Category: Stock Market

Beating the benchmark by 9% in the past year, what’s next for this ASX 200 share?
The WiseTech Global Ltd (ASX: WTC) share price closed the session on Thursday down 2.37% to $53.46.

The broader market also fell, with the S&P/ASX 200 Index (ASX: XJO) dipping 0.074%.

But the logistics software group is well ahead of the ASX 200 over the past 12 months.

The WiseTech share price is down 0.093%, while the market benchmark index has fallen 9.15%.

What’s next for this ASX 200 tech darling?

According to an article in The Australian today, WiseTech is looking for acquisition opportunities.

The company has about $500 million in cash and an undrawn $225 million debt facility, according to WiseTech CEO Richard White. He said: “We can use our ability to buy things.”

White gave an address at the Citi Australia & New Zealand Investment Conference in Sydney yesterday.

He told the crowd of institutional investors that the company was looking for more “tuck-in” deals.

This is particularly the case for its freight forwarding software segment.

White said: “We continue to see that (area) performing quite well. I am expecting to see more major deals signed in that space in the next few years.”

White also described land-side logistics as “an obvious next step”.

He added: “After that, it is warehousing”.

WiseTech share price snapshot

Back in mid-2021, WiseTech shares were trading in the $30-range, where they had been for quite a while.

Then came the full-year FY21 results, with Wisetech smashing its guidance and doubling its net profit.

The company dropped its results on 25 August. There was an immediate reaction with the WiseTech share price rocketing. And the growth continued. WiseTech shares breached the $60 mark in December.

It was a complete re-rating experience for the ASX 200 technology share darling, which had formed part of the much-lauded WAAAX shares quintet.

WiseTech was sold off with the rest of the ASX 200 in the first half of 2022. Its share price returned to the $30-range in June. It has since rebounded strongly by more than 50% to return to historically high levels.

The company announced its FY22 results on 24 August, with more good numbers sending the WiseTech share price northwards once again.

The post Beating the benchmark by 9% in the past year, what’s next for this ASX 200 share? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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13 October 2022
The Xero share price just hit a new 52-week low. Is it time to buy?
Owners of Xero Limited (ASX: XRO) shares are having zero fun in 2022. The tech stock darling has lost more than half its value over the year to date, with the Xero share price down 51%.

But it’s certainly not a case of zero hope for shareholders of the accounting software provider.

At least two top brokers are advocating a buy on Xero shares. And given the Xero share price just hit a new 52-week low today, perhaps it’s time to buy for the long term.

What’s been happening with the Xero share price?

The Xero share price hit a new 52-week low today at $70.34. It closed the session on Thursday at $71.75.

Things were looking up for Xero investors recently. The stock dropped into the early $70-range back in June and then regained some ground to land in the $90-plus range in early September.

That recovery was unfortunately short-lived. Here we are back in the early $70-range.

A technical analyst might point out a pattern here. The last two times Xero shares have dropped to this price level, they have found new support from ASX investors and have gone back up.

But here at The Fool, we don’t advocate technical analysis for ordinary investors. As the saying goes, past performance is not necessarily a reliable indicator of future performance.

Our Fool philosophy is to focus on the fundamentals of a business and purchase with a buy-and-hold mentality.

So, let’s see what the experts have been saying about the long-term outlook for Xero.

Are Xero shares a buy?

As my Fool colleague James notes, top broker Goldman Sachs considers Xero “our preferred large-cap technology name in ANZ” and a company that has “a compelling global growth story”.

Goldman also says Xero is “well-placed to navigate this uncertainty given the stickiness & importance of its software.”

The broker has a buy rating and a $111 price target on Xero shares. That’s a potential 55% upside from here.

Also this month, Citi retained its buy rating on Xero with a 12-month share price target of $106.80.

As we’ve reported recently, experts are recommending that investors consider buying oversold high-quality ASX growth stocks caught up in the broader market sell-off.

In a Livewire article, Tim Richardson of Pengana International Equities Limited said:

The indiscriminate sell-off in growth companies this year has extended beyond those with little or no cash flow and dubious business models.

Quality growth stocks across the board have underperformed value stocks, leaving some great companies priced at more attractive valuation levels. This implies higher potential returns over the medium-to-long term.

It’s a classic case of throwing the baby out with the bathwater. It may sound bad but it can create amazing buy-the-dip opportunities for value investors.

How’s Xero travelling in 2022?

In FY22, Xero reported a 29% increase in revenue to NZ$1.1 billion and a 28% jump in annualised monthly recurring revenue (AMRR) to NZ$1.2 billion in FY22.

There was also an 11% bump in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $212.7 million.

Total subscribers increased by 19% to 3.3 million, with a 7% boost in average revenue per user.

Xero didn’t make a profit in FY22, with a net loss after tax of ($9.1 million). But Xero has demonstrated it can make a profit. In FY21, its net profit after tax (NPAT) was $19.8 million.

The post The Xero share price just hit a new 52-week low. Is it time to buy? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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13 October 2022
Why did ASX 200 gold shares rise today?
ASX 200 gold shares finished the day in the green today.

Gold explorers include Evolution Mining Ltd (ASX: EVN), Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST).

Let’s take a look at how these ASX 200 gold shares performed on the market today.

Gold futures lift

Northern Star shares rose 0.74% today to $8.13, the Evolution share price climbed 0.78% to $1.95, while Newcrest shares jumped 0.81% to $17.48. In contrast, the S&P/ASX 200 Index (ASX: XJO) finished 0.07% in the red.

Northern Star, Evolution and Newcrest are all major global gold producers. The gold price impacts company earnings and, therefore, investor sentiment.

ASX 200 gold shares jumped today after gold prices recovered overnight. The gold price lifted 0.4% to US$1674.69 an ounce.

In a research note today, ANZ economist Madeline Dunk said:

Gold price inched higher to USD1,674/oz as investors weighed tighter monetary policy against rising geopolitical and economic risks.

The US dollar recouped its early day losses, after release of strong US PPI numbers, but failed to weigh on gold prices.

Looking ahead, CPI data, due to be released on Thursday US time, may provide a guide on the US Federal Reserve’s plans for interest rates.

Commenting on the impact of this data on the gold price, Dunk added:

Tomorrow’s CPI number will be an important guide for the Fed’s tightening path. A stronger print would be negative for the gold price.

Share price snapshot

Newcrest shares have fallen 29% year to date, while the Northern Star share price has descended nearly 14%. Evolution shares have lost 52% since the start of 2022.

For perspective, the ASX 200 has shed nearly 11% year to date.

The post Why did ASX 200 gold shares rise 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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13 October 2022

Here are the top 10 ASX 200 shares today

A husband and wife dance with their young daughter in their lounge room.

The S&P/ASX 200 Index (ASX: XJO) closed in the red after spending most of today in the green. The index ended Thursday’s trade 0.07% lower at 6,642.6 points.

Only one of the market’s sectors posted a notable gain today. The S&P/ASX 200 Financials Index (ASX: XFJ) lifted 1.4%.

It was driven higher by the big banks, which took off as brokers responded to Bank of Queensland Ltd (ASX: BOQ)’s financial year 2022 earnings, posted to the ASX yesterday.

The bank’s net interest margin (NIM), in particular, seemingly piqued experts’ interest. It lifted in the final quarter following rate hikes, as my Fool colleague Bronwyn reports.

Meanwhile, the S&P/ASX 200 Real Estate Index (ASX: XRE) was the index’s biggest weight, falling 1.9%.

The S&P/ASX 200 Energy Index (ASX: XEJ) also closed 0.9% lower after oil prices fell for a third consecutive day.

The Brent crude oil price slipped 2% to US$92.45 a barrel overnight while the US Nymex crude oil price fell 2.3% to US$87.27 a barrel.

All in all, two of the ASX 200’s 11 sectors closed in the green on Thursday. 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 travel giant Qantas Airways Limited (ASX: QAN). The airline’s stock rocketed nearly 9% following news it expects to return to underlying profitability this half.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Qantas Airways Limited (ASX: QAN)	$5.62	8.7%
Kelsian Group Ltd (ASX: KLS)	$4.74	6.28%
St Barbara Ltd (ASX: SBM)	$0.755	4.14%
Telix Pharmaceuticals Ltd (ASX: TLX)	$5.35	4.09%
West African Resources Ltd (ASX: WAF)	$1.06	3.92%
Ramelius Resources Limited (ASX: RMS)	$0.645	3.2%
Magellan Financial Group Ltd (ASX: MFG)	$10.75	3.17%
De Grey Mining Limited (ASX: DEG)	$1.005	3.08%
Imugene Ltd (ASX: IMU)	$0.17	3.03%
Westpac Banking Corp (ASX: WBC)	$23.07	2.95%

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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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 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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13 October 2022

Here are 3 top ASX growth shares that analysts rate as buys
Are you interested in adding some more ASX shares to your portfolio this month?

Three ASX growth shares that could be in the buy zone are listed below. Here’s why analysts are bullish on them:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX growth share that could be in the buy zone is Aristocrat Leisure. This gaming technology company is one of the leaders in the industry and the owner of a world class portfolio of games. These include poker machines and digital games. At the last count, the latter had ~20 million monthly active users, which was generating significant recurring revenues. Another couple of positives are that Aristocrat is undertaking a major $500 million share buyback and looking to expand into the real money gaming market.

Citi is bullish on the company and has a buy rating and $40.20 price target on its shares.

Readytech Holdings Ltd (ASX: RDY)

Another ASX growth share that analysts are tipping as a buy is enterprise software provider Readytech. In August, Readytech released its full year results and revealed a 16.8% year over year increase in revenue to $78.3 million and a 45.5% jump in underlying EBITDA to $27.5 million. The good news is that its growth isn’t expected to stop there. Management expects to build on this in FY 2023 with organic revenue growth in the mid-teens. This will be boosted by $2 million of incremental revenue from FY 2022 acquisitions.

Goldman Sachs is a fan of the company and has a buy rating and $4.30 price target on its shares.

Xero Limited (ASX: XRO)

A final ASX growth share that has been named as a buy for investors is Xero. It is a cloud accounting platform provider which has been growing at a consistently solid rate for a number of years. This led to the company reaching ~3.3 million subscribers globally earlier this year. Pleasingly, Xero’s subs growth looks unlikely to end here. Management estimates that it has a global market opportunity of 45 million subscribers.

Goldman Sachs is also a big fan of Xero and has a buy rating and $111.00 price target on its shares.

The post Here are 3 top ASX growth shares that analysts rate as buys 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 positions in and has recommended Readytech Holdings Ltd and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Readytech Holdings Ltd. 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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13 October 2022
If I’d invested $1,000 in Mineral Resources shares at the start of 2022, here’s what I’d have now
Mineral Resources Limited (ASX: MIN) shares are in the green this year, soaring by 24% since the start of 2022.

That sounds like good news for investors.

Let’s take a look at how much money I would have now if I had invested $1,000 in this iron andÂ lithium explorerÂ at the start of the year.

Is the Mineral Resources share price a winner?

The Mineral Resources share price has been up and down this year, hitting a high of $73.80 on 13 September and a low of $42.89 on 6 July.

However, those who held on to the company’s shares amid the volatility should be satisfied with their investment.

Let’s say I had bought Mineral Resources on 4 January, the first day of trading in 2022. On this day, Mineral Resources shares were fetching $56.22 at the market open.

Just imagine I had invested $1,000 in Mineral Resources at that time. I would have walked away with 17 shares with $44.26 left over.

At Thursday’s close, these shares are fetching $69.10 a piece. That means this investment would now be worth $1174.70.

Looking at the year overall, on 6 July, when the company’s share price hit $42.89, I may have been worried. On this day, my investment would have fallen to $729.13.

However, on 13 September, my investment would have climbed to be worth $1,254.6.

But that’s not all. Mineral Resources also paid a total dividend of $1 per share in FY22. Therefore, after buying 17 shares at the start of the year I would also have $17 in dividends.

That would take mean my investment would now be worth $1,191.70.

Share price snapshot

The Mineral Resources share price closed 1.45% in the red on Thursday at $69.10. Despite the loss, it has rocketed 64% in the past year, but has fallen 5% in the past month.

For perspective, theÂ S&P/ASX 200 IndexÂ (ASX: XJO) has shed more than 8% in a year.

The company has a market capitalisation of about $13.2 billion.

The post If I’d invested $1,000 in Mineral Resources shares at the start of 2022, here’s what I’d have 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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13 October 2022
3 ASX shares that are great-value buys right now: fund manager
It’s always interesting to see what some fund managers are looking at on the ASX share market. Things are particularly volatile at the moment as investors come to terms with high inflation and increased interest rates.

Ophir Asset Management finds ASX shares that look like they can significantly grow earnings over the long term. But, this investment manager likes to look across a range of industries to find opportunities.

The investment team recently went through some of its holdings within the Ophir High Conviction Fund (ASX: OPH) and discussed what it likes about them, with a particular focus on the first ASX share.

AUB Group Ltd (ASX: AUB)

This is a business that provides insurance broking, underwriting and risk services in Australasia. Ophir noted that its recent FY22 result was at the top end of market expectations and guidance for next year was “better than expectations”.

Ophir said that a unique element of the business is that it partners with local management teams of acquired businesses and adopts an owner-driven model to try to deliver the best outcomes for clients. It services around one million clients across 500 locations.

One of the things the fund manager likes is the resilience of the ASX share’s earnings because small and medium enterprises are “unlikely to cancel their insurance cover in market downturns as it is a core pillar of any business, much like accounting”. The fund manager pointed out that AUB performed well during the GFC.

Ophir said that not only is it resilient, but it has grown earnings strongly. Some peers have grown at a similar rate. These businesses can use both organic growth and acquisitions to grow.

It thinks it can grow its broker and agency margins, which lag competitors. The fund manager pointed out there is a valuation gap compared to peers. Historically, its price/earnings (P/E) ratio has traded in line with Steadfast Group Ltd (ASX: SDF) and PSC Insurance Group Ltd (ASX: PSI). A gap has formed, which Ophir suggested could be due to the acquisition of Tysers.

The fund manager suggests there is more upside than expectations for the ASX share because management has been “conservative” with guidance and synergies.

Mineral Resources Limited (ASX: MIN)

Mineral Resources operates as a mining services and processing company in Australia, China and Singapore. It is also a producer of iron ore and lithium. This is one of the few resource businesses that Ophir is invested in.

The business’ lithium result was “very strong” in FY22, according to the fund manager. The company has also announced plans for its Ashburton projection which “should increase the production rate of iron ore whilst also materially reducing average costs”.

Life360 Inc (ASX: 360)

Life360 is an ASX tech share that offers a service that aims to ensure the safety of family members.

Ophir said that it delivered a “strong” recurring earnings beat in its recent result and that a price increase was announced for its membership base.

The investment team said they believe the business will reach breakeven in the near term.

In that update, Life360 said:

We expect Life360 to be on a trajectory to consistently positive adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) and operating cash flow by late calendar year (CY) 2023, such that we record positive adjusted EBITDA and operating cash flow for CY24. This trajectory could be further assisted by the positive impact of potential future price changes.

The post 3 ASX shares that are great-value buys right now: fund manager appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc., PSC Insurance Group, and Steadfast Group Ltd. The Motley Fool Australia has positions in and has recommended Steadfast Group Ltd. The Motley Fool Australia has recommended Austbrokers Holdings Limited and PSC Insurance Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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13 October 2022
Goodman share price hits two-year low: Time to buy?
The Goodman Group (ASX: GMG) share price has continued its slide on Thursday.

At one stage today, the integrated property company’s shares dropped to a two-year low of $15.57.

This means the Goodman share price is now down 41% since the start of the year.

Is the Goodman share price weakness a buying opportunity?

While Goodman’s shares are seemingly out of favour with investors right now, it’s quite the opposite with brokers.

A large number of Australia’s leading brokers have the equivalent of buy ratings on its shares with price targets significantly higher than where the Goodman share price trades today.

For example, the team at Citi has a buy rating and $23.50 price target on its shares. This implies potential upside of 50% for investors. Citi commented:

While risks are rising against a higher interest rate backdrop, we retain Buy given the strong underlying rent growth (rents on average -20% below market), embedded performance fees as well as the best balance sheet in the sector, which could see GMG outperforming its peers.

Who else is bullish?

This sentiment was echoed by the team at Goldman Sachs, which currently has a buy rating and $25.40 price target on its shares.

This suggests even greater upside for the Goodman share price of 63% over the next 12 months. Goldman said:

We expect solid rental growth as demand for high quality logistics space continues to outpace available supply. Although the macro environment remains challenged, we believe there is upside risk to its conservative guidance as the Group has historically “Guided light”, coming in ahead of initial estimates. Given GMG’s preference to own, develop and manage high-quality industrial assets in key infill markets globally, we believe it is well-positioned to capture market rental growth, which when coupled with elevated investment demand for industrial assets will assist in contributing to AUM growth over time.

The post Goodman share price hits two-year low: Time to buy? 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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13 October 2022
Why Endeavour shares could offer access to an ‘attractive asset’: expert
The Endeavour Group Ltd (ASX: EDV) share price has had a disappointing run of late. The stock has dumped 19% since its August high, with 12% of that fall coming on the back of the company’s full-year earnings.

But Endeavour shares provide the key to what one top broker has dubbed an appealing business: Dan Murphy’s.

The Endeavour share price is down 0.74% right now, trading at $6.74. That’s despite the S&P/ASX 200 Index (ASX: XJO) posting a 0.07% gain.

Let’s take a closer look at what top broker Macquarie reportedly likes about the relatively new ASX 200 stock.

Endeavour shares offer key to ‘attractive asset’: expert

It’s been just 16 months since Endeavour shares hit the ASX following the company’s spin out of supermarket giant Woolworths Group Ltd (ASX: WOW). And what a whirlwind it has been.

Endeavour operates Australia’s largest retail drinks network and a portfolio of licensed hotels. In its short life as a stand-alone company, it has pushed through lockdowns, major floods, and inflation.

But drinks retail brand Dan Murphy’s is one piece of the puzzle that Macquarie particularly likes. The broker was quoted by the Sydney Morning Herald as saying:

As a staple service and product provider with significant organic reinvestment opportunity we believe it is an attractive asset.

Describing the retailer as a “staple service” may mean the broker is confident it can push through current economic uncertainty.

The business has a growing loyal customer base, with the number of active My Dan’s members growing by 15% to 4.5 million in financial year 2022. At the same time, its footprint grew to 258 stores.

Additionally, the broker has named Endeavour among the companies it expects to post positive updates at its upcoming annual general meeting (AGM), The Australian reports.

The company will host its AGM next Tuesday. A trading update on the company’s performance in the first quarter of financial year 2022 is expected to drop the day before.

No doubt all eyes will be watching Endeavour and its share price next week.

The post Why Endeavour shares could offer access to an ‘attractive asset’: expert 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 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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13 October 2022
Is the Northern Star share price on the comeback trail? Check these charts out
The Northern Star Resources Ltd (ASX: NST) share price is trading in the green on Thursday.

At the time of writing, shares in the gold miner are swapping hands more than 1.3% higher at $8.18 on no news.

Today’s gain marks a 17% rally Northern Star shares have embarked on since bouncing off prior lows of $6.96 on 26 September.

Is Northern Star set to rise again?

To understand the forces at play with the Northern Star share price we have to take a step back and analyse the wider picture.

The key undercurrents that feed into the share are the gold price, and by extension, the macroeconomic landscape.

In particular, the strength of the US dollar has been a headwind for gold bugs this year, with the price of the yellow metal taking a backward step whilst the greenback surges to new highs.

This fits with the long-term correlation between the pair. Both are seen as quality/low-risk assets that investors flock to in times of turbulence.

However, the key difference this time is inflation and interest rates. With the rise in interest rates, investors can realise a positive yield on cash, whereas gold pays no interest.

As seen in the chart below, the inverse-like relationship has been in situ over the past 18 to 20 years, with the most recent rally in the US dollar correlating to a sharp reversal in the gold price.

It now trades at US$1,669 per troy ounce, down from highs of US$2,052/t oz in March.

Given its status as a producer of the precious metal, Northern Star is considered a price taker on the market price of gold.

As such, its share price fluctuates with volatility in the commodity markets, and this year’s heavy sell-off in the gold markets has been reflected in the Northern Star share price.

Despite its most recent rally, it too trades well off previous highs, and has a sharp recovery ahead in order to reach these levels once more.

This activity is seen in the chart below, with the Northern Star share price in black.

Even more interesting, is the path of inflation expectations has been most heavily correlated with the price of gold (and hence, the Northern Star share price) in 2022.

Inflation/gold correlation

Inflation expectations are measured in a particular derivatives contract known as the five-year breakeven rate.

It measures what the market thinks the inflation rate will be over the next five years. As seen in the chart below, the market now believes that US inflation will be 2.32% in five years time, down from 3.6% in March (blue line).

Perhaps unsurprisingly, this is when the gold price peaked as well – despite all the debate on gold’s status as an inflation hedge.

It is therefore a contentious debate as it appears the Northern Star share price is heavily linked to the price of gold, which is heavily linked to macroeconomic indicators like inflation, interest rates and the US dollar.

Northern Star also trades on a forward price-to-earnings (P/E) ratio of 23.7 times, ahead of the industry median of 6.4 times.

However, this does suggest investors expect an above-industry earnings result from the company over the next 12 months.

Meanwhile, the gold miner is also valued at a price-to-book (P/B) ratio of 1.14 times, and generated more than $570 million in free cash flow for FY22.

It’s also rated a buy from 15 out of 15 analysts covering the share right now, with a consensus price target of $10.70, according to Refinitiv Eikon data.

Time will tell if all of these forces combine to inflect positively on the Northern Star share price. With no certainty on interest rates and inflation, the gold price could break out either way.

The post Is the Northern Star share price on the comeback trail? Check these charts out 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 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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13 October 2022