Category: Stock Market

What a sad end to the week the S&P/ASX 200 Index (ASX: XJO) has been enduring so far this Friday. At the time of writing, the ASX 200 has lost another painful 1.85% or so and is now back under 6,500 points.

But let’s not let that ruin our weekends. So let’s now take a look at the ASX 200 shares that are currently topping the share market’s trading volume charts, according to investing.com, instead.

The 3 most traded ASX 200 shares by volume this Friday

Pilbara Minerals Ltd (ASX: PLS)

ASX 200 lithium stock Pilbara is our first share to check out today. So far this Friday, a hefty 15.3 million Pilbara shares have been bought and sold on the share market. There hasn’t been a peep out of Pilbara so far today that we can point to.

However, this lithium producer has suffered a nasty share price hit today. Pilbara shares are presently down by 3.3% at $2.06 a share. It’s this steep drop that seems responsible for this elevated trading volume.

South32 Ltd (ASX: S32)

ASX 200 diversified miner South32 is our next share to check out this Friday. As it currently stands, a notable 18.91 million South32 shares have changed hands. South32 has recently been buying back its own shares, which could be boosting volumes in itself.

However, it’s almost certainly the horrible share price fall we’ve seen with South32 today that is responsible for South32’s high volumes. The miner has suffered a whopping 5.54% drop to $4.18 a share so far today, which puts South32 at a five-day loss of almost 15%.

Telstra Corporation Ltd (ASX: TLS)

Telstra is our third, final and most traded share of the day thus far. So far today, a sizeable 19.21 million of this ASX 200 telco’s shares have found a new home. We haven’t heard anything out of Telstra today either.

But this blue-chip share has not escaped the woes of the broader market either. Telstra has today lost a not-insignificant 1.8% of its value and is now at $3.81 a share at the time of writing. This is the most likely explanation for Telstra’s presence here today.

The post Here are the 3 most heavily traded ASX 200 shares on Friday appeared first on The Motley Fool Australia.

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More reading

• Why is the Coles share price getting off lightly today?
• ASX 200 midday update: GUD crashes, tech shares tumble
• Down 20% today: Why the GUD share price is crashing to a 6-year low
• Why I think the Pilbara Minerals share price is currently undervalued
• ‘Stellar performer’: Why this fundie is buying the dip in the NAB share price

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation 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 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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No one can deny that this June has been a pretty horrible one thus far. Perhaps that old adage of ‘sell in May and go away’ is actually proving prescient this year (it’s usually not).

Since the start of the month, the S&P/ASX 200 Index (ASX: XJO) has lost a painful 10.6%, including the 1.8% it has shed today thus far. But it’s been a far worse June for the WiseTech Global Ltd (ASX: WTC) share price.

WiseTech shares have copped a beating so far today. The logistics software provider has shed another 2.2% so far today and is now down to $35.13 a share. Since WiseTech started June at a price of $42.10 a share, the company has now lost almost 17% over June thus far.

That puts the company’s losses over 2022 so far at a nasty 41.3%.

But WiseTech is still one of the top performers of the ASX 200 over a longer time frame. The company is still up an impressive 378% over the past five years, despite the heavy falls we’ve seen over this year.

And, as we covered earlier this month, it’s not as though WiseTech is in any kind of financial trouble. The company still has $380 million in cash on its books and no debt.

Is now a good time to buy the WiseTech Global share price?

So could this be a buying opportunity for WiseTech, the W in the old WAAAX club of ASX high-flyers?

Well, let’s hear from an ASX expert. Sean Fenton from Sage Capital recently sat down with Livewire for a podcast. Here’s what he had to say about WiseTech:

I think Richard White at WiseTech Global has built a great business… A founder-led business. He’s still got a very big equity share, and it’s also strongly aligned. Works very hard, right down to the nitty gritty, to the company. So he’s very involved day to day in managing that.

And, I think, importantly, is just executed in terms of a logistics tech company, going global with a huge array of acquisitions and focusing on what’s important. Getting the subscribers in there. Consolidating tech where he needs to. And managing that’s been quite complex, and they’ve executed very well.

So it’s fairly safe to say that Fenton is bullish on WiseTech shares right now. It will be interesting to see where this ASX growth share goes next.

At the current WiseTech share price, this ASX 200 tech share has a market capitalisation of $11.44 billion, with a dividend yield of 0.25%.

The post Down 17% in June, is the WiseTech share price a wise move for ASX bargain hunters? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 tech shares getting hit hardest today?
• The Wisetech share price is down 33% this year, despite the fact the company’s rolling in cash. What gives?
• How are ASX 200 tech shares performing following the RBA rate hike?
• Why is Audinate outperforming other ASX tech shares today?
• Why did ASX 200 tech shares fall today?

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

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The Whitehaven Coal Ltd (ASX: WHC) share price is underperforming on Friday despite no word having been released by the company.

In fact, there’s been positive news regarding the price of coal, with one expert increasing its 2022 price target for the commodity by 22.7%.

At the time of writing, the Whitehaven share price is $5.01, 5.91% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently down 2.09% while the S&P/ASX 200 Energy Index (ASX: XEJ) has slumped 2.14%.

Let’s take a closer look at what might be going on with the ASX 200 coal share on Friday.

Coal price upgraded amid Australia’s energy crisis

The Whitehaven Coal share price is struggling on Friday despite positive sentiments about the price of coal.

 Finch Ratings has lifted its price expectations for Newcastle thermal coal in 2022 by US$50 to U$270 per tonne. It also upped its 2023 expectations by US$16 to US$120 per tonne.

“Our increased thermal coal assumptions for 2022-2023 reflect high [year to date] prices,” the ratings provider said. It continued:

[Prices have been] supported by tight supply due to the Australian wet season, strong Indian demand mitigating lower demand in China, and structurally higher prices of Newcastle 6,000. However, Australian supplies will eventually recover, while India and China have increased imports from Russia, helping meet recovering Chinese demand.

Newcastle coal futures are trading at US$395 a tonne on Friday, according to Trading Economics.

Whitehaven is also in the news due to comments reportedly made by its CEO Paul Flynn on Australia’s energy crisis.

The coal producer’s boss reportedly told the Australian Financial Review ESG Summit the crisis was born from the push to ditch coal which indirectly led to outages at coal-fired power plants. In an article published yesterday afternoon, the publication quoted Flynn as saying:

If you tell the people who are backing you up that you no longer need their services, and you’ve only got five years to remain, they will start to unwind the maintenance programs …

I think we do have to chart a sensible pathway to a just transition here, because the way we are currently configured is giving everybody unfortunately a very bumpy road.

How is the ASX 200 energy sector performing on Friday?

The ASX 200 energy sector has underperformed the broader market for much of Friday. Its fall is currently led by the Whitehaven share price.

In the coal producer’s shadow are the share prices of Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT). They’re down 3.2% and 2.6% respectively.

Meanwhile, Viva Energy Group Ltd (ASX: VEA)’s stock is the sector’s best performer, having slipped just 0.36%.   

Whitehaven Coal share price snapshot

Fortunately, today’s dip hasn’t been enough to undermine the Whitehaven Coal share price’s year-to-date gains.

The stock has lifted 82% since the start of 2022. It’s also nearly 178% higher than it was this time last year.

The post Why is the Whitehaven share price crumbling 6% on Friday? appeared first on The Motley Fool Australia.

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More reading

• 2 energy ASX shares to buy while inflation is killing everything else: expert
• ASX 200 energy shares are up 40% so far this year. Can they run further?
• ASX coal shares have been soaring lately. Here’s why
• Do Whitehaven Coal shares pay dividends?
• 3 ASX 200 energy shares cracking new 52-week highs on Monday

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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S&P/ASX 200 Index (ASX: XJO) shares get a lot more media and analyst attention than companies in the small-cap space.

But not all ASX 200 shares are household names.

Speaking to Livewire recently, Anthony Aboud, portfolio manager at Perpetual, and Sean Fenton, managing director at Sage Capital, tipped two ASX 200 shares they believe the market has overlooked.

A bounce back in earnings ahead

Aboud named Event Hospitality and Entertainment Ltd (ASX: EVT), citing the strength of the management team and the ASX 200 share’s bounce back potential from the pandemic.

“It is a founder-led business and if you could get three worse industries to be hit by COVID: it is cinemas, hotel and ski lodges. And they’ve got the trifecta there. So, they’ve been hit really badly,” he said.

Aboud continued:

We feel that they went into COVID though with a very strong balance sheet and have managed to take costs out of their business structurally. They’ve actually started some new revenue streams, but also reinvest in all of their systems. I believe that they’re going to make materially more money on the other side of COVID than they did going in.

Looking at some strengths over the next few years, Aboud noted that there are good lead indicators in its hotels business, with bookings “looking very good”.

Just in Sydney with the light show on at the moment, Vivid, Sydney hotels are above 80% occupancy. Just for some lights, you know? We’re starting to see those lead indicators come through.

Addressing its ski related business, Aboud said, “This will be probably the most profitable snow season they’ll ever have.”

As for the cinemas business, he added, “And don’t forget Top Gun.”

Summing up why Perpetual likes this overlooked ASX 200 share, Aboud said, “We feel that they’re going to really have a bounce back in earnings.”

He said analysts still have earnings forecasts in 2023 and 2024 some 30% below pre-COVID levels.

“We think they’ll beat those earnings. We think the market’s overlooking it. We think it’s a quality management team with quality assets [and] a good balance sheet,” he said.

An overlooked ASX 200 share with growth opportunities

Fenton tipped Nufarm Ltd (ASX: NUF) as the ASX 200 share the market is overlooking.

Noting that we’re heading into a period of economic downturn, he said Sage Capital looks for companies whose business is “unrelated and resilient to that”.

Namely, the agricultural sector.

We’ve got a global energy crisis, which feeds through to fertilisers, driving soft commodity prices higher. Nufarm is a global crop protection business so it does all the herbicides, fungicides, pesticides. With increasing value of crops, you want to protect those as a farmer. That’s a good base business.

Fenton said that long-term shareholder Sumitomo had sold down their holdings which “crunched the price down a little bit… I think there’s a good opportunity to enter it at the moment”.

Fenton also noted the ASX 200 share offers growth opportunities:

They’ve got some R&D [research and development] and a broader seeds business. Within that [they have] some omega-3 canola IP [intellectual property], and that’s been approved by the FDA to go into fish food, but also into human consumption.

Over the next few years, there’s a real opportunity for them to grow that business, good IP, a high margin business, and that’s one that’s being overlooked a bit by the market.

The post 2 ASX 200 shares the market has overlooked: fundies appeared first on The Motley Fool Australia.

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More reading

• Why Bailador, Fortescue, Nufarm, and Telstra shares are rising
• ASX 200 midday update: NAB completes acquisition, lithium miners sink, Origin tumbles
• Here are the top 10 ASX shares today
• 3 ASX All Ordinaries shares enjoying a Wednesday windfall
• ASX 200 midday update: BHP and Pilbara Minerals shares tumble

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

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When a board director spends almost a million bucks of his own money buying more shares in the company he runs, it’s usually a positive sign for investors.

In a statement to the ASX this week, Austral Resources Australia Ltd (ASX: AR1) revealed that executive director Daniel Jauncey has spent $848,774 purchasing 1,615,066 shares in the micro-cap copper miner.

The significant thing here is that it was an on-market trade. Not an exercise of options. Or a rights issue. Nor director’s remuneration (where the issuing of new shares forms part of a director’s salary package). It was just Jauncey spending his own money to invest in this young ASX mining share.

Jauncey purchased the shares in a series of trades between 8 June and 10 June. The Austral Resources share price moved between 54 cents and 56 cents over these three days.

Jauncey directly held 10 million shares in Austral Resources prior to the trades. So, his recent purchases represent a 16% increase in his investment.

What does a major purchase by an ASX insider signal?

Well, ask yourself, how much confidence would you need to feel in an ASX share in order to put almost $1 million of your hard-earned money into it?

In most cases, when a company insider makes a large on-market purchase, it usually means management is feeling very confident and optimistic about the future of the company.

What is Austral Resources?

Austral Resources is a copper producer in Queensland’s Gulf Country. It’s a relatively new ASX mining share, having commenced trading on the exchange in November 2021.

Its initial public offering (IPO) price was 20 cents. Today, it’s trading at 43 cents, down 7.6% for the day so far but up 165% year to date.

The company owns the Lady Annie copper mine, which produces LME quality copper cathode. It’s also just finished developing a new mine at Mt Isa.

Austral Resources also lays claim to “1,340 km2 of highly prospective exploration tenements”, some with advanced exploration status.

What’s the latest news from this ASX mining share?

This follows an intensive eight-month site development process that turned a paddock into an open-cut mine.

The company said this first production “paves the way for Austral to meet its stated objective of producing copper cathode at a rate of 10,000 tonnes per annum from mid-2022”.

Approximately 354,000 tonnes of copper oxide ore were mined in this first production. It represents more than 4,000 tonnes of contained copper.

Austral CEO Steve Tambanis said it was a huge milestone:

The most important aspect is that the operation is de-risked and comfortably ramping-up to design capacity of 10,000tpa cathode. With that comes increased sales revenue and cashflow.

Our exploration and development activities are being scaled up to discover and deliver new copper ore.

The post Guess which ASX insider just bought almost $1 million of his company’s shares appeared first on The Motley Fool Australia.

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More reading

• Why did this ASX copper share just pop then stop?

Motley Fool contributor Bronwyn Allen 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 5E Advanced Materials Inc (ASX: 5EA) share price has climbed further into the green today, now up 1.77% at $2.88.

Investors have pushed the share from lows of $2.83 on 16 June, following a period of wide-reaching volatility in 2022, as seen on the chart below.

What’s up with the 5EA share price?

Investors rallied the 5EA share price back in May as well following the release of the company’s third-quarter results.

The minerals exploration and production company reported a net loss from operations of $33 million. That was up from $3.8 million the year prior and amounted to a net loss of 79 cents per share.

Market fundamentals for boric acid are healthy, CEO Henri Tausch said at the time, “with average boric acid prices up more than 50% during Q1 2022”.

Aside from that, 5EA yesterday confirmed its NASDAQ-listed stock will be included in the Russell 2000, Russell 3000, and Russell Microcap indices.

Inclusion into the benchmarks will also see 5EA shares purchased by funds and investment managers that have mandates tied to the indices.

It also secures a vote of approval for the share, seeing as it had to pass several selection criteria before its inclusion.

Also in June, 5EA signed a letter of intent with Corning Inc to supply boron specialty metals as part of a collaboration with the company.

Corning is one of the largest technical glass manufacturers in the world, 5EA says.

Since the company floated in March 2022, the 5EA share price is down around 3%.

The post Why has the 5E Advanced Materials share price leapt 17% in 2 days? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ordinaries shares defying today’s rout to surge higher
• 3 ASX All Ordinaries shares that leapt more than 10% on Thursday
• 3 ASX All Ordinaries shares that defied Thursday’s slump to leap 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a disappointing decline. At the time of writing, the benchmark index is down 2.2% to 6,447.6 points.

Four ASX shares that have avoided the selloff today are listed below. Here’s why they are rising:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up almost 4% to $4.16. This gain appears to have been driven by optimism that the company could still have a chance of benefiting from shortages in the United States market. This follows news that a major infant formula manufacturing facility has been shut down just two weeks after reopening. This has been driven by flooding on this occasion.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is up 6% to 64 cents. This morning this infant formula company upgraded its FY 2022 guidance to reflect its deal with the US government. Bubs was previously expecting “modest” half on half growth from the $38.5 million gross revenue it recorded during the first half. Whereas it now expects gross revenue to be over $100 million for FY 2022, subject to scheduled operations occurring without disruption. Possibly holding its shares back a touch was a lack of operating leverage.

Evolution Mining Ltd (ASX: EVN)

The Evolution share price is up 5% to $3.67. This has been driven by a rebound in the gold price and a broker upgrade by UBS. The latter saw Evolution upgraded to a buy rating with a $4.05 price target. The former has led to the S&P/ASX All Ords Gold index storming 2.6% higher today.

Zip Co Ltd (ASX: ZIP)

The Zip share price is up 3.5% to 52.3 cents. This is despite there being no news out of the buy now pay later (BNPL) provider. However, it is worth noting that a number of BNPL shares are storming higher on Friday. Investors may believe that this area of the market has been oversold in recent weeks.

The post Why A2 Milk, Bubs, Evolution, and Zip shares are rising despite the selloff appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ordinaries shares defying today’s rout to surge higher
• The Zip share price is actually climbing today. What’s going on?
• ASX 200 midday update: GUD crashes, tech shares tumble
• Here’s why the A2 Milk share price is defying the market selloff on Friday
• ‘The bar has been set low’: Why this top broker just upgraded the Evolution Mining 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 ZIPCOLTD FPO. The Motley Fool Australia has recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Santos Ltd (ASX: STO) share price has surged higher in 2022, clipping a 22% gain in that time.

Despite recent volatility, one portfolio manager is still constructive on the share, noting the long-term upside potential.

Santos has slipped 4% into the red to $7.72 today on no news, as the S&P/ASX 200 Index (ASX: XJO) slides 2%.

Compelling opportunity

According to Vince Pezzullo of Perpetual Asset Management, Santos is well-positioned to capitalise on market trends for the future.

The portfolio manager laid out the investment case for Santos.

[O]ur investment thesis is the leverage that Santos has to domestic gas and export liquefied natural gas markets as we believe these forms of energy are key to facilitating Australia and the world to transition to a lower carbon future.

A key driver of Santo’s share price is global energy markets, he says, “and we have seen these tighten of late and oil and gas prices rallying,” the portfolio manager wrote on Livewire.

“One of the ways it is looking to do this is through increasing LNG imports and Santos is a key global producer through its stake in the PNG LNG, Gladstone LNG, and Darwin LNG assets,” he added.

Adding to the compelling opportunity are Santos’ recent asset sell downs that have strengthened its balance sheet.

“Successful execution of all these sell-downs would see the company significantly exceed its target of US$2 – 3 billion in asset sales in 2022,” Pezzulo opined.

This could blow out to 2023 however, due to various routine setbacks. Nevertheless, the portfolio manager is constructive toward Santos on a number of levels.

Brent crude oil still buoyant at US$118 per barrel alongside surging gas markets are also key components, Pezzullo said.

“We would welcome these sales as it would significantly cut Santos’ capital expenditure, improve its cash flow and potentially lead to a re-rating of the stock,” he concluded.

In the last 12 months, the Santos share price has held onto a 1.5% gain.

The post Santos share price ‘a compelling opportunity’: fundie appeared first on The Motley Fool Australia.

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More reading

• 2 energy ASX shares to buy while inflation is killing everything else: expert
• 5 things to watch on the ASX 200 on Thursday
• The Santos share price is up 27% this year. Is it too late to buy?
• ‘Resilient growth profile’: Why this broker is tipping Santos shares to outperform
• This fund manager is optimistic on these 2 leading ASX 200 energy shares

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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The Rio Tinto Limited (ASX: RIO) share price is set to finish lower today.

Despite the company not releasing any price-sensitive announcements to the ASX, the mining giant’s shares are currently down 4.94% to $106.19.

This brings its losses this week to more than 8% following a broader market sell-off.

In contrast, the S&P/ASX 200 Index (ASX: XJO) is currently shedding 2.25%.

What’s dragging Rio Tinto lower?

There are a couple of reasons as to why the Rio Tinto share price might be heading south today.

The current decline in iron ore prices is providing a resistance across the mining sector, with the majors down.

Shares in BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) are down 3.91% and 4.69%, respectively.

This is leading the S&P/ASX 200 Resources Index (ASX: XJR) to completely erase yesterday’s 0.56% short-lived gain.

As such, the benchmark index for Australian resource companies is falling 3.34% to 5,475.2 points.

With the price of the steel-making ingredient fetching a three-week low of US$131.50 per tonne, investors have turned elsewhere.

The only performing index among a sea of red is the S&P/ASX All Ordinaries Gold (ASX: XGD) sub-industry.

The index is up 2.48% to 6,119.6 points.

Also putting pressure on the Rio Tinto share price is news surrounding China’s plans to set up a centralised iron ore buyer.

According to the Financial Times, the Xi administration is hoping to reduce reliance on Australia’s biggest export.

The move involves Beijing securing lower iron ore prices through larger bulk purchases from its state-owned mining and steel companies.

Notably, this will promote domestic iron ore production and boost investments in bringing mines online inside and outside the country.

Regarded as a key commodity in Rio Tinto’s portfolio, the latest news is particularly significant.

In the financial year ending 31 December 2021, iron ore accounted for 62% of the total group sales revenue.

Rio Tinto share price review

Over the last 12 months, the Rio Tinto share price has dropped 14%.

However, when looking at 2022, the mining outfit’s shares are up around 6%.

Based on today’s price, Rio Tinto commands a market capitalisation of roughly $41.19 billion.

The post Why is the Rio Tinto share price diving 5% on Friday? appeared first on The Motley Fool Australia.

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More reading

• ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink
• Rio Tinto share price lower despite Gudai-Darri update
• Why is the Rio Tinto share price tumbling 6% today?
• 2 ASX dividend shares to buy this month: experts

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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Rumour has it that Pointsbet Holdings Ltd (ASX: PBH) shares were in the sights of a potential takeover two weeks ago. Yet, here were are, with no word of a deal being considered by the board.

At the time of writing, shares in the sports betting company are holding up well during a difficult day for the market. Currently, the S&P/ASX 200 Index (ASX: XJO) is down a significant 2.26%. Meanwhile, Pointsbet shares are 1.96% in the green.

Perhaps the market is only now responding to the prospects of Pointsbet being a takeover target. But rather than speculate, let’s take a look at what has been reported.

Betting on itself

The Pointsbet share price has seen better days, that’s for sure. Unfortunately for shareholders, a growing concern about rising interest rates has pulled valuations of many unprofitable names back down to Earth.

Pointsbet shares have not been immune to the drawdown. Reporting a $247.9 million loss for the 12 months ending 31 December 2021, investors have lost their confidence in the company under the current economic conditions.

However, the 87% retracement in the company’s shares has now put it on the takeover menu. Unbelievably, Pointsbet could almost be considered a Warren Buffett-style investment based on its price-to-book value.

At the end of last year, the company counted $569 million worth of cash and equivalents on its balance sheet. Comparatively, Pointsbet’s current market capitalisation is approximately $535 million.

Now, realistically, the business has likely chewed through a chunk of that capital in the first six months of this year unless it has drastically clamped down on expenses. Though, reports of an approach from Rupert Murdoch’s News Corporation (ASX: NWS) indicate there still might be value in Pointsbet shares.

According to reports, a consortium including former Sportsbet chair Matthew Tripp lobbed a deal worth over $200 million at Pointsbet for its Australian division. It is believed the deal was an attempt to give News Corp scale for its own offering in the works.

Reportedly, the Pointsbet board rejected the offer without presenting it to shareholders. This is at a time when the company expects the Australian division to soon be EBITDA positive.

Are Pointsbet shares an opportunity?

While the Pointsbet share price is down 71% since the start of the year, some brokers are still bullish on the company.

As my Fool colleague James covered recently, Bell Potter is one such broker with a buy on Pointsbet shares. The large market opportunity in the United States fed into the analysts placing a $6 price target on the company.

For context, shares are currently swapping hands at $2.08, indicating a potential 188% upside.

The post Own Pointsbet shares? Here’s why the company rebuffed a Murdoch takeover approach appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Block, Harvey Norman, and PointsBet shares are sinking
• These were the worst performing ASX 200 shares last week
• 10 ASX All Ords shares that could be stung by tax-loss selling
• Why these top brokers say the beaten-up PointsBet share price has 100% upside
• Investors are betting on the Pointsbet share price today, it’s up 5%

Motley Fool contributor Mitchell Lawler 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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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