Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) has taken a tumble on Tuesday after the RBA lifted the cash rate. In afternoon trade, the benchmark index is down 0.5% to 7,501.9 points.

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

ARB Corporation Limited (ASX: ARB)

The ARB share price is down over 10% to $29.88. This 4×4 auto parts company’s shares have come under pressure after Macquarie gave a lukewarm response to its half year update. Its analysts have downgraded ARB’s shares to a neutral rating with a $33.00 price target.

Centuria Capital Group (ASX: CNI)

The Centuria Capital share price is down 5% to $1.87. This follows the release of the property company’s half year results. Although Centuria Capital delivered strong top line growth, its operating profit was flat year over year.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price is down 5% to $10.26. Investors have been selling this furniture retailer’s shares since the release of its half year results. Macquarie has also responded to its results by downgrading its shares to a neutral rating with an $11.30 price target. The broker appears concerned by the headwinds the company is facing from higher interest rates and a cooling housing market.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is down 2% to $1.016. This may have been driven by a broker note out of Goldman Sachs. It has warned that the gaming company could fall short of expectations with its results. It notes that industry feedback and data updates suggest that competition has been strong. This is being driven by disruption from a new entrant in the market, which it feels could be pressuring net margins and earnings.

The post Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping appeared first on The Motley Fool Australia.

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More reading

• ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024
• Why is the ARB share price beating the ASX 200 today?
• Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today
• Nick Scali share price plummets despite 70% profit boost
• These are the 10 most shorted ASX shares

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 ARB Corporation. The Motley Fool Australia has recommended ARB Corporation. 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 slipped into the red amid the Reserved Bank of Australia (RBA) handing down another interest rate rise. At the time of writing, the index is 0.54% lower at just below 7,500 points.

The ASX 200 was up more than 0.2% during lunchtime trading. The benchmark index also proved resilient earlier in the day, despite a retrace in US markets overnight.

Then, at 2:30pm AEDT, the RBA released its interest rate decision following a meeting of its board.

The central bank announced another 0.25% increase in interest rates, bringing the official cash rate to 3.35%. This was broadly in line with consensus expectations, as the RBA continues to dampen stubbornly high inflation.

Atop today’s cash rate hike, the RBA board also increased the interest rate on Exchange Settlement balances by another 0.25%, taking that to 3.25%.

In the minutes following the announcement, the ASX 200 tumbled more than 0.6%.

February marks the ninth consecutive interest rate hike from the central bank. (The board does not meet in January.)

The first of those hikes came on 3 May last year, when the official cash rate was at a rock bottom 0.10%. At that time, the interest rate had not been lifted since November 2010.

What did the RBA announce post its meeting?

RBA governor Philip Lowe explained the board’s decision to hike rates yet again following the meeting, saying, “Global inflation remains very high.”

Lowe acknowledged that inflation pressures are easing somewhat, with lower energy prices and the impact of higher rates.

However, the ASX 200 is under pressure after he added, “It will be some time, though, before inflation is back to target rates. The outlook for the global economy remains subdued, with below-average growth expected this year and next.”

CPI inflation over the year to the December quarter came in at 7.8%, the highest level since 1990. And Lowe also noted that underlying inflation of 6.9% “was higher than expected”.

“Global factors explain much of this high inflation,” he said. “But strong domestic demand is adding to the inflationary pressures in a number of areas of the economy.”

The RBA forecasts CPI inflation will continue to ease this year to 4.75%. By mid-2025, the central bank expects inflation will be hovering at “around 3%”, right at the top of its target range.

As for the broader economy, Lowe said the board expects GDP growth will slow to around 1.5% during 2023 and 2024.

The labour market remains an area of concern in the bank’s inflation battle. The unemployment rate of 3.5% is the lowest since 1974.

“Given the importance of avoiding a prices-wages spiral, the Board will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms in the period ahead,” Lowe said.

What’s ahead for ASX 200 investors?

ASX 200 investors should expect at least one more interest rate hike to come. Perhaps more.

Lowe reiterated the RBA’s priority of bringing inflation back to its 2% to 3% target range.

According to Lowe:

High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later.

He said the RBA would seek to keep “the economy on an even keel, but the path to achieving a soft landing remains a narrow one”.

Also likely pressuring ASX 200 shares today was Lowe’s reminder that more rate hikes are likely on the horizon:

The board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.

As in previous statements, he added that the board “will do what is necessary to achieve that”.

The post ASX 200 falls following ninth consecutive RBA interest rate hike appeared first on The Motley Fool Australia.

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More reading

• Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping
• ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024
• Nuix share price rockets 43% following court win
• Does the Coles dividend forecast make it a great buy for income?
• Why Beach Energy, Medibank, Pushpay, and Whitehaven Coal shares are rising

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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1) In the US, the soft landing versus recession debate continues, even as traders expect the terminal fed-funds interest rate to now peak at between 5% and 5.25%.

Goldman slashes US recession risk odds to 25 per cent, according to the AFR. 

“We have cut our subjective probability that the US economy will enter a recession in the next 12 months from 35 per cent to 25 per cent, less than half the 65 per cent consensus estimate in the latest Wall Street Journal survey,” Goldman’s chief economist Jan Hatzius said.

Labour markets remain tight both in the US and here in Australia, almost the exact opposite conditions that traditionally signal an imminent recession. Combined with a slowdown in the rate of inflation, and the goldilocks soft landing scenario is well and truly in play.

Last week, US federal reserve Chairman Jerome Powell said he continues to think there’s a path to getting inflation back down to 2% without a really significant economic decline or a significant increase in unemployment.

No wonder equity markets have had a strong start to 2023. The S&P/ASX 200 Index (ASX: XJO) is within a whisker of its all time highs, and up over 7% so far this year. The S&P/ASX All Technology Index (ASX: XTX) is an even more impressive 12.7%, with Block Inc (ASX: SQ2) shares up over 30% since the start of the year.

2) Doomsayers are never far from the headlines, especially in the US, as epitomised by this headline on MarketWatch…

“Look for stocks to lose 30% from here, says strategist David Rosenberg. And don’t even think about turning bullish until 2024.”

The former chief North American economist at Merrill Lynch said the US recession is just starting, and that investors can expect to endure more uncertainty leading up to the time when the Federal Reserve first pauses its current run of interest rate hikes and then begins to cut.

Excerpt:

Fortunately for investors, the Fed’s pause and perhaps even cuts will come in 2023, Rosenberg predicts. Unfortunately, he added, the S&P 500 Index (SP: .INX) could drop 30% from its current level before that happens. Said Rosenberg: “You’re left with the S&P 500 bottoming out somewhere close to 2,900.”

At that point, Rosenberg added, stocks will look attractive again. But that’s a story for 2024.

I’d be taking the other side of that “30% drop” bet, not because I’m incredibly bullish, but because such falls are very rare, and more so coming after a year where the S&P 500 index sank almost 20%, with the tech heavy Nasdaq Composite Index (NASDAQ: .IXIC) tumbling 33%.

3) Here in Australia, according to the AFR, UBS equity strategist Richard Schellbach says share prices have rallied too hard, with the investment bank believing they’re factoring in too much optimism.

“The reality is over the next six months we have the laggard impact of higher interest rates coming through, and fixed-rate mortgages getting priced higher and consumers starting to run down their savings significantly.

“Some of these profit results, which we think will be okay, are likely to see a muted share price reaction because prices have run up so hard, they’ve already factored in that earnings story.”

It’s not “the market is going to fall 30% rhetoric,” but suggesting investors don’t go all-on just because the ASX 200 has had a strong start to 2023. There’s a long way to go… and that’s just to get us to the end of February and this earnings season. 

4) Speaking of earnings season, growth is going to be hard to come by for a lot of companies as year on year comparisons are still impacted by abnormal COVID trading conditions in 2022.

Yesterday, Nick Scali Limited (ASX: NCK) reported a stunning 70% increase in first half profit on the back of record deliveries due to the large outstanding order bank at 30 June 2022. 

Yet despite January being the strongest trading month for the furniture retailer, and being better than the company’s expectations, Nick Scali brand written wales orders were down 12% from January 2022.

The Nick Scali share price sank 13% yesterday, and is down another 3.9% today to $10.38. Despite being one of the highest quality retailers on the ASX, Nick Scali shares are now down 35% from its November 2021 high. 

Stock picking can be tough.

Based on consensus estimates, Nick Scali shares trade on a forecast FY24 earnings multiple of 11.5 times and fully franked dividend yield of 6.5%. The shares look good value on those numbers, but the coming “mortgage cliff” is the great unknown, with Nick Scali themselves saying “at this point it is difficult to provide further guidance” for the rest of this financial year.

5) As widely expected, the Reserve Bank of Australia have hiked interest rates by another 25 basis points, bringing the cash rate to 3.35%.

It’s more good news for savers, with at-call savings accounts paying around 4% interest rates widely available. If you are not making your cash work hard for you, it’s time to shop around for a better interest rate on your savings. 

While higher interest rates naturally slows the economy – and is soon to inflict some serious pain on mortgage-holders – the good news is that with each RBA monthly meeting, we’re closer to peak interest rates for this cycle.

No longer will interest rates and inflation be the driver of share prices – 2023 will be all about earnings. 

Leading fund manager QVG Capital says it believes the job to be done in 2023 “is to own the relatively small number of companies run by motivated insiders that produce growing free cash flows.”
The fund’s top holdings include Hansen Technologies Limited (ASX: HSN), Johns Lyng Group Ltd (ASX: JLG) and Lovisa Holdings Ltd (ASX: LOV). 

The post ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024 appeared first on The Motley Fool Australia.

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More reading

• Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping
• Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today
• Nick Scali share price plummets despite 70% profit boost
• Top ASX dividend shares to buy in February 2023
• ASX income stocks: A once-in-a-decade chance to get rich?

Motley Fool contributor Bruce Jackson has positions in Block. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Hansen Technologies, Johns Lyng Group, and Lovisa. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Johns Lyng Group and Lovisa. 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 Nuix Ltd (ASX: NXL) share price is on fire on Tuesday afternoon after emerging from a trading halt.

The investigative analytics and intelligence software provider’s shares were up as much as 43% to $1.29 at one stage.

The Nuix share price has since pulled back a touch but currently remains up 31% to $1.19.

Why is the Nuix share price rocketing?

As we covered here earlier today, Nuix put its shares into a trading halt this morning while it awaited a ruling in the Federal Court of Australia. This was in relation to a claim made by its former CEO, Edward Sheehy.

Mr Sheehy filed proceedings in the Federal Court in October 2020 claiming that he validly exercised options in January 2020 that would have entitled him to be issued with approximately 22.6 million shares.

And with the former CEO insisting that he would have sold these shares long before the Nuix share price had collapsed, he was claiming significant damages.

All in all, Sheehy was seeking an award of damages of up to $183 million plus interest, which was the equivalent of almost two-thirds of Nuix’s market capitalisation prior to today.

As you might have guessed from the Nuix share price reaction, the Federal Court has ruled in the company’s favour and dismissed Sheehy’s claims.

In a brief statement this afternoon, Nuix commented:

[T]he Federal Court of Australia has delivered its judgment in relation to the proceedings brought by Mr Edward Sheehy against Nuix.

The Federal Court this morning dismissed Mr Sheehy’s claims. There is no requirement for Nuix to amend its options register and Mr Sheehy is not entitled to any monetary compensation from the company.

And while Mr Sheehy will have a period of time to appeal the decision, it seems unlikely that this will be overturned if appealed. Particularly given that a previous claim for the same matter was dismissed in the supreme court in 2019.

The post Nuix share price rockets 43% following court win appeared first on The Motley Fool Australia.

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More reading

• Why is everyone talking about Nuix shares today?

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

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Coles Group Ltd (ASX: COL) has been growing both its dividends and share price since it listed on the ASX in 2018. But is now a good time to snap up the S&P/ASX 200 Index (ASX: XJO) supermarket operator’s stock for passive income? Let’s take a look.

What kind of dividends can investors expect from Coles shares?

Coles shares are arguably a potential dividend winner by design. The company aims to deliver a dividend payout ratio of between 80% and 90%.

Thus, the company’s dividends will likely grow alongside its profits. And brokers are seemingly expectant.

Citi is forecasting Coles shares to offer investors 72 cents per share in financial year 2023. That’s tipped to grow to 77 cents per share in financial year 2024.

That’s slightly higher than Morgans’ outlook – 64 cents per share in financial year 2023 and 66 cents per share in financial year 2024.

For comparison, Coles shares provided 63 cents per share in financial year 2022 – a 3.3% increase on those of financial year 2021.

Potential risks

Of course, no investment is without risks – even those capable of creating passive income.

Coles will assumably only pay dividends if its profits increase. Thus, headwinds currently facing the company could dent its periodic offerings.

The supermarket giant previously noted the cycling of lockdowns in the first half of financial year 2022 could impact its upcoming earnings. Meanwhile, inflation was tipped to take a bite out of its bottom line this fiscal year.

Coles shares could be an ASX dividend buy

Speaking of inflation, while Coles shares are by no means immune to the cash eating measure, the supermarket operator is a discretionary retailer. Aussies can’t simply stop buying food when the cost-of-living rises.

That means its earnings are arguably defensive. Thus, I believe Coles shares could make a good passive income buy in the current economic environment. And I’m not alone in thinking so.

Both Morgans and Citi have equivalent buy ratings on the stock, with respective price targets of $19.50 and $18.90. That means Coles shares could offer up to 8% upside.

The post Does the Coles dividend forecast make it a great buy for income? appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’d start building a second income this February, for $30 a week
• Should I buy Coles shares before this month’s ASX earnings update?
• Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season
• ASX shares investors rejoice! RBA says inflation has now peaked
• ‘Attractive stock’: Fundie names one ASX share to buy, one to watch, one to avoid

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is back on form and is edging higher. At the time of writing, the benchmark index is up 0.1% to 7,546.2 points.

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

Beach Energy Ltd (ASX: BPT)

The Beach share price is up 2.5% to $1.58. This may have been driven by a broker note out of Macquarie. Its analysts have upgraded the energy producer’s shares to a neutral rating with a $1.50 price target. The broker was pleased with news that Webuild has been appointed to complete the Waitsia gas plant construction.

Medibank Private Ltd (ASX: MPL)

The Medibank share price is up 2% to $3.03. This morning, this private health insurer announced that it will increase its premiums by an average of 2.96% from April. This is the lowest increase in 22 years. Investors may believe this is a nice balance in the current environment. Medibank has also decided to defer this increase until the start of June.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price is up 2% to $1.20. Investors have been buying this donation technology provider’s shares after it reconfirmed and narrowed its FY 2023 guidance. Pushpay now expects underlying EBITDAF of US$55 million to US$57 million. This compares to its previous guidance of US$54 million to US$58 million.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up 5.5% to $8.93. This has been driven by a strong rise in coal prices overnight. According to CommSec, Coal Nymex futures rose 5.3% to US$157.00 a tonne. This news has given a number of other ASX coal shares a major boost today.

The post Why Beach Energy, Medibank, Pushpay, and Whitehaven Coal shares are rising appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Why Beach, Newcrest, Patriot Battery Metals, and Warrego Energy shares are rising
• Top ASX value shares to buy in February 2023
• Did you buy $1,000 of Whitehaven shares 10 years ago? If so, here’s how much passive income you’ve received

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 Pushpay. The Motley Fool Australia has positions in and has recommended Pushpay. 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 stock market has had an incredible start to the 2023 calendar year. Rewind back to the start of January, and we’ll see the S&P/ASX 200 Index (ASX: XJO) was at 7,038.7 points.

But today, the ASX 200 is sitting at 7,541 points at the time of writing, a good 7.1% above where it began the year at. Historically speaking, this is an incredibly positive start to the trading year.

What’s funny is that the end of 2022 was dominated by investor pessimism. Predictions were abounding that 2023 would ‘inevitably’ see a recession.

Rising interest rates and high inflation would result in a hard landing for the US economy, and probably Australia’s too. Thus, shares were going to have a dreadful year.

Well, anyone who sold their shares on this pessimism would probably be feeling pretty silly right about now.

So that brings us to the question: will there be a stock market crash in 2023?

Is the stock market heading for an ASX 200 crash in 2023?

Well, I’ll keep this one simple: I have no idea.

There could be a recession in 2023, or there might not be.

The share market could crash if we have a recession, or it could go higher.

The economy could boom but shares go into a bear market.

All of these scenarios are possible.

But I don’t have a crystal ball. Even economists get these kinds of predictions wrong all of the time. And I’m not an economist.

So I’m not going to make any kind of predictions here today. And I’m certainly not basing my investing actions on what might happen to the stock market or the economy this year.

Instead, I’ll be trying to follow the advice of the legendary investor Warren Buffett.

Back in his 2012 letter to the shareholders of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), Buffett said this about trying to invest based on economic indicators:

Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful)…

American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor.

The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.

Since the basic game is so favorable, Charlie [Munger] and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of “experts”, or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.

So instead of worrying about whether there’ll be a stock market crash in 2023 or not, I’m going to keep on doing what I’ve always tried to do: invest in the best ASX shares and exchange-traded funds (ETFs) as much as possible, at the best prices possible.

At the end of the day, nothing else really matters.

Sure, we’ll get the occasional stock market crash. But these crashes are just good opportunities to load up on our favourite shares and ETFs at even better prices.

Worrying about recessions, stock market crashes, and trying to time the market is a fool’s game (and not the good kind of Fool). I think we’re all better off playing Buffett’s game instead.

The post Will the stock market crash in 2023? appeared first on The Motley Fool Australia.

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More reading

• Better buy: Core Lithium vs Pilbara Minerals shares
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why is the ARB share price beating the ASX 200 today?

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. 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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The last 12 months or so have been a wild ride for Lake Resource N.L. (ASX: LKE) and those invested in its shares.

After peaking at $2.65 in April 2022, the Lake Resources share price crashed to a low of 54.5 cents in July. It’s since recovered just 38% to trade at 75 cents.

Meanwhile, many of its S&P/ASX 200 Index (ASX: XJO) lithium peers have soared into the green.

Shares in Sayona Mining Ltd (ASX: SYA) and Pilbara Minerals Ltd (ASX: PLS), for instance, have gained 85% and 41% respectively since this time last year.

And among the carnage facing its share price, Lake Resources has also found itself a favourite among short sellers. Should that be a red flag for those invested in the lithium share? Let’s take a look.

Is a large short interest a red flag for ASX investors?

Short sellers effectively bet against a company’s share price. Thus, considering the level of short seller interest in a share can be a means to gauge market sentiment.

That certainly sounds like a red flag for investors ‘going long’ on the stock (expecting it to gain in the future).

Especially as short-selling proponents – such as Warren Buffett – argue that, among other impacts, short sellers can help sniff out dishonest business practices. The billionaire once said:

The situations in which there have been huge short interests … very often have been later revealed to be frauds or semi-frauds.

Though, short sellers can also make false claims against a company in a bid to cause investors to sell its stock in a panic, in turn reducing its share price.

If that’s indeed the case, an investor might be wise to largely ignore short sellers.

Right now, around 7% of Lake Resources shares are being shorted. That places it among the ASX’s 10 most shorted stocks, alongside fellow ASX 200 lithium outfits Sayona, Core Lithium Ltd (ASX: CXO), and Liontown Resources Ltd (ASX: LTR).

Fortunately for those interested in Lake Resources shares, there is a relatively simple way to know what one notable short seller dislikes about the share – simply because they’ve told us.

Lake Resources shares hit by short attacks in 2022

Short seller interest in Lake Resources shares spiked in June last year, just weeks before a scathing attack by activist short seller J Capital dropped, seemingly sending the stock to its lowest price in years.

Since then, J Capital has released a number of reports criticising the company, most recently in December.

Much of its critiques have boiled down to the direct lithium extraction (DLE) technology currently being developed by Lake Resources’ partner Lilac Solutions. The technology is crucial to the company’s Kachi project’s planned production.

Lake Resources has responded to a previous report from the activist short seller, calling its claims “incorrect” and “inaccurate”.

The post Lake Resources shares are among the most shorted on the ASX. Is this a red flag? appeared first on The Motley Fool Australia.

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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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The Woodside Energy Group Ltd (ASX: WDS) share price is up 0.98% in afternoon trade.

The S&P/ASX 200 Index (ASX: XJO) oil and gas company closed yesterday trading for $36.05 per share and is currently trading for $36.405 apiece.

That’s today’s price action for you.

Now, here’s why the Woodside share price could enjoy some heady tailwinds in 2023.

Tailwinds ahead for the Woodside share price?

There are numerous factors that will impact the performance of the Woodside share price in the year ahead.

Chief among those is the price of oil.

When crude oil topped US$120 in March 2022, ASX oil stocks rallied almost across the board.

Which brings us to some rather bullish forecasts for the oil price in 2023.

According to analysts at Goldman Sachs, the oil price is forecast to rise by some 20% amid new supply issues and diminishing spare capacity even as demand looks set to grow.

This comes as China reopens from its extended COVID lockdowns. It will see the world’s most populous nation upping its energy requirements, while sanctions are likely to see much of Russia’s oil exports slashed. 

And with new investments in exploration and production lagging, Goldman sees the price of crude oil heading back to US$100 per barrel. That’s up from just over US$80 per barrel today.

According to Goldman Sachs analyst Jeff Currie (quoted by Bloomberg), “The commodity super cycle is a sequence of price spikes with each high higher and each low higher.”

Should the next sequence see the price spike higher, as Currie expects, it should offer some helpful tailwinds for the Woodside share price.

What else is ahead for the ASX 200 oil stock?

After years of delays, it appears Woodside is closer to developing its joint venture Sunrise gas field.

Sunrise is located some 150 kilometres offshore of Timor-Leste and 450 kilometres from Darwin.

Woodside owns approximately 33% of the $50 billion gas field, with its joint venture (JV) partners Osaka Gas and the Timor-Leste government owning the rest.

Development of the gas field has been on the back burner as the partners debate the merits of constructing an LNG export plant in Timor-Leste. Woodside has opposed that proposal, citing higher costs involved than processing at existing plants in the Northern Territory.

Now, as The Australian reports, Woodside is reconsidering its opposition to that plan, with new modular technology potentially bringing the costs of constructing a plant in Timor-Leste down to a palatable level.

In a move that could offer a boost to the Woodside share price, the oil giant stated it will now conduct a new study alongside its JV partners with a “strong focus on delivery of gas to Timor-Leste”. The company will compare how that plan stacks up against delivering the gas for processing to Australia.

“It is important we continue to look at ways to develop the Greater Sunrise fields using the latest technologies by evaluating, for example, modular LNG, that did not exist in the past,” Woodside CEO Meg O’Neill said.

According to O’Neil:

Against a backdrop of global geopolitical instability and constrained energy supply chains, there is an opportunity for the Sunrise Joint Venture to significantly advance this regionally important project…

The Timorese are very keen to have that development in country and we recognise it is an important national project for them, so we feel like it’s appropriate to reopen the concept evaluation, understand the technologies, understand the technical challenges.

Woodside share price snapshot

The Woodside share price has been a strong performer amid higher energy costs.

As you can see in the graph below, shares in the ASX 200 energy company are up 36% over the past 12 months.

The post Why the Woodside share price could leap higher in 2023 appeared first on The Motley Fool Australia.

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

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With Commonwealth Bank of Australia (ASX: CBA) shares recently hitting a record-high, it’s clear to see that the market is expecting a strong half-year result from the banking giant later this month.

Ahead of the release on 15 August, let’s take a look to see what analysts are expecting from Australia’s largest bank.

CBA half-year results preview

According to a note out of Goldman Sachs, its analysts expect a strong but slightly below consensus profit result from the bank. It commented:

1H23E cash earnings from continued operations (pre-prefs, pre-NRIs) up 7.6% on pcp to A$5,108mn vs. Visible Alpha consensus A$5,165mn.

Despite this, the broker believes CBA will pay a larger than expected interim dividend. It expects an interim dividend of $2.12 per share, versus the $2.09 per share consensus estimate.

What will drive this result?

Goldman is expecting CBA’s deposits to have been a major tailwind for the bank’s net interest margin (NIM) during the half. Though, it has warned that this could soon become a headwind. The broker explained:

Amongst the major banks, CBA has the highest skew towards deposit funding (CBA at c.70% vs. peers at c.60%), which our product pricing analysis suggests should have been a tailwind over 1H23, contributing to our 24bp hoh forecast expansion in CBA’s 1H23E NIM. However, we have witnessed some more aggressive deposit repricing in late CY23/early CY24 and we will be keen to understand the extent to which this — along with the impact on deposit mix — will have on NIMs over the remainder of CY23.

What else should you look out for?

With the cash rate increasing there are concerns about bad and doubtful debts (BDDs) increasing. However, Goldman Sachs appears confident that this won’t be the case with this result. It adds:

While cash rates rose 2.25% over the course of CBA’s 1H23, we think the impact on CBA’s BDD charge will be fairly muted, to date. However, we are keen to hear from management on i) any exposures where they have witnessed some deterioration, ii) the sensitivity of the banks’ provision models to deteriorating macroeconomic conditions (GDP growth, unemployment and house price), and iii) how capital levels might respond if economic conditions start to deteriorate over the course of CY23.

Should you buy CBA shares?

Unfortunately, for valuation reasons, Goldman isn’t recommending CBA shares to its clients.

It currently has a sell rating and $92.56 price target on them. This implies material downside for the bank’s share price from current levels.

Though, it is worth noting that this has been the case for some time and hasn’t been able to prevent CBA shares from scaling new heights this year.

The post Own CBA shares? Here’s the bank’s half-year results preview appeared first on The Motley Fool Australia.

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

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