Category: Stock Market

What a difference a year makes.

Twelve months ago, technology shares were riding high, bathing in all the love from the market. It’s the future! How can you go wrong?

But now the S&P/ASX All Technology Index (ASX: XTX) has crashed 36% year to date and high-growth tech stocks have been abandoned like a sinking ship.

But does this mean there are some bargains to be nabbed?

Here are two ASX shares that Celeste Funds Management reckon are ripe for investing at the moment:

‘Ballast in the portfolio’ during uncertain times

As a services provider, Data#3 Limited (ASX: DTL) is rarely mentioned among the more glamorous tech stocks.

But for the Celeste team, it’s a reliable investment in tough times for the market and the economy.

“Data #3 [shares] rose 3.5% over the month of September in what was one of the most challenging months in ASX history,” its memo to clients read.

“While there were no new announcements of note in September, the strong August result saw Data #3 deliver sales of $2,193 million (+12.2% vs pcp) and NPAT of $30 million (+19.1% vs pcp).”

While most tech shares plunged, the Data #3 share price has actually risen 4.6% so far this year.

The business has a $6 million backlog of work and showed “no signs of weakening demand”, which investors loved during a time of great economic anxiety.

“Looking ahead, while cognisant on valuation, we remain positively disposed to Data #3 as it is a high-quality business with a strong balance sheet that should provide ballast in the portfolio during a period of economic volatility.”

‘Well placed to grow’ 

Infomedia Limited (ASX: IFM) is another name not often seen among the higher-profile tech stocks. The business provides software for the automotive parts supply and service industry.

The share price took a significant hit last month.

“Infomedia declined by 16.4% over the month after the company closed the data room to several prospective private equity bidders post 15 weeks of due diligence.”

The Celeste team backed the company’s rejection of the acquisition proposal.

“This bid was typical of recent form of most private equity bids in Australia which have amounted to little more than time-wasting fishing trips.”

The analysts retain full faith in Infomedia’s long-term prospects.

“Infomedia has solid software, solves a problem for the corporate user, and remains well placed to grow under the new CEO,” read the memo.

“We expect targeted investment in sales and marketing over the next 12 months will boost execution capability in the USA and Europe.”

Infomedia shares have dropped 21.9% since the start of the year, but it does pay out a 4.7% dividend yield.

The post ‘High quality’: Fund names 2 obscure ASX tech shares to buy now appeared first on The Motley Fool Australia.

More reading

• Why 5E Advanced Materials, Appen, Core Lithium, and Infomedia shares are dropping
• Why Clinuvel, EML, Infomedia, and Link 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 positions in and has recommended Infomedia. The Motley Fool Australia has recommended Infomedia. 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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Despite what the market may do, it’s set to be a good day for South32 Ltd (ASX: S32) shareholders.

The time has come for shareholders to dig into the ASX 200 mining company’s latest final dividend.

Here’s what you need to know about today’s payday.

It’s raining dividends for South32 shareholders

Back in August, South32 unveiled its FY22 results. In the process, the ASX 200 miner declared a final dividend of 14 US cents along with a special dividend of 3 US cents.

Pleasingly for shareholders, both of these dividends are fully franked.

South32 has used an AUD/USD exchange rate of 67.65 US cents, so the total is equivalent to roughly 25.13 cents in Aussie dollars.

South32 shares turned ex-dividend for this payment on 15 September. As a result, any South32 shares purchased on or after this date won’t be scooping up today’s payout.

Unlike its former owner BHP Group Ltd (ASX: BHP), South32 doesn’t have a dividend reinvestment plan (DRP). So, shareholders will be receiving today’s payment in cash.

Across the financial year, South32 declared total dividends of 25.7 US cents, fully franked. This represents a whopping 272% increase from the total dividends of 6.9 US cents seen in FY21.

This hefty dividend hike was supported by elevated commodity prices, which helped South32 enjoy a four-fold increase in underlying earnings in FY22, hitting US$2.6 billion.

In Aussie dollars, South32 will soon have paid out roughly 37.08 cents per share in dividends this year. At current levels, this puts South32 shares on a monster trailing dividend yield of 10.0%. Adding in franking credits, this yield cranks up to 14.3%.

However, looking ahead, broker Goldman Sachs is forecasting South32 to slash its annual dividends by 44% in FY23 to 14.3 US cents. This represents a prospective forward dividend yield of around 6%.

What’s next for the South32 share price?

Earlier this week, Goldman Sachs downgraded its rating on South32 shares from buy to neutral. What’s more, the broker cut its 12-month price target on South32 shares by 21% to $3.70, in line with where shares are trading today.

This downgrade came after the broker lowered its forecasts for base metals prices. But on a more positive note, Goldman highlighted South32’s supportive dividend yield, share buyback, and compelling long-term base metals growth.

Morgans, on the other hand, is bullish on the ASX 200 miner. The broker has an add rating and a $5.50 price target on South32 shares. At current levels, this implies potential upside of 49% over the next 12 months.

Explaining its positive view, Morgans commented:

Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

South32 share price snapshot

The South32 share price has bounced around this year and is currently printing a 7.7% fall since the start of 2022.

Despite sitting in the red, South32 has outperformed the S&P/ASX 200 Index (ASX: XJO), which has tumbled 10.7% in the year to date.

However, South32 shares are lagging the Big Australian, with BHP shares experiencing a more muted 4.7% fall so far this year.

The post The South32 dividend is being divvied out today. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Why investors were looking on the bright side for ASX 200 bank shares today
• Is this why a certain ASX 200 director keeps buying up big on their company’s shares?
• Guess which ASX 200 coal share is leaping higher on a possible takeover

Motley Fool contributor Cathryn Goh 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 Harvey Norman Holdings Limited (ASX: HVN) share price will be on watch tomorrow as the ASX 200 retail share turns ex-dividend.

As of tomorrow, Harvey Norman shares will be trading without entitlements to the company’s latest fully franked final dividend of 17.5 cents. In other words, Harvey Norman shares will be going ex-dividend.

This means that today will be the last day to lock in this dividend, which will be paid on 14 November.

Given that Harvey Norman does not have a dividend reinvestment plan (DRP), shareholders will have no choice but to receive this payment in cash.

After today, investors shopping for Harvey Norman shares won’t score the company’s latest dividend payment. But they’ll likely be able to scoop up shares at a discount.

This is because a company’s shares usually fall on the day they turn ex-dividend as the value of the dividend leaves the share price.

The extent of the fall varies based on investor sentiment and what the market is doing on that particular day. But it typically reflects the size of the dividend payment in question.

In Harvey Norman’s case, its latest final dividend of 17.5 cents represents a yield of 4.2%. So, the Harvey Norman share price will likely face plenty of downwards pressure tomorrow.

How did Harvey Norman perform in FY22?

The ASX 200 retail share handed in its FY22 results on the final day of ASX reporting season in August.

Total system sales revenue marginally backpedalled by 1.7% from the prior year to $9.6 billion, but still came in 13.0% higher compared to FY20.

Meanwhile, net profit after tax (NPAT) slipped by 3.6% to $811 million as the company battled COVID lockdowns, supply chain issues, and labour shortages during the year.

The retailer ended FY22 with 169 franchised Harvey Norman complexes in Australia, 19 franchised Domayne complexes, seven franchised Joyce Mayne complexes, and 109 overseas company-operated stores.

Despite the reduction in profits, Harvey Norman raised its full-year dividends by 7% to 37.5 cents per share, fully franked. At current levels, this puts Harvey Norman shares on a mighty trailing dividend yield of 9.1%. With the benefit of franking credits, this yield grosses up to a whopping 13.0%.

What’s the outlook for the Harvey Norman share price?

Brokers are mostly bullish on the Harvey Norman share price.

In the wake of the ASX 200 retailer’s FY22 report, Citi retained its buy rating on Harvey Norman shares with a 12-month price target of $4.70. With shares last closing at $4.12, this implies potential upside of 14%. In Citi’s view, official retail data, industry feedback, and retailer trading updates suggest household spending will be resilient into FY23.

Goldman Sachs also has a buy rating on Harvey Norman shares. Its price target is slightly higher than Citi’s at $4.80, implying potential upside of 17% over the next 12 months. 

Goldman believes that a slowing macroeconomic and housing market is sufficiently factored into consensus expectations. The broker also believes Harvey Norman is more defensive on competition due to its regional, premium boomer exposure and a higher proportion of bulky items, which are not yet shipped by Amazon (NASDAQ: AMZN).

However, Macquarie isn’t as keen on Harvey Norman shares. After digesting the retailer’s recent results, Macquarie retained its neutral rating, remaining cautious about the outlook for consumer spending in 2023.

In terms of dividends, Macquarie is forecasting Harvey Norman to slightly wind back its annual payment in FY23 to 35 cents. Meanwhile, Citi is forecasting a steeper decline to 31 cents. This represents prospective forward dividend yields of 8.5% and 7.5%, respectively.

The post This ASX 200 retail share is going ex-dividend tomorrow appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX dividend shares for the rest of 2022?
• Have ASX 200 retail shares been worth buying so far in FY23?
• Why is ASIC suing these 2 ASX All Ordinaries companies?
• ASX 200 retailer Harvey Norman’s boss calls mooted changes to dividend franking credits ‘totally mad’
• What might the latest retail sales figures mean for ASX 200 consumer shares?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Cathryn Goh 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 Amazon and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended Amazon. 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Medallion Financial managing director Michael Wayne explains the nature of businesses behind the ASX shares he would target right now.

Hottest ASX shares

The Motley Fool: What are the three best stock buys right now?

Michael Wayne: Yeah, it’s obviously a difficult one. The companies that we’re choosing to focus on, if you were desperate to put money in the market at the moment — which we’re not necessarily that keen on doing — but if you’re looking to invest at the moment, I think you want to invest in companies with short duration cash flows or short duration earnings.

By that I mean, the companies that are making money and generating good cash flows in the here and the now. As opposed to some of those long-duration growth names, who have great stories but whose value, a lot of the value embedded, is based on future earnings, three, four, five years out.

And we saw that particularly with the likes of, say, your Zip Co Ltd (ASX: ZIP)s, for example, or your Afterpays to some extent. These companies have wonderful stories, enormous amount of growth but a lot of that growth isn’t set to convert to cash flow earnings for a number of years to come. Those are the businesses, I think, which are being discarded the quickest and dropping the most harshly — so I think you want to avoid those types of companies.

The three good businesses that we like in the long-term standpoint, which have come back a fair way. 

I’ll start with a boring one, if you like, but I think a company like CSL Limited (ASX: CSL), for instance, offers good long-term appeal for a lot of investors. It’s a large company but still delivering double-digit revenue and earnings growth. We expect that to continue to deliver over the years to come, particularly as plasma collections ramp up again in the post-COVID world. Also, rising unemployment in the US could actually be a tailwind for someone like CSL because in the US, when you go and you donate blood, you actually get paid for it. But also, they are a US dollar earner so they generate their revenues and a lot of their earnings in US dollars and you convert that back to an Aussie dollar share price, it’s a tailwind, particularly when you see the Aussie dollar come back as much as it has.

That’s a business that ticks all the boxes when looking at the balance sheet, looking at the revenues, the earnings, the margins, the number of growth opportunities within that business is phenomenal. We’re comfortable in picking that up in the long-term horizon. 

Another business reported very well during earnings season is a company called Altium Limited (ASX: ALU) — it’s a tech business. They actually provide the technology which is used to produce plastic circuit boards. The growth of their new product, Octopart, was very strong and management’s conviction in hitting their FY26 targets has increased significantly because this is a business that has transitioned away from their old fee structure towards a more software-as-a-service, annuity-type fee structure. I think that’ll put the company in good stead going forward as well.

Finally, another interesting tech business, a company called Audinate Group Ltd (ASX: AD8). This is a company which has delivered some very good revenue growth numbers. It’s not profitable just yet but in time, it’s expected that it will turn profitable. They’re looking to target $100 million of earnings by 2025, up from about $46 million in revenue today. That’s a business with a long-term growth path. Effectively, they have a protocol, which is embedded into numerous electronics goods and products around the world. It allows those pieces of equipment to communicate without the need for cords. Just think about outdoor entertainment, sporting events, concerts, that sort of thing. A lot of the technology is used in those places but basically, 80% or 85% of new electronics hitting the market from brands like Toshiba, Bosch for instance, all embed Audinate’s protocol.

I think, in time, they’re going to not only continue to outperform their opposition but I think the adoption rate is about 15 times the nearest competitor — it’s got a significant competitive advantage there. They’re also now looking to diversify away from a pure reliance on the audio-digital space to the visual-digital space and that also will open up an untapped market for them.

MF: I’m an Audinate shareholder myself and, I tell you what, it was in some strife back in May but it’s recovered really well since, hasn’t it?

MW: Yeah, they were caught with a bit of a negative update towards the beginning of the year. They’re one of these businesses who have an enormous order book, so there’s enormous demand in place but they were struggling to meet that demand. They were struggling to get supply of certain chips that they required and they were one of the many victims globally that suffered from the freezing up of the microchip market and the delays in shipping, et cetera. 

But a lot of that has now been worked through and the company is starting to really ramp it up and be able to overcome some of those hurdles they were facing earlier in the year.

Fingers crossed it can recover back towards that $10 mark, where it got to briefly a few months ago. I think it’s a good long-term play [with] almost an unregulated monopoly in its space.

The post If you must buy now, here are the 3 ASX shares to grab: expert appeared first on The Motley Fool Australia.

More reading

• CSL share price lower despite FY23 guidance update
• Share market sell-off: 3 top ASX shares to buy now
• The CSL share price had a strong first quarter. What’s next?
• Why dividends matter
• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’

Motley Fool contributor Tony Yoo has positions in AUDINATEGL FPO and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended AUDINATEGL FPO, Altium, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. 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 to carve out a modest gain. The benchmark index rose 2.5 points to 6,647.5 points.

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

ASX 200 expected to edge lower

The Australian share market looks set to edge lower on Thursday after a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.2% lower this morning. In late trade in the United States, the Dow Jones is up 0.2%, the S&P 500 is down 0.1%, and the NASDAQ has risen 0.2%.

Bank of Queensland remains neutral rated

The Bank of Queensland Ltd (ASX: BOQ) share price will be one to watch today after yesterday’s heroics. According to a note out of Goldman Sachs, its analysts have responded to its results by retaining their neutral rating with an $8.51 price target. Goldman said: “Despite valuation support, we believe its NIM leverage will ultimately underperform peers and its expenses will remain under pressure.”

Oil prices fall

Energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a tough day after oil prices dropped again on Wednesday night. According to Bloomberg, the WTI crude oil price is down 2.35% to US$87.25 a barrel and the Brent crude oil price is down 1.8% to US$92.57 a barrel. Global recession fears have been weighing on prices this week.

Lake Resources rated as a buy

The Lake Resources N.L. (ASX: LKE) share price has the potential to more than double in value according to analysts at Bell Potter. This morning the broker has retained its speculative buy rating with a slightly trimmed price target of $2.52. Bell Potter notes that the lithium developer has now signed two conditional offtake and equity agreements for a total of 50ktpa and 20%, respectively.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a difficult day after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.35% to US$1,680 an ounce. Traders were selling down the precious metal ahead of the release of key US inflation data.

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

More reading

• Here are the top 10 ASX 200 shares today
• Looking to buy Bendigo Bank shares? Here’s how the bank compares with peers on one key metric
• Why Baby Bunting, Block, Fortescue, and Santos shares are dropping
• Why investors were looking on the bright side for ASX 200 bank shares today
• Bank of Queensland, BrainChip, Coronado Global, and Lake Resources shares are rising

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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Are you looking to add some growth shares to your portfolio in October?

If you are, then the three ASX growth shares listed below could be worth considering. Here’s why analysts rate them as buys:

Allkem Ltd (ASX: AKE)

The first ASX growth share that has been tipped as a buy is Allkem. It is a leading lithium miner with projects in Argentina, Australia, and North America. The company is already producing large quantities of lithium, but won’t stop there. It is now aiming to grow its production in a manner that allows it to maintain a 10% share of global lithium supply over the long term.

Macquarie is bullish on Allkem due to the strong lithium pricing outlook. As a result, it has put an outperform rating and $21.00 price target on its shares.

NextDC Ltd (ASX: NXT)

Another ASX growth share that has been named as a buy is NextDC. It is one of the ANZ region’s leading data centre operators with a portfolio of world class centres across key locations throughout Australia. But like Allkem, NextDC isn’t resting on its laurels. It is now looking to expand into regional locations and overseas in Asia. This appears to put NextDC is a strong position to benefit from the ongoing structural shift to the cloud.

Goldman Sachs believes NextDC is well-placed for long term growth and has put a buy rating and $14.20 price target on its shares.

Treasury Wine Estates Ltd (ASX: TWE)

A final ASX growth share that has been tipped as a buy is Treasury Wine. It is the wine giant behind popular brands such as Penfolds, 19 Crimes, and Wolf Blass. The company was a very strong performer in FY 2022 thanks to its growing US business and the success of its premiumisation strategy.

Pleasingly, Morgans is bullish on Treasury Wine’s outlook and is forecasting “strong earnings growth” over the next few years. In light of this, it has put an add rating and $13.93 price target on its shares.

The post Analysts say these ASX growth shares are buys appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why is the Core Lithium share price in the green today?
• Can ASX lithium shares charge higher over the rest of 2022?
• Which has more upside, Allkem or Pilbara Minerals shares?
• 3 excellent ASX growth shares analysts rate as buys

Motley Fool contributor James Mickleboro has positions in Allkem Limited and NEXTDC Limited. 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 Treasury Wine Estates Limited. 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) posted its first gain of the week today. The index lifted 0.04% to close at 6,647.5 points.

It followed a mixed session on Wall Street that saw the Dow Jones Industrial Average Index (DJX: .DJI) gain 01%, the S&P 500 Index (SP: .INX) fall 0.6%, and the Nasdaq Composite Index (NASDAQ: .IXIC) dump 1.1%.

The S&P/ASX 200 Financials Index (ASX: XFJ) led the way on Wednesday, gaining 1.9%.

Its strong performance came as Bank of Queensland Ltd (ASX: BOQ) posted its full year earnings and Commonwealth Bank of Australia (ASX: CBA) hosted its annual general meeting.

Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) fell 1.5% amid lower oil prices.

Both the Brent crude oil price and the US Nymex crude oil price fell slipped 2% overnight to trade at US$94.29 a barrel and US$89.35 a barrel respectively.

Miners and tech shares also had a rough day, with the S&P/ASX 200 Materials Index (ASX: XMJ) and the S&P/ASX 200 Information Technology Index (ASX: XJI) both slipping 0.9%.

All in all, two of the ASX 200’s 11 sectors closed in the green. But which share outperformed all others? Keep reading to find out.

Top 10 ASX 200 shares countdown

Today’s top performing ASX 200 share was none other than Bank of Queensland. The stock gained 11% on news the bank’s after tax profits lifted 15% year on year in financial year 2022.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Bank of Queensland Ltd (ASX: BOQ)	$7.59	11.13%
Coronado Global Resources Ltd (ASX: CRN)	$2.09	8.01%
Westpac Banking Corp (ASX: WBC)	$22.41	3.75%
BrainChip Holdings Ltd (ASX: BRN)	$0.875	3.55%
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	$24.75	3.34%
Perpetual Limited (ASX: PPT)	$23.94	3.23%
Lifestyle Communities Limited (ASX: LIC)	$16.09	3.21%
HomeCo Daily Needs REIT (ASX: HDN)	$1.19	3.03%
Whitehaven Coal Ltd (ASX: WHC)	$10.68	2.99%
Challenger Ltd (ASX: CGF)	$6.24	2.97%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Looking to buy Bendigo Bank shares? Here’s how the bank compares with peers on one key metric
• Why investors were looking on the bright side for ASX 200 bank shares today
• Bank of Queensland, BrainChip, Coronado Global, and Lake Resources shares are rising
• Is this why a certain ASX 200 director keeps buying up big on their company’s shares?
• What’s the outlook for ASX 200 bank shares in Q2?

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 recommended Challenger Limited and Westpac Banking 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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ASX 200 bank shares received some good support from ASX investors on Wednesday.

The Westpac Banking Corp (ASX: WBC) share price rose by 3.75% to finish at $22.41.

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price went up 3.34% to $24.75.

The Commonwealth Bank of Australia (ASX: CBA) share price rose by 2.44% to close at $96.29.

National Australia Bank Ltd (ASX: NAB) shares went up 1.32% to $29.88.

By comparison, the S&P/ASX 200 Index (ASX: XJO) closed just 0.04% higher at 6,647.5 points.

Why did ASX 200 bank shares do well today?

The first factor is a flow-on effect after Bank of Queensland Ltd (ASX: BOQ) shares rose by an astonishing 11.3%.

That happened because the bank released its full-year results today. And, boy, were shareholders happy.

They appeared unperturbed about the 5% decline in cash earnings for the 12 months ending 31 August.

The key detail that likely excited them was a better-than-expected net interest margin (NIM) at the end of FY22.

Top broker Goldman Sachs stated:

The highlight of the result was that BOQ’s 4Q22 NIM came in at 1.81%, well ahead of the 1.75% 2H22 average, and also our FY23E forecast of 1.78% and Visible Alpha Consensus Data forecast of 1.75%.

This is good news for all banking stocks because investors have been worrying about NIMs all year.

The NIM is the amount of money ASX 200 banks earn from the interest paid by loan holders less the interest paid by the banks to savings deposit holders.

Rising interest rates are great for banks because they can charge more interest on existing and new loans. But they can also lead to reduced new mortgage lending and increased bad debts.

So, investors have been wondering what the NIMS of the big ASX 200 bank shares are going to look like when a bunch of the big lenders report their full-year results in the next month or so.

After seeing the Bank of Queensland’s NIM and its share price response today, they’re likely assuming other ASX 200 bank shares are poised to rise when those banks report their results.

Three of the big four will report shortly. ANZ on 27 October, Westpac on 7 November, and NAB on 9 November.

Adding to the momentum for ASX 200 bank shares today, CBA held its annual general meeting.

CBA CEO Matt Comyn spoke positively about the outlook:

Overall, we remain fundamentally optimistic about the medium to long term opportunities for Australia, as well as our capacity to provide support in the immediate future for customers who need us.

What do the experts think of the banks?

As we reported recently, head of Australian equities at Tyndall Asset Management Brad Potter expects the banks’ net interest margins (NIMs) to “continue to increase strongly over the next six to 12 months”, which will lead to “decent earnings growth”.

The wholesale Tyndall Australian share fund holds all four ASX 200 bank shares. It is overweight in Westpac and ANZ shares and underweight in CBA shares.

The post Why investors were looking on the bright side for ASX 200 bank shares today appeared first on The Motley Fool Australia.

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More reading

• Looking to buy Bendigo Bank shares? Here’s how the bank compares with peers on one key metric
• Bank of Queensland, BrainChip, Coronado Global, and Lake Resources shares are rising
• Is this why a certain ASX 200 director keeps buying up big on their company’s shares?
• What’s the outlook for ASX 200 bank shares in Q2?
• Guess which ASX 200 coal share is leaping higher on a possible takeover

Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Westpac Banking 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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There are many different ways to judge Bendigo and Adelaide Bank Ltd (ASX: BEN) shares. One is to look at its profitability compared to an ASX bank share peer like Bank of Queensland Ltd (ASX: BOQ).

For readers who didn’t notice, BOQ just released its 2022 financial year result today for the 12 months to 31 August 2022.

I’m not saying to compare the banks’ market capitalisations or dividend yields. But I think it could be interesting to look at their net interest margins (NIMs).

What is a NIM?

A NIM could be the most important profitability metric for banks. Why? Because it measures the lending profitability of a bank. It tells investors what profit margin a bank is making on its loans.

There are two parts to how much of a net interest margin a bank achieves. This can have a major influence on both Bendigo Bank shares and BOQ shares.

The first part is the overall rate the bank is lending money at. For example, it could have lent $100,000 at an interest rate of 4%.

The other side of the equation is how much it is costing the bank to fund that loan. For example, it could be using $100,000 from a savings account and paying the saver an interest rate of 2%.

Readers may be able to quickly tell that the bank’s NIM for this is 2% — that’s the 4% lending rate, compared to the 2% rate on the savings account.

Banks need to attract savers, or pay for other sources of income, so that they can then lend out that money. If it doesn’t pay a good rate, then it won’t attract a lot of money.

Banks also need to offer an attractive interest rate so that they are competitive with their peers and can win over potential borrowers.

In recent times, competition has been pulling down on bank NIMs.

How do Bendigo Bank shares compare to BOQ shares?

A NIM doesn’t ultimately define which bank is better. But, I think it can show the competitive strength of a bank.

Let’s look at the NIMs reported in the FY22 results from both regional banks.

For the 12 months to 30 June 2022, Bendigo Bank reported that its NIM was 1.74% (down 21 basis points). I think it’s important to recognise that this result barely includes any effect of the Reserve Bank of Australia (RBA) raising interest rates.

Meanwhile, the result BOQ just released had a year-end date of the end of August, so it had a little more time for the RBA rate effect to flow through. Even so, BOQ’s full-year NIM was 1.74%, down 12 basis points for the financial year

When looking at the two, we can see that their NIMs were identical. It’s possible that if Bendigo Bank shares had the same year-end date as BOQ that its NIM may have been slightly higher.

It will be interesting to see what happens next with NIMs.

The market is expecting bank NIMs are going to rise because the RBA has been increasing the official interest rate. This is enabling banks to hike borrower rates quickly but take things a bit slower for savers.

I’m not sure which of these two ASX bank shares will see a stronger rise in their NIM in FY23. But, BOQ said today it has good momentum going into the new financial year and all three of its divisions are seeing lending growth.

The post Looking to buy Bendigo Bank shares? Here’s how the bank compares with peers on one key metric appeared first on The Motley Fool Australia.

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More reading

• Bank of Queensland, BrainChip, Coronado Global, and Lake Resources shares are rising
• What’s the outlook for ASX 200 bank shares in Q2?
• Bank of Queensland share price leaps 8% higher on results and NIM outlook
• Everything you need to know about the upsized Bank of Queensland dividend
• Bank of Queensland share price on watch following FY22 results

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 positions in and has recommended Bendigo and Adelaide Bank Limited. 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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Generally, an individual’s risk appetite will fall with age. This is because someone in their 20s or 30s has a lot more time to recoup their losses compared to someone in their 60s who is nearing retirement and will soon be reliant on their nest egg to fund their future lifestyle.

In light of this, if you’re building a retirement portfolio, it could be worth selecting shares that are consistent with your risk profile and investing goals.

With that in mind, listed below are a couple of ASX 200 shares that Morgans rates as buys and could be suitable for a well-balanced retirement portfolio:

Coles Group Ltd (ASX: COL)

The first ASX 200 share that could be a top option for a retirement portfolio is Coles.

It is of course one of Australia’s big two supermarket operators. In addition, Coles has a sprawling network of liquor stores.

Coles could be worth considering due to its solid growth prospects thanks to its refreshed strategy, its generous dividend policy, and its defensive qualities. Another positive is the company’s focus on automation which will cut costs and support its online business.

Morgans is positive on the company in the current environment. It commented:

[W]e continue to see COL as offering good value with the company possessing defensive characteristics that should hold up relatively well in a weaker economic environment.

The broker currently has an add rating and $20.00 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

Another top ASX 200 option for a retirement portfolio could be Telstra.

Telstra also has defensive qualities, shares a good portion of its profits with shareholders, and has solid growth prospects. The latter is being driven by the telco giant’s T25 strategy, which has just replaced the successful and transformational T22 strategy.

The team at Morgans is very positive on the company and believes this new strategy will unlock value for investors. It commented:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote on Telstra’s legal restructure, which opens the door for value to be released. TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders.

Morgans has an add rating and $4.60 price target on its shares.

The post 2 excellent ASX 200 shares to buy for a retirement portfolio: broker appeared first on The Motley Fool Australia.

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More reading

• Telstra share price higher on AGM update
• What’s the outlook for ASX dividend shares for the rest of 2022?
• Buy this ASX 200 share in the aftermath of Optus hack: expert
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Telstra Corporation Limited. 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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