Category: Stock Market

Brokers say these are the ASX 200 mining shares to buy
If you’re wanting to diversify your portfolio by investing in the mining sector, then you may want to check out the ASX 200 mining shares listed below.

Both have recently been tipped as buys in the sector by leading brokers. Here’s what you need to know about these mining shares:

Iluka Resources Limited (ASX: ILU)

The first ASX 200 mining share for investors to look at is Iluka.

It is the mineral sands and rare earths miner behind a number of quality projects across South Australia and Western Australia. This includes the Eneabba project, where Iluka is developing a fully integrated rare earths refinery, which will be only the third of its kind outside the China market.

This is a big positive given how demand for rare earths is expected to remain strong long into the future.

Analysts at Goldman Sachs are bullish on Iluka. They commented:

We are positive on ILU’s project pipeline and forecast >40% production growth in mineral sands volumes, c.18ktpa of Rare Earths (~3.5-4ktpa of high value NdPr). We think ILU’s Eneabba RE refinery is a strategic asset considering it will be only the third western world RE refinery.

The Zircon and TiO2 feedstock markets entered a supply side driven deficit in 2021, and we think prices will remain supported in 2H22 & 2023.

Goldman Sachs currently has a conviction buy rating and $13.30 price target on Iluka’s shares.

South32 Ltd (ASX: S32)

Another ASX 200 mining share that has been tipped as a buy is South32.

It is a diversified mining mining and metals company producing alumina, aluminium, bauxite, coal, copper, lead, manganese, nickel, silver, and zinc at operations in Australia, Southern Africa and South America.

Morgans is very positive on the miner due to its portfolio optimisation and exposure to metals that will be important to the decarbonisation megatrend.

It explained:

S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32’s risk and ESG profile. Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

Morgans has an add rating and $5.50 price target on South32’s shares.

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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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7 October 2022
3 ASX shares I’d buy with $500
I think ASX shares are a great way to build wealth over the long term. For beginner investors, it might be the case that $500 is how much money they have to start.

In my opinion, investing is the type of thing that people can learn best by getting stuck into it and getting experience. People don’t need a ton of money to get started.

Many brokers have a minimum investment size of $500. For example, that’s how much CommSec requires investors to have.

I think it’s a good idea for beginner investors to consider investments that could make sense for the long term and that they might want to buy more of in the future. A $500 investment could just be the start.

With that in mind, here are three I’d start buying:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is an exchange-traded fund (ETF) that owns a number of businesses that we see and probably use in our everyday lives. An ETF is an investment that owns a bunch of different shares inside it.

I think it can be a useful teaching tool to be invested in shares that we use the products or services of.

Some of the recognisable names in this portfolio are: Apple, Microsoft, Amazon.com, Alphabet, Tesla, Meta Platforms, Nvidia, Costco, Adobe, Intel, Netflix, PayPal, Starbucks, Monster Beverage, Moderna, Airbnb, Kraft Heinz and Lululemon.

It could be a good time to consider this ASX share with $500 because the Betashares Nasdaq 100 ETF has dropped around 25% this year. In other words, these shares are on a big discount at the moment.

Australian Ethical Investment Ltd (ASX: AEF)

Australian Ethical is an interesting funds management business.

It looks to provide investors with investment funds that match their ethics. For example, it avoids fossil fuel businesses and invests in companies that are making a positive difference to the world.

The ASX share has a growing number of customers, as more people look for ethical investments.

A key segment of the business is that it offers superannuation money. It had $6.2 billion of funds under management (FUM) at 30 June 2022 – over FY22, it achieved record super net flows of $0.8 billion. It’s benefiting from the regular superannuation contributions made by employees and other people.

After falling around 60% in 2022, I think the Australian Ethical share price looks compelling for the long term.

Wesfarmers Ltd (ASX: WES)

I think Wesfarmers is one of the most attractive long-term ideas around.

It has been around for many decades, and I think it could continue to be one of the longest-running companies.

Several businesses are in the portfolio, including Bunnings, Priceline, Kmart, and Officeworks.

One of the most attractive things about this ASX share is that management is unafraid to change what names are in the portfolio. For example, it has divested coal, Kmart Tyre & Auto and Coles Group Ltd (ASX: COL) in recent times. It has acquired Catch, Priceline and a stake in a lithium project in recent years. I like that it’s focused on the future.

With a good dividend, a growing portfolio of good businesses, and a long-term focus, I think Wesfarmers is one of the most solid ASX shares around.

The Wesfarmers share price has fallen around 25% in 2022.

The post 3 ASX shares I’d buy with $500 appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Adobe Inc., Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Australian Ethical Investment Ltd., BETANASDAQ ETF UNITS, Costco Wholesale, Intel, Lululemon Athletica, Meta Platforms, Inc., Microsoft, Monster Beverage, Netflix, Nvidia, PayPal Holdings, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna Inc. and has recommended the following options: long January 2023 $57.50 calls on Intel, long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, short January 2024 $430 calls on Adobe Inc., short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS, COLESGROUP DEF SET, and Wesfarmers Limited. The Motley Fool Australia has recommended Adobe Inc., Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Australian Ethical Investment Ltd., Meta Platforms, Inc., Netflix, Nvidia, PayPal Holdings, and Starbucks. 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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7 October 2022
How did the A2 Milk share price manage to beat the ASX 200 in September?
The a2 Milk Co Ltd (ASX: A2M) share price outperformed the S&P/ASX 200 Index (ASX: XJO) in September.

A2 Milk shares fell 2.7% between market close on 31 August and 30 September. In this same time frame, the ASX 200 plunged 7.3%.

Let’s take a look at how the company’s shares performed last month.

How did September pan out for the A2 Milk share price?

The A2 Milk share price lifted 5% between 31 August and 2 September before pulling back.

The infant formula company’s share price appeared to lift on momentum from its FY22 results released on August 29. Net profit after tax (NPAT) lifted 42.3% to NZ$114.7 million, while revenue jumped 19.8%,

Bell Potter analysts upgraded the company’s shares to a buy rating with a $6.35 price target following these results.

Analysts at Bell Potter said:

We upgrade our rating from Hold to Buy. If A2M can execute on its strategy to achieve ~NZ$2Bn in FY26e revenues and EBITDA margins in the teens, then it would imply compound double digit EPS growth through to FY26e.

A2 Milk was the fourth-best performer on the ASX200 on September 2, as my Foolish colleague Brooke reported at the time.

However, on 9 September, A2 Milk shares fell slightly following a bearish broker note from Goldman Sachs. Goldman warned it would be hard for A2 Milk to replicate its strong FY22 results in FY23. Goldman placed a sell rating on A2 Milk shares with a $5.80 price target.

On 12 September, A2 Milk shares climbed nearly 3% on the back of good news out of China. The China Government renewed the registration of A2 Milk’s dairy process partner, Synlait Milk Ltd (ASX: SM1) .

In mid-September, Bell Potter released another note maintaining a buy rating on the company’s share price with a $6.60 price target.

Perpetual Equity Investment Company Ltd (ASX: PIC) also expressed confidence in A2 Milk in a release on 14 September, revealing it continues to see “material upside” to the A2 Milk share price. Analyst Sean Roger said:

The most pleasing aspect of the result was the strong growth of the China Label infant formula business.

Meanwhile, later in the month, Wilson Asset Management equity analyst Shaun Weick also expressed confidence in the A2 Milk share price. He said:

A2 Milk is always a very topical one. Yeah, we actually have bought some shares coming out of the FY22 result.

Share price snapshot

The A2 Milk share price has fallen 7% in the past year, but it has climbed 8% in the past six months and 2% this week.

For perspective, the ASX 200 has shed more than 5% in the past year.

A2 Milk has a market capitalisation of more than $4 billion.

The post How did the A2 Milk share price manage to beat the ASX 200 in September? 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 recommended A2 Milk. 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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7 October 2022
After a smashing first quarter, what’s the outlook for ASX coal shares in Q2?
ASX coal shares were on fire in the first quarter of the 2022 financial year (Q1 FY22).

The miners were buoyed by soaring thermal coal prices and resurgent metallurgical coal prices.

If you’re not familiar, metallurgical coal (also called coking coal) is primarily used in steel manufacturing. Thermal coal is mostly used to generate electricity.

Just how well did ASX coal shares do in Q1?

From the closing bell on 30 June through to market close on 30 September the All Ordinaries Index (ASX: XAO) lost 1.0%.

As for the ASX coal shares:
- The Whitehaven Coal Ltd (ASX: WHC) share price leapt 86.2% higher
- Yancoal Australia Ltd (ASX: YAL) shares gained 5.4%
- And the New Hope Corp Ltd (ASX: NHC) share price rocketed 81.8%
Before moving on to the Q2 outlook, we should note that Yancoal’s share price also reflects an interim dividend payout of 52.7 cents per share, paid on 5 September. Yancoal currently trades on a whopping 16.7% trailing dividend yield.

New Hope didn’t make a dividend payout in Q1. Meantime, Whitehaven paid a 40-cent per share dividend and currently trades on a 4.9% trailing yield.

Now, what can investors expect from ASX coal shares in the three months ahead?

What’s the outlook for ASX coal shares in Q2?

As you’d expect, atop company-specific metrics, the coal miners’ fortunes are tied closely to the price of coal.

For some insight into where coal prices look to be tracking in Q2, we turn to the federal Industry, Science & Resources Department’s latest quarterly Resources and Energy Report, released earlier this week.

The report divides the outlook into coking coal and thermal coal.

On the coking coal front, the department notes that while “prices have eased back from historic highs in the September quarter, the Australian premium hard coking coal price is forecast to average almost US$400 a tonne in 2022″.

In the quarter ahead, ASX coal share investors should pay attention to conflicting forces impacting coking coal prices.

Weakening steel markets, particularly lower demand from China, are putting downward pressure on prices. However, wet conditions in Australia “are expected to add to supply pressures and place upward pressure on prices”.

And sanctions on Russian coal exports will also see supplies reduced, supporting coal prices.

The EU sanctions on Russian coal exports were meant to take full effect last month.

According to the report:

It is expected that around a third to a half of Russian exports will be stranded in the immediate future. Ultimately, around 5 million tonnes annually is expected to be stranded from global markets.

Turning to thermal coal

ASX coal shares combined have seen Australia become the world’s second-largest thermal coal exporter.

Thermal coal prices topped out at US$450 per tonne in September. That same tonne is currently fetching US$396.

According to the federal government report, “Thermal coal prices remain extremely high, driven by weather and COVID-19 disruptions, as well as market uncertainties linked to the Russian invasion of Ukraine.”

The report continues:

It is not clear how long the Russian invasion of Ukraine and subsequent sanctions against Russia will affect coal markets. The exclusion of large quantities of Russian coal from markets in the Northern Hemisphere could inflate coal prices for years to come.

Australian thermal coal prices remain extremely high, as European nations look to build stockpiles ahead of the Northern Hemisphere winter.

The department expects prices to ease in 2023 and 2024 “as trade flows reorganise and supply recovers”.

But for Q2, the outlook for ASX coal shares remains healthy.

The post After a smashing first quarter, what’s the outlook for ASX coal shares in Q2? appeared first on The Motley Fool Australia.

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

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7 October 2022
Experts say these ASX dividend shares with 7% yields are buys
Looking for dividend shares to buy? Listed below are two ASX dividend shares that experts rate as buys.

Here’s why they are bullish on these dividend shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to consider buying is Adairs. It is the furniture and homewares retailer behind the Adairs, Mocka, and Focus on Furniture brands.

Goldman Sachs is a fan of the company and recently put a buy rating and $3.05 price target on its shares.

Its analysts believe the company is well-placed for growth thanks to its highly loyal and engaged customer base (1 million+ Linen Lover members), strong social media presence, and ongoing store roll-out opportunity. The broker also highlights Adairs’ strong presence on social media, which it believes the company can leverage to drive ongoing sales growth.

In respect to dividends, Goldman is forecasting fully franked dividends per share of 18 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.07, this will mean yields of 8.7% and 9.7%, respectively.

Charter Hall Long WALE REIT (ASX: CLW)

Another ASX dividend share that has been tipped as a buy is the Charter Hall Long Wale REIT.

It is a leading property company with a focus on high quality real estate assets that are leased to corporate and government tenants on long term leases. In respect to the latter, at the end of FY 2022, the Charter Hall Long Wale REIT had a weighted average lease expiry (WALE) of 12 years. Management highlights that this provides income security.

Citi is a fan of the company. The broker recently upgraded its shares to a buy rating with a $4.70 price target.

It believes its shares are great value after recent weakness. This is particularly the case given its “low risk income stream with c. 12 year WALE and 99.9% occupancy.”

As for dividends, the broker is forecasting dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT share price of $4.14, this will mean yields of 6.8% and 7%, respectively.

The post Experts say these ASX dividend shares with 7% yields are 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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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7 October 2022
‘Attractively priced’: Experts name 2 ASX shares to pounce on right now
In distressed markets like now, there are plenty of ASX shares that seem to be cheap.

But before you buy indiscriminately, Auscap Asset Management portfolio manager Tim Carleton warned investors to avoid value traps.

“You just think that the business is far too cheap for its earnings profile,” he told The Motley Fool last week.

“The problem is often that you have a business that doesn’t necessarily have significant earnings growth.”

With that in mind, a couple of other experts named two ASX shares that are heavily discounted right now that they believe have a bright future:

These pants are on sale right now

Baker Young managed portfolio analyst Toby Grimm describes GPT Group (ASX: GPT) as “a relatively defensive player within the Australian real estate sector”.

“It manages a diversified portfolio of high quality commercial, retail, office and industrial assets in key locations across Australia.”

In the face of steeply rising interest rates, the GPT share price has sunk more than 27% since the start of the year.

Grimm told The Bull this dip now provides a tempting entry point.

“Following asset disposals, investment mandate wins, and a better-than-expected first half-year result, we believe GPT is attractively priced on an earnings multiples basis and discount to net tangible asset backing.”

The reduced share price also means the dividend yield is now up to a handy 5.6%.

Macquarie Australian equity strategist Matthew Brooks this week named GPT as a stock that’s trading at one of the biggest discounts to the long-term trend.

“We think these stocks are more likely to outperform in a bear market rally.”

Would you rather be a Qantas customer or shareholder at the moment?

All the recent bad publicity that Qantas Airways Limited (ASX: QAN) has copped for its poor service levels may have investors wondering why they would bother to buy.

But many analysts, including Ord Minnett senior advisor Tony Paterno, feel it’s far better to be a shareholder than a customer of the flying kangaroo right now.

After all, the airline does operate in a near-duopoly in the domestic market.

“Our positive view of Qantas is supported by a favourable Australian industry structure that should lead to market share gains,” 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 shares are up just 3.5% year to date but have impressively climbed 17.6% since reporting season.

The post ‘Attractively priced’: Experts name 2 ASX shares to pounce on 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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7 October 2022
Buy these 2 ASX dividend shares supercharged by acquisitions: experts
This year valuations of ASX shares have been dominated by forces external to business operations, like inflation, interest rates, the economy, and a war in Europe.

In such helpless times, it can help to rattle the cage with something that the company can control. Like a blockbuster acquisition.

That’s what two ASX-listed companies recently did, with experts recommending buying into their shares:

Sensible deal adding earnings and value

Viva Energy Group Ltd (ASX: VEA) owns the Geelong Oil Refinery and Shell petrol stations in Australia.

Last month, supermarket giant Coles Group Ltd (ASX: COL) sold its service station network to Viva for $300 million.

Ord Minnett senior advisor Tony Paterno feels positive about the acquisition that saw 710 sites join the Shell network.

“We expect the balance sheet to remain in a net cash position after the $300 million deal is completed,” Paterno told The Bull.

“We believe the deal makes sense, as it offers Viva Energy additional flexibility from a strategic and operational standpoint, while also looking accretive to earnings and value.”

Paterno recommends Viva Energy shares as a buy.

The Viva share price has risen 16.5% year to date while handing out a tidy 6.2% dividend yield.

Reducing risk and expanding margins

Baker Young managed portfolio analyst Toby Grimm considers Australia and New Zealand Banking Grp Ltd (ASX: ANZ) shares a buy.

“Compared to the other three major banks, ANZ shares were recently trading on the lowest price-earnings multiple and offer the highest prospective dividend yield.”

Indeed, ANZ shares are currently paying out a juicy 5.8% dividend yield.

Grimm reckons the recent acquisition of Suncorp Group Ltd (ASX: SUN)’s banking arm aligns with ANZ’s long-term direction.

“The decision to expand core operations via the Suncorp Bank acquisition reduces risk and supports medium-term growth,” he said.

“Net interest margin expansion is expected to underpin ANZ’s full-year result.”

ANZ shares are down 11.7% so far this year. Grimm is in good company. According to CMC Markets, nine out of 15 analysts are currently rating ANZ shares as a buy, with seven of those recommending it as a strong buy.

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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 positions in and has recommended COLESGROUP DEF SET. 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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7 October 2022
Dividend play: Expert picks his favourite ASX 200 bank shares
Bank shares might be derided by some as “boring”, but there is no denying they are reliable dividend payers.

On the ASX, investors are fortunate enough to have some giant income-producing financial institutions to choose from. There are the big four, smaller regional banks and Macquarie Group Ltd (ASX: MQG), to name a few.

But which are the best to buy right now?

Shaw and Partners portfolio manager James Gerrish had a couple of ideas in his Market Matters Q&A.

‘The best technology and capital efficiency’

For Gerrish, there is no doubt which is the best dividend stock out of all the ASX bank shares.

“Commonwealth Bank of Australia (ASX: CBA) — market cap of $154 billion — is a housing-focussed bank. The best in the sector by a large margin, and our go to.”

But he added that this quality comes at a high stock price.

“It’s the most expensive, however, the returns they have achieved over time mean that its place at the top of the tree is well justified,” said Gerrish.

“They have the best technology and capital efficiency and these are important.”

Gerrish’s team owns CBA shares in its income portfolio.

“[It’s] a core holding that we up weight/down weight but rarely sell.”

Commonwealth shares are currently trading at a price-to-earnings (P/E) ratio of around 18 with a dividend yield of 3.98%.

The CBA share price is down 5.7% year to date.

The big improver

If you have CBA in the portfolio, then Gerrish reckons National Australia Bank Ltd (ASX: NAB) is a nice counterweight.

“NAB (market cap of $90 billion) is more of a commercial/business-focussed bank,” he said.

“[It] has been the big improver in recent years and we have identified NAB as our number two pick in the sector, while viewing it as complementary to a holding in CBA.”

The Motley Fool’s Tristan Harrison last week was full of praise for NAB shares, labelling it a “Warren Buffett” style investment.

“I think that Buffett will always want to buy businesses when he thinks they’re good value. But, I also think he’d want to choose investments that are quality,” said Harrison.

“In my opinion, NAB is a high-quality bank. One example can be seen in the profit NAB has achieved this year despite the headwinds of competition.”

Certainly, National Australia Bank has quite a few fans at the moment. According to CMC Markets, seven out of 14 analysts currently rate it as a buy. Six of those recommend it as a strong buy.

The NAB share price is up 3.3% so far this year, giving it a PE ratio of 15.4. Its dividend yield stands at 4.6%.

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Motley Fool contributor Tony Yoo 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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7 October 2022
Is the Rio Tinto share price a buy in October?
Amid a busy year on the charts, the Rio Tinto Limited (ASX: RIO) share price has continued in a sawtooth-like fashion and hit 52-week lows in September.

In what’s been an otherwise strong year for resource stocks in mining and energy, the diversified mining giant has failed to impress in 2022.

Instead, shares have drifted lower and reached year lows of $87.78 on 26 September. Naturally, the question then turns to Rio’s outlook for October.

Is Rio Tinto a buy?

Those hoping to secure Rio shares at these compressed prices might think so. Pending one’s view on the industry outlook, there are numerous tailwinds to mention from macroeconomic drivers.

However, analysts covering the share aren’t as conclusive.

Rio is currently rated a buy from 10 out of 18 brokers, with the remaining coverage saying it’s a hold, according to Refinitiv Eikon data.

The consensus price target from this list is $109.77, implying around 12% of upside potential from the current price of $97.54.

The Rio share price also trades on a forward price to earnings (P/E) ratio of 9.3 times, ahead of the GICS Metals & Mining Industry’s median of 6.6 times.

This is coupled with a price-to-book (P/B) ratio of 1.92 times. Again, this is a step in front of the peer median’s 1.46 times.

It’s not all capital gains that make up the Rio Tinto investment debate, however. Dividends are a large part of the total return investors can expect in this name.

According to Refinitiv, analysts estimate Rio to deliver a 7.6% dividend yield in the next 12 months. This is again ahead of peers but behind its trailing 12 month’s 8.8% yield.

The company also produced a return on equity (ROE) of 41.6% in 2021. This will be an interesting number to compare against in the mining giant’s upcoming FY22 results in October.

Is the premium on Rio Tinto shares worth it?

All-in-all, it looks as if investors are asked to pay a small premium to buy Rio shares versus comparable peers in the industry.

The question is whether the premium is justified or not.

While many of Rio’s commodity markets have performed exceptionally well in 2022, its hero product, iron ore, has mirrored the Rio Tinto share price this year.

As seen below, the two have tracked each other with striking similarity; drifting to continuous new lows in unison.

With iron ore trading near its 52-week lows as well, pressure remains from the bottom on the Rio Tinto share price. So far, it’s down more than 2% this year to date.

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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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7 October 2022
5 things to watch on the ASX 200 on Friday
On Thursday, the S&P/ASX 200 Index (ASX: XJO) managed to keep its winning streak alive with the smallest of gains. The benchmark index rose a modest 1.8 points to 6,817.5 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to end the week in the red after Wall Street tumbled overnight. According to the latest SPI futures, the ASX 200 is expected to open 55 points or 0.8% lower this morning. In late trade in the United States, the Dow Jones is down 0.9%, the S&P 500 has dropped 0.7%, and the Nasdaq has fallen 0.35%.

Oil prices rise again

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a decent finish to the week after oil prices pushed higher again overnight. According to Bloomberg, the WTI crude oil price is up 1% to US$88.61 a barrel and the Brent crude oil price is up 1.3% to US$94.57 a barrel. OPEC’s production cuts have boosted prices to three-week highs.

Dividends being paid

Today is payday for a number of dividend-paying ASX 200 shares. This includes insurance broker AUB Group Ltd (ASX: AUB), waste management company Cleanaway Waste Management Ltd (ASX: CWY), property company Home Consortium Ltd (ASX: HMC), telco Spark New Zealand Ltd (ASX: SPK), and logistic solutions technology company WiseTech Global Ltd (ASX: WTC).

Gold price edges higher

Gold miners including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.05% to US$1,721.70 an ounce. The precious metal appears to be running out of steam after some strong gains recently.

TechnologyOne rated neutral

The team at Goldman Sachs has retained its neutral rating on TechnologyOne Ltd (ASX: TNE) shares with a $13.15 price target. This follows the company’s Showcase event this week, which highlighted its cloud-native future and new fee model. Goldman commented: “The company did not elaborate on the pricing of its SaaS+ model, except to say that it will be greater than the current typical annual SaaS fee and will index with CPI.”

The post 5 things to watch on the ASX 200 on Friday 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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Austbrokers 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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7 October 2022