Stock Pick

Category: Stock Market

  • Why are these 2 ASX cannabis shares booming all of a sudden?

    a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.

    a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.

    You’re likely not hearing about ASX cannabis shares as much as you used to.

    It wasn’t all too long ago that most companies involved in the cultivation and sale of medicinal or recreational marijuana were booming. But as the pace of newly opening legal markets slowed, so too did investor enthusiasm for the sector.

    So why are these two ASX cannabis shares booming all of a sudden?

    Why are these ASX cannabis shares rocketing?

    The All Ordinaries Index (ASX: XAO) is down 0.7% in late morning trade, following a retrace in US markets overnight.

    But the Cann Group Ltd (ASX: CAN) share price is heading decidedly in the other direction, up 7.7%.

    And fellow ASX cannabis share Little Green Pharma Ltd (ASX: LGP) is also up 7.7%.

    The big gains come following some positive announcements from both companies earlier this week.

    First, here’s what Cann Group reported late afternoon on Tuesday.

    Cann Group’s license extended

    Investors have been bidding up the ASX cannabis share after the company announced its GMP manufacturing licence for its Mildura facility was extended to cover additional manufacturing capabilities.

    The Therapeutic Goods Administration (TGA) issued the initial license on 30 June.

    Under the extension, Cann Group is now allowed to manufacture and release finished dried flower products from its Mildura facility for patient use.

    Commenting on the development, Cann Group’s CEO, Peter Crock, said:

    This licence extension allows Cann to now manufacture patient-ready dried flower products at our Mildura facility, allowing us to quickly respond to market demands.

    The Cann Group share price is up 9.6% since the announcement.

    Little Green Pharma’s new supply agreement

    Also on Tuesday, ASX cannabis share Little Green Pharma reported on a new agreement inked by its wholly owned subsidiary, Little Green Pharma Denmark ApS.

    The agreement will see Little Green Pharma supply German medicinal cannabis distributor Cannamedical Pharma GmbH with a high-THC strain product. The deal for the delivery of bulk medicinal cannabis from Denmark to Germany has a potential value of $4.5 million over two years.

    This represents Little Green Pharma’s fourth contract to supply medicinal cannabis to Germany.

    The ASX cannabis share has gained 19.2% since the announcement.

    The post Why are these 2 ASX cannabis shares booming all of a sudden? 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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  • Why is the Woodside share price in the green today?

    An investor looks happy holding a finger to his computer screen while holding a coffee cup in a home office scenario.An investor looks happy holding a finger to his computer screen while holding a coffee cup in a home office scenario.

    The Woodside Energy Group Ltd (ASX: WDS) share price is outperforming the ASX 200 today.

    Woodside shares are rising 0.35% and are currently trading at $34.87. That means the energy producer is up around 8% this week. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.57% in the red today.

    Let’s take a look at how the Woodside share price is performing today.

    Oil price tipped to rise

    Woodside is not the only energy producer rising today. The Santos Ltd (ASX: STO) share price is lifting 2.06%, while Beach Energy Ltd (ASX: BPT) shares are up 1.57%.

    The Brent Crude oil price is up 0.08% to US$94.50 a barrel, while WTI Crude Oil is lifting 0.19% to US$88.62, according to Bloomberg.

    Meanwhile, ANZ analysts are predicting OPEC’s decision to cut oil production as a “turning point” for the oil market. As my Foolish colleague James reported yesterday, OPEC+ has decided to cut production by 2 million barrels per day from November.

    In a research report published today, ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said:

    We see crude oil pushing back towards US$100/bbl in the near term, and reiterate our short-term target of US$115/bbl.

    Market sentiment was already bearish in anticipation of a weakening global economy, and this decision should further tighten the market.

    The strategists noted tightening monetary policy and “China’s COVID-related movement restrictions” could put demand growth under pressure. However, they added:

    The oil market is in a fundamentally stronger position than it has been in previous economic downturns.

    Stocks are relatively low, in part due to OPEC’s supply discipline during the height of the pandemic.

    Woodside paid a fully franked dividend of 109 US cents per share to investors yesterday, 263% higher than that paid in the first half of 2021. In the first half of 2022, Woodside’s net profit after tax (NPAT) soared 414% to US$1.819 billion.

    Woodside share price snapshot

    The Woodside share price has surged 59% in the year to date, while it has risen 39% in the last year.

    In contrast, the ASX 200 has lost 9% in the year to date and 7% in the past year.

    Woodside has a market capitalisation of about $60.7 billion based on the current share price.

    The post Why is the Woodside share price in the green today? appeared first on The Motley Fool Australia.

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

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  • The Sayona Mining share price crashed 20% in September, but now…

    Five workers look shocked around computer screen with mouths openFive workers look shocked around computer screen with mouths open

    The Sayona Mining Ltd (ASX: SYA) share price sunk in September, but has October been a better month?

    Sayona shares fell 20% between market close on 31 August and 30 September. For perspective, the S&P/ASX 200 Index (ASX: XJO) lost 7% in the same timeframe.

    Let’s take a look at what’s happening with the Sayona share price.

    What’s going on?

    Sayona is a lithium explorer developing projects in Quebec, Canada and Western Australia.

    The Sayona share price has climbed 2.1% since market close on 30 September, despite it being down 2% today at the time of writing.

    The Piedmont Lithium Inc (ASX: PLL) share price has climbed 1.8% in the same time frame, while Core Lithium Ltd (ASX: CXO) has lifted 3.8%.

    Sayona shares soared 13% on 4 October on the back of positive lithium production news and a strong night of trade on Wall street.

    The company advised it had launched a pre-feasibility study to produce lithium carbonate at the North American Lithium (NAL) project. Sayona has a 75% stake in this venture, while Piedmont Lithium holds 25%.

    Sayona managing director Brett Lynch said:

    We look forward to examining the results of the PFS, as we work towards becoming a leading integrated producer and the largest in North America, amid accelerating demand from the battery and electric vehicle sector.

    However, the following day, Sayona shares slid 8% amid lithium industry weakness and potential profit-taking from investors.

    This was despite news about the company’s Moblan Lithium Project in Quebec, Canada. Sayona advised it had launched a pre-feasibility for this project, due for completion by May next year. Lynch said: “Sayona has worked rapidly to develop this project with an extensive drilling program.”

    Looking ahead, the Federal Industry Department recently predicted Australia’s lithium export earnings will lift by more than tenfold to $13.8 billion in the 2023 financial year. These earnings are then predicted to ease slightly in the 2024 financial year to $12.9 billion.

    Sayona Mining joined the ASX 200 officially on 19 September.

    Sayona Mining share price snapshot

    The Sayona Mining share price has soared 60% in the past year, while it has surged 85% year to date.

    For perspective, the ASX 200 has lost 7% in the past year.

    Sayona has a market capitalisation of about $2 billion based on the current share price.

    The post The Sayona Mining share price crashed 20% in September, but now… appeared first on The Motley Fool Australia.

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

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  • Here’s why the Talga share price is sinking 15% today

    A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.

    A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.The Talga Group Ltd (ASX: TLG) share price is on course to end the week deep in the red.

    In morning trade, the battery materials company’s shares are down 15% to $1.13.

    Why is the Talga share price sinking?

    Investors have been selling down the Talga share price on Friday after the company completed an institutional placement.

    According to the release, the company has received firm commitments for a $22 million placement of new fully paid ordinary Talga shares at a price of $1.10 per share. This represents a 17% discount to the Talga share price prior to its trading halt.

    Once completed, Talga’s pro forma cash position before costs at 30 September 2022 will be $27 million.

    Why is Talga raising funds?

    Proceeds from the placement will be used for a number of items.

    This includes funding Talga’s advancement of the Vittangi Anode Project, expanded operation of the Electric Vehicle Anode qualification plant, Niska expansion workstreams and resource drilling, next generation anode development (including Talnode-Si commercialisation), and for general working capital.

    Talga will now seek to raise a further $10 million from retail investors via a share purchase plan. This will be undertaken at the same price as the placement.

    Following today’s decline, the Talga share price has now lost a third of its value since the start of the year.

    The post Here’s why the Talga share price is sinking 15% today 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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  • The Qantas share price has just capped off a stellar first quarter. What’s next?

    A woman sits crossed legged on seats at an airport holding her ticket and smiling.A woman sits crossed legged on seats at an airport holding her ticket and smiling.

    The Qantas Airways Limited (ASX: QAN) share price staged a remarkable recovery in the quarter just gone by.

    From the closing bell on 30 June through to the end of trade on 30 September, shares in the flying kangaroo soared 12.3%.

    That’s particularly impressive given the S&P/ASX 200 Index (ASX: XJO) fell 1.4% over the quarter.

    The Qantas share price is up 5.4% so far in October, and is currently trading at $5.29.

    So, what can ASX 200 investors expect next from the airline?

    Tackling rising costs

    If you think filling up the family car is costing you a bundle these days, take a gander at what Qantas is shelling out for jet fuel.

    As The Motley Fool reported recently, the airline is forecasting a $5 billion fuel bill for FY23. That’s up 60% from FY19.

    But that won’t necessarily have a negative impact on the Qantas share price.

    The company is tackling rising fuel and other costs via a number of initiatives. That includes reducing its number of flights, with domestic capacity recently cut by another 10%. That means fuller flights, which may not be the best news for passengers. But it should enable Qantas to recoup the cost of higher jet fuel costs.

    While international capacity is likely to remain significantly below pre-pandemic levels over the coming year, domestic capacity is forecast to reach 95% of pre-pandemic levels in the current half and 106% of those levels in the second half of FY23.

    A premium on the Qantas share price ‘is warranted‘

    Tony Paterno, senior investment adviser at Ord Minnett, has a bullish outlook for the Qantas share price.

    According to Paterno (courtesy of The Bull), “Our positive view of QAN is supported by a favourable Australian industry structure that should lead to market share gains.”

    Paterno added:

    Given its superior domestic market structure and share, a restructured and more variable cost base, a strong balance sheet and potential upside from the loyalty program, we believe a premium for Qantas is warranted.

    Indeed, the loyalty program has the potential to help support the Qantas share price.

    The airline forecasts FY23 underlying earnings before interest and tax (EBIT) from its loyalty division will lift to between $425 million and $450 million.

    The post The Qantas share price has just capped off a stellar first quarter. What’s next? 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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  • A calmer day on the ASX and good news for savers. Scott Phillips on Nine’s Late News

    Scott Phillips on Nine's Late News, 9 September 2022Scott Phillips on Nine's Late News, 9 September 2022

    Motley Fool Australia Chief Investment Officer Scott Phillips joined Tracy Vo for Nine’s Late News on Thursday night to discuss a calmer day for the ASX, a smaller, but welcome, trade balance, what savers should be looking out for, and what to expect from the US market. 

    [youtube https://www.youtube.com/watch?v=xerfApf2CP0?feature=oembed&w=500&h=281]

    The post A calmer day on the ASX and good news for savers. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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    Motley Fool contributor Scott Phillips 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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  • If you’d bought $2,000 of NAB shares at the end of FY22, here’s how much you’d have now

    a young boy dressed in a business suit and wearing thick black glasses peers straight ahead while sitting at a heavy wooden desk with an old-fashioned calculator and adding machine while holding a pen over a large ledger book.a young boy dressed in a business suit and wearing thick black glasses peers straight ahead while sitting at a heavy wooden desk with an old-fashioned calculator and adding machine while holding a pen over a large ledger book.

    The National Australia Bank Ltd (ASX: NAB) share price posted a decent performance in the first quarter of financial year 2023.

    Indeed, investors who bought into the S&P/ASX 200 Index (ASX: XJO) big four bank at the end of June would be better off for it.  

    The NAB share price outperformed the market over the three months ended 30 September, closing last month at $28.81.

    Meanwhile, the ASX 200 slumped 1.43% and the S&P/ASX 200 Financials Index (ASX: XFJ) lifted 0.66%.

    So, if one were to have snapped up $2,000 worth of NAB shares at the end of financial year 2022, how much would their investment be worth now? Keep reading to find out.

    NAB shares gained 5.2% in the September quarter

    If you bought NAB shares at the end of financial year 2022, pat yourself on the back.

    A $2,000 investment at the end of June likely would have seen an investor with 73 NAB shares valued at $27.39 each.

    Such a parcel would have been worth $2,103 at the end of September, marking a 5.15% return on investment.

    And while I would love to also factor dividends into the equation, I unfortunately cannot.

    The bank hasn’t declared a payout since its 73-cent interim dividend, for which the stock traded ex-dividend in May.

    Though, patient investors will likely be rewarded with a dividend offering when the company releases its full-year earnings in November.

    Interestingly, NAB shares gained 5% in the September quarter without the bank releasing all that much news.

    The only price-sensitive announcement from the bank over the period was its third-quarter trading update.

    That saw it posting an unaudited statutory net profit of $1.85 billion and a $1.8 billion quarterly cash profit.

    Right now, the NAB share price is 2% higher than it was at the start of 2022. It has also lifted 7% since this time last year.

    For comparison, the ASX 200 has slumped almost 11% year to date and 6% over the last 12 months.

    The post If you’d bought $2,000 of NAB shares at the end of FY22, here’s how much you’d have now 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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  • Why Warren Buffett thinks it’s a mistake to dump your stocks in a bear market

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

    Model bear in front of falling line graph, cheap stocks, cheap ASX shares

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

    The S&P 500 is down 24% this year, and the stock market hasn’t been a great place to be holding your money of late. Investors have been dumping stocks left and right, with many quality companies seeing their valuations plummet as interest rate increases and rising inflation have made people second-guess their investments.

    But before you follow suit and decide to dump all of your stocks and hold cash or pivot to bonds, you should consider Warren Buffett’s advice, and why getting out of the stock market right now could be a costly mistake.

    Buffett believes it’s always favorable to remain invested

    Warren Buffett isn’t a fan of economic projections, or what he refers to as “dancing” in and out of stocks based solely on economic outlooks. And in a Berkshire Hathaway shareholder meeting in 2015, he said that “we think any company that has an economist has one employee too many.”

    Buffett is an investor who has remained invested for decades, all the while experiencing the effects of inflation, recessions, wars, and no shortage of crashes along the way. He believes that “the risks of being out of the game are huge compared to the risks of being in it.” And the game he’s referring to — investing — is favorable in the long run. Another popular investor, Peter Lynch, agrees with that notion, saying that “people who exit the stock market to avoid a decline are odds-on favorites to miss the next rally.”

    Given that the stock market has always recovered from every decline, history should serve as an important reminder to investors that there’s always light at the end of the tunnel. 

    Investors should focus on fundamentals rather than forecasts

    The key takeaway for investors is to invest in businesses that will do well in the long run, and to not worry about economic projections or what the experts think will happen. There are too many variables to factor in regarding where the economy may go, and the simpler option is to focus on a business itself.

    One example of a company that could make for a great long-term investment is drugmaker AbbVie (NYSE: ABBV), which has solid financials and a path to more growth. Revenue of $56.2 billion last year was 72% higher than the $32.8 billion the company generated in 2018. Profits during that time doubled to $11.5 billion. And over the trailing 12 months, the company has generated free cash flow of more than $22 billion.

    AbbVie’s acquisition of Botox-maker Allergan a few years ago has diversified its business; Botox cosmetic sales rose 19% in its most recent quarter (ended June 30). Its high-growth products Skyrizi and Rinvoq both generated sales growth in excess of 50% during the quarter and should make up for declines in revenue from top-selling drug Humira, which begins losing exclusivity as early as next year.

    Combined with its high-yielding dividend that pays 4.2%, AbbVie is the type of stock that you might expect to perform well in the long run, regardless of the economic situation. Its financials are strong, and the business is well-diversified.

    Another stock with strong fundamentals to consider is Adobe (NASDAQ: ADBE). The tech company sells popular software products, including photo-editing program Adobe Photoshop, on a recurring subscription basis. Its products are top of the line and essential to many professionals involved in web design and photography.

    However, the stock recently nosedived after announcing lacklustre earnings numbers where sales rose by 13% to $4.4 billion. That’s modest growth for a company that earlier this year commanded a hefty price-to-earnings multiple of more than 50 (now it’s down to less than 30). Last month, it also announced a seemingly expensive $20 billion acquisition of Figma, a company that focuses on creating web applications for collaborating on web design projects.

    With Adobe’s stock now near 52-week lows, it could present an attractive buying opportunity for investors. The company may have carved out a new growth avenue for its business, focusing more on collaboration — while also becoming a cheaper investment. Adobe has generated more than $7 billion in free cash flow over the trailing 12 months, and it is in a solid position to pursue more opportunities as they come up. In the long run, this can be another great stock to buy and hold.

    Buying and holding could pay off, now more than ever

    AbbVie and Adobe are just two examples of promising growth stocks to own for the long haul, but there are many other options out there that investors can load up on today. While there could still be declines in the months ahead for stocks, there’s also the possibility of an eventual rally that could make holding on to your investments a great decision.

    As long as you don’t need to take the money out, keeping it invested in stocks with strong fundamentals could be a move you thank yourself for later on.   

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

    The post Why Warren Buffett thinks it’s a mistake to dump your stocks in a bear market appeared first on The Motley Fool Australia.

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    David Jagielski 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 Adobe Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe Inc. and short January 2024 $430 calls on Adobe Inc. The Motley Fool Australia has recommended Adobe Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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  • The CSL share price had a strong first quarter. What’s next?

    A CSL scientist looking through a telescope in a labA CSL scientist looking through a telescope in a lab

    The CSL Limited (ASX: CSL) share price managed to regain strength and claw back some losses during the first quarter of FY 2023. It gained almost 6% from the close on June 30 to $285.02 at the end of September.

    The share continues in a long-term uptrend after bottoming on 15 February at $243 apiece. At the time of writing on Friday morning, it is at $291.06.

    Stepping back, CSL has traded in a sideways channel since peaking in February 2020, while the All Ordinaries Index (ASX: XAO) has been cyclical, as seen below.

    It is also up by just 1% in the past 12 months.

    TradingView Chart

    What’s next for CSL?

    Investors continue to rally the CSL share price from its February 2022 bottom despite a few blips along the way.

    As such, analysts continue to see value in the share on a forward-looking basis. According to Refinitiv Eikon data, 13 out of 16 analysts rate the biotech giant as a buy right now, with the other three saying to hold.

    The consensus price target from this list is $318.93, suggesting a return potential of almost 10% at the time of writing.

    CSL is also forecast to trade on a dividend yield of 1.4% for the next 12 months, slightly behind the GICS Industry Health Care Industry median forward yield of 2.02%.

    In addition, CSL trades at 40.7 times price-to-earnings (P/E) ratio, in line with the peer median’s P/E of 39 times.

    However, it’s trading at a discount compared to fellow industry ASX healthcare heavyweights Cochlear Limited (ASX: COH) and Ramsay Health Care Limited (ASX: RHC). They are priced at 46 times P/E and 51 times P/E, respectively.

    The share is also priced at 6.6 times the price-to-book (P/B) value – above the industry median of 2.8 times — and delivered a return on equity (ROE) of 19.65% in FY 2022. However, at the lofty 6.6 times P/B multiple, the ROE to investors is 2.97%.

    Point is, from what the market data suggests, it appears to be the status quo for CSL at the time being.

    This corroborates what we’re seeing on the CSL share price chart as well, with price action remaining relatively neutral of late.

    For instance, CSL is valued in line with the industry across several multiples, and trades at a premium to others.

    What does this mean for the CSL share price?

    Analyst price targets are bullish but with the consensus estimate of just 10% of upside potential, while the forward dividend yield is below the industry average.

    Furthermore, equity markets are currently experiencing a large drawdown from the highs of 2021, and there’s no telling when the market rout will end.

    With these points in mind, the biotech giant has some work to do before investors rapidly change their minds about the CSL share price.

    The post The CSL share price had a strong first quarter. What’s next? appeared first on The Motley Fool Australia.

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

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  • October could be a big month for the Telstra share price

    A group of people of all ages, size and colour line up against a brick wall using their devices.

    A group of people of all ages, size and colour line up against a brick wall using their devices.The Telstra Corporation Ltd (ASX: TLS) share price was a relatively decent performer in September.

    Although the telco giant’s shares fell 3% during the month, this was notably better than the ASX 200 index and its 7% decline.

    What lies ahead for the Telstra share price in October?

    It looks set to be a very eventful month for the Telstra share price in October.

    That’s because next week Australia’s largest telco will be inviting shareholders to vote on the proposed corporate restructure at a scheme meeting on the same day as its annual general meeting.

    It is also worth noting that a trading update is likely to be provided to investors the same day. The market will no doubt be keen to see if Telstra is still performing in line with its FY 2023 guidance.

    What is the corporate restructure?

    Telstra’s corporate restructure is a key component of its T25 strategy.

    The company notes that it is an important next step in Telstra’s drive to increase focus on its customer and infrastructure businesses, increase transparency of the assets in these businesses, and create greater flexibility and optionality to realise value from its fixed infrastructure assets over time.

    If shareholders approve the restructure, it will see the establishment of Telstra Group Limited as the head entity of the Telstra group.

    After which, the aim is to eventually have InfraCo Fixed (physical network infrastructure assets), InfraCo Towers (physical mobile tower assets), ServeCo (customer service and products), and Telstra international below it.

    From there, Telstra has a number of options. This includes selling some of its assets or demerging them into separate ASX listings. The latter is being seen as the likely option for the InfraCo Fixed business.

    Are Telstra’s shares a buy this month?

    The team at Morgans is positive on the Telstra share price ahead of the scheme meeting.

    In fact, the broker believes that this meeting could be the key to unlocking value for shareholders. 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. This, free option, combined with likely reputational damage to its closest peer, following a major cybersecurity incident, means TLS looks well placed for the year ahead.

    Morgans has an add rating and $4.60 price target on the company’s shares.

    The post October could be a big month for the Telstra share price 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 positions in and has recommended 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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