Category: Stock Market

It could be tricky for a beginner investor to know when to start investing in ASX shares.

Negative headlines sell. They attract a lot of attention and website clicks. When share markets are falling, there are regular fear-evoking headlines that talk about how many billions of dollars the share market has dropped on any given day.

But what if the worst days for falls are actually among the best days for buying ASX shares?

Let’s look at the share price graph for REA Group Limited (ASX: REA) or Xero Limited (ASX: XRO) and ask which time periods appeared the best time to buy. It would seem to me, on a graph, that market crashes provide the cheapest buying opportunities.

So, that’s why I believe this period — amid elevated inflation and rising central bank interest rates — could prove to be an opportune time to buy ASX shares.

But let’s look at some very wise advice from legendary investor Warren Buffett who once compared shares to buying hamburgers.

Hamburger discount

Buffett said:

To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.

To apply that quote to today’s situation, many ASX shares are now close to the cheapest they’ve been in over two years, but many investors seemingly don’t want to buy them anymore.

How does this apply to beginner investors for ASX shares?

Investing is about choosing investments that have compelling long-term futures, yes.

But, an important part of investing is ‘buying low’. How can someone make a gain on their investment if they significantly overpaid or bought at the price peak in the first place?

Paying a good price is key for good long-term returns.

While it’s impossible to say when share prices will go lower (or higher), we can evaluate the potential investments that are in front of us. Is this business that we’re looking at valued attractively for long-term investment?

At the moment, I’m seeing lots of opportunities, which I have written about recently, including Brickworks Limited (ASX: BKW), Reece Ltd (ASX: REH), Beacon Lighting Group Ltd (ASX: BLX), Baby Bunting Group Ltd (ASX: BBN), City Chic Collective Ltd (ASX: CCX), and Adairs Ltd (ASX: ADH).

This certainly seems like a good time to be buying hamburgers for the long term.

The post Why cheap hamburgers could give beginner ASX share investors food for thought appeared first on The Motley Fool Australia.

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More reading

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• 2 All Ords ASX shares I think are underrated buys right now
• What I love about these 2 ASX dividend shares
• Why I think these 2 ASX shares are steals
• Experts name 2 blue chip ASX 200 shares to buy

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 ADAIRS FPO, Brickworks, and Xero. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Brickworks, and Xero. The Motley Fool Australia has recommended Baby Bunting and 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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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share after its short interest rose to 16%. There are concerns that rising living costs and higher airfares could stifle the travel market recovery.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 12%. This betting technology company’s shares have risen 30% over the last month but short sellers aren’t giving up. Its lofty valuation could be behind this.
• Nanosonics Ltd (ASX: NAN) has short interest of 11.9%, which is down slightly week on week. Short sellers appear to be targeting this medical device company due to its sales model change in the US. There are fears that taking things in-house could disrupt its sales and lead to higher costs.
• Block Inc (ASX: SQ2) has short interest of 11.2%, which is up week on week. This mirrors the short interest of the payment company’s shares on Wall Street. Although its shares are down ~60% in 2022, short sellers appear to believe they can keep falling.
• EML Payments Ltd (ASX: EML) has short interest of 10.1%, which is up week on week. Short sellers will have been pleased to see this payments company’s shares crash lower last week following the surprise and sudden exit of its CEO.
• Lake Resources N.L. (ASX: LKE) has short interest of 9.6%, which is up week on week. Last week this lithium developer was hit with a short attack from J Capital. It claims that investors still have no evidence that the Lilac DLE technology works at scale. It also highlighted heavy insider selling and share issues to research firms.
• Regis Resources Limited (ASX: RRL) has short interest of 9%, which is up week on week. Short sellers have loaded up on this gold miner’s shares despite its recent record quarter. They may believe this strong form will not be maintained.
• PolyNovo Ltd (ASX: PNV) has seen its short interest remain flat at 8.8%. Short sellers may be going after this medical device company due to its mixed performance and lofty valuation.
• Kogan.com Ltd (ASX: KGN) has seen its short interest rise to 8.55%. Short sellers appear to believe inventory mismanagement, supply chain headwinds, higher marketing costs, and increasing competition from Amazon will weigh on this ecommerce company’s performance.
• Core Lithium Ltd (ASX: CXO) has entered the top ten with short interest of 8.3%. Short sellers may believe that lithium prices are going to fall materially and weigh on valuations.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for Regis Resources shares in FY23?
• EML Payments share price lifts on confirmed takeover talks
• Can the Kogan share price turn over a new leaf in FY23?
• Why are Lake Resources shares receiving the most attention on Friday?
• Clipped wings: Why ASX 200 travel shares are having trouble getting off the ground today

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 Betmakers Technology Group Ltd, Block, Inc., EML Payments, Kogan.com ltd, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has positions in and has recommended Block, Inc., EML Payments, Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd and Flight Centre Travel 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 Aussie Broadband Ltd (ASX: ABB) has lifted in afternoon trade on Monday. At the time of writing, the share trades 3% higher at $3.10 apiece on no news.

As the growth/tech trade has unwound itself in 2022, investors have shifted priority onto fundamentals.

With that said, let’s take a look at Aussie Broadband’s financial position, and how this could be related to its share price.

Aussie Broadband balance sheet analysis

Turning to the company’s balance sheet, we see it has a total asset base of $297 million as of H1 FY22. On this base, it has long-term liabilities of $29 million.

It also held more than $168 million in cash at H1 FY22, up from $57 million in the prior corresponding period (pcp).

Moreover, its debt ratio is just 10.5%, whereas debt as a percentage of Aussie’s total capital is only 13% – suggesting the company is lowly leveraged.

It also covers its interest payment of more than 4 times from operating income, whilst generating $2.20 for every dollar invested into its asset base.

These seem to be supportive numbers for the Aussie Broadband share price.

Furthermore, the company looks as if it will meet its short-term obligations when they fall due. Short-term liabilities are covered more than 3 times from liquid assets, up from 1.5 times in the pcp.

As a result of its performance last half, it generated a 3.% return on its assets and a 6% return on shareholder equity for the 6 months to December 2021.

Net-net, investors have $190 million in shareholder equity at the time of Aussie Broadband’s last earnings report.

From this rudimentary analysis, it appears as if the company is reasonably well capitalised and will continue to meet its financial obligations as they fall due.

In the last 12 months, the Aussie Broadband share price has clipped an 11% gain.

The post Own Aussie Broadband shares? Here’s the state of the company’s balance sheet appeared first on The Motley Fool Australia.

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More reading

• Why did the Aussie Broadband share price fall 20% in June?
• ‘Just didn’t cut it’: Look out Telstra, a new high-speed start-up is coming for you!
• Down 47% in 2 months, is the Aussie Broadband share price an opportunity calling?

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 positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband 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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What a crazy 2022 it has been for the REA Group Ltd (ASX: REA) share price.

Despite surging over the medium-term, the property listings company’s shares are down 28% for the calendar year to date.

This is being driven by extreme inflationary movements and aggressive rate hikes which have sparked concerns among investors.

Over the same time frame, the S&P/ASX 200 Index (ASX: XJO) has also tumbled by around 10%.

Although there’s been recent share price weakness, let’s take a look at how much REA has paid in dividends since 2017?

What’s REA dividend history?

Notwithstanding COVID-19, the REA board has continued to increase its fully-franked dividends to shareholders for more than a decade. 

Below, we take a look at the past five years’ worth of dividends that the company has distributed.

• September 2017 – 51 cents (final)

• March 2018 – 47 cents (interim)

• September 2018 – 62 cents (final)

• March 2019 – 55 cents (interim)

• September 2019 – 63 cents (final)

• March 2020 – 55 cents (interim)

• September 2020 – 55 cents (final)

• March 2021 – 59 cents (interim)

• September 2021 – 72 cents (final)

• March 2022 – 75 cents (interim)

Calculating the above REA dividends since September 2017 gives us a total figure of $5.94 for every share owned.

While it might seem modest compared to the current share price, a $10,000 investment in 2017 would have reaped around $8,500 in profits today, including the dividends.

REA share price snapshot

Over the last 12 months, the REA share price has lost around 26%.

The company’s shares climbed throughout 2021 before reversing their gains from January 2022 onwards.

In terms of market capitalisation, REA is the largest property and property-related services group on the ASX, valued at approximately $15.97 billion.

At the time of writing, REA shares are swapping hands at $120.72, up 0.97%.

The company has a dividend yield of 1.23%.

The post How much have REA shares paid in dividends in the last 5 years appeared first on The Motley Fool Australia.

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More reading

• Why experts are tipping these ASX 200 shares as buys
• Here are the top 10 ASX shares today
• Why this broker sees huge upside for REA share price despite housing market downturn
• Here are 2 blue chip ASX shares analysts rate as buys
• Here’s why ASX 200 tech shares are taking a beating on Wednesday

Motley Fool contributor Aaron Teboneras 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 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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S&P/ASX 200 Index (ASX: XJO) dividend shares can be a great source of dividend income if those businesses are committed to paying solid payouts to investors.

Keep in mind though that dividends are not guaranteed. Not only that, but share prices can go backwards as well.

I think it’s important to ensure we look at ASX dividend shares at the right price. Indeed, the recent volatility in the market could prove useful in jumping on these opportunities at lower prices.

A bonus of lower prices is that it increases the prospective dividend yield of shares. On the back of lower share prices, I think these two ASX 200 dividend shares look like compelling options:

JB Hi-Fi Limited (ASX: JBH)

In my opinion, JB Hi-Fi is one of ASX’s leading retail shares. It has proven during the COVID-19 years that it is capable of capturing consumer demand for the technology we want in our lives.

Phones and computers are often seen as discretionary. But I think they have become more embedded in our lives over the years, making them a bit more ‘essential’. This makes them less likely to suffer from a heavy drop in demand during economic downturns. Households will still need devices to work, learn, communicate, and so on. I think it was informative that in the three months to March 2022, JB Hi-Fi Australia sales were up 11.9% year on year and The Good Guys sales were up 5.5% year on year.

However, since 30 March 2022, the JB Hi-Fi share price has dropped 27%. This has pushed up the potential dividend yield on the company’s shares.

In FY23 and FY24, JB Hi-Fi is predicted to pay an annual dividend per share of $2.32 and $2.18 respectively, according to estimates on CMC Markets. This puts the grossed-up dividend yield for the next two financial years at 8.2% and 7.7%, respectively. These estimates assume a sizeable dividend cut from the ASX 200 dividend share compared to the FY21 level, reflecting lower earnings.

South32 Ltd (ASX: S32)

South32 is one of the bigger resource businesses on the ASX. It has a global portfolio of projects across the Americas, Africa, and Australia. It’s involved with bauxite, alumina, aluminium, copper, metallurgical coal, manganese, nickel, silver, lead, and zinc.

The South32 share price has dropped by around 33% since 8 June 2022.

The company’s profit is heavily influenced by changing commodity prices. A higher commodity price largely adds to profit, because it costs a similar amount to extract that resource whether the resource price is US$10 higher or lower. But, a lower commodity price mostly detracts from profit.

Commodity prices have fallen in recent weeks. I think this could prove to be an opportunistic time to buy because of the cyclical nature of resources.

CMC Markets has estimates of annual dividends per share of 31.8 cents in FY23 and 28.3 cents in FY24. That translates into a projected grossed-up dividend yield of 13% in FY23 and 11.7%. Those look like solid yields to me, incorporating lower earnings and dividends compared to FY22.

The post I think these 2 ASX 200 dividend shares are buys for income appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: ANZ to buy Suncorp Bank for $5bn, Whitehaven Coal’s update
• 5 things to watch on the ASX 200 on Monday
• 2 rising ASX shares of companies with a market stranglehold
• What’s in store for the BetaShares NASDAQ 100 ETF in the next 12 months?
• Own Soul Patts shares? Here’s what to look out for in FY 2023

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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The Vulcan Energy Resources Ltd (ASX: VUL) share price hit a snag towards the end of FY22.

Since soaring to a record high of $16.65 on 13 September 2021, the clean lithium developer’s shares have been trending lower.

At the time of writing, Vulcan Energy shares are swapping hands at $5.74, down more than 65% from their peak 10 months ago.

Let’s take a peek at the outlook for Vulcan Energy shares for FY23.

Vulcan Energy shares a buy, according to Alster Research

The ASX lithium sector took a hit following a bearish analysis from broker Goldman Sachs that indicated prices for the crucial battery-making ingredient could tumble.

According to the broker, “fundamental mispricing has, in turn, generated an outsized supply response well ahead of the demand trend in focus”.

Currently, lithium prices are fetching around US$72,000 per tonne.

Nonetheless, the company aims to become the world’s first lithium producer with net zero greenhouse gas emissions by 2025. It hopes to supply the European lithium-ion battery and electric vehicle market with a battery-quality lithium hydroxide chemical product.

What do other brokers say?

While Goldman Sachs didn’t initiate a price target on Vulcan Energy shares, UBS did.

Earlier this year, the Swiss investment firm raised its rating by 7.4% to $10.20, implying a significant upside of almost 80% for investors. 

And, as my Fool colleague James reported, the Alster Research team was even more bullish.

Its analysts believe Vulcan Energy shares are a buy with a massive price target of $20.00 apiece.

The broker commented:

We remain confident about Vulcan’s operational development and improvement in becoming a provider of renewable energy and lithium with a zero-carbon footprint, which is why we reiterate our buy recommendation.

However, this broker note came out before Goldman Sachs’ negative report, which together with other international factors, sent the industry into a freefall.

The post What’s the ahead for the Vulcan Energy share price? appeared first on The Motley Fool Australia.

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More reading

• Why has the Vulcan share price lost a nasty 6% today?
• Why Pro Medicus, St Barbara, Vulcan, and Whitehaven Coal are pushing higher
• Vulcan Energy share price leaps 8% on Italian energy producer agreement
• Why did the Vulcan Energy share price crater 28% in June?
• Down 8%, why is the Vulcan Energy share price burning away today?

Motley Fool contributor Aaron Teboneras 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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The S&P/ASX 200 Materials Index is leaping 0.92% today, but two ASX mining shares are soaring far higher.

The Anson Resources Ltd (ASX: ASN) and Lunnon Metals Ltd (ASX: LM8) share prices are both flying higher on the back of new discoveries.

So let’s take a look at what these two explorers discovered.

Lunnon Metals Ltd 

The Lunnon share price is surging by nearly 11% today. Lunnon is exploring the Kambalda Nickel project in Western Australia.

Today, Lunnon provided an update on its drilling program at the Baker Shoot site. Drilling returned 23m at 6.78% nickel including 14m at 8.13% nickel and 7m at 5.92% nickel.

The company highlighted the width and grades are better than the recent mineral resource estimation for the project.

Commenting on the results, managing director Ed Ainscough said:

Another stand out result for Baker – the run of five consecutive metres over 10% Ni really is the “cherry on top”.

Following the results reported last week from this same section, the fact that Baker has the ability to deliver these nickel grades over such impressive widths and all so close to surface, is exciting for the entire Lunnon Metals team and naturally, of course, for our shareholders

Anson Resources Ltd (ASX: ASN)

The Anson Resources Ltd (ASX: ASN) share price is soaring 9% today. Ansom is exploring the Paradox Lithium Project in the state of Utah, USA.

Anson reported “high concentrations” of lithium and bromine from drilling at the site.

Results included:

• 97 parts per million (ppm) lithium (Li), 882ppm bromine(Br) in Clastic Zone 33 (11ft thick)
• 240ppm Li, 4,115ppm Br in Clastic Zone 31 (18ft thick)
• 111ppm Li, 4,112ppm Br in Clastic Zone 29 (18ft thick)

These assay results are outside the existing resource estimate at the site. Commenting on the resource, Anson said:

Anson plans to confirm a major resource upgrade on completion of its current
drilling campaign at the Cane Creek 32-1 and Long Canyon No. 2 wells.

There is also scope for further Resource expansion via targeted drilling in the western areas of the Paradox Project.

The post 2 tiny ASX mining shares soaring on new discoveries appeared first on The Motley Fool Australia.

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More reading

• What’s the ahead for the Vulcan Energy share price?
• Could ASX coal shares be set for a boost?
• Prediction: These tiny growth stocks could be worth $5 billion by 2030
• Here’s what brokers are saying about the Rio Tinto share price
• Understanding these 2 metrics will make you a better growth investor

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

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ASX coal shares have dominated this year and a recent set of external catalysts could push the sector even higher.

Names such as Whitehaven Coal Ltd (ASX: WHC) and Yancoal Ltd (ASX: YAL) are well positioned to benefit from any further upside.

Meanwhile, the price of coal trades 4% higher on the month at US$410 per tonne, within reach of its all-time highs.

ASX coal shares to flame higher?

With the price of coal continuing along its upward trajectory, the question turns to what’s next for ASX coal shares.

Whitehaven reported solid fourth quarter production, growing production by 17% thanks to increased output at its Narrabri mine.

It also expects earnings before interest, tax, depreciation and amortisation (EBITDA) of around $3 billion in FY22, well up from last year’s result.

Fellow coal player New Hope Corporation Limited (ASX: NHC) also signalled a bright outlook for coal sales earlier in FY22.

It reported that it had “received more requests for metallurgical coal from existing and new European customers ahead of a European Union ban on Russian coal imports in August,” according to reporting from Reuters.

Coal shares were also helped by recent news that China may be willing to reverse its stance on Australian coal imports when procuring metallurgical coal exports.

This, combined with the surge in coal prices underscores a positive outlook for ASX coal shares.

Consequently, the sector continues to catch a bid today, propping up other names within the wider resources segment.

The 3 ASX coal players, Whitehaven, Yancoal and New Hope, are up 173%, 174% and 125% in the past 12 months respectively.

The post Could ASX coal shares be set for a boost? appeared first on The Motley Fool Australia.

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More reading

• 11-year high: Whitehaven share price surges 8% on record $3b profit
• ASX 200 midday update: ANZ to buy Suncorp Bank for $5bn, Whitehaven Coal’s update
• Will it flip? Rumours stir up interest in ASX 200 coal mining shares
• Here are the top 10 ASX shares today
• Why Data#3, Netwealth, New Hope, and Pilbara Minerals shares are pushing higher

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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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.

A bear market occurs when the price of an asset or index falls by 20% (or more) from its all-time high. In the stock market’s case, this occurs every 3.6 years on average. In 2022, both the benchmark S&P 500 index and the technology-centric Nasdaq 100 index have crossed the bear-market threshold. The selling has been broad and relentless, especially for tech stocks, many of which have lost more than 50% of their value. But for long-term investors, that has created some interesting opportunities. 

These three companies are currently worth between $900 million and $2 billion, but they each have the potential to amass valuations of $5 billion by 2030. That opens the door to a significant amount of upside for investors. Here’s why.

1.Upstart: implied upside of 144%

Upstart Holdings (NASDAQ: UPST) is an artificial intelligence company that is changing the way banks assess potential borrowers. It says its algorithm can deliver loan decisions faster and more accurately than traditional methods of assessment, which have historically relied on Fair Isaac‘s FICO credit scoring system. 

Upstart has originated $25 billion worth of loans for its 60 bank and credit union partners since it started out, and it earns fees for doing so. But the company just entered the automotive loan segment, which is worth about $751 billion in originations annually, so it has only tapped a small slice of its potential so far. What’s more, Upstart could be eyeing business loans and mortgages in the future, which would take its opportunity to $6 trillion each year. 

Upstart is showing exceptional growth, increasing its revenue by a whopping compound annual rate of 96% between 2017 and 2021. But it’s set for a slowdown after cutting its 2022 revenue guidance amid challenges like rising interest rates and a weakening economy, though neither of these issues are likely to last for the long term. 

Upstart stock has taken investors on a rollercoaster ride. After listing publicly in December 2020 at $20 per share, it rose by over 20 times to an all-time high of $401 before crashing back to Earth, now trading at $24 per share. It has a $2 billion market valuation at the moment, so its stock price would need to rise by 144% to $59 in order to reach a $5 billion valuation by 2030. 

That’s only a fraction of Upstart’s all-time high, and considering the company’s potential, that goal seems very achievable by 2030. 

2. Lemonade: implied upside of 323%

Lemonade (NYSE: LMND) is another financial technology company using artificial intelligence to transform an age-old industry — this time, insurance. The company has developed a web-based bot that can interact with customers to write a quote in under 90 seconds, and pay claims within three minutes — all without human input in most circumstances.

In the two years between the first quarter of 2020 and the recent first quarter of 2022, Lemonade has more than doubled its customer base to 1.5 million, and more than tripled its in-force premium from $133 million to $419 million. It comes on the back of the company’s entrance into the car insurance market, its newest and potentially most lucrative segment. It could be worth over $316 billion in the U.S. during 2022 alone, from a pool of 198 million policyholders. 

Yet despite Lemonade’s strong growth, its stock has collapsed by 88% from its all-time high, and its market valuation now sits at a modest $1.1 billion. The company is losing quite a bit of money as it builds scale and expands its business, and investors have expressed little patience for this process amid the broader tech sell-off. But as the economy improves, so should the appetite for high-growth stocks.     

Lemonade had a market valuation of about $10 billion at its all-time high stock price, so it would have to regain half of that level to reach $5 billion. It has the potential and the growth rate to achieve that by 2030, and if it does, it would deliver investors a return of 323%.

3. Redfin: implied upside of 455%

In an economic environment where interest rates are rising, real estate prices will typically fall, so buying Redfin (NASDAQ: RDFN) stock is a contrarian play. But the company might be the future of the industry, and it’s too cheap to ignore right now.

Redfin has built an army of 2,750 real estate brokers across the U.S., and it represents 1.18% of all home sales by value. That significant scale allows the company to charge listing fees as low as 1%, far cheaper than the industry-standard 2.5%. Since Redfin started, it has saved sellers over $1 billion. 

The company also operates an iBuying segment that purchases homes directly from willing sellers, then attempts to flip them for a profit. It’s a risky practice especially if real estate prices are falling, and it dealt a catastrophic blow to Redfin’s key competitor Zillow Group (NASDAQ: Z)(NASDAQ: ZG) last year. Thankfully, Redfin’s iBuying business is much smaller, and it appears to have behaved less aggressively when acquiring properties, so there are no signs it will suffer a similar fate at this stage.

Redfin’s stock once traded at $96.59, but it has fallen 91% from that level to $8.43 today. That places its current valuation at just $900 million — less than half of its 2021 full-year revenue of $1.9 billion. In 2022, analysts expect revenue will grow further, to $2.5 billion. 

Redfin stock would need to rise 455% to $47 in order to amass a $5 billion valuation, and there’s a case that it might be there right now if not for the uncertainty in the real estate market. But that won’t last forever. As long as Redfin continues to grow steadily over the next eight years, it should find the target very achievable. 

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

The post Prediction: These tiny growth stocks could be worth $5 billion by 2030 appeared first on The Motley Fool Australia.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and recommends Lemonade, Inc., Redfin, Upstart Holdings, Inc., Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Fair Isaac and recommends the following options: short August 2022 $13 calls on Redfin. The Motley Fool Australia has recommended 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 Suncorp Group Ltd (ASX: SUN) share price is sky high after the company accepted a near $5 billion takeover bid for its banking namesake.

The sale will see the financial services giant working exclusively in insurance. The move is said to support its goal to become Trans-Tasman’s leading insurance provider.

At the time of writing, the Suncorp share price is trading at $11.76, 5.95% higher than its previous close.

Let’s take a closer look at the transformative takeover announced today.

Suncorp share price leaps on $5b bank sale

The Suncorp share price is surging on news Australia and New Zealand Banking Group Ltd (ASX: ANZ) will be snapping up Suncorp Bank for $4.9 billion. That represents a $1.3 billion premium on the bank’s net tangle assets.

Suncorp expects to reap $4.1 billion of net proceeds from the sale. It plans to return most of the cash to shareholders.

The sale of Suncorp Bank is the company’s latest move to simplify its business. It follows the sale of its interest in RACT Insurance in December and its Australian Wealth business in March.

Suncorp chair Christine McLoughlin said:

Both [Suncorp’s banking and insurance] businesses will benefit from a singular focus on their growth strategies and investment requirements.

Our purpose of building futures and protecting what matters – the focus of our company for over 100 years – will remain at our core and enable our people to deliver on our vision to create the leading Trans-Tasman insurance company.

Suncorp will focus on its portfolio of insurance brands including AAMI, GIO, Shannons, Apia, Vero, and its own Suncorp brand following the transaction.

ANZ’s acquisition of Suncorp Bank will see it taking on $47 billion of home loans, $45 million in high-quality deposits, and $11 billion in commercial loans.

Suncorp and ANZ commit to Queensland

Both Suncorp and ANZ have doubled down on their commitment to the sunshine state upon announcing the takeover plan. Such sentiment is perhaps unsurprising given the raft of hurdles to be surpassed before the acquisition can go ahead.

The takeover is subject to the approval of the Federal Treasurer and the Australian Competition and Consumer Commission (ACCC). Notably, it’s also subject to amendments to Queensland’s State Financial Institutions and Metway Merger Act 1996.

Suncorp has today committed to establishing a Disaster Response Centre of Excellence to monitor and respond to extreme weather and natural disasters in the state. It will also maintain its head office in Brisbane.

Meanwhile, ANZ promises there will be no job losses or branch closures from the takeover for three years following its completion.

It will also allocate $15 billion of new lending to support Queensland-based renewable energy projects and green Olympic Games infrastructure, and $10 billion of new lending for Queensland energy projects over the next decade. Finally, the big bank has promised $10 billion of lending for Queensland businesses over the next three years.

The post Suncorp share price surges 6% as banking ditched in favour of insurance appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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