Category: Stock Market

The Woodside dividend is being paid to shareholders today. Here’s the lowdown
The Woodside Energy Group Ltd (ASX: WDS) dividend is due to hit bank accounts today.

Woodside shares have fallen more than 3% since market close on 5 September to $33.87. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) has shed 2.09% in the same time frame.

Let’s take a look at the details of the Woodside dividend.

Woodside dividend to be paid today

Woodside investors are due to receive a fully franked dividend of US109 cents today. This will equate to $1.59953041 in Australian dollars, based on the exchange rate of US68.145 cents, as advised on 14 September.

Today’s interim dividend is 263% higher than the dividend paid in the first half of calendar year 2021.

The dividend includes 76 cents per share reflecting 80% of Woodside’s underlying net profit after tax (NPAT), and 33 cents per share from the merger with the petroleum business of BHP Group Ltd (ASX: BHP).

Woodside’s underlying NPAT exploded 414% to US$1.819 billion in the first half of 2022.

Woodside’s 2022 interim dividend is the largest delivered to shareholders since 2014. Commenting on the dividend in a briefing to investors on 30 August, CEO Meg O’Neill said:

It is pleasing to be able to maintain Woodside’s traditionally high dividend yield, particularly given the number of shares on issue was almost doubled on completion of the merger three months ago.

In 2020, Woodside’s interim dividend was US26 cents per share, 76% less than the 2022 interim dividend.

Back in 2018, the company delivered an interim dividend of US53 cents per share, while the 2019 interim dividend was US36 cents per share.

Woodside’s final dividend in 2021 was more than three times higher than the interim dividend.

Woodside share price snapshot

The Woodside share price has soared 35% in the past year, while it has surged 54% in the year to date.

For perspective, the ASX 200 has shed more than 8% in the past year.

Woodside has a market capitalisation of about $64 billion based on the current share price.

The post The Woodside dividend is being paid to shareholders today. Here’s the lowdown 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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6 October 2022
3 top-performing ASX ETFs in the first quarter of FY23
With the first quarter of the new financial year done and dusted, it’s an opportune time to take stock.

It was an eventful three months for the S&P/ASX 200 Index (ASX: XJO), which staged a comeback in August before giving back these gains in September.

In the end, the ASX 200 slipped by 1.4% across the quarter to finish at 6,474 points.

But that didn’t stop some ASX exchange-traded funds (ETFs) from knocking it out of the park.

Using data from Google Finance, let’s take a look at the three best-performing ASX ETFs in the first quarter of FY23.

BetaShares Global Uranium ETF (ASX: URNM)

Leading the way in Q1 was the BetaShares Global Uranium ETF, taking out the gold medal with a quarterly gain of 21.8%.

As its name suggests, the URNM ETF aims to provide investors with exposure to a portfolio of leading companies in the global uranium industry.

This includes companies involved in the mining, exploration, development, and production of uranium and modern nuclear energy. It also includes companies that hold physical uranium or uranium royalties.

The URNM ETF comprises around 35 companies. At the moment, its top three holdings are Cameco Corp (NYSE: CCJ), NAC Kazatomprom (LSE: KAP), and Sprott Physical Uranium Trust (TSE: U.U), which account for nearly 43% of the portfolio.

Uranium shares have been on a tear this year as Russia’s invasion of Ukraine has sent global energy markets into a tailspin. Countries have been turning to nuclear energy as a solution, which has sent uranium prices skyward.

BetaShares Crypto Innovators ETF (ASX: CRYP)

Next up, the silver medal goes to the BetaShares Crypto Innovators ETF, which soared by 20.2% across the quarter to finish at $2.68.

The CRYP ETF aims to provide investors with ‘picks and shovels’ exposure to companies at the forefront of the crypto economy. This includes crypto trading platforms, companies building crypto mining equipment, and companies that have significant investments in crypto.

The CRYP ETF currently invests in around 30 companies. Top holdings include Coinbase Global Inc (NASDAQ: COIN), MicroStrategy Incorporated (NASDAQ: MSTR), and Marathon Digital Holdings Inc (NASDAQ: MARA).

Crypto markets have been hammered since the beginning of 2022. But they’ve found some support in the new financial year.

The Ethereum price jumped 24% across the quarter to finish at around US$1,300. However, the Bitcoin price didn’t fare as well, shedding roughly 3% to end at around US$19,500.

This comes amid hopes that the US Federal Reserve might slow down interest rate hikes. According to Forbes, experts believe cryptocurrencies offer a hedge against currency deflation, which is what could happen if interest rate hikes ease.

BetaShares Solar ETF (ASX: TANN)

Rounding out this all-BetaShares podium is the Solar ETF. It lit up with a quarterly gain of 14.4% to finish at $12.73.

The TANN ETF is a relatively new addition to the ASX, joining the ranks in June 2022. It aims to provide investors with exposure to a portfolio of global companies in the solar energy industry.

This includes solar panel manufacturers, inverter suppliers, installers, manufacturers of solar-powered charging systems, and providers of solar project finance.

There are currently 40 companies in the TANN ETF. Top holdings include First Solar Inc (NASDAQ: FSLR), a leading solar panel manufacturer; Enphase Energy Inc (NASDAQ: ENPH), a manufacturer of solar microinverters; and Tesla Inc (NASDAQ: TSLA), the renowned electric vehicle maker.

These companies enjoyed stellar quarters of their own, seemingly boosted by a recently-passed climate bill in the US. First Solar was the standout as its shares soared to new heights, nearly doubling across the three months to US$132.27.

The post 3 top-performing ASX ETFs in the first quarter of FY23 appeared first on The Motley Fool Australia.

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- Don’t miss out on these very exciting ASX ETFs
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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 Betashares Crypto Innovators ETF, Coinbase Global, Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended First Solar. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and recommends Bitcoin and Ethereum. 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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6 October 2022
Why Tesla shares dropped Wednesday
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

Tesla (NASDAQ: TSLA) shares have now plunged more than 20% in less than 20 days. There are several reasons for that, but a new catalyst now has the drop gaining momentum. Today, as of 10:34 a.m. ET, the stock was trading at its morning lows down 5.4%.

So what

Today’s move lower was sparked by the news that Tesla CEO Elon Musk has reversed course and now intends to follow through with his bid to purchase Twitter for his original offer price of $54.20 per share. Musk has been fighting in court to back out of the deal, but now intends to spend the full $44 billion he originally offered. That’s likely the part that has Tesla shareholders on edge today. But it shouldn’t be the only point of concern.

Now what

Musk already sold about $20 billion in Tesla stock over a six-month period beginning late last year. He sold an additional $7 billion in August as the fate of his fight to back out of the deal remained uncertain, and he might be forced to pay the full amount. Now he has agreed to that, and Wedbush analyst Dan Ives thinks he might sell another $2 billion or $3 billion of Tesla stock, according to Barron’s.

But that’s not the sole concern for Tesla shareholders. In taking over Twitter, Musk has to now lead a company he himself damaged with repeated claims of fake accounts and incorrect reporting metrics. Now he’ll have deal with repercussions that could include lost advertising and other income streams. Investors are right to wonder whether that could take his focus away from Tesla at a time when the company is ramping up two new factories and fending off an influx of new competition.

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

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Howard Smith 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 Tesla and Twitter. 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.

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

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6 October 2022
Analysts name 2 ASX dividend shares to buy with 4%+ yields
If you are looking to boost your income with some dividend shares, then two listed below could be worth a closer look.

Both of these dividend shares are expected to provide investors with great yields in the near term. Here’s what you need to know about them:

Macquarie Group Ltd (ASX: MQG)

The first ASX dividend share that could be in the buy zone is investment bank Macquarie.

That’s the view of the team at Morgans, which likes Macquarie due to its exposure to long-term structural growth areas such as infrastructure and renewables. The broker is also expecting the investment bank to benefit from recent market volatility through its trading businesses and win market share in Australian mortgages.

As for dividends, Morgans is expecting partially franked dividends of $7.07 per share in FY 2023 and $7.47 per share in FY 2024. Based on the current Macquarie share price of $162.10, this will mean yields of 4.3% and 4.6%, respectively.

Morgans has an add rating and $215.00 price target on the company’s shares.

National Storage REIT (ASX: NSR)

Another ASX dividend share that has been named as a buy is National Storage. It is one of the region’s leading self-storage operators with over 225 centres that provide tailored storage solutions to 90,000+ residential and commercial customers.

The team at Ord Minnett is positive on the company after its strong showing in FY 2022. National Storage reported a 28% increase in total revenue and a 46% increase in underlying earnings to $126.5 million. This was underpinned by acquisitions, a strong increase in revenue per available metre, and a 2.8% increase in its occupancy rate.

Looking ahead, the broker is forecasting dividends per share of 11 cents in both FY 2023 and FY 2024. Based on the current National Storage share price of $2.33, this equates to yields of 4.7%.

Ord Minnett has a buy rating and $2.70 price target on its shares.

The post Analysts name 2 ASX dividend shares to buy with 4%+ yields 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 recommended Macquarie Group 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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6 October 2022
40% upside: Expert picks 3 ASX gold shares attractive to buy right now
2022, for investors at least, will be remembered as a weird one.

The year has seen seemingly contradictory forces come together to produce results that are entirely different from conventional wisdom.

One such oddity has been depressed gold prices and gold shares.

Usually investors associate gold as a “safe haven” during times of high inflation. The idea is that the precious metal retains value far better while other assets depreciate.

Rampant inflation, as many readers would know, has been the hot topic for pretty much all of this year.

But currently, according to goldprice.org, the price for the commodity is actually lower than where it started 2022. It’s also lower than where it was 12 months ago.

Very odd.

However, Shaw and Partners portfolio manager James Gerrish reckons last week the situation started to turn around.

“Gold stocks finally found some love, hence we’ve updated our view on three of the major names,” he said in his Market Matters newsletter.

“Although, not surprisingly, there’s a degree of similarity across the sector.”

Here are the three ASX gold shares that are looking good at the moment:

‘We like the risk/reward’ for this gold miner

It’s been a brutal few months for shareholders of gold miner Newcrest Mining Ltd (ASX: NCM).

“Heavyweight gold stock Newcrest Mining has endured an awful 2022 falling over 45% from its April high under the combined weight of rising bond yields and an extremely strong US dollar,” said Gerrish.

“However, as bond yields threaten to soften following the Bank of England’s intervention we can see gold and its related stocks regain some of its lost lustre.”

Newcrest shares closed Wednesday at $17.89 each.

Gerrish’s team favours the stock as a buy now for a rally heading into the festive season.

“Market Matters is bullish [on] Newcrest into Christmas, initially targeting the $20 area,” said Gerrish.

“We like the risk/reward to Newcrest around $16.50 looking for ~20% upside into 2023.”

‘Rally could be hard and fast’

Northern Star Resources Ltd (ASX: NST) investors have also had a frustrating year, seeing the stock price lose almost 40% from mid-April to last week.

“Northern Star has held up better than most of its peers over recent weeks but it’s still been a tough year for the gold miner.”

However, Gerrish believes the current pessimism on gold is “quite extreme”.

“We believe this stock offers good value at current levels and when the sentiment turns for the sector the rally could be hard and fast.”

Northern Star has already rallied almost 22% since Monday last week to close Wednesday at $8.48 a share.

‘40% upside into 2023 feeling very achievable’

Evolution Mining Ltd (ASX: EVN) is a similar story to Newcrest, according to Gerrish.

“Evolution looks like an exaggerated form of Newcrest having fallen over 60% from its April high,” he said.

“However, we also now like the risk/reward towards Evolution, with 40% upside into 2023 feeling very achievable.”

The Evolution share price finished Wednesday at $2.10.

“Market Matters is bullish on Evolution targeting the $2.75 area,” said Gerrish.

“We like EVN as a contrarian/countertrend play into Christmas.”

The post 40% upside: Expert picks 3 ASX gold shares attractive to buy right now appeared first on The Motley Fool Australia.

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

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6 October 2022
Are ASX tech shares cheaper than US tech stocks?
Most readers of The Motley Fool don’t have to be told twice how much technology shares have suffered this year.

They just need to look at the sea of red in their portfolios as evidence of how much these stocks have re-rated over the past 12 months.

The S&P/ASX All Technology Index (ASX: XTX) has now dropped more than 31% year to date, while the Nasdaq Composite (NASDAQ: .IXIC) has plunged 29.4%.

But as the world approaches the point at which interest rates will stop increasing, it’s time to assess where the bargains can be picked up.

Cloud computing is a dominant area of tech that pretty much covers every relevant growth business in the sector. The term simply refers to tech products and services delivered over the internet.

Every quarter, New Zealand’s Clare Capital examines the valuations of listed cloud companies in the US and Australia/New Zealand markets.

The latest report provides an insight as to where an investor could secure a better entry point when buying tech shares.

US vs ANZ tech valuations

The home of public technology businesses is the United States, which has a plethora of innovative companies listed on both the NYSE and NASDAQ exchanges, all serving a massive population.

Tech is a relatively minor part of the ASX, which is dominated by mining and finance businesses.

Perhaps this explains why investors in the US seem to appreciate cloud companies more.

As of the end of September, Clare Capital’s US cloud index shows a median ‘enterprise value to next 12 months revenue’ ratio of 5.2.

The ANZ cloud index is positively a bargain compared to that, sitting at a median multiple of 2.8.

So one could conclude that ASX tech companies are now significantly cheaper than their US counterparts.

Clare Capital’s methodology involves 93 companies in the US and 50 from Australia and New Zealand.

“It is worth noting that there is a significant company size difference between the two indices, with the median EV of US companies at NZ$8.3 billion versus NZ$0.3 billion for ANZ companies,” read the report.

Courtesy: Clare Capital

Tech carnage could now have ‘plateaued’

The brutality of 2022 is seen in how Clare Capital’s US cloud index has dropped 64% over the past 12 months. The ANZ index has plummeted 48%.

However, the freefall of US cloud companies seems to have “plateaued after a rough year”, with the 30 September multiple just 4% lower than the previous quarter.

Meanwhile, the Australia and New Zealand valuations actually increased 9% over the same three months.

While local tech shares are cheaper than the US equivalents, investors will need to carefully examine each company on their potential.

Historically, US tech shares have shown more upside due to a larger addressable market and an investor base more enthusiastic about the sector.

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

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6 October 2022
‘High quality’: Analyst names 2 ASX tech shares to buy right now
ASX shares have enjoyed a nice revival since the Reserve Bank’s latest interest rate increase on Tuesday afternoon.

The 25 basis point hike was smaller than many experts expected, so growth and technology stocks have made hay the last couple of days.

But it’s still a volatile world. It’s important to buy growth shares with suitable attributes.

To assist, one Wilson Asset Management expert recently named a pair of tech stocks he would pounce on right now:

‘A much higher quality business’ than we thought

Wilson equities dealer Will Thompson was “surprised” by ELMO Software Ltd (ASX: ELO) over reporting season.

“They’re proving that they’re able to increase that ARR [annual recurring revenue] over the past year,” he said in a Wilson video.

“Costs [are] now at a level where they don’t need to… raise money anymore. It’s starting to look like a much higher quality business than we previously thought.”

Elmo is a buy for Thompson.

According to CMC Markets, five out of seven analysts currently agree with him that it’s a buy.

Despite a strong rally since Tuesday, the Elmo share price has nevertheless halved since the start of 2022.

Ready to pick up some bargains

Thompson is a fan of the people who run billing software maker Hansen Technologies Limited (ASX: HSN).

“It’s got one of the best management teams — high quality. They’ve been there for 30 years,” he said.

“Balance sheet’s really strong. They’ve reported good earnings.”

Despite this, the Hansen share price has plunged more than 23% since 5 August.

“It’s been a frustrating period,” said Thompson.

“They’re looking to do a bit of M and A [mergers and acquisitions] but just the vendors [are keeping] valuations still probably at the end of 2020 and 2021 levels where they were eye-wateringly high.”

But this stalemate seems to be resolving.

“Hopefully they’ll be able to make… a few transactions in the second half of the year and into 2023.”

Elvest Co portfolio manager Adrian Ezquerro told The Motley Fool last month that Hansen’s a buy for an investor willing to be patient.

“We remain pretty optimistic on Hansen’s prospects,” he said.

“We think in this market maybe vendor expectations might be becoming a little more realistic and the business is on a circa 7% free cash flow.”

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

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- 2 ASX shares now at a buying opportunity after a shocking 2022: fundie
- 3 beaten down ASX All Ords tech shares that are printing cash
Motley Fool contributor Tony Yoo has positions in Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Elmo Software and Hansen Technologies. The Motley Fool Australia has positions in and has recommended Elmo Software. 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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6 October 2022
5 things to watch on the ASX 200 on Thursday
On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had another strong day and charged notably higher again. The benchmark index rose 1.7% to 6,815.7 points.

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

ASX 200 expected to open flat

The Australian share market looks to have run out of steam after two very big sessions. According to the latest SPI futures, the ASX 200 is expected to open the day flat this morning. On a volatile night on Wall Street, in late trade the Dow Jones is up 0.3%, the S&P 500 is up 0.2% and the NASDAQ has pushed 0.1% higher.

Bank of Queensland rated neutral

The Bank of Queensland Ltd (ASX: BOQ) share price will be one to watch today. Ahead of the regional bank’s full year results release next week, Goldman Sachs has reiterated its neutral rating and $8.16 price target on its shares. While only a neutral rating, this price target implies potential upside of approximately 17% for investors.

Oil prices rise after OPEC cut

Energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good day after oil prices pushed higher on Wednesday night. According to Bloomberg, the WTI crude oil price is up 1.5% to US$87.82 a barrel and the Brent crude oil price is up 1.8% to US$93.50 a barrel. This follows news that OPEC is cutting production by 2 million barrels a day to boost prices.

Dividends being paid

A large group of ASX 200 shares will be paying their shareholders their latest dividends today. This includes appliance manufacturer Breville Group Ltd (ASX: BRG), funerals company InvoCare Limited (ASX: IVC), conglomerate Wesfarmers Ltd (ASX: WDS), and energy giant Woodside. The latter is paying its shareholders a 160 cents per share fully franked dividend today.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued day after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.25% to US$1,726.40 an ounce. A stronger US dollar weighed on the gold price.

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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 Wesfarmers 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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6 October 2022
How did the Westpac share price manage to beat the ASX 200 in September?
The Westpac Banking Corp (ASX: WBC) share price ended up falling less in September than the S&P/ASX 200 Index (ASX: XJO). The ASX 200 fell 7.3% while the Westpac share price declined by 4.5%.

That’s an interesting result considering a sizeable part of the ASX 200 is made up of the big banks: Westpac, Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and National Australia Bank Ltd (ASX: NAB).

The ASX 200 consists of many varied companies and can be influenced by different industries or even individual shares. For example, BHP Group Ltd (ASX: BHP) makes up around 10% of the ASX 200. Other resource shares also have sizeable weightings in the index such as Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).

Other large businesses in the ASX 200 include CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), Woodside Energy Group Ltd (ASX: WDS), and Woolworths Group Ltd (ASX: WOW).

I won’t run through how every single business performed last month. But the BHP share price fell by around 5% and many others also saw painful falls.

What happened that could have limited the damage for the Westpac share price?

One of the biggest problems facing investors, and the market as a whole, is that interest rates are rising.

In theory, that’s meant to hurt the valuations of assets like shares. It essentially means that investors are wanting to pay a lower multiple of earnings for a business.

But things are a little different for banks because a large part of the activity of lending is about interest rates.

Banks had been suffering from lower net interest margins (NIMs) when interest rates were close to 0%. A NIM tells investors how much profit a bank is making by lending. This is done by comparing the lending rate to the cost of financing that lending (such as through savings accounts).

While it’s difficult for borrowers to see the cost of their loan go up, it’s seen as a good thing for the NIM of banks because they can quickly pass on the rate hike imposed by central banks. But savers generally aren’t seeing the same level of increase.

There are also questions about what higher rates may do to the level of loan arrears and bad debts in the long term. However, higher interest rates are expected to increase bank profitability in the short term.

In summary, it’s not surprising that many ASX shares fell in September when the Reserve Bank of Australia (RBA) increased interest rates by another 50 basis points. That certainly impacts valuations. However, Westpac’s short-term earnings should benefit from a higher interest rate.

Broker ratings

In September, the broker Citi decided to increase its Westpac share price target to $30, which implies a possible rise of more than 30%. It thinks the bank will benefit from the level of liquidity that it has.

Macquarie is less optimistic about the Westpac share price, with a neutral rating and a price target of just $22.25. It thinks Westpac will do well with a rising NIM but, in the longer term, there could be pressure on its loan book because of the higher interest rates.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group 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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5 October 2022
Expert reveals why ‘a premium is warranted’ for Qantas shares in October
Qantas Airways Limited (ASX: QAN) shares finished 2.51% higher on Wednesday at $5.30 apiece.

This outperformed the overall market, which rallied for a second day due to the Reserve Bank’s lower-than-expected rate hike yesterday.

The S&P/ASX 200 Index (ASX: XJO) finished up 1.74% to 6,815.7 points.

Expert says Qantas shares worth a premium

Tony Paterno of Ord Minnett says Qantas is a buy.

On The Bull this week, Paterno said Qantas has a “superior domestic market structure and share”.

He said:

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.

Qantas fell in September

The Qantas share price hit some turbulence in September, as my colleague Tristan reported.

There was no price-sensitive news from the company last month. However, the market continued to worry about the impact of rising inflation, interest rates, and fuel costs on the airline.

As Tristan reported, Qantas is working on several cost and revenue initiatives to offset the impact of higher inflation and fuel costs.

One of them is reducing its domestic capacity by another 10%. The company said some capacity may be restored once “operational resilience” improves.

In the first half of FY23, capacity will be 95% of pre-COVID levels and in the second half, it will be 106% of pre-COVID levels.

Qantas share price snapshot

Over the past year, the most investors have been willing to pay for Qantas shares is $5.97.

That’s where the ASX travel share was trading in November last year.

In December 2019, before the pandemic, Qantas was trading at a historical five-year high of $7.46 a share.

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Motley Fool contributor Bronwyn Allen has positions in Qantas Airways 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 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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5 October 2022