Category: Stock Market

After a horror year, what’s next for ASX BNPL shares in the new quarter?
ASX BNPL shares are putting in a mixed performance as we round out the second week of the new quarter (Q2 FY23).

After a difficult Q1, here’s how these four buy now, pay later stocks have performed so far in Q2 (since the closing bell on 30 September):
- Openpay Group Ltd (ASX: OPY) shares are up 5.6%
- Zip Co Ltd (ASX: ZIP) shares are down 8.0%
- Sezzle Inc (ASX: SZL) shares are flat
- Block Inc (ASX: SQ2) shares are up 5.6%
For some context, the All Ordinaries Index (ASX: XAO) is up 2.7% over this same period.

How have ASX BNPL shares performed heading into the new quarter?

ASX BNPL shares have had a year to forget, so far.

The companies’ share prices have all gotten absolutely hammered as investors awoke to the reality that inflation wasn’t transitory, and interest rates across most of the developed world were heading sharply higher.

After posting some truly phenomenal gains in the year-plus following the pandemic recovery trade (commencing late March 2020), things began to slow down for ASX BNPL shares by mid-2021.

As for 2022, here’s how the same four companies have performed to date, over a period that has seen the All Ordinaries tumble 13%:
- Openpay Group Ltd (ASX: OPY) shares are down 74.0%
- Zip Co Ltd (ASX: ZIP) shares are down 85.3%
- Sezzle Inc (ASX: SZL) shares are down 84.3%
- Block Inc (ASX: SQ2) shares are down 49.2%*
See what we mean by a year to forget.

(*Note, Block commenced trading on the ASX on 20 January this year following its successful acquisition of Afterpay.)

Well, those are the quarters gone by.

So, what’s next?

What to expect in the quarter ahead?

When talking about ASX BNPL shares, it’s important to remember we’re taking a broad-stroke approach to the sector here.

Each company has its own management team, different balance sheets, and its own specific market strengths, weaknesses, and potential growth outlook.

With that said, investors in ASX BNPL shares would do well to keep an eye on the outlook for inflation and any resulting rate hikes. Not just from the RBA here in Australia. But, even more importantly, from the US Federal Reserve.

As mentioned, the dismal share price performance of buy now, pay later companies over the first three quarters of the calendar year was largely driven by soaring inflation and hawkish tightening from central banks across much of the world.

ASX BNPL shares are more vulnerable to rising interest rates than many stocks for several reasons.

First, many of them have high debt levels. And as rates rise, the cost of servicing that debt rises as well.

Second, higher rates (and inflation) put greater pressure on their customer base. Sure, a greater number of cash-strapped customers may be tempted to use BNPL services to delay paying for their purchases. But the BNPL companies can expect the number of clients who fail to make those repayments also rise alongside the tougher economic environment.

And third, ASX BNPL shares are largely priced based on forecast future revenues. Those revenues may indeed eventuate. But higher interest rates increase the present cost of those future earnings.

With that in mind, tomorrow’s Consumer Price Index (CPI) figures due out of the US should offer some early indication as to the outlook for these companies in Q2.

If inflation in the world’s top economy comes in below consensus expectations, ASX BNPL shares should receive some welcome tailwinds amid hopes of a less hawkish Fed.

The post After a horror year, what’s next for ASX BNPL shares in the new quarter? 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 positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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
2 top Warren Buffett stocks to buy and hold for the long haul
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.

One of the keys to Warren Buffett’s phenomenal success over the years has been his willingness to buy stocks of good companies possessing long runways of future growth at discounted prices and then hold them for the long haul.

Using exactly that strategy, Buffett has generated aggregate gains of 3,641,613% since taking control of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) in 1965, for a 20.1% compound annual growth rate (CAGR). In comparison, the S&P 500 has generated 30,209% in total returns over that period, for a CAGR of 10.5%. In other words, there’s a good reason Buffett is referred to as the Oracle of Omaha and people buy, sell, and hold the same stocks he does.

Buffett was relatively late in buying tech stocks, but he’s made up for that since. The following pair of companies represent some of his biggest tech holdings. They fit neatly within his strategy, and you can also buy and hold them for the long run.

Apple

Apple (NASDAQ: AAPL) is not only Buffett’s biggest tech holding but his largest holding overall, representing a whopping 41% of Berkshire Hathaway’s total portfolio. With almost 1 billion shares under his management, the investing oracle has accumulated $128.2 billion worth of Apple stock. With shares down 23% from recent highs and at some of the lowest prices in the past year, it’s a stock you might want to consider acquiring for your own portfolio.

The weakness has to do with the new iPhone 14, which reportedly faces weakening demand. The company reportedly reversed plans to hike production because of it, but such bearishness is all relative.

The iPhone, which was unveiled in September and starts at $1,000, is still selling quite well, beating out low-cost entry-level models elsewhere, and Apple is still planning to produce some 90 million iPhone 14s, which is in line with its original forecast for the device.

Apple still commands about half of the U.S. smartphone market, despite the iPhone getting long in the tooth after having been first introduced 15 years ago. And MacBook shipments are going against the grain, with market intelligence firm IDC reporting shipments surging 40.2% in the third quarter compared with a 15% decline in global PC shipments.

Yet, as much as hardware remains a driving force for Apple, services are the real growth opportunity going forward. Services account for 20% of total sales, though the company is not immune to economic concerns. Analysts estimate App Store revenue dropped 5% in September due to a sharp decline in gaming revenue as inflation and recession fears take a toll on consumers. Growth may be a little slower now than it was, but margins are rising, and at 71.5%, well above Apple’s 43.3% overall gross margins.

There will be ups and downs in any business, but Apple will be commanding a leadership position for years to come and would be a stock to consider now and in the future.

Verisign

Although Buffett first bought Verisign (NASDAQ: VRSN) nearly a decade ago, he has not accumulated nearly as much of its stock as he has of Apple’s. He owns 12.8 million shares, worth some $2.3 billion. Not shabby, but it represents only 0.7% of the Berkshire portfolio, so its rise and fall won’t have as great of an impact on performance. Still, it’s one that investors ought to consider as well.

Verisign is the premier global provider of domain name registry services. It’s the main company charged with doling out the .com, .edu, .gov, and .net domain names you find on the internet, while providing the routing support for them. Its behind-the-scenes operations basically point people to the correct website when they type in any site ending in those designations, helping to keep the world online and connected.

Verisign ended the second quarter with 351.5 million domain name registrations across all top-level domains, all of which pay a fee to it annually. It’s been likened to the exclusive toll collector on the internet’s “toll road,” and it enjoys high-margin recurring revenue while having conversely low capital requirements, leading to very stable free cash flow generation.

There’s no likelihood the internet is going anywhere, and its importance to business, even in the face of a potential recession, only continues to grow. Certainly, there was a massive uptick in the number of people starting their own businesses during the early months of the pandemic — and registering their domain names — that has since normalized, but that just underscores the long-term upward trajectory Verisign has at its back.

Buffett first bought Verisign in the fourth quarter of 2012, investing $143 million at an average of around $42 per share. With near monopoly-like status in its industry, careful stewardship of its business, and a cash-rich stream of revenue, the growth thesis behind Buffett’s purchase of Verisign is still very much intact. With shares down 30% year to date, it may be the perfect time to buy your own stake, too.

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

The post 2 top Warren Buffett stocks to buy and hold for the long haul appeared first on The Motley Fool Australia.

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Rich Duprey 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 Apple and VeriSign. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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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13 October 2022
Are Coles shares a buy ahead of the company’s November AGM?
Coles Group Ltd (ASX: COL) shares have reportedly been tipped as a November winner, with the company’s annual general meeting (AGM) expected to deliver a bout of positivity.

The S&P/ASX 200 Index (ASX: XJO) supermarket operator will host its AGM next month. There, it could provide an update on its activities through the first few months of financial year 2023.

The Coles share price is trading at $16.38 right now, 0.18% higher than its previous close. Meanwhile, the ASX 200 is up 0.23%.

The stock has been outperforming this year so far, falling 8.5% compared to the index’s 12.2% tumble.

Let’s take a closer look at what the market might be expecting to hear from Coles next month.

Could Coles shares be an AGM winner?

There could be an exciting few weeks ahead for Coles shares. The company is preparing to release its sales results for the first quarter on 26 October and host its AGM on 9 November.

Making the near future more exciting, Macquarie has reportedly tipped the supermarket operator to be an AGM winner.

The broker has an outperform rating on Coles shares. It expects the company could benefit from an update at its AGM, the Australian Financial Review reports.

Last November, the company’s leaders revisited its pandemic-induced struggles before looking to the future, with a focus on the Christmas period.

This time around, they might look back at a period defined by the rising cost of living, inflation, and rate hikes.

Of course, being an S&P/ASX 200 Consumer Staple Index (ASX: XSJ) share, Coles is largely protected from such happenings.

Though, the company noted inflation will still likely impact its bottom line this financial year. Additionally, its sales growth could be dinted from the cycling of 2021 lockdowns.

Management could also look to a future without Coles Express. The business is set to be sold to Viva Energy Group Ltd (ASX: VEA) for $300 million.

Getting down to business, Coles’ AGM will see shareholders voting on the election of Terry Bowen and Scott Price onto the company’s board.

Meanwhile, Jacqueline Chow and chair James Graham will be standing for re-election. Graham noted that, if re-elected, he will likely retire before the end of the ensuing term.

Macquarie isn’t alone in expecting big things from Coles shares in the future. Morgans and Citi both also rate the stock a buy, slapping Coles shares with respective price targets of $20 and $20.10.

The post Are Coles shares a buy ahead of the company’s November AGM? 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 Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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
ResMed share price drops: Is this a buying opportunity?
The ResMed Inc. (ASX: RMD) share price is trading lower on Thursday.

In afternoon trade, the sleep treatment focused medical device company’s shares are down 1.5% to $33.78.

Why is the ResMed share price falling?

The weakness in the ResMed share price could have been driven by the release of an update from one of one of the company’s rivals.

Overnight, health technology giant Philips revealed that its third-quarter financial performance was impacted by continued supply chain challenges that were more significant than anticipated.

It also warned that the remainder of the second half may not be as strong as expected because of these challenges. The company said:

Looking ahead, Philips still expects a better second half of the year, compared to the first half of 2022. However, the company sees prolonged supply chain disruptions and a worsening macro-environment. Consequently, Philips now expects a mid-single-digit comparable sales decline for the fourth quarter of 2022 with a high-single-to-double-digit adjusted EBITA margin range.

Is this a buying opportunity?

According to a note out of Goldman Sachs, its analysts remain bullish on the ResMed share price.

This morning the broker has retained its buy rating and $36.80 price target on the company’s shares.

Based on where its shares are trading today, this implies potential upside of 9% for investors over the next 12 months. It commented:

We are Buy-rated on RMD. Our 12-month target price of A$36.80 is unchanged and remains based 85% on our NTM EV/EBITDA valuation of A$35.00 (multiple of 27.3x based on weighted average of peers, sector and DCF target multiple) and 15% on our M&A valuation of A$46.90 (multiple of 36.7x).

Goldman also remains neutral on fellow medical device company Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), with a price target of $17.90.

The post ResMed share price drops: Is this a buying opportunity? 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 ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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
‘Significant opportunity’ Zip share price turns red as CEO packs his bags for the United States
The Zip Co Ltd (ASX: ZIP) co-founder and CEO Larry Diamond has moved to the USA indefinitely.

Zip shares are down 0.78% today and are currently trading at 63.5 cents. For perspective, the S&P/ASX 200 (ASX: XJO) is 0.19% in the green today.

Let’s take a look at what is going on at Zip.

Zip CEO moves

Zip’s CEO and co-founder Larry Diamond moved to the USA “permanently” on Wednesday with his wife and family, the Financial Review reported.

Diamond sees the USA as a “significant opportunity”. Zip’s USA revenue grew more than the company’s Australian revenue in FY22. After COVID-19 restrictions, Diamond had been spending two weeks in every six in the USA, the publication reported. Commenting on his move, reportedly to Manhattan New York, Diamond said:

It is important to be there to demonstrate what we have done in Australia.

It is hard to be there then come home: I have to be on the ground. There is still a significant opportunity for fintech in the US, as US banks are asleep at the wheel.

Zip made the decision to close its Singapore and UK arms in FY22 to “optimise” the global cost base.

The USA’s Federal Reserve has raised interest rates from nearly zero to 3.25% since March. ZIP USA revenue exploded 69% to $282 million in the 2022 financial year. Australian revenue grew 39% to $297.4 million. At the time, Diamond highlighted the role of BNPL companies amid rising inflation. He said:

In times of heightened inflation and cost of living pressures, BNPL has become even more of an important budgeting tool for everyday consumers.

Meanwhile, the team at Macquarie has recently tipped the Zip share price to drop. Analysts placed a 60 cent per share price target on the Zip share price and gave it an underperform rating.

The Block Inc CDI (ASX: SQ2) share price is up 2.62% today, while Sezzle Inc (ASX: SZL) shares are 2% in the red.

Zip share price snapshot

The Zip share price has descended 85% year to date. In the past year, the Zip share price has sunk 90%.

Back on 19 February 2021, the Zip share price hit a high of $12.35.

Zip has a market capitalisation of about $448 million based on the current share price.

The post ‘Significant opportunity’ Zip share price turns red as CEO packs his bags for the United States 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 positions in and has recommended ZIPCOLTD FPO. 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
Missed the boat on Whitehaven shares? This other ASX coal share ‘screams value’: expert
It’s been an exercise in kicking thyself in 2022 for investors who ignored ASX coal shares or got out of them because they thought the transition to renewable energy was going to kill the coal industry quick.

Case in point: Whitehaven Coal Ltd (ASX: WHC) shares have skyrocketed 225% in the year to date.

Other pure-play ASX coal shares have also had many days in the sun this year.

The New Hope Corporation Limited (ASX: NHC) share price is up 194% year to date. Stanmore Resources Ltd (ASX: SMR) shares are up 173% year to date.

But according to Katana Asset Management, it’s not too late to get in on the ASX coal shares party.

Why are ASX coal shares shooting the lights out?

ASX coal shares have skyrocketed in 2022 due to a supply/demand imbalance caused by the Ukraine war.

As we reported in late September, top broker Macquarie raised its outlook for the thermal coal price by 38% to 114% over CY23 to CY27.

The broker reckons developed economies are showing a “willingness to pay a premium to secure energy supply” given the global challenges.

The broker thinks the thermal coal price will lift by 25% to US$410 per tonne in the second half of CY22 and it will be US$367.50 per tonne in 2023.

As my Fool colleague Bruce Jackson notes, elevated coal prices are delivering huge profits to the miners.

Steve Johnson of Forager Funds says some coal companies “are generating almost their whole market cap every year in cash flow“.

The coal price closed at US$405 per tonne overnight. That’s up 66% year over year. The coal price hit a record of US$460 per tonne in September.

The stock to buy if you missed out on Whitehaven shares

Katana’s Hendrik Bothma writes on Livewire that Yancoal Australia Ltd (ASX: YAL) is a sitting duck for ASX investors looking for good value today.

It could be an opportunity for investors who feel they’ve missed out on Whitehaven shares.

Bothma said:

With soaring coal prices these companies have been generating record revenue and eye-watering cash flow.

All bar one has received their share of air-time, and we think this laggard screams value. That company is Yancoal Australia.

Despite a market cap in excess of $7bn it lacks coverage and remains under-researched.

There are a few possible reasons for this… 62% of the company is owned by Yankuang Energy Group Co Ltd based in China, and until recently the company was facing a very different fate with crippling debt. This presents the opportunity, fuelled by strong coal prices the company has significantly de-risked over the past year, and now sits in a net cash position.

This turnaround has gone largely unnoticed due to the lack of coverage leaving the share price trading at a significant discount to peers.

YAL is a clear laggard from a lack of coverage, and their dramatic turnaround has gone largely unrewarded… it’s only a matter of time until they re-rate.

The Yancoal share price is up 113% in the year to date compared to a 225% bump for Whitehaven shares.

Whitehaven shares versus Yancoal shares

Katana has done a comparative analysis of the two ASX coal shares.

Before we get into the detail, here is the bottom line as Katana sees it:

YAL is currently trading on a FY22e P/E of 1.4x and EV/EBITDA 0.9x. By comparison this represents a 71% and 66% discount to their closest peer. It’s not often that you see a company generate billions in profit while trading on a P/E of <2x.

Consensus also forecasts YAL paying an FY22 full-year dividend yield of ~37% (unfranked), which is ~8x the ASX 200 average and means you get over a third of your investment back in dividends in one year. In contrast, WHC paid an effective yield of 15% in FY22 (5% dividend and 10% buyback).

WHC does however intend to undertake an additional 25% buyback if approved at the AGM this month, which would put them on a similar effective yield.

Katana’s analysis comparing Whitehaven shares and Yancoal shares reveals a few salient points.

As per the Livewire article:
- Yancoal and Whitehaven are predominantly thermal coal producers with a rough 85% thermal and 15% metallurgical coal split
- Yancoal sells more than double the volume of Whitehaven and outsells other ASX pure-play producers
- They have similar operating cash costs but Yancoal generates almost double the free cash flow per share. Yancoal has a free cash flow yield of 85% compared to Whitehaven’s 27%. That means investors today would pay 1.2 times free cash flow per Yancoal share compared to four times free cash flow for Whitehaven shares
- At the end of FY22, Whitehaven had a $970 million net cash balance. Yancoal moved from net debt of $3.4 billion with 40% gearing to a net cash position in July.
What’s the latest news from Yancoal?

As my Fool colleague James reported earlier this month, Yancoal recently made a major debt repayment.

It prepaid US$1 billion of debt from available cash. This is expected to save about US$207 million in total borrowing costs over the loan periods.

The Yancoal share price is down 0.33% at the time of writing to $5.96. Whitehaven shares are down 0.7% to $10.61.

The post Missed the boat on Whitehaven shares? This other ASX coal share ‘screams value’: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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 Woolworths share price a buy ahead of this month’s AGM?
Shares of Woolworths Group Ltd (ASX: WOW) are rangebound today and are currently trading flat at $33.05 cents apiece.

After a rollercoaster year on the charts, the Woolworths share price has now receded to 52-week lows. This follows a heavy sell-off period from August to date.

Noteworthy is that the company will also hold its annual general meeting (AGM) on 26 October.

As seen below, the share has tracked the benchmark S&P/ASX 200 Index (ASX: XJO) very closely these past 12 months.

Is Woolworths a buy?

Woolworths shares trade on a price-to-earnings (P/E) ratio of 25.6 times and are also priced at a price-to-cashflow (P/CF) ratio of 11.3 times. Each of these is ahead of the industry median of 7.9 times and 3.14 times, respectively.

Although, the company did deliver a return on equity (ROE) of 39.7% last filing. That was ahead of peers Coles and Wesfarmers at 35% and 26.6%, respectively.

However, these are historical numbers, and the company’s AGM and annual report will reveal a lot more detail.

Analysts at Macquarie yesterday released the broker’s ‘event study’ that suggests the AGM ‘season’ can provide a positive catalyst to share prices.

While Woolworths and many other names posted FY22 numbers in late August, the AGM and annual reports provide a unique insight into the performance of the first few trading months of the new financial year.

As a result, investors often reward companies on the back of any earnings surprise that may come as a result of the “mini reporting season”, the broker says.

In its report released Wednesday, the broker posted its top 100 stocks with an outperform rating. These are the names it believes warrant a buy.

Woolworths was named on the list of consumer discretionary retail shares that Macquarie tips to outperform.

Underpinning the investment thesis, the broker notes the strength of the Australian economy. It suggests “consumer spending had not declined as feared”, according to Bloomberg.

Meanwhile, Woolworths is rated as a buy from eight out of 15 analysts covering the share right now, according to Refinitiv Eikon data.

However, the share also has three sell ratings from this list. The consensus price target is $38.23, implying a small amount of upside yet to be realised if correct.

The Woolworths share price is down 13% this year to date.

The post Is the Woolworths share price a buy ahead of this month’s AGM? 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 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
Why Baby Bunting, Mirvac, NIB, and Pilbara Minerals shares are dropping
The S&P/ASX 200 Index (ASX: XJO) is on form on Thursday and on course to record a small gain. At the time of writing, the benchmark index is up 0.25% to 6,663.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down a further 3.5% to $2.92. Investors have been selling this baby products retailer’s shares following a very disappointing update earlier this week. This latest decline means the Baby Bunting share price is now down 25% over the last three sessions. Not even news of some insider buying today has been able to stop the slide.

Mirvac Group (ASX: MGR)

The Mirvac share price is down 3% to $1.87. This property company’s shares have come under pressure this week after it announced the impending retirement of both its CEO and Chair. The company’s CEO, Susan Lloyd-Hurwitz, will retire from Mirvac on 30 June 2023 after a decade in the top job.

NIB Holdings Limited (ASX: NHF)

The NIB share price is down over 11% to $6.66. This morning this private health insurer announced the completion of a $135 million institutional placement. These funds were raised at the floor price of $6.90 per new share, which represents an 8.1% discount to its last close price. The proceeds will be used to support NIB’s expansion into the NDIS market as a Plan Manager.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down 4% to $4.97. Investors appear to have been selling Pilbara Minerals and other lithium shares today following a bearish broker note out of Morgan Stanley last night. The broker has raised concerns over lithium demand and prices in China. This sent lithium stocks on Wall Street sinking deep into the red.

The post Why Baby Bunting, Mirvac, NIB, and Pilbara Minerals shares are dropping 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 Baby Bunting and NIB Holdings 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
2 top US stocks to buy for the long haul
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.

The software industry is fertile ground for investors today. Demand is on a long-term upswing, supported by a steady shift toward online work and entertainment. Many software businesses have more attractive selling models that are becoming increasingly subscription based, in turn stabilizing cash flows. And valuations have declined sharply with the latest bear market.

With those positive factors in mind, let’s look at two excellent options for investors seeking exposure to the sector. Read on for a few reasons to like Adobe (NASDAQ: ADBE) and Electronic Arts (NASDAQ: EA) stocks right now.

1. Adobe

Adobe stock has become cheaper this year, partly thanks to a growth slowdown and partly due to worries about its $20 billion acquisition of Figma. The growth hangover won’t last forever, and the buyout will likely reward patient investors.

Adobe creates software products for digital creators ranging from students to huge global brands. Its cloud platforms have attracted many more customers this year, even on top of soaring growth in earlier phases of the pandemic. Sales are up to $13.1 billion through the first nine months of the year compared to $11.7 billion a year earlier.

Operating trends might look weaker over the next nine-month period, and Adobe is taking on some extra risk as it incorporates the new Figma business into its cloud platform. But the volatility from these issues should fade, allowing patient shareholders to generate solid returns by simply holding onto this software-as-a-service stock.

2. Electronic Arts

Electronic Arts is a video game developer boasting one of the industry’s most dominant content portfolios. From sports franchises to adventure games, casual titles to battle royale brands, EA covers every industry niche and all of the popular monetization models.

That diversity is paying off. Sales in the most recent quarter were up 22% thanks to popularity across brands like FIFA 22 and Apex Legends. EA is also still boosting its earnings at a time when many other digital entertainment specialists are seeing falling profit margins.

That success is a big reason the stock is outperforming peers like Take-Two Interactive (NASDAQ: TTWO). But EA still looks attractive today at a valuation of less than five times sales, one of the cheapest rates investors have seen in the last seven years.

While demand in the video game industry might slow into 2023 as compared to the past few years, the long-term outlook is bright for this business. It is becoming more profitable and steadier, too, thanks to the shift to a subscription-based content model. As a result, investors are likely to see good returns in this software niche over time, especially if they focus on world-class businesses like EA.

Adding EA and Adobe to your portfolio might add volatility in the short term, given the rocky outlook for many tech specialists right now. In exchange for that bumpiness in returns, though, you’ll get exposure to some world-class businesses that are almost certain to be posting stronger sales and earnings in five years than investors are seeing today.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post 2 top US stocks to buy for the long haul appeared first on The Motley Fool Australia.

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Demitri Kalogeropoulos 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. and Take-Two Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts and has recommended the following options: long January 2023 $115 calls on Take-Two Interactive, 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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13 October 2022
Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher
In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.3% to 6,665.3 points.

Four ASX shares that have climbed more than most today are listed below. Here’s why they are pushing higher:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is up 2.5% to 61.5 cents. Investors have been buying this lithium developer’s shares after it announced the submission of the mining licence application for the Ewoyaa Lithium Mine in Ghana. If everything goes to plan, Ewoyaa will be the country’s first lithium mine.

ELMO Software Ltd (ASX: ELO)

The ELMO share price is up 29% to $3.13. This follows confirmation that the human resources and payroll software company is in takeover talks. ELMO notes that it has received approaches expressing interest in acquiring the company from various parties, including Accel-KKR. However, no agreement has been reached in relation to any transaction.

Qantas Airways Limited (ASX: QAN)

The Qantas share price is up 10% to $5.68. The catalyst for this was the release of a market update this morning. That update reveals that Qantas expects to report an underlying profit before tax of $1.2 billion to $1.3 billion for the first half of FY 2023. Qantas also expects its net debt to fall to between $3.2 billion and $3.4 billion at 31 December, which is below the bottom of the target range of $3.9 billion.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is up 3% to $23.08. This morning analysts at Goldman Sachs reiterated their bullish view on this banking giant following the release of a rival’s full year results. It said: “We would particularly highlight our Buy recommendation (on CL) on WBC, whose year-to-date consensus NIM upgrades have significantly lagged peers.”

The post Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Elmo Software. The Motley Fool Australia has positions in and has recommended Elmo Software. 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