Category: Stock Market

2022 has been an extremely volatile year for a number of ASX shares. Are the lower prices of businesses that are burning cash too attractive to ignore? Or are they too risky?

There are plenty of businesses that have seen big falls.

At the time of writing, before Thursday’s trading, these are some examples of the falls we’ve seen in 2022:

The RPMGlobal Holdings Ltd (ASX: RUL) share price has dropped 23%.

The Whispir Ltd (ASX: WSP) share price has declined 53%.

The Bigtincan Holdings Ltd (ASX: BTH) share price has fallen 31%.

Of course, every fall is different and each investor may have a different thought about why they sold (or bought) at a lower price.

However, some investors may be thinking it’s possible that some of these unloved names could have been oversold. Only time will tell for sure, but let’s take into account some thoughts from some expert investors on the situation.

Forager is a fund manager that has a reputation for often finding sold-off opportunities.

The Forager Australian Shares Fund (ASX: FOR) investment team recently gave some comments discussing the types of companies the fund is currently invested in:

On the current portfolio and RPMGlobal

Forager senior analyst Alex Shevelev said:

Some of these investments are in businesses that are currently loss-making. And you might be asking why a value biased fund manager is investing in companies that are loss-making. Well, we’ve actually had quite a bit of success in this space over the last 10 years of the existence of the fund.  Jumbo Interactive Ltd (ASX: JIN) a couple of years back was a great example [and] RPM is a good more recent example. These companies are frequently misunderstood, and it’s exactly because of that short-term lack of profitability that the companies can sometimes build up significant long-term value.

On Whispir

The Forager analysts pointed out to investors that the ASX shares they are interested in have proven business models. They have a proven product that “solve real customer needs and that already generate decent and growing amount of revenue.”

Forager senior analyst Gaston Amoros said this about one of the holdings:

Just to give you an example, Whispir already caters to some very large customers and if clearly addressing need to manage communications with customers and employees more efficiently and effectively.

What about Bigtincan?

Shevelev gave further comments on the types of ASX shares they’re looking at and another holding:

There’s also a lot of recurring revenue in these businesses. Now, customers tend to stay very sticky to these products. They’re often mission critical and they’re very difficult to rip out and replace with competitive products. So, a company like Bigtincan, for example, the sales enablement business, they have the vast majority of their customers from the prior year stay with them.

Foolish takeaway

So, it’d probably be wise to think individually about each business that has been sold off. But, ASX shares that have proven business models, have loyal customers, are making revenue and address a key need could be interesting to look at in this environment according to the investment thoughts of Forager.

The post Loss-making ASX shares: Big investment opportunity or extreme risk? appeared first on The Motley Fool Australia.

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More reading

• Why is the Whispir share price tumbling 10% on Monday?
• ‘Great long-term investment’: Expert names small-cap ASX share to buy for cheap

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 BIGTINCAN FPO, RPMGlobal Holdings, and Whispir Ltd. The Motley Fool Australia has positions in and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended RPMGlobal Holdings and Whispir 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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The Woodside Energy Group Ltd (ASX: WDS) share price has been volatile over the past 12 months. Amid the rollercoaster of the ASX share market in the last few months, was it a good move to acquire the BHP Group Ltd (ASX: BHP) oil and gas business?

For readers who don’t know, Woodside is the largest oil and gas company on the ASX. It became a lot larger after merging with the BHP petroleum division and issuing BHP shareholders with new Woodside shares.

The merger

When it announced the acquisition back in November 2021, Woodside boasted that the combined business would create a global top 10 independent energy company by production.

It said that the combination will lead to a business that has a high margin oil portfolio, long-life LNG assets, and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

Greater scale is one obvious benefit. But, Woodside has also estimated that there will be synergies of more than US$400 million per annum from optimising corporate processes and systems, leveraging combined capabilities, and improving capital efficiency on future growth projects and exploration.

How has the Woodside share price performed?

The merger was completed at the start of June 2022. Since then, the Woodside share price has risen by around 5%.

Over the same time period, the S&P/ASX 200 Index (ASX: XJO) share price has dropped more than 3%. In other words, Woodside shares have outperformed the ASX 200 by almost 10% since the merger happened. That’s quite a bit of outperformance over a relatively short period of time.

However, the merger wasn’t a surprise in June 2022. Investors have known about it since November 2021. Since the announcement of the merger, the Woodside share price has risen by 44%. That compares to a 5.5% drop for the ASX 200. Woodside shares have outperformed by around 50%.

However, it’s hard to say how much is down to Woodside’s merger with the BHP division and how much is down to the huge jump in energy prices after the Russian invasion of Ukraine.

But, don’t forget that Woodside will get a few hundred million dollars of synergies. It’s not just about the revenue boost.

Woodside CEO Meg O’Neill said:

The merger delivers a diverse portfolio of quality operating assets, plus a suite of growth opportunities across oil, gas and new energy that promises ongoing value for our shareholders.

We believe that completion of the merger will enable Woodside to play a more significant role in the energy transition that is imperative as we respond to climate change while ensuring reliable and affordable supplies of energy to a growing and aspirational global population.

Woodside dividend expectations

According to estimates on CMC Markets, Woodside is expected to pay a grossed-up dividend yield of 16.2% in FY22.

Woodside will reveal its full-year results for FY22 on 30 August.

The post Has the BHP Petroleum acquisition been positive for the Woodside share price? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 energy shares mixed amid bearish oil price outlook
• 2 little-to-no-debt ASX 200 shares to buy in a downturn: fundie
• Why is the Woodside share price having such a strong start to the week?
• 5 things to watch on the ASX 200 on Monday

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 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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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 Nasdaq Composite Index (NASDAQ: .IXIC) is cranking on August 10, 2022, up 2.4% at 12:53 p.m. Today’s big gains come as earnings season continues and following the release of the latest inflation data from the U.S. Department of Labor this morning. According to the data, the Consumer Price Index, or CPI, rose 8.5% in July. For context, that’s still near the highest levels of the past four decades, but it’s trending very much in the right direction after June’s 9.1% set a 41-year high.

Today, investors are betting that slowing inflation is a good signal that a sharp recession is less likely. Energy and food prices are moderating, and many companies are still reporting upbeat quarterly results and expectations. Upstart (NASDAQ: UPST) and Affirm Holdings (NASDAQ: AFRM) are at the leading edge of that consumer risk, and their highly volatile stocks are up big today on the optimistic reading of the inflation data.

Today’s noteworthy postearnings gainers include The Trade Desk (NASDAQ: TTD), with shares up more than 36% at one point. Investors are also betting on better prospects for renewable and low-carbon energy companies. Shoals Technologies (NASDAQ: SHLS) and Plug Power (NASDAQ: PLUG) are two of those up big today.

When near-record inflation is a “good” thing

While the CPI is still very high, today’s interpretation of the data was generally positive. We have seen energy and food prices begin to come down, and some areas of the global supply chain crisis are improving, too. Semiconductor companies, in particular, are reporting that the cycle in that industry is turning from too much demand to too much supply in certain product categories. While that’s not a positive for shareholders in the short term, it’s positive for the broader economy that the supply shortfall that’s kept many products off the shelves and prices very high might be starting to ease.

Investors see this as very positive for Upstart, the AI-driven consumer lending platform, and for buy now, pay later specialist Affirm Holdings, with their shares up 16% and 13%, respectively, at this writing. Both companies live at the leading edge of consumer credit risk. By and large, the bulk of their lending products are unsecured consumer debt (though Upstart is diversifying into auto lending), which is the first kind of credit to see increased rates of default in weak economic periods. However, today’s gains could prove temporary, as both saw their stocks fall sharply earlier this week on earnings and economic speculation.

The Trade Desk’s second quarter was, by almost every measure, exceedingly strong. It reported 35% revenue growth, continued to retain more than 95% of its customers, and more than doubled its operating cash flows. If there’s one not-great number, it’s stock-based compensation, which almost tripled year over year and was the primary factor in The Trade Desk reporting a GAAP loss.

What happens next? Plenty of volatility as investors try to telegraph what happens in the near term. Investors in both companies should be prepared for that and acknowledge that their risks will be amplified if consumers continue to get squeezed. The companies’ long-term prospects, however, are tied to their ability to keep disrupting the traditional credit card and consumer lending industries.

The Trade Desk shakes off earnings woes for adtech

The Trade Desk’s results were a breath of fresh air for the adtech industry. In recent weeks, many of the companies that are deeply involved in the growing digital ad industry have reported somewhat mixed results. The mature giants like Facebook parent Meta Platforms (NASDAQ: META) have reported strong ad volume but falling ad rates, as marketers have cut ad spending.

Investors seem happy to trade a portion of equity to co-founder and CEO Jeff Green, however, as part of his compensation. Shares are up a massive 36% at this writing.

Cleantech stocks cleaning up today — can they keep it up?

The stocks of a number of clean energy companies are up big today. Shares of Shoals Technologies, which makes electrical wiring for utility-scale solar plants, are up 14% today, joining hydrogen companies Plug Power and Bloom Energy (NYSE: BE). The latter’s shares are up more than 15% after Bloom reported expectations-beating earnings and said it expects to be cash flow positive for the full year.

Plug Power reported on August 9. Unlike Bloom, its results came up short of expectations. However, analysts continued to have bullish outlooks, raising their price targets on the company, partly due to the expected tailwinds of the recently passed landmark federal climate legislation.

Looking beyond near-term price targets and potential tailwinds from the new climate law, investors should focus on the financials. Plug Power has a very long record of cash burn (it has never had a positive-cash-flow year in its multidecade history), while Shoals and Bloom have demonstrated positive cash flows in the past and are trending in positive directions.

Optimistic thinking is nice, but as investors, we mustn’t forget that long-term wealth comes from a healthy — growing — bottom line.

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

The post Nasdaq surges after inflation data: Why the top tech and growth stocks moved higher appeared first on The Motley Fool Australia.

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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. Jason Hall has positions in Bloom Energy Corp, The Trade Desk, and Upstart Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Affirm Holdings, Inc., Meta Platforms, Inc., The Trade Desk, and Upstart Holdings, Inc. The Motley Fool Australia has recommended Meta Platforms, Inc., The Trade Desk, and Upstart Holdings, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The CSL Limited (ASX: CSL) share price has been on a decent run over the last couple of months.

Since the middle of June, the biotherapeutics company’s shares have risen a sizeable 14%.

This compares to a gain of approximately 6% for the benchmark ASX 200 index.

Why is the CSL share price on a roll?

Investors have been bidding the CSL share price higher due to the release of very positive industry data.

That data shows that plasma collection levels are now back to pre-COVID levels in the United States at long last.

This is a big positive for CSL as plasma is a key ingredient in many of its most lucrative therapies. When it was in short supply, the company was paying more than normal for donations, which was putting pressure on its margins. With supply now back to normal and collection prices reducing, CSL should soon start to see its margins improve again.

All in all, the general consensus is that CSL is now over the worst of its issues, and it is onwards and upwards from here. But will it be onwards and upwards for the CSL share price?

Where are its shares heading?

According to a note out of Goldman Sachs, its analysts believe CSL’s shares may be close to peaking for the time being.

This morning the broker has resumed coverage on the company with a neutral rating and $307.00 price target. This implies potential upside of just 5% from the current CSL share price of $292.35.

Goldman believes that the company’s shares are about fair value now based on historic earnings multiples. It explained:

Valuation of 34x NTM P/E has now recovered to the 5yr avg, and is back above the 10yr (29x). We believe risk-reward is once again well-balanced, and reinstate our rating at Neutral, with a 12-month TP of A$307.

The post Goldman Sachs gives its verdict on the CSL share price appeared first on The Motley Fool Australia.

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More reading

• CSL share price climbs as $16 billion Vifor acquisition becomes effective
• ‘Excited about the pipeline’: Why Wilson says the CSL share price is in the buy zone right now
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts
• Up 8% in July, is there more upside in the CSL share price this earnings season?
• Why Citi just became even more bullish on the CSL share price

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 CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In this high-tech age that we live in, those ASX shares perceived to represent “boring” businesses can be unfairly overlooked.

According to Switzer Financial Group director Paul Rickard, Aurizon Holdings Ltd (ASX: AZJ) is a prime example of a company with this perception in the market. 

“Boring is, I guess, any business involved in rail, haulage, logistics and coal,” he told Switzer TV Investing.

“But for many investors, they’ve gone to Aurizon for the income — because it’s been a high yielder.”

Share price heavily discounted after dividend announcement

On Monday, the market savaged Aurizon shares after the company revealed its full-year financials.

Investors were disturbed that a stock well-known for its yield was cutting its dividend by 24%. The Aurizon share price plummeted 6% that morning before recovering somewhat in the afternoon.

Rickard feels like that was an overreaction.

“It did cut its dividend, but that was, by and large, expected,” he said.

“It was actually a little bit better than analyst forecasts — but it was still a dividend cut.”

The sell-off, he added, has created “some value” for those dividend hunters willing to buy in for about a 5.6% yield next year.

“The market probably misunderstood what was coming.”

Taking advantage of the market’s misjudgment

Aurizon has two main businesses. One is owning and maintaining a network of train tracks in Queensland, the other is a haulage business that has many interests outside of that state. 

While much of its business relies on transporting coal, Rickard reckons Aurizon is shifting away from that to boost the stock’s ESG attractiveness.

“It’s actually divesting a part of what’s called East Coast Rail, which is its Hunter Valley thermal coal haulage business.”

The track business, which brings in about 55% of its revenue, can be considered an infrastructure play.

The Aurizon share price closed Wednesday at $3.89.

Aurizon isn’t a stock Rickard would actively chase, but Monday’s dip makes it appealing right at the moment.

“It’s an attractive yield… Markets have probably misjudged what they’re being told to create [buying] opportunities.”

It usually trades within a tight range, and is at the lower side of that spectrum.

“I think at $3.80 to $3.90 it’s reasonable for a dividend payer,” said Rickard.

“I wouldn’t go too much above $4, and I’m not expecting a huge [capital] gain. But I think you can quantify the risks.”

The post ‘Misunderstood’: Expert names dividend ASX share to buy now at price dip appeared first on The Motley Fool Australia.

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More reading

• Why Alliance, Aurizon, MVP, and Suncorp shares are dropping today
• Aurizon share price slips as dividend cut by 24%
• 5 things to watch on the ASX 200 on Monday
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Aurizon share price sinks despite ‘transformative’ acquisition win

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 recommended Aurizon 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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The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Thursday.

That’s because this morning the telco giant has released its highly anticipated full year results.

Telstra share price on watch following strong result and dividend increase

• Revenue dropped 4.7% year over year to $22,045 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 8.4% to $7,256 million
• Net profit down 4.6% to $1,814 million
• Fully franked final dividend of 8.5 cents per share
• Outlook: FY 2023 underlying EBITDA of $7.8 billion to $8.0 billion

What happened in FY 2022?

For the 12 months ended 30 June, Telstra posted a 4.7% decline in revenue and an 8.4% increase in underlying EBITDA to $7.3 billion.

A key driver of Telstra’s earnings growth was its mobile business. It performed very strongly, reporting EBITDA growth of 21.2% or $700 million over the prior corresponding period. This reflects the addition of 155,000 net retail postpaid handheld services, 2.9% postpaid handheld average revenue per user (ARPU) growth, and 6.4% mobile services revenue growth.

In addition, 1 million Internet of Things (IoT) services were added, along with 218,000 wholesale services.

Telstra also advised that InfraCo Fixed income was $2.4 billion, with core access revenue up 3.1% including NBN recurring receipts up 3.3%. Amplitel was established as a standalone business with the sale of a non-controlling 49% interest delivering net cash proceeds after transaction costs of $2.8 billion. Amplitel revenue increased by 8.9%.

Things weren’t quite as positive in Fixed for Consumer and Small Business. Telstra notes that this continued to be impacted by the tail end of the NBN migration. However, there is confidence that segment EBITDA has bottomed.

Another positive was that Telstra has continued to cut costs. It revealed that underlying fixed costs were down $454 million and total operating expenses were down $906 million.

In light of this strong performance and its positive outlook, the Telstra board decided to make its first dividend increase in eight years. It lifted its final dividend by half a cent to 8.5 cents, bringing its full year dividend to 16.5 cents per share.

How does this compare to expectations?

The good news for the Telstra share price today is that this result appears to be ahead of expectations.

For example, according to a note out of Goldman Sachs, its analysts were expecting revenue of $21.6 billion and underlying EBITDA of $7.13 billion. Telstra has beaten on both.

And much like the rest of the market, the broker was not expecting a dividend increase in FY 2022. Goldman was forecasting a final dividend of 8 cents per share and a full year dividend of 16 cents per share.

Management commentary

Telstra’s CEO, Andy Penn, was very pleased with the company’s performance in FY 2022. He said:

Our mobiles result was outstanding, Consumer & Small Business Fixed grew sequentially in the second half, Enterprise returned to growth and we started to realise the benefits of setting up our infrastructure assets as standalone InfraCo businesses. We also continued to take cost out of the business, with underlying fixed costs down $454 million and total operating expenses down $906 million, or 5.8 percent.

Commenting on the company’s decision to increase its dividend for the first time in many years, Penn said:

This represents the first increase in the total Telstra dividend since 2015 and recognises the confidence of the Board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens EPS growth from FY21 – FY25, the strength of our balance sheet and the recognition by the Board of the importance of the dividend to shareholders

Outlook

Telstra has provided an update on its guidance for FY 2023. Pleasingly, it is in line with previously stated targets. It is as follows:

• Total Income of $23.0 billion to $25.0 billion
• Underlying EBITDA2 of $7.8 billion to $8.0 billion
• Capex4 of $3.5 billion to $3.7 billion
• Free cashflow after lease payments (FCFal) of $2.6 billion to $3.1 billion

The post Telstra share price on watch amid strong FY22 result and surprise dividend increase appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s the Telstra dividend forecast through to 2024
• ‘Exciting’ ASX 200 dividend share expected to deliver material returns: expert
• ‘Wouldn’t have been on my radar previously’: Why WAM likes Telstra shares right now
• Looking to buy Telstra shares? Here’s what to watch when the telco giant reports this week

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

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The Zip Co Ltd (ASX: ZIP) share price has run out of steam recently.

After rocketing higher in July, the buy now pay later (BNPL) provider’s shares have taken a tumble.

For example, since this time last week, the Zip share price has lost 13% of its value.

Where next for the Zip share price?

Unfortunately, one leading broker believes the Zip share price could be heading lower from here

According to a recent note out of Citi, its analysts have downgraded the company’s shares to a sell rating with a 70 cents price target.

Based on the current Zip share price of $1.23, this implies potential downside of 43% for investors over the next 12 months.

What did the broker say?

Although Citi believes that Zip’s plan to tighten its risk settings will reduce its bad debts, it expects this to come at the expense of growth.

In light of this, it feels that Zip may need to find further way to lower its costs to reduce its cash burn.

It explained:

While we expect net bad debts to decline as Zip tightens risk settings, we expect this to negatively impact TTV and have lowered our growth forecasts meaningfully and think Zip needs to make further cost cuts to reduce cash burn.

Given the risks to both transaction volumes and bad debts over the next 12 to 18 months in a tougher economic environment, we downgrade to Sell/High Risk.

The broker also criticised management’s very costly decision to pursue the acquisition of Sezzle Inc (ASX: SZL).

We also have some concerns on Zip’s decision making as the Sezzle acquisition process (which we had concerns on) resulted in Zip spending $60 million of capital. We continue to see value in Zip’s Australian business given its differentiated offering (albeit with higher credit risk), but see the US business as lacking scale.

The post Top broker warns that the Zip share price could sink 43% appeared first on The Motley Fool Australia.

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• Does this signify more bad news for ASX BNPL shares like Zip?
• Why is the Block share price tumbling 5% on Wednesday?
• Could Afterpay’s global ambitions threaten the future of Zip shares?
• These are the 10 most shorted ASX shares
• Did Zip really outgrow former ASX favourite Afterpay in the June quarter?

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 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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Buying ASX shares can be very fruitful in the long run, but it’s demonstrably difficult to do better than average (“the market”).

If it was easy, everyone would be doing it.

So if you’re not happy with the performance of your portfolio, especially in a turbulent year like 2022, you may need to pause and assess.

After all, “Am I doing this right?” is a wise question one can ask oneself in any endeavour in life.

To help answer this self-critique, the team at Marcus Today put forward two types of amateur portfolios that should ring alarm bells:

Just buy ETFs rather than own a ‘moron portfolio’

The first red flag is if your portfolio consists entirely of well-known S&P/ASX 100 (ASX: XTO) companies.

“A lot of you probably do this by default. This is where most of you get trapped. Holding around 20, mostly big, mostly obvious stocks,” the Marcus Today blog post read.

“You trust them by virtue of their size and brand but don’t know them in detail.”

One might think holding such massive companies is “safe” but this is deceptive because it can provide a false sense of security and encourage laziness.

“This is often a more risky approach than it looks because of your lack of research and engagement.”

Many people who possess this mix of ASX shares are voluntarily “stuck” because they are too afraid of the potential tax bill after years of holding.

“You can get trapped into this approach by capital gains (‘I can’t sell’), which is understandable but not ideal,” read the blog post.

“It may seem normal and sensible, but the truth is that if you’re going to do this ‘moron portfolio’ thing, you’d be better saving yourself from a lot of admin, activity and lost evenings and weekends by just buying market ETFs.”

The Marcus Today team admits people who ended up with such a portfolio from an inheritance — or from shares provided at an initial public offering, such as Commonwealth Bank of Australia (ASX: CBA) or Insurance Australia Group Ltd (ASX: IAG) in the 1990s and 2000s — are not at fault.

But even they might want to consider mixing up the investments.

“Just don’t pretend it’s ‘clever’. It’s lazy.”

Trading anything and everything

Perhaps the opposite of just holding a bunch of ASX 100 names is stock picking anything and everything.

For the Marcus Today team, this should also ring alarm bells.

“Now we get to a place [that] a lot of beginners get trapped without knowing it’s not normal,” read the blog post.

“It involves tips and it invites a lot of volatility, risk and reward. It is for people who don’t have a heart condition.”

The amount of volatility and risk involved in such a portfolio means a lot of time and energy required to keep one’s head above water.

“This is riding the stormy seas. It’s about timing fads, finding diamonds in the rough, spotting change.

“It’s for those of you with the time and energy and risk profile to attempt transformation.”

The trouble with this approach, other than the heightened risk, is that it only really works during bull markets. Years like 2022 would have slaughtered such a portfolio.

“Stocks with no earnings die in the cold. Trading loses money when it goes cold. Trading is an activity to do when the sun comes out.”

The post ASX investors beware: Watch for 2 red flags in your portfolio appeared first on The Motley Fool Australia.

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• 3 rising ASX shares to buy that have passed the bottom: expert
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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 Insurance Australia 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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The Commonwealth Bank of Australia (ASX: CBA) share price was out of form on Wednesday.

The banking giant’s shares ended the day 0.3% lower at $101.00.

Why did the CBA share price edge lower?

Investors were selling down the CBA share price despite the banking giant delivering a full year result a touch ahead of expectations.

For example, according to a note out of Goldman Sachs, the bank’s earnings were 2% ahead of its expectations thanks to better than expected bad and doubtful debts. In addition, the CBA final dividend was slightly ahead of the broker’s expectations and its CET1 ratio was 8 basis points ahead of estimates at 11.5%.

Judging by the CBA share price performance, it seems as though the market was expecting an even stronger result. And with that not coming, they decided to hit the sell button.

Is it time to invest?

Unfortunately, despite Australia’s largest bank outperforming its expectations, Goldman Sachs hasn’t seen enough to change its recommendation.

It continues to rate the bank as a sell with an improved price target of $86.86.

Based on the current CBA share price, this implies potential downside of 14% for investors over the next 12 months.

Why is Goldman bearish?

While Goldman acknowledges that CBA is a high quality bank and that its fundamentals remain strong, it just can’t justify the premium valuation of the CBA share price.

It explained:

Overall we reiterate our Sell rating, given: i) while operating trends remain strong with volume growth best amongst the major bank peer group (3 month annualised 0.9x system vs. NAB also at 0.9x, WBC 0.7x, ANZ 0.6x), and ii) CBA has the best leverage of the major banks to higher rates, iii) it is also more exposed to sector wide headwinds such as intense mortgage price competition, as well as further potential macro downside that appears likely to more adversely impact the household this cycle. Overall, we do not believe its fundamentals justify the 56% 12-mo forward PER premium it is currently trading on versus peers, compared to the 19% historic average.

The post Is the CBA share price a buy after the bank’s FY22 results? appeared first on The Motley Fool Australia.

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With the S&P/ASX 200 Index (ASX: XJO) bouncing back 8.8% over the past 50 days, the hottest question for investors right now is whether we are past the bottom.

However, experts have always warned that trying to time the market is a mug’s game. Not even professionals can do it successfully.

It’s a different matter for individual ASX shares though.

When you focus on just one stock, one can estimate whether there has been a turnaround after assessing the company’s financials, external drivers, and investor behaviour.

Keeping this in mind, Fairmont Equities managing director Michael Gable named three ASX shares this week that he thinks are on the way up:

Rocketing upwards even as the market was tanking in June

Digital audio networking provider Audinate Group Ltd (ASX: AD8) has seen its share price climb a spectacular 73% since its 11 May trough.

This is a great sign for Gable.

“It bottomed in May. The market bottomed in June,” he told Switzer TV Investing.

“If you see a stock that’s bottomed and heading higher well before the rest of the market… you’re better off buying something like this because it’s already outperforming the market.”

It seems everyone is loving Audinate right now.

According to CMC Markets, all four analysts that cover it rate the stock as a strong buy.

Last week, The Motley Fool reported Morgan Stanley had a buy rating for Audinate with a price target of $9, which has already been met.

The company is due to release its financials on 22 August.

Great result, recovery well underway

After losing 44% for the year until 17 June, REA Group Limited (ASX: REA) shares have since rallied to boost the company’s value by a third in just a few weeks.

The stock is sensitive to interest rate fears, not just as a member of the technology sector, but because of its exposure to real estate.

Gable now feels like the turnaround is in place.

“Mid-June, everyone was pricing in silly interest rates. What they’re pricing now isn’t so silly,” he said.

“It’s starting to make sense that we should get a bit of a recovery here.”

Another positive is that REA shares have shown decent resilience during a tough time for growth shares, according to Gable.

“The good thing is it hasn’t dropped as much as some other tech stocks.”

Goldman Sachs, The Motley Fool reported, is a fan of REA’s financials this week and also rated the stock as a buy.

“Overall we thought the REA result, commentary and cash performance was positive.”

‘BHP has bottomed out’ 

Mining giant BHP Group Ltd (ASX: BHP) is one that the Fairmont team has recently bought into.

The share price has gained about 7.8% since a 17 July trough.

“I think BHP has bottomed out. It’s really moving along quite nicely.”

The company this week proposed to acquire OZ Minerals Limited (ASX: OZL). Although the offer was promptly declined, Morgans doesn’t think that’s the end of the story.

“If nothing else, this development should reduce any concern that BHP might have been considering a larger, more transformative acquisition,” stated its analysts.

“There has been a consistent fear from some that history would repeat itself and BHP eventually [becomes] attracted to a +$100 billion acquisition/merger at a high point in the cycle. Instead, BHP has remained on-strategy and focused.”

The post 3 rising ASX shares to buy that have passed the bottom: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 ASX All Ordinaries shares rocking new 52-week highs on Wednesday
• Does this signify more bad news for ASX BNPL shares like Zip?
• Here are the top 10 ASX 200 shares today
• Mayne Pharma share price rockets 25% on $680 million payday

Motley Fool contributor Tony Yoo has positions in AUDINATEGL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended AUDINATEGL FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended REA 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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