Category: Stock Market

The Zip Co Ltd (ASX: ZIP) share price was an incredible performer last month.

During the month of July, the buy now pay later (BNPL) provider’s shares rocketed a whopping 159% higher.

What happened to the Zip share price?

There appear to have been a few catalysts for the stellar rise by the Zip share price.

One was news that the company has decided to pay an US$11 million break fee to scrap its merger with rival Sezzle Ltd (ASX: SZL).

The market was never quite sure about the deal and with management expecting that going solo will help it become profitable sooner, the Zip share price unsurprisingly reacted positively to the news.

What else?

Also giving the company’s shares a boost was a rebound in the tech sector.

While the benchmark ASX 200 index rose an impressive 5.7% last month, the S&P ASX All Technology index vastly outperformed this with its gain of 16.2%.

Investors appear to have rotated back into the sector on the belief that tech shares like Zip had been oversold.

And so with the Zip share price still down 74% in 2022 even after last month’s heroics, it wasn’t overly surprising to see the company outperform its peers. Especially with its outlook improving following the Sezzle merger termination.

Quarterly update

Finally, the release of a reasonably solid quarterly update also gave its shares a lift.

For the three months ended 30 June, Zip reported a 27% increase in quarterly revenue over the prior corresponding period to $160.1 million. This was driven by strong results across its consumer operations in the United States, Australia, New Zealand and Rest of World despite growth being tempered by a deterioration in consumer sentiment and adjustments to risk settings.

This means that for the full-year, Zip delivered a 54% increase in revenue to approximately $621.5 million.

Management also revealed further steps that it believes will help reduce its global cost base. This includes closing down Zip Business and the Pocketbook app, as well putting its planned crypto and investment products on the back-burner. It may even exit the UK and other Rest of the World businesses.

All in all, a great month for shareholders. Here’s hoping that August is just as kind to Zip’s shares.

The post Why did the Zip share price rocket 159% in July? appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares in July
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why BrainChip, Fortescue, PointsBet, and Zip shares are dropping
• ASX 200 midday update: Zip crashes, PointsBet tumbles
• The big dipper: Zip share price dives 24% in wild end-of-week ride

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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The AGL Energy Limited (ASX: AGL) dividend will be in focus this reporting season. After dividend cuts in the last years, could there be a turnaround in the upcoming result?

AGL’s profit has been hurting. Dividends usually track the direction of net profit after tax (NPAT), as a dividend is funded by previous profit generation.

Dividends can be an attractive way to reap the rewards of a company’s profit each year.

But, let’s look at what energy giant AGL’s dividend is expected to be.

Dividend projections

In the FY22 half-year result, AGL paid an interim dividend of 16 cents per share. That was a reduction from the 41 cents per share FY21 interim dividend.

The FY21 final dividend from AGL was 34 cents per share. The total dividend per share for FY21 was 75 cents per share.

On CMC Markets, the estimate for the total FY22 dividend per share is 23.9 cents. That implies a final dividend in the single-digit cents, which would be a very large decrease.

A total dividend per share of 23.9 cents would be a decrease of almost 70%.

Plenty of brokers like Morgans and UBS have somewhat similar estimates for the dividend from the energy business.

However, Credit Suisse thinks the final FY22 dividend could be similar to the interim dividend.

AGL dividend growth expected

All the brokers mentioned above are expecting AGL to increase its annual dividend per share in FY23.

The dividend estimate on CMC Markets implies that the dividend could more than double in FY23. The projected dividend in FY23 is 48.5 cents per share, which would be a dividend yield of 5.8% at the current AGL share price.

Another AGL dividend increase is expected in FY24. That estimate is 64.6 cents per share, which would be a dividend yield of 7.7%.

Is the AGL share price a buy?

Morgans rates the energy business as a buy, with a price target of $9.67 as profit is expected to recover. That implies a possible rise of around 15% over the next 12 months.

UBS is neutral on the business, with a price target of $8.35. That implies they expect the AGL share price to be flat over the next year.

Credit Suisse has an outperform rating on AGL, with a price target of $10.80. That suggests a possible rise of almost 30% after price rises for customers were more than expected.

AGL share price snapshot

Since the beginning of 2022, AGL shares are up 33% as the company became a takeover target.

At the current share price, AGL has a market capitalisation of $5.63 billion.

The post Can the AGL dividend bounce back this earnings season? appeared first on The Motley Fool Australia.

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More reading

• What’s been impacting the AGL share price this week?
• ‘Elevated prices’ give AGL share price a shot at 26% upside: JP Morgan
• These were the best (and worst) performing ASX 200 sectors of FY22
• Own ASX 200 energy shares? Retailers could hit back on AEMO fees
• Top brokers name 3 ASX shares to buy next week

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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If you’re looking to boost your income with some dividend shares, then the two listed below could be worth considering.

Analysts have recently named these ASX 200 dividend giants as buys. Here’s what you need to know about them:

BHP Group Ltd (ASX: BHP)

BHP could be an ASX 200 dividend share to buy if you’re not averse to investing in the resources sector.

It is of course one of the world’s largest mining companies with a collection of world class operations across a number of commodities and geographies.

The team at Citi are very positive on BHP and have previously highlighted the significant free cash flow it is generating from its operations.

It expects this free cash to underpin fully franked dividends per share of $4.32 in FY 2022 and then $3.77 in FY 2023. Based on the current BHP share price of $38.68, this implies yields of 11.1% and 9.7%, respectively.

Citi also sees decent upside for the Big Australian’s shares. It currently has a buy rating and $44.50 price target on them.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that could be a quality option for income investors is banking giant Westpac.

That’s the view of the team at Morgan Stanley which retained its outperform rating and $22.30 price target on the bank’s shares last week.

And while this price target means only minimal upside for the shares of Australia’s oldest bank, it doesn’t stop the dividends from being any less attractive.

Morgan Stanley is expecting Westpac to pay fully franked dividends per share of $1.25 in FY 2022 and $1.30 in FY 2023. Based on the current Westpac share price of $21.51, this will mean yields of 5.8% and 6%, respectively, over the next two years.

The post Experts name 2 ASX 200 dividend giants to buy appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• ‘Raises a whole lot of issues’: Which ASX 200 banks are still funding new fossil fuel projects?
• Guess which ASX 200 bank has been revealed as the world’s longest dividend-paying share
• Why is the BHP share price gaining ground today?
• Why this ASX investment company dumped NAB for Westpac shares

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

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The Rio Tinto Limited (ASX: RIO) share price has been falling in recent weeks. It’s down by around 18% since 8 June 2022.

The ASX mining share earns a dominant portion of its profit from iron ore.

Like most other commodity ASX shares, Rio Tinto shares are heavily affected by changes in the resource price because this can have sizeable impacts on the potential profitability of the business.

Indeed, the iron ore price has been falling in recent weeks as well.

One of the main factors that may have been catching investor attention has been the formation of a Chinese entity, the China Mineral Resources Group. The concern is that this body may seek to bulk buy iron ore for a number of major players in China, exerting influence to purchase iron ore at a lower price. This could certainly affect many ASX mining shares.

But it seems Rio Tinto isn’t particularly concerned by this development.

Rio Tinto boss responds

Rio Tinto CEO Jakob Stausholm commented on the China Mineral Resources Group during an earnings call about the company’s 2022 second quarter:

Look, I think we need to step back and figure out what is facts and what is rumours. I mean, we all know that there was an inaugural meeting of this entity, the day before yesterday. How they will act in the market is rumours. And, and I don’t want to speculate on that. I have no particular concern. We have worked for the last 50 years successfully with China for the benefit of Rio Tinto and I believe we have also been helpful in China developing the steel industry. So, I’m very confident that will continue.

But, it’s not as though Rio Tinto, BHP Group Ltd (ASX: BHP), and Fortescue Metals Group Limited (ASX: FMG) are tiny businesses with no market power and no ability to alter their plans.

Responding to whether the formation will lead Rio Tinto to change its strategy and invest more heavily in Australia, Stausholm said:

We are not changing the thinking position within Rio Tinto based upon the market rumours about this, so, no, I cannot see that linkage.

FY22 half-year earnings recap

Rio Tinto delivered its report for the six months to 30 June 2022.

It said that net cash generated from operations fell 23% to US$10.5 billion. Free cash flow dropped 30% to US$7.15 billion. The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) declined 26% to US$15.6 billion.

As a result of the profit decline, the ordinary dividend was reduced to US$2.67 per share, a drop of 29%.

Rio Tinto share price snapshot

Over the last month, the Rio Tinto share price has dropped 2.5%. However, over the past six months, Rio Tinto shares have shed 12%.

The post Own Rio Tinto shares? Why CEO has ‘no particular concern’ over China and iron ore price appeared first on The Motley Fool Australia.

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More reading

• ‘Not immune’: How Rio Tinto shares are feeling the sting of inflation
• Broker tips 26% upside for Rio Tinto share price post-results
• ASX 200 midday update: Rio Tinto drops, tech shares jump, Macquarie impresses
• Did the Rio Tinto interim dividend really just tumble 52%?
• Why is the Rio Tinto share price underperforming today?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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 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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ASX dividend shares could be the answer for income-seeking people who want to boost their investment income.

Many companies are able to pay a dividend and invest in their businesses for more growth over the long term.

However, dividends are definitely not guaranteed. Share prices can up and down during periods of volatility. Profit can also move quite a bit year to year, depending on what’s happening in the economy and what’s happening within the company.

I like that with that cash dividend payments, we can decide to do whatever we want with the money. We can take up a dividend reinvestment plan (DRP), use the cash to invest in other ASX shares, save it, or spend it.

Let’s have a look at a couple of ideas that could be attractive for dividends in the next few years.

Accent Group Ltd (ASX: AX1)

Accent is one of the leading footwear retailers in Australia. It sells brands it owns as well as ones where it acts as the distributor.

Some of the brands it’s responsible for include CAT, Dr Martens, Glue Store, Hoka, Henleys, Nude Lucy, Skechers, The Athlete’s Foot, and Vans.

Let’s look at the potential dividends for the next couple of financial years, according to estimates on CMC Markets.

In FY22, which has already finished (but the final dividend hasn’t been declared), Accent is expected to pay an annual dividend of 5 cents per share. That translates into a potential grossed-up dividend yield of 5.4%.

Accent is expected to achieve dividend growth in FY23 and FY24.

In FY23, the business is expected to pay an annual dividend per share of 9.2 cents, translating into a grossed-up dividend yield of 10%.

In FY24, the ASX dividend share is expected to pay a dividend of 11.2 cents per share. That would be a grossed-up dividend yield of 12.2%.

The business is hoping to grow its profit through store rollouts for different brands, grow its online sales, work with quality brands, and so on.

I think longer-term dividend growth and profit growth could make it an attractive option at this price.

Duxton Water Ltd (ASX: D2O)

Duxton Water is a pretty unique business on the ASX. It owns a portfolio of water entitlements which it can then provide to Australian farmers. Water leases can be for various lengths of time, including for the long term as well as forward allocation contracts and spot allocation supply.

The business says that 67% of its permanent water value is leased to Australian farming businesses. That accounts for 86% of the company’s high-security portfolio. The weighted average lease expiry is 1.8 years, or 4.9 years including renewal options.

Duxton Water recently paid its tenth consecutive and increasing dividend to shareholders of 3.2 cents per share. It’s also paying a dividend every six months.

The ASX dividend share said “with the company’s high percentage of leased entitlements and visible revenue streams”, it is able to provide growing dividends.

It’s expecting to pay dividends of 6.7 cents per share for FY22 (which, for Duxton, is based on the calendar year) and 7.1 cents per share in FY23.

That means the 2022 grossed-up dividend yield is expected to be 5.7% while, in 2023, the grossed-up dividend yield is expected to be 6%.

I like this business as it provides interesting diversification, a good yield, and growing income.

The post I think these 2 ASX dividend shares are buys for income in August appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• Why Accent, Humm, IAG, and Webjet shares are dropping
• Why is the Accent share price sinking 7% today?
• The Accent share price has already surged 18% in FY23. What’s next?
• Analysts name 2 ASX dividend shares to buy with 4%+ yields

Motley Fool contributor Tristan Harrison has positions in DUXTON FPO. 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 Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Brokers are always on the lookout for ASX shares that could be opportunities to buy. And, certainly, August could be the month to pounce on the ideas that have just been named as buys.

Share prices are always changing and updates are regularly flowing from businesses. This can change whether experts think they are a buy, hold, or sell.

No one can truly know what a share price is going to do next week or next month. But, investors can make a judgement of whether they believe a share price is undervalued or not.

Brokers like to put a ‘price target’ on a business. That’s where the broker thinks the share price will be in 12 months’ time.

Audinate Group Ltd (ASX: AD8)

Audinate is a business that offers the Dante IP networking solution. It’s described as the worldwide leader and is “used extensively in the professional live sound, commercial installation, broadcast, public address and recording industries”. Dante replaces traditional analogue cables by transmitting synchronised AV signals across large distances to multiple locations at once, using just an ethernet cable.

The broker Morgan Stanley currently rates Audinate as a buy, with a price target of $9. It also wants to see the company’s full FY22 result.

But it noted the preliminary numbers for FY22 from the ASX share and believes this bodes well for FY23.

Audinate reported that revenue was up 33.4% to US$33.4 million. The gross profit margin was 74.7%. FY22 earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between A$3.8 million to $4.3 million (up from $3 million in FY21).

Improved chip supplies allowed unmet demand from the FY22 third quarter to be delivered in the FY22 fourth quarter, the company said.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel is one of the world’s largest businesses specialising in corporate travel.

The broker Macquarie recently rated the ASX share as ‘outperform’ with a price target of $20.80. That’s a potential upside of around 10%.

Macquarie recognises the sector is recovering from COVID-19 impacts. However, there are also some issues such as more expensive plane tickets and airlines reducing their number of flights.

The broker thinks that the ASX share has a significant number of clients, such as in healthcare and government, that should continue to need the company’s services.

Macquarie thinks that Corporate Travel Management’s earnings are going to jump in FY23.

Based on the profit estimate for the 2023 financial year, the Corporate Travel share price is valued at 25 times FY23’s estimated earnings, according to Macquarie.

The post Brokers just rated these 2 ASX shares as buys for August appeared first on The Motley Fool Australia.

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More reading

• Audinate share price soars 5% as revenue thrives
• Top brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today
• Why are Flight Centre, Webjet, and other ASX travel shares sinking today?
• ASX 200 midday update: Brickworks higher, IAG drops on prelim results, Zip rockets

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 AUDINATEGL FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended Corporate Travel Management Limited and 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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With the August earnings season about to kick off, ASX companies big and small will soon turn in their report cards for mums, dads (and every other type of investor!) to judge their progress.

But before the bell rings on the duxes and drop-outs, we asked our Foolish contributors to let us know which ASX shares they reckon will top the class in the long run. Here is what the team came up with:

7 best ASX shares for August 2022 (smallest to largest)

• Lindsay Australia Limited (ASX: LAU), $144.95 million
• Electro Optic Systems Holdings Ltd (ASX: EOS), $148.86 million
• Ansarada Group Ltd (ASX: AND), $164.82 million
• Temple & Webster Group Ltd (ASX: TPW), $637.52 million
• Charter Hall Long WALE REIT (ASX: CLW), $3.29 billion
• Treasury Wine Estates Ltd (ASX: TWE), $8.84 billion
• South32 Ltd (ASX: S32), $17.63 billion

(Market capitalisations as of 31 July 2022)

Why our Foolish writers love these ASX shares

Lindsay Australia Limited

What it does: Lindsay Australia is an integrated transport, logistics, and rural supply company. It has a large and growing fleet of road and rail transport, along with more than 40 rural supply stores and transport depots.

By Bernd Struben: The Lindsay share price has gained around 17% so far in 2022, despite skyrocketing fuel costs. Even following that gain, the stock trades at a reasonable price-to-earnings (P/E) ratio of 20 times. And, I believe it has strong growth potential with the end-to-end solutions the company provides to Australia’s farmers by simplifying transport and logistics issues across the agricultural sector. That’s particularly relevant in light of a growing global food crunch.

In its FY22 first-half (H1) results, Lindsay reported a 20.2% year-on-year increase in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), which reached $31.4 million. The company also continues to expand its rail fleet, adding 50 refrigerated containers in H1, bringing the total to 350.

Lindsay is also a reliable dividend payer, with a current trailing dividend yield of 3.96%, unfranked.

Motley Fool contributor Bernd Struben does not own shares of Lindsay Australia Limited.

Electro Optic Systems Holdings Ltd

What it does: Electro Optic Systems (EOS) is an Australian-owned and operated defence, space and communications company.

By Aaron Teboneras: EOS designs, manufactures and exports advanced technology systems. Key applications include sensors and systems for space domain awareness, optical, microwave and on-the-move satellite products, and remote weapons systems.

With the EOS share price currently trading not far off multi-year lows at 91 cents, I believe this has created an attractive buying opportunity for long-term investors.

Defence capabilities among Australia and its allies have been growing in importance since Russia’s invasion of Ukraine and China’s assertiveness in the Indo-Pacific region. This has highlighted a need among many EOS customers, including NATO, to increase their defence expenditure.

In FY2021, EOS reported record revenue of $211.8 million. That was 17.5% higher than what it achieved in FY2020 ($180.2 million). The company expects FY22 revenue to be equal to or higher than FY21.

Furthermore, the defence contractor continues to heavily invest in the future, particularly in its SpaceLink division. The total addressable market for this is estimated to be around US$2 billion per annum from 2024.

Motley Fool contributor Aaron Teboneras owns shares of Electro Optic Systems Holdings Ltd.

Ansarada Group Ltd

What it does: Ansarada is a provider of specialised cloud-based software addressing the needs of companies and organisations requiring data management solutions for managing mergers and acquisitions, tender processes, and board meetings.

By Mitchell Lawler: The tech sector has been punished so far in 2022. However, while it is not uncommon to find small-cap ASX tech shares showing falls of more than 40% on a year-to-date basis, the Ansarada share price has been somewhat resilient, retracing 19% since the start of the year.

Notably, the reduction in the company’s share price has coincided with sustained growth across key metrics. Last week, Ansarada released its fourth-quarter results for FY22. Positively, revenue increased 43% year-on-year (YoY) to $12.9 million, accompanied by customer growth of 52% YoY.

With an impressive staple of clients, zero debt, and $22 million in cash, I believe Ansarada is currently a relatively well-positioned company.

Motley Fool contributor Mitchell Lawler owns shares of Ansarada Group Ltd.

Temple & Webster Group Ltd

What it does: Temple & Webster is the largest, online-only retailer of furniture and homewares in Australia. A majority of the 200,000 products for sale on the company’s website are held and directly despatched to customers by external suppliers. Temple & Webster also has a growing private-label range.

By Tristan Harrison: The Temple & Webster share price has fallen heavily in 2022, which I think has created an opportunistic time to buy.

The company continues to grow strongly, with its latest trading update showing 23% revenue growth year-on-year.

The ASX retailer is adding new growth avenues, such as its ‘The Build’ website for home improvement. It’s also aiming to boost its productivity and customer experience by investing in areas such as data, personalisation, AI, augmented reality and logistics.  

I believe greater scale can benefit Temple & Webster’s unit economics and enable further re-investment. Plus, it’s considering “opportunistic inorganic activity”, meaning potential acquisitions.

Motley Fool contributor Tristan Harrison does not own shares of Temple & Webster Group Ltd.

Charter Hall Long WALE REIT

What it does: Charter Hall Long WALE REIT is a real estate investment trust (REIT). It owns a portfolio of properties with long weighted average lease expiries (WALE).

By Sebastian Bowen: I believe Charter Hall Long WALE REIT is an investment worth considering as we head into the last month of winter. This property trust specialises in holding real estate assets with long WALEs, as its name implies. These include distribution centres, offices, and pubs, among others.

Many of these properties are held with lease agreements spanning more than a decade, with inflation-linked rental increases built into many. This arguably provides investors today with much-needed certainty in an uncertain investing environment.

Even better, on recent pricing, this REIT offers a trailing distribution yield of close to 7%. As such, it could well be worth a look this August.

Motley Fool contributor Sebastian Bowen owns units of Charter Hall Long WALE REIT.

Treasury Wine Estates Ltd

What it does: Treasury Wine is the maker, marketer, and supplier of iconic Australian wine brands including Penfolds, Wolf Blass, and 19 Crimes.

By Brooke Cooper: The Treasury Wine share price has had a rough trot over the last few years.

It’s been impacted by the pandemic, Chinese tariffs on Australian wine, and general market weakness.

In fact, the stock is around 24% lower than it was at the start of 2020, trading at $12.25. However, brokers are tipping a turnaround.

Morgans has slapped Treasury Wines shares with an ‘add’ rating and a $13.93 price target.

The broker believes the company is gearing up to post a few years of strong earnings growth, starting with the six months ended 30 June.

Motley Fool contributor Brooke Cooper does not own shares of Treasury Wine Estates Ltd.

South32 Ltd

What it does: South32 is one of Australia’s largest miners. It has a portfolio of world-class assets across a range of locations and commodities, including aluminium, copper, and nickel.

By James Mickleboro: I think South32 shares could be a top option for investors in August. Last month, the miner released its fourth quarter and FY2022 production update and revealed it had another solid year despite battling weather, COVID, and labour headwinds.

In light of this, and the strong prices South32 is commanding for a number of the commodities it produces, the company appears well-placed to deliver bumper free cash flow when it releases its full-year results later this month. And thanks to its strong balance sheet, this could potentially mean big dividends for shareholders.

Looking ahead, I believe the future is bright for South32 due to its exposure to commodities that are integral to the decarbonisation megatrend. So with its shares changing hands for just 0.75x net asset value, compared to Fortescue Metals Group Limited (ASX: FMG) at ~1.4x, this could make South32 great value today.

Motley Fool contributor James Mickleboro does not own shares of South32 Ltd.

The post Top ASX shares to buy in August 2022 appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ansarada Group Limited, Electro Optic Systems Holdings Limited, Lindsay Australia Limited, and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended Ansarada Group Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited, Lindsay Australia Limited, Temple & Webster Group Ltd, and Treasury Wine Estates 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with another solid gain. The benchmark index rose 0.8% to 6,945.2 points.

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

ASX 200 expected to rise again

The Australian share market looks set to start the week in a positive fashion after another strong night on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 46 points or 0.7% higher this morning. On Wall Street, the Dow Jones was up 1%, the S&P 500 climbed 1.4%, and the NASDAQ stormed 1.9%.

Oil prices rise again

Energy producers Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a positive start to the week after oil prices pushed higher on Friday. According to Bloomberg, the WTI crude oil price rose 2.3% to US$98.62 a barrel and the Brent crude oil price climbed 2.1% to US$103.97 a barrel. This was driven by speculation that OPEC won’t boost its supply as some hoped.

Westpac shares upgraded

The Westpac Banking Corp (ASX: WBC) share price could be heading a lot higher from current levels according to analysts at Goldman Sachs. This morning the broker upgraded the banking giant’s shares to a buy rating and put them on its coveted conviction list. Goldman has a $26.12 price target on Westpac’s shares. Its analysts highlight “WBC’s NIM leverage to higher rates.”

Gold price pushes higher

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a good start to the week after the gold price pushed higher on Friday night. According to CNBC, the spot gold price was up 0.8% to US$1,772.50 an ounce. This was driven partly by the softening of the US dollar and meant a second successive week of gains for the precious metal.

Ramsay takeover progressing?

The Ramsay Health Care Limited (ASX: RHC) share price will be on watch amid reports that KKR’s takeover approach is progressing. In April, the private hospital operator received a non-binding $88 per share offer from the private equity giant. According to the AFR, Ramsay is believed to have received a new request for due diligence on its French business, Ramsay Sante. This is thought to be the only thing holding up a binding offer being tabled.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• ASX shares are back, baby!
• Have Woolworths shares been a market-beating investment over the past 5 years?
• Why this ASX 200 giant ‘looks attractive’ right now: expert
• These were the best performing ASX 200 shares in July
• ‘Raises a whole lot of issues’: Which ASX 200 banks are still funding new fossil fuel projects?

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 Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended Ramsay Health Care 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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A war in Europe, supply constraints, inflation, rising interest rates and a possible recession have completely preoccupied the markets this year.

So it’s no wonder that the S&P/ASX 200 Index (ASX: XJO) sank almost 12% for the first half of 2022.

But oddly, while all those problems still persist, the index has rallied 5.8% this month.

So are ASX shares back in vogue?

One expert certainly thinks so.

Share markets didn’t even blink after a monster rate hike 

According to DeVere Group chief executive Nigel Green, investor appetite for risk assets — such as shares — has returned.

He made the observation after seeing stocks head upward following the US Federal Reserve’s whopping 75-basis-point rate hike on Thursday morning.

“Typically, markets get into a tailspin over interest rate hikes, especially the size of the Fed’s latest 75 bps,” said Green.

“But investors have seemingly shrugged this off, maybe because it was largely priced-in, maybe because the Fed chair suggested rate rises may now slow.”

That reaction from the markets suggests a shift in the bigger picture, he added.

“Investors appear to have rediscovered their appetite for risk, with global stock markets and high yield corporate bonds both making steady gains over the month so far.”

The Reserve Bank of Australia on Tuesday is expected to follow the US’ lead, and raise its cash rate by a likely 50 basis points.

Green also noted the types of shares that were severely punished in the first half of the year for being riskier have actually outperformed in the July rally.

“Global small-cap stocks have outperformed global large-cap stocks, while in the US, the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) index has outperformed the broader-based S&P 500 Index (SP: .INX).”

Why is everyone so bullish all of a sudden?

So what’s going on?

Green identified four drivers as to why investors are bullish again.

“First, investors believe that central banks will squeeze inflation out of the system,” he said.

“The higher interest rates go in the near term, the sooner they can come down and help facilitate a new economic cycle.”

The second factor was the sell-off in the first half meant that valuations no longer looked expensive, as they did for much of 2021.

“Third, the ‘there is no alternative’ (TINA) argument persists,” said Green.

“Although central banks are raising interest rates aggressively, they remain negative in real terms. Equities have the advantage of being linked to the real economy, with many companies able to raise their selling prices with inflation and so offer investors a level of protection from inflation that cash and bonds can’t.”

Lastly, the larger companies around the world are generally in a “sound financial position”. 

“Big tech in the US is cash rich. Global energy and mining companies are enjoying windfall earnings. Rising interest rates help financials’ boost profits,” said Green.

“Meanwhile, many companies have used the rock-bottom borrowing rates of recent years to refinance their debt at much cheaper rates.”

While Green is a believer that sentiment has turned, he warned investors that none of the problems the market feared have actually gone away.

“Economic data continues to weaken. Continental Europe appears particularly vulnerable to recession later this year, given its reliance on Russian gas,” he said.

“Investors’ response should be to avoid panicking and stick to basic investment truisms.”

The post ASX shares are back, baby! appeared first on The Motley Fool Australia.

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More reading

• Have Woolworths shares been a market-beating investment over the past 5 years?
• Why this ASX 200 giant ‘looks attractive’ right now: expert
• These were the best performing ASX 200 shares in July
• These were the worst performing ASX 200 shares in July
• Here are the top 10 ASX 200 shares today

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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Coronado Global Resources Inc (ASX: CRN)

According to a note out of Goldman Sachs, its analysts have retained their buy rating but trimmed their price target on this coal miner’s shares to $2.15. Although Coronado delivered a second-quarter update that was short of Goldman’s expectations, it remains bullish. This is due to its “compelling” valuation and strong free cash flow generation. The latter is expected to underpin huge dividend payments in the next couple of years. The Coronado Global share price ended the week at $1.41.

Mineral Resources Limited (ASX: MIN)

Analysts at Citi have retained their buy rating and $73.00 price target on this mining and mining services company. Citi is positive on Mineral Resources due to its exposure to iron ore and lithium. Its analysts expect the price of the latter to stay higher for longer thanks to strong demand and tight supply. The Mineral Resources share price was fetching $53.74 at Friday’s close.

Telstra Corporation Ltd (ASX: TLS)

Analysts at Credit Suisse have retained their outperform rating and $4.50 price target on this telco giant’s shares. The broker has been running the rule over the company’s impending Multi Operator Core Network agreement with TPG Telecom Ltd (ASX: TPG). It is expecting the agreement to be accretive to Telstra’s earnings if the ACCC gives the deal its approval. Outside this, the broker is positive on the telco partly due to favourable trends in the key mobile business. The Telstra share price ended the week at $3.89.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Why this ASX 200 giant ‘looks attractive’ right now: expert
• Brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today
• Why is the Telstra share price lagging the ASX 200 on Thursday?
• Here are 2 ASX dividend shares to buy right now according to experts

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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