisingly! – considering re-floating the company on the ASX to take advantage of the surge in traffic, and the expectation that the airline will turn a profit this year.

As I said, above, ‘revenge’ certainly seems to be the new black.

But what about investing?

Well, if you’ve been investing over the past 12 – 18 months, there’s a very good chance your portfolio hasn’t done as well as you’d hoped. Sure, the Energy sector did extraordinarily well, but most others were fair-to-middling… or worse.

And that goes double for investors in businesses considered to be ‘growth’ or ‘tech’ companies.

And so?

And so, here’s our chance for a little revenge.

Not because I know what’s coming, this week, or this month, or this year.

But because I reckon the future is bright for Australian listed companies.

And I reckon prices are pretty attractive for many of those businesses.

Which means, we might get a couple of shots at ‘revenge’.

We get to buy shares of some companies at a much lower price than their recent highs.

And, if I’m right, we might also have an opportunity to make some good money – because if they are cheap, there’s a very good chance those share prices go higher, over the long term.

Don’t get me wrong – I enjoy a bit of retail therapy. But there’s only so many things that are worth buying.

But revenge investing, done well, can pay off for a long, long time.

Imagine buying shares of Berkshire Hathaway (I did) or the banks (I didn’t) during the depths of the GFC?

Imagine buying shares of some of the big – temporary – losers during the COVID crash (I bought some and missed others!).

But even if you missed those periods, just imagine how much your money might be worth, in 5, 10, 15 or 20 years (or longer, if you’re lucky enough to be young!) if you invest well, today.

By all means, enjoy your revenge spending and revenge travel.

But if you want real revenge – life-long, value-creating, spend-and-spend-again revenge – try revenge investing instead!

Fool on!

The post You want revenge? Try ‘revenge investing’! appeared first on The Motley Fool Australia.

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More reading

• BHP share price higher amid record first half iron ore production
• Can income investors bank on CBA growing its dividend yield by 18%?
• My Fortescue shares are up 30% in 3 months. Should I buy more?
• Watch these 2 ASX 200 growth shares take off this year: expert
• Here are 2 excellent high yield ASX dividend shares that experts rate as buys

Motley Fool contributor Scott Phillips has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway and Super Retail Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Berkshire Hathaway. 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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Commonwealth Bank of Australia (ASX: CBA) shares are currently the lowest yielding of the big four, offering investors a mediocre 3.57% dividend yield. But could it be about to grow the passive income it hands to investors?

One expert thinks the biggest of the S&P/ASX 200 Index (ASX: XJO)’s big four banks could boost its dividends significantly in the coming years.

Indeed, it could be on track to grow its offerings by 18%, potentially boosting its yield along with them.

Right now, the CBA share price is trading at $107.65.

Let’s take a closer look at what income investors might expect from CBA shares in the coming years.

CBA’s dividends tipped to soar

CBA shares might not be the big four bank income investors tend to turn to. Indeed, the giant’s 3.57% yield is dwarfed by the likes of ANZ Group Holdings Ltd (ASX: ANZ) shares.

ANZ – which happens to be the smallest of the big four ­– currently offers a 5.89% dividend yield, the highest of its peers.

But CBA’s dividends might be about to jump 18%, according to broker Morgans.

It tips the bank to offer $4.10 of dividends per share this financial year, as my Fool colleague James recently reported.

That’s up from $3.85 per share last financial year and comprises a $1.75 interim payout and $2.10 final offering, both of which were fully franked.

And the financial year 2024 could bring even more dividend growth. Morgans forecasts CBA to declare $4.55 of dividends per share next fiscal year.

That would see the bank trading with a 4.22% dividend yield at its current share price – an 18.2% increase.

Are CBA shares a passive income buy?

With that in mind, could CBA shares represent a passive income buy right now?

Interestingly, Morgans had a hold rating on the stock in November. It slapped it with a $94.57 price target – representing a potential 12% downside.

Meanwhile, Jefferies is said to expect the CBA share price to slide 15% to trade at $91.30.

The post Can income investors bank on CBA growing its dividend yield by 18%? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares with multi-decade growth runways: Scott Phillips
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 3 ASX 200 shares smashing new 52-week highs on Wednesday
• Why is this ASX 200 mining share halted today?

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 positions in and has recommended Jefferies Financial Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Fortescue Metals Group Limited (ASX: FMG) share price has performed very well over the last three months, rising by around 30%.

After such a strong run for the ASX iron ore share, should it be considered a leading investment contender or would it be better to be left alone?

Fortescue isn’t the only one to be doing well in the iron ore sector. The share prices of BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have also risen.

When times are good, it can mean big dividends paid by Fortescue shares. Let’s have a look at how much dividend income the resources giant may pay.

Dividend expectations

In FY23, Fortescue is expected to pay an annual dividend per share of $1.416, according to Commsec. This could translate into a forward grossed-up dividend yield of 9.1%. The Fortescue share price has done so well that the prospective dividend yield has been pushed down.

Another sizeable annual payment is expected in FY24 from the ASX mining share, of $1.12 per share. If this is paid it would amount to a grossed-up dividend yield of 7.2%

What’s driving the Fortescue share price higher?

The business appears to be benefiting from the steadily improving iron price. According to Commsec, it has risen to US$120 per tonne.

As a commodity business, changes in the resource price can have an outsized effect on its profit-generating ability and investor sentiment.

With Chinese lockdowns seemingly over, economic activity is rebounding in the country. This could mean more economic activity, driving higher demand for steel and iron. If the construction sector can achieve a turnaround, that might be even more helpful.

It’s hard to judge how much further the supply and demand relationship can drive the iron ore price from here.

Is it a good time to buy Fortescue shares?

Fortescue seems to be one of the more volatile blue chips on the ASX. But, I’ll make no predictions about the next time it’s going to fall significantly.

When it comes to commodity businesses, I think it would be wise to avoid thinking the good times are going to last forever.

I believe that there will be another good time to invest in Fortescue shares. I’m glad my current holding has done well, but this could be close to the peak price (in the short term).

For me, I’d rather wait until the Fortescue share price is back to $17.50 or under.

The post My Fortescue shares are up 30% in 3 months. Should I buy more? appeared first on The Motley Fool Australia.

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More reading

• Fortescue shares: 4 reasons to buy (and not buy) in 2023
• My ASX shares fell 15% last year. Here’s what I’m doing now
• ASX 200 mining shares: To buy or not to buy?
• Why did iron ore shares lag the ASX 200 on Monday?
• Why is the Fortescue share price being hammered on Monday?

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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Even though investors refer to it all the time, past performance really has nothing to do with the future fortunes of a stock.

Shares themselves have no memory so they don’t care where they came from. It only matters what will happen from now.

So saying a particular stock is bound to head up because it’s dipped so much in recent times is as irrational as saying it is due to crash because it has outperformed.

A perfect example of this is seen in the two stock tips that First Sentier Investors portfolio manager Alison Thai gave this week.

She is forecasting both will have a wonderful 2023, but their share prices have seen vastly different fortunes over the past 12 months. One lost 60% and the other dropped only 5.4%.

Two criteria that make an ‘attractive investment’

Among technology companies, Thai knows exactly what she’s looking for.

“Companies that have critical and scalable software while also maintaining strong unit economics, that’s going to be an attractive investment,” she said in a First Sentiers video.

Virtual network services provider Megaport Ltd (ASX: MP1) fits the bill for her.

The stock is now going for a heavy discount, after devaluing 60% over the last year.

The stickiness of its offerings is alluring for Thai.

“They’ve been able to prove that their customers tend to add on more products and services over time,” she said.

“What this means is that Megaport offers this nice organic growth trajectory because revenue per customer is increasing over time.”

Add new customer signings to that, and Thai reckons the business offers high revenue growth, is nearing earnings break-even, and runs in a capital-light manner.

Using the same criteria outside of tech, Thai favours insurance broker AUB Group Ltd (ASX: AUB).

She believes the business will benefit from “a buoyant premium rate environment”.

“But they don’t need to take on the underwriting risk that an insurance company would,” said Thai.

“This means they offer solid earnings growth without the capital intensity of an insurance company.”

The AUB share price has risen a phenomenal 43% since a trough last June, and currently hands out a dividend yield of 2.35%.

Both of Thai’s tips are heavily favoured by her peers too.

According to CMC Markets, eight out of 10 analysts covering AUB shares reckon it’s a strong buy. Eight out of 12 analysts surveyed say the same for Megaport.

The post Watch these 2 ASX 200 growth shares take off this year: expert appeared first on The Motley Fool Australia.

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More reading

• My ASX shares fell 15% last year. Here’s what I’m doing now
• Here are the top 10 ASX 200 shares today
• Here are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo has positions in Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Aub Group and Megaport. 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 an income boost in 2023, then it could be worth considering the ASX dividend shares listed below.

Both of these dividend shares have been tipped to climb higher from current levels and pay big dividends to shareholders.

Here’s what you need to know about these high yield shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share that could be a top option is Adairs. It is the leading furniture and homewares retailer behind the Focus on Furniture and Mocka brands, as well as the eponymous Adairs brand.

FY 2022 was a year to forget for the retailer. It reported a sharp decline in profits due to significant COVID related disruptions across its operations.

The good news is the worst appears to be behind the company now. It recently revealed that its performance has improved materially in FY 2023.

The team at Jarden is positive and has an overweight rating and $3.28 price target on the company’s shares.

As for dividends, the broker is forecasting fully franked dividends per share of 18 cents per share in FY 2023 and 22 cents per share in FY 2024. Based on the current Adairs share price of $2.85, this will mean yields of 6.3% and 7.7%, respectively.

Rio Tinto Ltd (ASX: RIO)

Goldman Sachs believes that this mining giant could be an ASX dividend share to buy right now. The broker responded to Rio Tinto’s quarterly update this week by retaining its buy rating and lifting its price target to $134.40.

The broker likes Rio Tinto due to its “compelling valuation” and “return to production growth in 2023.” It also sees “potential for FCF/t improvement in the Pilbara over the medium term driven by Rhodes Ridges.”

As for dividends, based on the latest Rio Tinto share price of $121.99, Goldman is forecasting dividend yields of 5.2% in FY 2023 and 6.7% in FY 2024.

The post Here are 2 excellent high yield ASX dividend shares that experts rate as buys appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 mining shares: To buy or not to buy?
• 5 things to watch on the ASX 200 on Wednesday
• Top ASX value shares to buy in 2023
• Why Baby Bunting, Origin, Rio Tinto, and South32 shares are dropping 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 positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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 not often anyone gets to outdo the legendary Warren Buffett at investing.

After all, Buffett has an unrivalled six-decade investing career, which he has used to build his company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) from relative obscurity to the US$693 billion behemoth it is today. Giving himself a net worth of US$110 billion in the process, of course.

Yet, like all of us, Buffett is only human. As such, he does make mistakes from time to time. I’m sure one of his biggest mistakes was passing up on Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) stock. Alphabet is the US tech giant that owns Google.

It is one of the most successful companies of all time, giving investors a 3,270% return since its 2004 IPO (that’s 17.2% per annum compounded).

Yet neither Buffett nor Berkshire owns this company. Nor has Buffett or Berkshire ever owned it.

Buffett never bought Alphabet stock. Should we?

Alphabet’s Google is one of the most dominant companies on the planet. It has near-total dominance in the global search engine business, only ceding ground where it has been completely barred from participating in a market, as has happened with China.

But Google also dominates in other areas too. It owns the Android smartphone operating system, which is by far the most used system globally. Other Alphabet apps like Google Maps, Translate, and YouTube are also among the world’s most popular.

Quite simply, Alphabet has one of the widest and deepest moats of any company anywhere. And yet Buffett, who coined the term ‘moat’ himself, has never owned it.

To be fair, some aspects of Alphabet’s business would be hard for a nonagenarian to get their head around. And Buffett has come out before and waxed lyrical about his love of the company and regret in not buying it:

But even though Buffett has never bitten the bullet on Alphabet, that doesn’t mean we can’t. And right now might be the perfect time to consider an investment.

Be greedy when others are fearful

Alphabet stock has had a pretty shocking year. In early 2022, Alphabet’s Class A stock hit a high of US$151.55. Today, it is going for just US$91.29, a fall of almost 40%:

This leaves the company on a pretty compelling valuation, in my view. One that hasn’t happened for Alphabet in a decade.

At present, Alphabet’s Class A stock has a price-to-earnings (P/E) ratio of 18.48. That means investors are being asked to pay $18.48 for every $1 of earnings.

By comparison, the ASX’s Commonwealth Bank of Australia (ASX: CBA) has a P/E ratio of 19.7 right now. Woolworths Group Ltd (ASX: WOW) is sitting at a P/E ratio of 26.88.

Yes, by this metric, CBA and Woolies shares are more expensive than Alphabet stock. I know which company I would rather own for the next decade and beyond! So perhaps now is the time to do what Buffett did not, and buy Alphabet shares.

The post Alphabet stock: A once-in-a-decade opportunity to outdo Warren Buffett? appeared first on The Motley Fool Australia.

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• How to avoid the biggest mistake in investing: expert
• I would follow Warren Buffett’s advice when buying ASX shares in 2023
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• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth
• I would follow Warren Buffett’s advice when buying ASX shares in 2023

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 and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In the last six months, the BHP Group Ltd (ASX: BHP) share price has risen by around 30%. It has certainly been a great run for the ASX mining share – but is it a buy?

As Australia’s biggest resources business, BHP benefits enormously from higher commodity prices.

The iron ore price has gone from around US$90 per tonne up to US$121 per tonne, according to Commsec.

When the price of a resource rises, it boosts revenue and usually adds even more to net profit after tax (NPAT) because the costs of producing the resource are largely fixed but the price for it has increased. That extra cash can flow straight to the bottom line.

What’s driving the BHP share price higher?

The mining giant is seemingly benefiting from the improving outlook for China. After a period of COVID-19 lockdowns, which limited economic activity, things are now looking more promising for a recovery. China’s cities are open again.

A return to full economic activity could be good news for the demand for commodities like iron ore, copper, and nickel, which BHP supplies. That could also be good news for the BHP share price, which we’re already seeing.

But China doesn’t want to pay too much for iron of course. According to reporting by the Australian Financial Review:

China’s state planner on Wednesday issued its third warning this month against excessive speculation in iron ore, adding it will increase supervision of the country’s spot and futures markets.

Companies should not engage in price gouging and speculation, said the National Development and Reform Commission (NDRC), in a post on its official WeChat account.

So, the higher the iron ore price goes, the more pressure China could try to put on it and push the price of iron ore down.

Should investors buy right now?

The phrase “buy low, sell high” is a bit of a cliché. However, I think it’s very relevant when it comes to investing in resource businesses.

It seems easy to buy shares when commodity prices are roaring and strong profit is likely. But, resource prices don’t usually stay strong forever. Supply and demand can vary quite significantly. Just look at how things have plunged and soared for iron since 2015.

I don’t think it makes a lot of sense to buy at the current BHP share price when it’s close to its all-time high. Even if the company’s dividend income could be strong this year.

In my opinion, the best time to buy BHP shares is when things look bleak and the outlook is pessimistic.

One leading investment bank, Goldman Sachs, has a neutral rating on the ASX mining share, with a price target of $48.10, according to Commsec. That implies a slight fall for the BHP share price over the next year.

The post Should I buy BHP shares in 2023? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• My ASX shares fell 15% last year. Here’s what I’m doing now
• ASX 200 mining shares: To buy or not to buy?
• Why did iron ore shares lag the ASX 200 on Monday?
• BHP share price hits milestone $50 mark on Monday

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 Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re “over the market volatility“, it may be time to buy blue-chip ASX 200 shares that won’t deliver spectacular returns over the short term but will deliver reliable earnings and growth over the long term.

That’s the advice of Motley Fool Australia’s chief investment officer, Scott Phillips, who chatted with Gemma Dale on nabtrade’s Your Wealth podcast yesterday.

Phillips nominated two ASX healthcare shares with “multi-decade runways” for growth based on long-term social trends. Both are large-cap shares in the S&P/ASX 200 Index (ASX: XJO).

The ‘long-term winners’ for growth this year

Phillips said the economy is in a state of flux and no one really knows what’s going to happen next.

In such tumultuous times, he reckons “long-term winners are really, really, really attractive” because they offer earnings stability and good growth prospects.

Phillips said:

… if you can do moderately well for a very long period of time as an investor, you’ll do very well overall.

And if you can buy businesses that are in that space that just continue to compound away, grind away and just get bigger and bigger and bigger, and more and more successful over time, I think that’s an opportunity there.

Which two ASX 200 shares should you buy?

The two ASX 200 shares Phillips recommends are Cochlear Limited (ASX: COH) and Resmed CDI (ASX: RMD).

Phillips likes these ASX 200 shares because the world is getting older and fatter, and these companies are the market leaders in their respective fields of helping people hear and helping them sleep.

Why buy Cochlear shares?

Cochlear is the world’s leading hearing implant device manufacturer. Its implants are the standard of care for children with severe or profound hearing loss. The company also sells products to seniors once their normal hearing aids are no longer effective.

Phillips said:

It’s a medically diagnosed condition [and] Cochlear is the leader in this space. They are in a business that is going to have more and more people diagnosed over time because medical science gets better, the world is becoming more affluent so the developing worlds … will be able to afford some of this technology … and if you’re a Cochlear customer, you’re a Cochlear customer effectively for life — it’s an implanted device.

Why buy Resmed shares?

Resmed is a global leader in sleep technology. It develops, manufactures, and distributes medical devices such as CPAP masks, and cloud-based software applications that diagnose, treat, and manage a range of respiratory disorders. These include sleep apnoea, which is common among obesity sufferers, and chronic obstructive pulmonary disease (COPD).

Phillips said:

… sleep apnoea is a continuing issue, the world is getting fatter, we’re getting older, the growth in the diagnosis of sleep apnoea continues to be huge, so these are companies I think with literally multi decade runways.

They’re not going to be spectacular growth, they’re not going to give you Afterpay-like returns over six or 18 months but these are just great businesses that I think have a really great long term future.

Phillips said as the market leaders, the two ASX 200 companies had excellent prospects for revenue growth, which bodes well for share price appreciation.

He said: “As long as you remain the brand of choice, that’s a pretty good way to keep that cash rolling.”

Also during the interview, Phillips discussed what investors could do to set their portfolios up for success in today’s difficult economic environment.

The post 2 ASX 200 shares with multi-decade growth runways: Scott Phillips appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• How to prepare your portfolio for the ‘old normal’: Scott Phillips
• 3 ASX 200 shares smashing new 52-week highs on Wednesday
• Why is this ASX 200 mining share halted today?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Cochlear. 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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After a terrible 2022, it’s not entirely surprising that many investors are tentative about what to do for 2023.

How much worse will the Australian and global economies get? When will central banks stop raising interest rates? How badly will company earnings fare as the year wears on?

Are ASX shares a wise investment for 2023? Will they end the year higher or lower than now?

AMP Ltd (ASX: AMP) chief economist Dr Shane Oliver set out to explore the answers to these riddles.

First the bad news, then the good news

If you’re fed up with the volatility we saw in 2022, unfortunately, the prominent economist reckons more will follow this year.

“2023 is likely to remain volatile and a retest of 2022 lows for shares is a high risk,” Oliver said on the AMP blog.

“Economic growth will slow sharply this year thanks to rate hikes and cost of living pressures — with a high risk of recession in the US and Europe.”

But the great news is that, if you can withstand the early volatility, sunshine could follow later in the year.

“Easing inflation, central banks getting off the brakes — with the RBA at or close to the peak on rates — economic growth likely stronger than feared and improved valuations should make for better returns.”

Why will Australia fare better than most?

Why is Oliver optimistic? 

One of the reasons is that long-term inflation expectations remain low.

“Inflation has likely peaked,” he said. 

“Labour market tightness is showing signs of easing which should take pressure [off] wages – this is flowing from slowing demand and in Australia will be helped by foreign workers returning.”

He also feels like many central banks are closer to “peak hawkishness” and that Australia specifically will dodge a recession.

“A slump in consumer spending along with weaker global growth will see Australian growth slow to around 1.5% this year,” said Oliver.

“The risk of recession is high, but it’s likely to be avoided.”

The Reserve Bank of Australia, in Oliver’s opinion, is less “aggressive” and is not as likely to go overboard with rate hikes compared to other central banks.

Despite a slowing economy, Australian business investment outlook “remains solid”.

“A rebound in Chinese growth is likely to support export volumes and prices,” said Oliver.

“Chinese growth is expected to rebound to around 6% this year thanks to reopening providing an offset to weakness in other countries.”

The Australian labour market will also see an easing of current staff shortages.

“Immigration is rebounding rapidly, which means more workers and support for economic growth.”

For all these reasons, Oliver reckons ASX shares will outperform global stocks.

He’s forecasting international shares will return around 7% this year, so Australian stocks will certainly end up much higher by the end of 2023.

“The anticipation of stronger growth in 2024 and improved valuations should make for better returns in 2023.”

The post Why ASX shares could be much higher at the end of 2023 appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why did the AMP share price crumble 4% on Monday?
• Why AMP, Computershare, IAG, and Telix shares are dropping today

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 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) fought hard and carved out the smallest of gains. The benchmark index rose 0.1% to 7,393.4 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday following a poor night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% lower this morning. In late trade in the United States, the Dow Jones is down 1.3%, the S&P 500 has fallen 1.05% and the NASDAQ has dropped 0.75%. This has been put down to a combination of skittishness and profit taking.

BHP quarterly update

The BHP Group Ltd (ASX: BHP) share price will be on watch on Thursday when the mining giant releases its second quarter production update. According to a note out of Goldman Sachs, its analysts are expecting the Big Australian to report iron ore shipments of 74.8Mt, which is ahead of the consensus estimate of 71.9Mt. Goldman also expects copper production of 420kt and met coal production of 6.9Mt.

Oil prices fall

Energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a tough day after oil prices tumbled on Wednesday night. According to Bloomberg, the WTI crude oil price is down 1.1% to US$79.27 a barrel and the Brent crude oil price is down 1.3% to US$84.82 a barrel. Oil prices fell on US recession concerns.

Allkem named as a buy

The Allkem Ltd (ASX: AKE) share price could be great value after its quarterly update. That’s the view of analysts at Bell Potter. This morning the broker has retained its buy rating with a slightly trimmed price target of $19.36. It said: “We expect AKE’s cash generation to lift substantially from 2023 with ongoing strength in lithium demand, commodity prices and production growth.”

Gold price edges lower

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) will be on watch after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.2% to US$1,905.8 an ounce. The precious metal appears to be running out of steam after some strong gains recently.

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

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 3 ASX 200 shares smashing new 52-week highs on Wednesday
• Why is this ASX 200 mining share halted today?
• Cheap ASX shares: A rare chance to get rich?
• Guess which ASX 200 lithium share just capped off a record quarter

Motley Fool contributor James Mickleboro has positions in Allkem. 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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