Category: Stock Market

With international borders well and truly open, two years of pent-up demand and a desire to escape the winter has seen droves of Aussies pack their bags and take off to warmer climates. 

Two popular ASX travel shares riding this recovery are Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB).

These companies go head to head in the Australian leisure market. But while Flight Centre has a strong presence in corporate travel, Webjet is a big player in the business-to-business (B2B) hotel accommodation space. 

Fresh off an overseas trip, I’m keen to put these ASX travel shares under the spotlight to see which company might be the better buy.

The case to upgrade Flight Centre shares

For months now, Flight Centre has been the most heavily shorted share on the ASX. But it might not be all doom and gloom.

While borders were shut and revenue shrivelled up, Flight Centre acted swiftly to significantly reduce its cost base, realign and modernise its brands, and accelerate its investment in technology.

Most notably, the company cut its Australian brick-and-mortar store network in half, meaning it’s now emerged from COVID a much leaner business. Importantly, the company believes it’s still able to reach 95% of its customers despite these store closures. All the while, competing travel agents have shuttered up shop and exited the market for good.

With the travel environment more complex now than ever before, travellers are turning to experts – like those at Flight Centre – to navigate the complexity and provide peace of mind.

Flight Centre’s corporate travel business has also been making inroads since the pandemic, growing market share organically through new big account wins and high retention. The company’s FCM business won 12 of its largest 20 accounts during the pandemic. And since the first half of FY21, it’s secured accounts with an annual spend of around $4.5 billion. 

The case to double click on Webjet shares

Compared to Flight Centre, Webjet is a much more capital-light business since it doesn’t run a network of physical stores. Nor does it employ an army of salespeople to operate these stores.

Even still, it’s also emerged from COVID as a leaner, more cost-effective company. Its Webbeds ‘bed bank’ business has slashed costs by 31% compared to pre-pandemic levels and is on track to be 20% more cost efficient when it’s back operating at scale.

What’s more, Webbeds has its sights set on moving up one spot to become the number one global B2B accommodation provider. This strategy is seeing Webbeds target a greater market opportunity through channel expansion, diversifying into untapped domestic markets, and an increased presence in North America.

Webjet is also targeting significant market share growth in its online travel agency (OTA) business, which already captured more than 50% of the OTA flights market in Australia and New Zealand prior to COVID. As the structural shift to online continues to accelerate, Webjet is aiming to outperform the domestic bookings market by 1.5x, underpinned by its brand strength and unique technology.

Webjet’s financial year ends on 31 March, so the ASX travel share has already handed in its FY22 results. The company’s operating leverage was on full display, with revenue growing 63% in the second half compared to the first, while expenses only ticked up by 10%. 

Is there turbulence ahead for ASX travel shares?

I’ve presented the blue-sky scenario for these ASX travel shares but it’s important to be wary of the risks. After all, Flight Centre shares are attracting short interest for a reason. At the moment, 15% of Flight Centre shares are held as short positions, while Webjet’s short interest stands at around 7%.

It appears the market is concerned that the travel recovery may take longer than expected, hampered by inflation and rising living costs. 

At the same time, the industry is battling a lack of capacity from airlines, particularly on international routes, leading to higher airfares which could stifle demand. 

As the dust settles from COVID, more travellers have been opting to venture domestically rather than overseas. This is an unwelcome trend for travel agents as they earn higher margins on international travel.

Looking out over the longer term, there are also debates over the relevance of travel agents and if video conferencing tools have changed the corporate travel landscape for good.

Which is the better ASX travel buy?

Flight Centre is a proven performer with an aligned founder at the helm and a long history of creating shareholder value.

That said, I’m attracted to the scalability of Webjet’s model, its earnings potential, and the runway for organic growth ahead for its Webbeds business.

The post Better ASX travel buy: Flight Centre or Webjet? appeared first on The Motley Fool Australia.

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More reading

• It’s gained 60% in 2 years, does the Webjet share price still have room to grow?
• Are we flying first class with Flight Centre shares?
• These are the 10 most shorted ASX shares
• Why did the Flight Centre share price underperform the ASX 200 in July?
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts

Motley Fool contributor Cathryn Goh 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 Flight Centre Travel Group Limited and Webjet 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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If you’re wanting to diversify your portfolio quickly, then exchange traded funds (ETFs) could help you achieve this. But which ETFs should you consider buying?

Listed below are two popular ETFs that are highly rated:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is the BetaShares Asia Technology Tigers ETF. It gives investors exposure to approximately 50 of the Asian region’s largest technology and ecommerce companies.

Through this ETF you’ll be buying a slice of tech giants such as Alibaba, Baidu, Infosys, JD.com, Kuaishou Technology, Meituan Dianping, Pinduoduo, Samsung, and Tencent Holdings.

In respect to Tencent, it is a multinational technology conglomerate and one of the largest companies in the region (and the world).

Tencent is best known for its communication and social platforms, Weixin, WeChat and QQ. These are the dominant platforms in the region by some distance. For example, earlier this year, the company revealed that WeChat users had reached 1,288 million.

The company also has plenty of other businesses such as Tencent Music, Tencent Meeting, and Tencent Games, to name just three.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ETF for investors to consider buying is the BetaShares Global Cybersecurity ETF. This fund tracks the performance of an index covering the leading companies in the growing global cybersecurity sector.

With cybercrime on the rise and demand for cyber security services growing fast, the companies included in the fund appear well-placed for long term growth. This includes Accenture, Cisco, Cloudflare, Crowdstrike, and Okta.

In respect to CrowdStrike, it provides the popular Falcon platform that delivers incident response and forensic analysis services. These have been designed to help businesses understand whether a breach has occurred.

The post 2 exciting ETFs for ASX investors to buy today appeared first on The Motley Fool Australia.

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• Why the BetaShares ASIA ETF is 50% below its former glory
• 3 ETFs for ASX investors to buy right now
• 2 exciting ETFs for investors to buy in August
• Why I think these ASX tech shares are buys in August
• 3 ETFs for smart ASX investors in August

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 BETA CYBER ETF UNITS. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telstra Corporation Ltd (ASX: TLS) share price dropped into the red on Thursday. This followed the release of the company’s full year results for FY 2022.

The telco giant’s shares ended the day down by 1.25% to $3.96.

What did analysts say about the result?

Telstra delivered a result that was largely in line with the market’s expectations and its final dividend increase to 8.5 cents per share was a big (pleasant) surprise.

In light of this, the weakness in the Telstra share price appears to have been driven by its guidance for FY 2023.

Telstra has guided to EBITDA growth of 7.5% to 10% in FY 2023, which wasn’t quite as strong as analysts at Goldman Sachs were expecting.

The broker has commented:

Telstra reported FY22 EBITDA/EPS that were +1%/+9% vs. GSe, but in-line excl. $116mn of legacy network disposals. Lower Digicel & NBN one-off earnings expectations resulted in FY23 EBITDA guidance -1% vs. GSe prior. T25 targets were mostly re-iterated, except for returning D&IP to growth in FY24E (with the inter-capital fibre build being more IRU/cash focused). However, the key surprise was the 8.5¢ final dividend (GSe 8.0¢).

Is the Telstra share price good value?

While Goldman sees value in the Telstra share price, it doesn’t see enough to recommend it as a buy just yet.

According to the note, the broker has retained its neutral rating and $4.40 price target on the company’s shares. Based on the current Telstra share price, this implies potential upside of 11% for investors.

But that’s not including dividends. Goldman is forecasting a 17 cents per share fully franked dividend in FY 2023, which would mean a 4.3% yield. This would stretch the total return on offer with its shares to over 15%. Not bad for neutral!

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

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• Why AMP, OFX, Rio Tinto, and Telstra shares are dropping
• Equity markets threaten to ‘melt up’ as Nasdaq enters bull market territory
• Everything you need to know about the latest Telstra dividend
• Telstra share price higher on earnings beat and surprise dividend increase
• Telstra share price on watch amid strong FY22 result and surprise dividend increase

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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It’s not often that a company sees a massive geographic market shut down overnight.

But that’s exactly what happened to Treasury Wine Estates Ltd (ASX: TWE) in 2020.

It was a frightening time when the first wave of COVID-19 broke out around the world. 

There were no vaccines yet, and economies tanked around the globe after individual freedoms were curtailed to stop the spread.

In a not outrageous suggestion, the Australian government called for an independent study into the origins of the pandemic.

Unfortunately, China took exception to this. Beijing retaliated by imposing crippling tariffs on certain imported goods from Australia.

Wine was one of those newly taxed items, and instantly one of Treasury Wine’s biggest markets disappeared into thin air.

‘Successfully repositioned’ business

Fast forward two years, and Treasury’s management has done its best to pivot away from the world’s largest country.

Investment fund WAM Leaders Ltd (ASX: WLE) has high hopes for its holding, according to portfolio manager John Ayoub.

“Under the leadership of Tim Ford… Treasury Wine Estates has successfully repositioned itself away from China,” he said in a memo to clients.

“The business is now in a much stronger position than it was prior to the tariffs, allowing the company to shift back to a growth mindset.”

To demonstrate, Ayoub referred to how the acquisition of US business Frank Family Vineyards late last year “filled a key gap” in that country. 

“This transaction came with both cost synergies as well as revenue cross-sell and distribution synergies, and has created a new growth pillar for the US business.”

Defensive in economic downturns

The other tailwind for Treasury Wine is that it’s in an industry that should be resilient through imminent consumer belt-tightening from rising interest rates.

“In the current environment, Treasury Wine Estates is set to outperform,” said Ayoub.

“Wine consumption has proven defensive in previous economic downturns, the company is well positioned to pass through inflationary pressures and it has well-recognised brands and strong vintages that are in perennial demand.”

The company has an impressive array of new labels launching in the coming months.

“In fact, 4 August marked the release of the latest vintage Penfolds from Australia, California and for the first time, France,” Ayoub said.

“Later this year, we should also see the release of the inaugural Chinese Penfolds.”

Treasury Wine is scheduled to report its financials on Thursday. The stock price is currently pretty much where it started the year.

Shaw and Partners portfolio manager James Gerrish agreed last week that Treasury Wine has a bright future ahead of it.

“The stock is not overly cheap but solid year-on-year growth looks achievable to justify an FY23 PE of 22x,” he said.

“We like Treasury Wine Estates, plus it remains a potential takeover target although tight money markets may delay any action out of Europe.”

The post ‘Back to a growth mindset’: Expert names ASX share ready to take off appeared first on The Motley Fool Australia.

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More reading

• Treasury Wine share price up amid key China trademark win
• 2 excellent ASX growth shares to buy now according to brokers
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts
• Winner winner chicken dinner: Expert names 2 ASX shares to buy now
• Morgans name 3 of the best ASX shares to buy in August

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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Are you looking for dividend shares for your income portfolio?

If you are, you may want to check out the two listed below that have been rated as buys by brokers.

Here’s what you need to know about these ASX 200 dividend shares:

Harvey Norman Holdings Limited (ASX: HVN)

The first ASX 200 dividend share that could be in the buy zone is Harvey Norman.

It is of course a retail giant selling furniture, bedding, computers, communications, and consumer electrical products. In addition, the company invests in property, leases premises, and provides consumer finance and other commercial loans.

It has been tipped as a buy by the team at Goldman Sachs. Its analysts like Harvey Norman due to their belief that it is well-placed to defend its strong market position from online disruption thanks to its favourable customer demographics.

In addition, Goldman is expecting some big dividend yields in the near term. Its analysts are forecasting fully franked dividends per share of 36 cents in FY 2022 and 36.3 cents in FY 2023. Based on the current Harvey Norman share price of $4.47, this will mean yields of 8%.

Goldman has a buy rating and $4.60 price target on its shares.

South32 Ltd (ASX: S32)

Another ASX 200 dividend share to consider is South32. It is a diversified mining and metals company producing alumina, aluminium, bauxite, copper, energy and metallurgical coal, lead, manganese, nickel, silver, and zinc.

Thanks partly to its exposure to metals necessary for the decarbonisation megatrend, analysts are expecting South32 to generate significant earnings and free cash flow over the coming years. This is also expected to underpin some very big dividends.

Morgans, for example, is forecasting fully franked dividends per share of ~28 cents in FY 2022 and ~35 cents in FY 2023. Based on the current South32 share price of $4.04, this will mean yields of 6.9% and 8.7%, respectively.

The broker also sees plenty of value in the South32 share price at current levels. It has an add rating and $6.00 price target on its shares.

The post 2 ASX 200 dividend shares with ~7%+ yields that experts rate as buys appeared first on The Motley Fool Australia.

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More reading

• What’s impacting ASX 200 retail shares today?
• Brokers name 2 ASX dividend shares to buy with 4%+ yields
• Top broker predicts 50% upside for South32 share price. Here’s why
• 2 ASX 200 dividend shares analysts rate as buys
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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 Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman 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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After a soul-crushing first half of 2022, both ASX shares and US stocks have really picked up in the past few weeks.

The S&P/ASX 200 Index (ASX: XJO) has now gained almost 10% since its 20 June trough. The S&P 500 Index (SP: .INX) has climbed 14.8% over a similar period.

And amazingly, the Nasdaq Composite (NASDAQ: .IXIC) has now rocketed more than 20% since mid-June.

That’s a bull market, believe it or not.

Thursday morning was something of a watershed moment as the latest figures pushed the yearly US inflation percentage downwards.

That aroused stock investors no end, pushing the NASDAQ up 2.9% for the day. The ASX 200 followed with a 1.1% climb.

This is all very exciting. Some people might even dare to think ASX shares have now passed the bottom.

However, multiple experts are warning against complacency.

‘Too early to say we’re out of the woods’

While DeVere Group chief executive Nigel Green welcomed the retreat of US inflation, he cautioned that investors needed to understand the full picture before partying like it’s 1999.

“It is still too early to say we’re out of the woods with inflation and the impact it could have on the Fed’s decision-making,” he said.

“Some of the drivers of the 40-year high inflation rate we’ve been seeing are subsiding — commodity prices are coming down, and supply chain issues are decreasing. But we still have rising wages, and this will continue to drive core inflation.”

MFS Investment Management portfolio manager Rob Almeida warned investors that none of the behaviours typically seen when the market bottoms have yet to materialise.

“Historically, markets have tended to bottom when investors give up — stop caring, vow never to invest again and no longer ask ‘Is this the bottom?’” he said.

“I’ve lived through that twice and I don’t think we’re there yet. But when investors stop asking whether we are, we will be.”

Green cautioned investors against getting caught up in the excitement and buying anything and everything.

“You must buy wisely in this volatile environment,” he said.

“Investors’ response should be to avoid complacency and a ‘buy everything’ mindset and stick to basic investment fundamentals.” 

ASX shares still under stress

Local experts further warned that ASX shares will be under pressure for the foreseeable future.

It seems the steep rise in interest rates over the past three months is starting to bite. Consumer advocacy group Choice found this week that 90% of Australians have seen their expenses balloon in the past year.

“Almost all households are feeling the pressure of price rises,” said Choice editor Marg Rafferty.

“Cost of living pressures continue to be a major issue for Australians with our latest Consumer Pulse data showing 23% of households are struggling to get by, which is up from 18% in June last year.”

Furthermore, Nucleus Wealth chief investment officer Damien Klassen reckons ASX shares are still overvalued.

On face value, the ASX currently trades at a price-to-earnings (P/E) ratio of about 14.7 times, which is significantly cheaper than the rest of the world at 16.1 times.

But the trouble is that the dominant mining and banking shares skew that measurement with their slim PE ratios.

“For resources, it is because it has volatile revenues and even more volatile profits. For banks, the extreme leverage used increases the risk,” Klassen said on a Nucleus blog post.

“If you strip these sectors out and compare Australia excluding banks and resources, it no longer looks cheap. Actually, it’s well above the 90th percentile, close to as expensive relative to the world as it has ever been.”

The post ASX shares are rallying! Here’s what to do now: experts appeared first on The Motley Fool Australia.

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More reading

• Down 20% since March, is this ASX 200 share a misunderstood investment opportunity?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why has the Block share price exploded 9% on the ASX 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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It’s been a rough few months for the share price of S&P/ASX 200 Index (ASX: XJO) favourite JB Hi-Fi Limited (ASX: JBH).

The electronics retailer’s stock is trading 19% lower than the 52-week high it posted back in March.

As of Thursday’s close, the JB Hi-Fi share price was $46.04.

But one fundie is sceptical of bearish opinions on the stock, saying “it’s a great example … of the consensus view being one that [could] be wrong”.

Let’s take a look at what Forager co-founder and chief investment officer Steven Johnson likes about the ASX 200 COVID-19 winner’s post-pandemic future.

Does this ASX 200 share offer an electric future?

This year has been an ultimately downhill rollercoaster for the JB Hi-Fi share price, but the company’s earnings have stayed strong.

In fact, it was only last month it posted its preliminary results for financial year 2022. It recorded 3.5% more sales, 6.8% higher earnings, and a 7.7% increase in after-tax profits compared to those of financial year 2021.

They’re results that impressed Johnson as much as they did the market. He admitted that, while Forager hasn’t snapped up JB Hi-Fi shares as yet, the company has piqued the fundie’s attention. He labelled JB Hi-Fi:

A really good example of something that we are looking at at the moment.

This is a stock that is quite well known by the market … but if you go and look at broker consensus for this business, the assumption about the next two years is that its profitability is going to halve, it’s going to go right back to 2019 levels.

Indeed, brokers are split on their outlook for the ASX 200 stock and its share price, as The Motley Fool Australia’s Bronwyn Allen recently reported.

But Johnson appears to have seen through clouds of doubt to make out a “thesis … that was once the consensus view”. The fundie continued:

This is a wonderful business that has a very, very low cost of doing business [and] maybe it won’t shrink as much as people think. And it may even grow over the long term like it has for most of the past 20 years.

The JB Hi-Fi share price is currently almost 6% lower than it was at the start of the year. That means it’s outperformed the ASX 200 by around 1% in that time. It has also gained 80% over the last five years.

The post Down 20% since March, is this ASX 200 share a misunderstood investment opportunity? appeared first on The Motley Fool Australia.

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More reading

• ASX shares are rallying! Here’s what to do now: experts
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why has the Block share price exploded 9% on the ASX today?

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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The ResMed Inc (ASX: RMD) share price will be one to watch on Friday morning.

This follows the release of sleep treatment focused medical device company’s full year results.

ResMed share price on watch amid solid FY 2022 growth

• Revenue up 12% year over year to US$3.6 billion
• Gross margin contracted 140 basis points to 57.7%
• Operating income up 11% to US$1 billion
• Non-GAAP net income up 9% to US$850.8 million

What happened in FY 2022?

For the 12 months ended 30 June, ResMed reported a 12% (13% in constant currency) increase in revenue to US$3.6 billion.

A key driver of this strong growth was the U.S., Canada, and Latin America segment. It reported a 15% increase in revenue to US$2,382.6 million thanks to a 24% increase in device revenue and a 7% lift in software-as-a-service revenues.

Combined Europe, Asia, and other markets supported this with a 7% (11% in constant currency) increase in sales to US$1,195.5 million. This growth was split evenly between its devices and masks businesses.

In addition, the company’s revenue was boosted by a competitor recall. Management estimates that incremental fourth quarter revenue in the range of US$60 million to US$70 million related to the recall.

And while its margins were impacted by higher freight and manufacturing costs, this couldn’t stop ResMed from delivering solid non-GAAP net income growth of 9% to US$850.8 million.

This allowed the ResMed board to declare a final quarterly cash dividend of US$0.44 per share, which is up 5% on the prior corresponding period.

How does this compare to expectations?

Potentially good news for the ResMed share price is that this result appears to have come in ahead of expectations.

For example, the market consensus estimate was for a full year profit after tax of US$825.6 million.

However, it is worth noting that the ResMed share price is trading flat in after hours trade on Wall Street after falling 1% overnight. This could be a sign that today will be a red day despite the earnings beat.

Management commentary

ResMed’s CEO, Mick Farrell, was very pleased with the company’s performance in FY 2022. He said:

Our fourth quarter and full-year fiscal year 2022 results demonstrate strong growth and ResMed’s market leadership. During the quarter, we saw continued adoption of our most advanced platform innovation to date, the 100% cloud-connectable AirSense 11. We launched this solution into several new countries in Europe while continuing to see strong sales in the U.S.

We also introduced our newest device to meet the needs of an industry crisis in PAP supply, the AirSense 10 Card-to-Cloud solution, during the quarter. The card-to-cloud device was launched into the U.S. and many other markets and is designed to work without an embedded communications module. This redesign allowed us to increase deliveries to customers and ultimately to get many more patients onto life-saving sleep apnea and respiratory care therapy. Both of these platforms, as well as our legacy, market-leading, 100% cloud-connected AirSense 10 device, will support solid growth throughout FY23.

Outlook

No guidance has been given for FY 2023. However, Farrell spoke positively about the company’s growth prospects and its medium term goal. He concluded:

Our global team remains focused on supporting patients, providers, and physicians — our top priority is to get products directly into the hands of patients who need therapy most. Looking ahead, we are confident in our ability to grow steadily throughout fiscal year 2023 and to continue delivering for all stakeholders. We are investing in R&D to drive accelerated adoption of digital health solutions in sleep apnea, COPD, and outside-hospital care, as we progress towards our goal to improve 250 million lives in 2025.

The post ResMed share price on watch following solid FY22 growth appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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 Thursday, the S&P/ASX 200 Index (ASX: XJO) had a very strong day and raced notably higher. The benchmark index rose 1.1% to 7,071 points.

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

ASX 200 expected to fall

The Australian share market looks set to end the week in the red following a poor night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 19 points or 0.3% lower this morning. In the United States, the Dow Jones rose 0.1%, the S&P 500 dropped 0.1%, and the Nasdaq tumbled 0.6%.

Oil prices charge higher

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good day after oil prices strengthened overnight. According to Bloomberg, the WTI crude oil price is up 2.5% to US$94.22 a barrel and the Brent crude oil price is up 2.2% to US$99.58 a barrel. Traders were buying oil after the IEA increased its 2022 demand growth forecast.

ResMed results

The ResMed Inc (ASX: RMD) share price will be one to watch on Friday. This morning the medical device company is releasing its fourth quarter and full year results. In respect to its full year result, the market is expecting ResMed to report a profit after tax of US$825.6 million for the 12 months ended 30 June.

Gold price falls

Gold miners such as Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a subdued finish to the week after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.6% to US$1,802.60 an ounce. Traders were selling gold amid the prospect of more rate hikes by the U.S. Federal Reserve even though there are signs that inflation is peaking.

IAG results

The Insurance Australia Group Ltd (ASX: IAG) share price could be on the move today. This morning the insurance giant is scheduled to release its full year results. According to CommSec, the market is expecting the company to report a full year net profit after tax of $248 million. From this, IAG has been tipped to pay a final dividend of 3.1 cents per share.

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

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended Insurance Australia Group Limited and ResMed Inc. 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 hot debate igniting financial circles right now is whether ASX shares — and stock markets across the world — have reached the bottom. Could the bear finally be ready to hibernate for the rest of winter, or does it plan to skulk about into spring?

Regardless of which direction the bear takes, one thing’s for sure… inflation and interest rates are never far from the headlines. And, many are feeling the pinch of higher prices and mortgage payments.

With the cost of living biting into our bank balances, we asked our Foolish contributors which ASX dividend shares they reckon could make great buying right now for some potential passive income in the future.

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

Nick Scali Limited (ASX: NCK), $814.86 million

Codan Limited (ASX: CDA), $1.60 billion

Centuria Industrial REIT (ASX: CIP), $1.94 billion

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), $9.36 billion

Vanguard Australian Shares Index ETF (ASX: VAS), $11.20 billion

Woolworths Group Ltd (ASX: WOW), $46.15 billion

Westpac Banking Corp (ASX: WBC), $78.71 billion

(Market capitalisations as of 11 August 2022)

Why our Foolish writers love these ASX dividend shares

Nick Scali Limited

What it does: Established more than 60 years ago, Nick Scali counts itself among Australia’s largest importers of quality furniture. The company imports more than 5,000 containers of furniture annually. In 2017 it expanded internationally to New Zealand.

By Bernd Struben: Nick Scali has a long track record as a reliable dividend payer. The furniture importer has made biannual dividend payments every year, dating back to 2014. It even paid out two dividends in the pandemic-addled year of 2020.

Up 42% since 17 June, the Nick Scali share price remains down 35% year to date. At the current price, the company pays a trailing dividend yield of 6.0%, fully franked.

This month, Jack Collopy, portfolio manager at Perpetual singled out the stock as one in which Perpetual recently increased its holdings. “Nick Scali is extremely well run, has an excellent balance sheet, and we think the recent Plush acquisition will prove to be a great use of capital,” he said.

Motley Fool contributor Bernd Struben does not own shares of Nick Scali Limited.

Codan Limited

What it does: Codan manufacturers and supplies a broad range of products that leverage the company’s radio-frequency-focused intellectual property. These products can be divided into two main segments: communications equipment and metal detection equipment.

By Mitchell Lawler: The company behind the wildly popular Minelab metal detectors has an enviable record for revenue and earnings growth in recent years.

Since 2016, Codan has grown its 12-month trailing revenue from $140.6 million to nearly $500 million at the end of last year. Even more impressively, profits have rapidly expanded from a touch under $13 million to around $99 million over the same timeframe.

Despite a history of success, the Codan share price has been sold down 48% over the past year. At present, the communications company is producing a dividend yield of 3.3%. I believe now could represent a rare opportunity to buy Codan shares at a relative discount.

Motley Fool contributor Mitchell Lawler does not own shares of Codan Limited.

Centuria Industrial REIT

What it does: Centuria Industrial REIT owns $4 billion worth of industrial property, such as warehouses, across Australia. It has a particular focus on properties that are in short supply. For example, 38% of the company’s portfolio is based in Sydney, where the vacancy rate is just 0.3%.

By Tristan Harrison: At the end of FY22, the Centuria Industrial REIT portfolio had a weighted average lease expiry (WALE) of 8.3 years and an occupancy rate of 99%. I believe this gives investors good income visibility as well as security.

Management expects strong demand will lead to net operating income growth in FY23. It is also looking at value-add projects and is developing the company’s pipeline.

The Centuria Industrial REIT is expected to pay a distribution of 16 cents in FY23, which translates into a forward distribution yield of 5.4% after a 25% fall in the share price since 29 April 2022. I think the stock looks undervalued at around $3.

Motley Fool contributor Tristan Harrison does not own shares of Centuria Industrial REIT.

Washington H. Soul Pattinson and Co. Ltd

What it does: Commonly referred to as Soul Patts, the Australian-based investment house holds a diverse portfolio of assets across a range of industries. The company has been listed on the ASX since 1903 and has consistently paid dividends to shareholders.

By Aaron Teboneras: I believe the Soul Patts share price offers an attractive opportunity for investors to buy in at the current price.

After slumping to a 20-month low of $22.52 in late June, shares in the investment company have climbed by almost 8% over the past month to close on Thursday at $25.93. But having reached as high as $40 back in October last year, I believe the Sol Patts share price has the potential to continue its march higher.

In addition, Soul Patts has made a habit of increasing its final dividend by 1 cent each year since 2012. In FY21, the board declared a dividend of 36 cents per share.

With this in mind, history would suggest that the upcoming final dividend could be bumped up to 37 cents.

Keep a lookout next month as Soul Patts is scheduled to report its FY22 earnings results on 22 September.

Motley Fool contributor Aaron Teboneras does not own shares of Washington H. Soul Pattinson & Co. Ltd.

Vanguard Australian Shares Index ETF

What it does: VAS is an exchange-traded fund (ETF) that tracks the S&P/ASX 300 Index (ASX: XKO). It is the most popular index fund and ETF on the ASX.

By Sebastian Bowen: This ETF from Vanguard is not a flashy investment. VAS is a simple index fund that holds the largest 300 shares on the ASX by market capitalisation. Like most index funds, the largest companies on the ASX make up the lion’s share of the VAS portfolio. And since most of the largest shares on the ASX pay out regular dividends, so does this ETF.

Investors enjoy quarterly distributions from VAS. Its last four payments amounted to approximately $6.26 per unit. That gives investors a trailing yield of approximately 7.12% on recent pricing. For its diversification, ‘bottom drawer’ appeal and hefty yield, I think VAS is well worth considering for dividend investors this August.

Motley Fool contributor Sebastian Bowen does not own shares of the Vanguard Australian Shares Index ETF.

Woolworths Group Ltd

What it does: Woolworths is the conglomerate behind the eponymous supermarket chain. In addition, it owns Big W, Countdown, and the Everyday Rewards loyalty program.

By James Mickleboro: I think Woolworths shares could be a top option for income investors this month. This is because the retail giant is a rare example of a company that can actually benefit from inflation. Especially if it can pass through its higher costs effectively.

The team at Goldman Sachs expects this to be the case and is forecasting a sales compound annual growth rate (CAGR) of 6.6% and underlying net profit after tax (NPAT) of 14.1% over FY22 to FY24.

Goldman expects this to lead to fully-franked dividends per share of 96 cents in FY22 and $1.18 in FY23. Based on the current Woolworths share price of $38.02, this will mean yields of 2.5% and 3.1%, respectively.

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

Westpac Banking Corp

What it does: As Australia’s oldest bank, and one of its largest, Westpac provides consumer, business, and institutional banking services.

By Brooke Cooper: The Westpac share price has underperformed the market over 2022 so far, gaining around 5% year to date, but brokers are still bullish on its future.

Goldman Sachs believes the stock “offers the most upside of the banks”. Meanwhile, both Morgan Stanley and Goldman Sachs expect the bank to up its dividends over the coming years.

They’ve respectively tipped Westpac’s dividends to rise to $1.30 and $1.35 in FY23. For context, the bank gave shareholders $1.18 in dividends in FY21.

Motley Fool contributor Brooke Cooper does not own shares of Westpac Banking Corp.

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

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More reading

• ASX 200 better buy: Wesfarmers or Woolworths?
• Own Westpac shares? Here’s when the ASX 200 bank will release its FY22 earnings
• I think these ASX 200 dividend shares look like good income picks after reporting
• Guess how much Woolworths shares have paid in dividends over the last 5 years
• ‘Capital light and scalable’: Expert picks 2 ASX shares to buy now while CHEAP

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. 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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