Category: Stock Market

The QBE Insurance Group Ltd (ASX: QBE) share price is in the green today, up 3.7% despite reporting mixed half-year results for HY22. At the time of writing, the insurance giant is trading at $12.60.

The company’s biggest hit came from its investment income amid changes to the risk-free rate that caused large unrealised losses for bond yields.

In other parts of its investment portfolio, unfavourable credit spreads and unrealised losses on equities contributed to its contraction in investment income.

However, the ASX finance share also reported top-line premium growth of 13.78% and a lower combined operating ratio (COR) of 0.42%, suggesting it received more in premiums than it paid in claims from the prior period.

What did QBE report?

• Gross written premiums up 13.78% from HY21 to 11.6 billion
• COR down 0.42% from HY21 to 92.9
• Net profit after tax (NPAT) down 65.75% from HY21 to 151 million
• Net investment income drops 1548.27% to a negative 840 million, down from $58 million
• Adjusted cash return on equity slips to 4.3%, down from 11.9% in HY21

The insurer reported an $840 million loss in investment income for HY22, but excluding the risk-free rate, came in positive at $14 million.

Net profit contracted due to several headwinds, the company said.. These included the impact on its investment portfolio and the reinsuring of North America excess and surplus (E&S) lines.

Despite facing headwinds for its bottom line, QBE Insurance improved its COR, which was helped by an 18% growth of its gross written premiums from 2021.

What else happened in HY22?

QBE reported the highest premium growth in its international operating segment outside of North America and Australia Pacific, growing 18.5%. Results were buoyed by lower catastrophe costs, which helped reduce the impact of war in Ukraine and positive operating leverage.

QBE also mentioned the issue of inflation in its report. It cited that the cost of claim payments was not perfectly correlated with inflation, meaning that QBE believed other factors besides inflation were affecting the cost of its claim payments.

What did management say?

Commenting on the results, QBE Insurance CEO Andrew Horton said: 

Launched in February 2022, we have made pleasing progress against our new strategic priorities. Over the half, we placed significant focus on our North America operations. 

We have materially simplified the business and I am confident we have the right strategy and team in place to drive a sustained improvement in performance.

What’s next?

For the rest of this year, gross written premiums (GWPs) are expected to rise at roughly 10%. The company noted in its outlook that the market could support organic growth with a moderate premium rate increase.

The company also expects to beat the COR of -94% it finished on in FY21.

Over the next 12 months, QBE Insurance will undergo a re-risking process for its investments. The exit total investment return is on track for a -2.8% contraction.

QBE share price snapshot

The QBE share price is up 9.12% over the past 12 months. Shares in the company are beating the S&P/ASX 200 Financials Index (ASX: XFJ) by a convincing margin, as it is currently down 6.27% for the same period.
QBE Insurance’s market capitalisation is $18.6 billion at the latest share price action.

The post QBE share price lifts despite $840 million income hit appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley 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 Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is going nowhere today after the company requested a trading halt. 

The Paradigm share price has rocketed from $1.05 per share on 28 July to $1.99 per share at Wednesday’s close, a gain of 89.5%. 

Across this timeframe, the ASX-listed biopharmaceutical company released its quarterly results for the three months ended 30 June 2022 and announced the results of a major research project.

Before market open this morning, it entered a trading halt pending an announcement relating to a capital raising.

Let’s dive deeper to get up to speed with what’s happening at Paradigm. 

Why is Paradigm in a trading halt?

The Paradigm share price has been frozen today after the company requested a trading halt in relation to a capital raising.

It will remain halted until the start of normal trading on Monday or when the announcement is released to the market, whichever comes first.

The company burned $32 million of cash for FY22 and the cash balance at 31 December 2021 was nearly $55 million. It seems Paradigm wants to solidify its capital base to progress the research initiatives outlined below. 

In its last announcement on Monday, Paradigm reported it will be presenting the results of its drug development to treat the metabolic disease mucopolysaccharidoses (MPS) type I in February next year. 

Paradigm’s long-term goal is to develop an injectable form of pentosan polysulfate sodium (PPS) to treat MPS. Historically, PPS has primarily been used to assist with bladder pain.

In addition, Paradigm is researching the use of PPS for a range of other clinical uses, such as treating pain in patients suffering from musculoskeletal disorders. 

Paradigm share price snapshot

The Paradigm share price is up 45% in the last six months and 87% over the past month. It has also gained 4% this year to date.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has declined by 2% across the last six months and 7% year to date, but is up almost 7% in the past month.

The recent rapid rally in the Paradigm share price has been spurred by some positive developments. However, investors should be aware that Paradigm’s net loss has been on a downward trend from FY17 to FY21.

The recent momentum has driven Paradigm’s market capitalisation to around $450 million.

The post Up 90% in 2 weeks, here’s why the Paradigm share price has been halted appeared first on The Motley Fool Australia.

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Motley Fool contributor Raymond Jang 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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1) US inflation slowed from 9.1% in June to 8.5% in July, a print that was lower than expected.

Cue a big rally in US markets as investors looked ahead to a moderation of the Federal Reserve’s interest rate rises as it attempts to get inflation back under control.

The Nasdaq 100 jumped 2.9%, simultaneously exiting bear market territory and entering a bull market, having risen 20% above its June lows. The index is still 19% below its November 2021 high.

No wonder I’m feeling better about my investments than I was just a few weeks ago. 

And there could be more gains ahead as hedge funds unwind shorts, funds which fled to cash rush to get back into the rising market, and retail investors buy the dip.

As Bloomberg puts it…

“Nobody saw it coming, and now everyone wants in. That’s a nutshell synopsis of how an improbable equity market bounce is threatening to become a melt up.”

2) The S&P/ASX 200 Index (ASX: XJO) has taken somewhat of a lead from Wall Street, although not to the same extent, up a somewhat modest 54 points to 7046 in lunchtime Thursday trade.

No melt up here, sadly, although that shouldn’t be expected given the ASX 200 is dominated by huge banks and mining companies. 

3) Long-suffering Telstra (ASX: TLS) shareholders finally have something to cheer about… the first increase in the total Telstra dividend since 2015.

Outgoing CEO Andy Penn said the increased dividend “recognises the confidence of the Board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens earnings per share (EPS) growth from FY21 – FY25, the strength of our balance sheet and the recognition by the Board of the importance of the dividend to shareholders.”

Given the Telstra share price is largely flat over the past almost 20 years, any investment in the company has long been about the fully franked dividend. 

Despite Mr Penn’s ambitions of turning Telstra into a growth company, it remains a large utility company operating mostly in two very competitive environments – mobile and broadband. From an investing perspective, utility companies are yield plays.

Based on the full year dividend of 16.5 cents, Telstra shares trade on a fully franked dividend yield of 4.1%. Not bad, but in this rising interest rate environment, not as attractive when compared to alternatives, including risk free term deposits. 

Valuation-wise, Telstra shares are off the charts, trading on 28 times earnings. They are anything but risk-free.

4) One dividend stock flying under the radar is one I own, GQG Partners (ASX: GQG), the boutique global investment manager headquartered in the United States.

In what has been a tough period for the sector – hurt by outflows and poor investment performance – funds under management have increased by 2.4% from the previous year. 

Floated in October last year at $2 per share, like most recent IPOs, the GQG share price has traded below its issue price.

Like all fund managers, GQG’s results will largely be driven by its investment performance over the long term, and all strategies are ahead of their benchmarks over a five year period. 

Unlike many fund managers, most of GQG’s revenues in the first half were derived from management fees, and not performance fees. As such, profits are far less volatile than typical fund managers like Magellan Financial Group (ASX: MFG) and Pinnacle Investment Management (ASX: PNI). I also own the latter.

Given GQG’s relatively predictable results, if you extrapolate the roughly US$0.02 quarterly dividend across the full year, converted to Aussie dollars, GQG shares trade on a dividend yield of around 7.1%.

Not bad for a growing company trading on roughly 13 times profit. This $4.7 billion company looks to be flying under the radar of most income investors.

The post Equity markets threaten to “melt up” as Nasdaq enters bull market territory appeared first on The Motley Fool Australia.

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• ‘We’ve become the piggy bank’: GQG share price jumps on half-year results
• Everything you need to know about the latest Telstra dividend
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• Telstra share price on watch amid strong FY22 result and surprise dividend increase
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Bruce Jackson has positions in GQG Partners Inc. and PINNACLE FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has positions in and has recommended PINNACLE FPO and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is performing strongly this Thursday. At the time of writing, the ASX 200 is up a healthy 0.74% at around 7,045 points. But that’s nothing compared to the BetaShares Nasdaq 100 ETF (ASX: NDQ).

NDQ units have had a cracking day so far. This exchange-traded fund (ETF) has lifted an impressive 1.7% to $29.37 a unit at the time of writing.

NDQ is an ASX-listed index fund. It covers no ASX shares though, instead tracking the 100 largest companies on the US NASDAQ-100 (NASDAQ: NDX). The NASDAQ stock exchange is renowned as the major US exchange that holds most of the US’s famous tech shares. Its largest holdings are the likes of Apple, Amazon.com, Microsoft, Tesla and Alphabet.

It also holds a bevvy of other household tech names, including PayPay, Netflix, Starbucks, Adobe and NVIDIA.

So why is the BetaShares NASDAQ 100 ETF having such a strong showing this Thursday?

What’s boosting the BetaShares Nasdaq 100 ETF (NDQ)?

Well, we need not look any further than the performance of the NASDAQ-100 Index itself.

Last night on the US markets, the NASDAQ had an exceptionally strong showing. It gained a healthy 2.85%, rising from 13,008.16 points to 13,378.32 points.

This was supported by moves like Apple rising 2.62%, Microsoft appreciating 2.43% and Amazon and Tesla both gaining more than 3.5%. And with these companies among the NDQ’s top holdings, the gains are flowing into the NDQ ETF today as well.

But why not as much as the NASDAQ’s gains last night? Aren’t NDQ and the NASDAQ-100 essentially the same thing?

Well, yes. But there are other factors at play too. The US NASDAQ-100 Index is obviously priced in US dollars. But NDQ is an ASX-listed ETF priced in Aussie dollars.

And the Aussie dollar has been on the rise over the past few days. This devalued what US companies are worth in Australian dollar terms, and might explain the more tempered movements of NDQ today compared to its underlying index.

But even so, it’s certainly a strong and pleasing showing from this ETF.

Despite today’s gains, the BetaShares Nasdaq 100 ETF has had a rough time in recent months. NDQ units remain down by almost 20% in 2022 thus far, and by just over 10% over the past 12 months. But they also remain up by more than 130% over the past five years.

The BetaShares Nasdaq 100 ETF charges a management fee of 0.48% per annum.

The post Here’s why the BetaShares Nasdaq 100 ETF (NDQ) is outperforming the ASX today appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Adobe Inc., Alphabet (A shares), Amazon, Apple, Microsoft, Nvidia, Netflix, PayPal, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, Netflix, Nvidia, PayPal Holdings, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Netflix, Nvidia, PayPal Holdings, and Starbucks. 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 Ragusa Minerals Ltd (ASX: RAS) share price is shooting the lights out today, up 55% to 16 cents.

The junior ASX mining company revealed new rock sampling results and plans for its maiden drill program in an announcement this morning.

The news relates to the company’s NT Lithium Project in the Northern Territory. It said a review of historical data plus a recent site visit had confirmed “high-grade lithium prospectivity”.

More than 15 million Ragusa shares have traded hands already today. That’s six times the company’s 90-day average of 2.2 million.

What discovery is causing this ASX mining share to soar?

In its statement, Ragusa said some of the historical exploration works identified “numerous high-grade lithium results from rock chip samples”. This included 8.03% Li2O3 and 7.25% Li2O6, with most others registering more than 2% Li2O (with several >5% Li2O).

Ragusa is using this data and new rock sampling results to determine where to start drilling in its maiden program. The latest results include:

• SM001 – 5.46% Li2O
• SM008 – 2.27g/t Au
• SM009 – 4.59g/t Au

Ragusa said the samples had high-grade lithium in amblygonite. There were also elevated lithium values in mica and significant gold values from quartz/scorodite samples.

Ragusa said: “… the true extent of many of the pegmatites is significant — spanning several kilometres in length, with potential for a significant discovery”.

Then there’s the bowling ball-sized crystal …

Ragusa said that staff stumbled across “a single crystal approximately the size of a bowling ball” during the recent reconnaissance visit. Yep, just sitting on the surface waiting to be picked up.

The company said:

It was found at surface in a scraping adjacent to weathered albite/mica/quartz rubble and outcrop.

Upon investigation, the crystal is thought to be a heavily weathered spodumene based on residual colour, estimated density, prismatic shape, internal striations parallel to the long axis and strongly elevated lithium content, although heavily depleted from weathering.

So, when will Ragusa dig some stuff out of the ground?

Ragusa said it had developed a target generation and drill program design incorporating several “high priority confirmed lithium bearing targets”.

The company said: “Logistics planning and preparation is underway to conduct this planned drilling campaign during the current dry season.”

Ragusa has an approved Mining Management Plan for Exploration (MMP) already in place for 21 RC and diamond drill holes. It’s now seeking permission for more drill holes.

The drilling was “expected to yield definitive results”, the company said.

What did management say?

Ragusa chair Jerko Zuvela said:

The company’s strategic and highly prospective NT Lithium Project, with high grade historical and confirmatory lithium sample results, four granted tenements, approved MMP and upcoming commencement of our maiden drilling program is very exciting and puts Ragusa in a strong position to rapidly accelerate the development of our project within a proven high quality lithium district.

We have a significant opportunity to utilise our exploration and development experience to rapidly
progress our NT Lithium Project and realise the massive upside value potential in a Tier 1 jurisdiction
close to major infrastructure at a time of record lithium prices.

Share price review for this ASX mining share

The Ragusa Minerals share price is up 121% over the past year, outperforming the metals and mining benchmark index by a mile.

The S&P/ASX 300 Metal & Mining Index (ASX: XMM) is down 11% over the same period.

The ASX mining share has a market capitalisation of $12.8 million.

The post Guess which ASX mining share is rocketing 55% on a new lithium find appeared first on The Motley Fool Australia.

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More reading

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• 1 emerging catalyst that Apple investors may have missed
• Why did the Whitehaven Coal share price just hit an 11-year high?
• Brainchip share price powers up another 5% on Thursday
• ‘We’ve become the piggy bank’: GQG share price jumps on half-year results

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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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.

Apple Inc. (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup.

More specifically, Apple’s iPhone revenue increased to $40.7 billion last quarter from $39.6 billion in the prior-year period. While that isn’t a huge jump, it is worth noting that global smartphone sales dropped 9% year-over-year in the second quarter of 2022, according to market research firm Canalys. Apple’s iPhone shipments, however, reportedly increased 8% year-over-year to 49.5 million units as per Canalys.

Emerging markets were one of the reasons behind Apple’s resilient iPhone sales performance last quarter. CEO Tim Cook said on the latest earnings conference call that Apple witnessed “very strong double-digit growth in Brazil, Indonesia, and Vietnam.” He also added that the company’s revenue in India nearly doubled. That’s something investors should take note of, as the Indian market presents a solid long-term growth opportunity for Apple. Here’s why.

Apple is benefiting from higher smartphone spending in India

Canalys reports that smartphone shipments in India hit 36.4 million units in the second quarter of 2022, an increase of 12% over the prior-year period. That means Apple grew at a much faster pace in the Indian market last quarter.

Though the company didn’t clarify its revenue from the Indian market, estimates suggest that Apple’s revenue from its Indian operations was close to $3 billion in fiscal 2021. The tech giant’s Indian revenue reportedly increased 68% last fiscal year. In fiscal 2022 analysts expect Apple’s top line to increase another 31% in the Indian market, which would bring its revenue over there close to $4 billion.

While that looks like a small amount compared to Apple’s projected revenue of $392 billion in fiscal 2022, the company’s impressive growth in India at a time of high inflation means that consumers are willing to spend on iPhones. More specifically, the average selling price (ASP) of a smartphone in India stood at $211 in the first quarter of the calendar year.

Apple’s entry-level iPhone SE is priced at 43,900 Indian rupees in that market, which translates into roughly $553 at the current exchange rate. So Apple seems to be enjoying solid pricing power in India. This isn’t surprising, as smartphone ASPs are rising in the Indian market thanks to the transition to 5G devices. Counterpoint Research estimates that the ASP of a smartphone in India increased 14% last year.

Apple capitalized on higher smartphone spending in India by cornering a 44% share of the market for devices priced at $400 or higher. Smartphone ASPs can be expected to head higher in India this year as sales of entry-level devices decline, driven by the growing adoption of 5G.

Sales of 5G smartphones reportedly increased 163% year-over-year in the second quarter in India as per CyberMedia Research. Even better, sales of premium (priced between $325 and $630) and super-premium smartphones (priced between $630 and $1,260) increased 80% and 96% year-over-year, respectively.

So the conditions are ripe for Apple to step on the gas in the Indian market, and the company is pulling the right strings to ensure that it doesn’t miss out on the lucrative long-term opportunity present over there.

India could give the tech giant a big long-term boost

According to Ericsson, 500 million 5G smartphones could be sold annually in India by 2027, with the latest wireless standard accounting for 39% of overall mobile phone users in the country. That points toward a huge jump over last year’s 5G smartphone shipments of 64 million units. Additionally, the 5G smartphone penetration rate in India that Ericsson sees in 2027 indicates that this market could keep growing at an impressive pace for a longer period.

Apple’s strong position in the premium end of the Indian smartphone market means that it is well placed to take advantage of this opportunity. Additionally, the company has been shoring up its manufacturing capabilities in India to make its smartphones more accessible to customers over there. Apple started making the iPhone 13 in India earlier this year. It is expected to manufacture the next-generation iPhones as well over there to reduce dependence on China, which could help Apple keep the price of the upcoming devices competitive.

Apple recorded 48% growth in iPhone shipments in India in 2021 to 5.4 million units, cornering a 4.4% share of that market. This year Apple’s share of India’s smartphone market is expected to jump to 5.5%, with shipments increasing to 7.5 million units thanks to an increase in sales of high-end devices. It wouldn’t be surprising to see this number head higher in the long run as 5G adoption improves.

In all, Apple seems to be on its way to becoming a key player in India’s smartphone space, and that could unlock a huge growth opportunity for this tech stock given the market’s projected growth in the coming years.

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

The post 1 emerging catalyst that Apple investors may have missed appeared first on The Motley Fool Australia.

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Harsh Chauhan 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 Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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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What an unbelievably great year it has been for the Whitehaven Coal Ltd (ASX: WHC) share price.

After briefly touching a year-to-date low of $2.58 in January, the coal producers’ shares haven’t looked back.

During morning trade today, its shares hit an 11-year high to reach $6.63 before profit takers swooped in.

At the time of writing, Whitehaven Coal shares are up 0.94% to $6.43 apiece.

What’s firing Whitehaven shares ahead?

Despite the global economy remaining uncertain, coal prices have continued to surge.

According to Trading Economics, the latest price for the charcoal-coloured rock is fetching at US$398.65 per tonne. This represents a 3.68% increase from the day before and is ultimately boosting the Whitehaven Coal share price.

The IEA released a report on 28 July projecting that global coal demand will return to its all-time high this year.

It noted that this is being driven by rising natural gas prices, which have intensified gas-to-coal switching in many countries.

Subsequently, this is partly offsetting the slow economic growth recorded in China as well as the current tight market conditions. The latter has been exacerbated by Russia’s invasion of Ukraine earlier this year.

Notably, with coal prices continuing to power ahead, Whitehaven Coal is projecting to deliver its strongest ever full year result.

Management is expecting to report an FY22 EBITDA of approximately $3 billion, subject to a final audit.

These results are expected to be released on Thursday 25 August.

Whitehaven share price snapshot

On the back of strong coal prices, the Whitehaven share price has rocketed by more than 146% in 2022.

In comparison, this has outperformed the S&P/ASX 200 Energy (ASX: XEJ) sector which has risen 27% over the same timeframe.

According to ANZ Share Investing, Ord Minnett is bullish on Whitehaven shares, raising its 12-month price target by 14% to $8. Based on where it trades today, this represents an upside of 24%.

Whitehaven commands a market capitalisation of approximately $6.15 billion.

The post Why did the Whitehaven Coal share price just hit an 11-year high? appeared first on The Motley Fool Australia.

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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 Brainchip Holdings Ltd (ASX: BRN) share price is advancing 4.53% on Thursday.

At the time of writing, the share is swapping hands at $1.155 apiece.

Brainchip has caught a bid today on no news. However, each of the S&P/ASX 200 Information Technology Index (ASX: XIJ) and the S&P/ASX All Technology Index (ASX: XTX) are outpacing peers today.

Both sectors are leading the pack today and have gained around 1.17% and 2.04% on the day respectively.

What’s up with the Brainchip share price?

Inflation data has been the main driver of asset returns in 2022. So with the latest US inflation data from July showing a potential slowdown in core prices, risk assets have caught a bid today.

“US consumer prices did not rise in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for…the past two years,” Reuters reported.

Technology shares – whose valuation and market pricing are sensitive to government bond yields – advanced today following a sharp pullback in the spectrum of US Treasury yields.

The relationship between Treasury yields and the price of tech stocks is abundantly clear in Brainchip’s case, as seen in the chart below looking at these instruments this YTD.

Investors had increasingly been pricing in the prospect of an economic recession in 2022/23 as central banks typically tighten their interest rate policy to combat the surging cost of living.

It does this to achieve price stability, however, it does so at the expense of economic growth in the economy. Each 1% increase in interest rates has an impulse effect downstream in the real economy. It really is a proper balancing act.

Hence, with inflation cooling, investors believe the likelihood of further, aggressive rate hikes is now less and less, which is a net positive for risk assets.

As can be seen, with a pullback in the level of Treasury yields – which look to have peaked in late June – the Brainchip share price has caught a bid, alongside the broad tech sector.

This extends gains to more than 114% for the share over these past 12 months of trade.

The post Brainchip share price powers up another 5% on Thursday appeared first on The Motley Fool Australia.

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• Why is the BrainChip share price bouncing 6% higher today?
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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 GQG Partners Inc (ASX: GQG) share price is climbing almost 4% today after the ASX-listed fund manager released a performance update for the first half of FY22. 

At the time of writing, GQG shares are trading for $1.59 apiece, a 3.58% gain on Wednesday’s closing price.

For comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) is currently up 0.77%.

Let’s take a closer look at GQG’s half-yearly results. 

What did GQG report?

Investors are pushing up the GQG share price on the back of the company’s H1 FY22 results. It recorded the following highlights:

• Positive net inflow of funds of US$6.3 billion 
• Funds under management of US$86.7 billion, an improvement of 2.4% on the first half of 2021
• Net operating income rose 18.3% to US$174.2 million
• Net income after tax fell 14.4% to US$125.3 million
• A quarterly interim dividend of US$0.0198 per share was declared

Over a five-year period, all of GQG’s portfolios outperformed their respective benchmark indices. 

The GQG Partners US Equity Strategy achieved the biggest gain, posting a net return of 16.97% across a five-year period. It beat the S&P 500 Index (SP: .INX), which reeled in a net return of 11.31% across the same period.

In terms of outperformance, the GQG Partners International Equity Strategy led from the front. It achieved a net return of 9.11% across five years. Across the same period, the MSCI ACWI Index (Ex USA Index) provided a net return of 2.50%. 

However, GQG’s net profit after tax went backwards. The continued investment in personnel and overall business activities were possible drivers of this fall. 

What else happened in H1 FY22?

The sound performance of GQG’s investment strategies has seen three of its senior investment analysts promoted from deputy portfolio managers to portfolio managers. This was effective as of 1 July 2022.

A majority of revenue is still sourced from asset-based fees rather than performance fees. Performance fees accounted for 3% of total revenue. 

The company’s weighted average management fee for the period was 47.6bps, down from 49.6bps in the first half of FY21.

GQG will pay a quarterly interim dividend of US$0.0198 per share. This represents 90% of distributable earnings for the quarter ended 30 June 2022. 

The ex-dividend date is 16 August 2022 and the cash payment will be processed on 29 September. 

What did management say?

Commenting on the results that have helped boost the GQG share price today, CEO Tim Carver said:

Our financial result is driven in large part by our investment performance over the long term. As at the end of June 2022 our strategies continued to provide solid long-term performance as compared to their benchmarks, which we believe provides the underpinnings for continued business success. 

In addition, Carver said large investors were reducing their exposure to equities, and GQG had become a victim of its own success as those institutions chose to sell their winners, the Australian Financial Review reported. He told analysts:

Perversely, I think we’ve become the piggy bank, where if there’s a broad equity de-risking, clients are not selling the fund managers who’ve largely underperformed or underperformed more significantly than we have.

GQG share price snapshot

The GQG share price slumped 17% during the first half of FY22. It is also down 3% over the past six months and 18% over the past year. However, it has soared 28% over the past month.

The ASX 200 has performed a little better over the long term, posting falls of 2% and 7% across the past six and 12 months, respectively. In contrast, it is up just 7% over the past month.

The post ‘We’ve become the piggy bank’: GQG share price jumps on half-year results appeared first on The Motley Fool Australia.

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Motley Fool contributor Raymond Jang 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.

Most investors have their regrets. One of the most commonly heard regrets in the last few years is failing to buy Tesla (NASDAQ: TSLA) stock early on.

Many swear they will not miss the boat again if the market offers them another opportunity to buy Tesla stock, preferably during a stock correction. And with Tesla’s stock down by around 30% (as of the time of writing) from its 12-month high, they are getting excited.

But investors should not rush into loading up on Tesla’s stock, at least not until they see these two signals.

1. Evidence of sustainability of earnings

Tesla has been on fire lately.

After delivering its first profitable year in 2020, it ended 2021 with some mind-blowing numbers — revenue surged 71% to $53.8 billion, and net profit jumped 665% to $5.5 billion. Tesla’s strong performance continued in the first half of 2022 after it delivered even higher revenue and net profit. A marked turnaround if you consider that the vehicle manufacturer almost went bankrupt a few times, most recently just a few years ago .

On top of that, the EV race has continued to intensify, with incumbents — General Motors and Ford — and pure EV players — like BYD — eyeing shares in this growing industry. There is no guarantee that Tesla can sustain its market share in this ever-more-competitive environment. Even if it succeeds in defending or even growing its sales volume, there is a risk that it might need to reduce its pricing to remain competitive, which will impact its margins and, ultimately, profitability.

Still, I find it hard to ascertain whether Tesla can remain profitable given its short history of profitability. In the event of an economic downturn — and we are seeing one coming quickly — such profits could evaporate quickly. The U.S. government recently released its inflation rate for the 12 months ended June 2022, which hit an all-time high not seen since 1981.

There are two parts to stock investing. While finding a great company with durable earnings is paramount, it’s equally important to buy its stock at a fair price. Overpaying for a stock reduces potential returns. Moreover, determining a company’s actual value is not an exact science and isn’t fairly straightforward. That means it’s essential to have a margin of error, or in Ben Graham’s words, a margin of safety. 

Tesla’s bulls will immediately disagree with such a comparison since they view Tesla more as a technology company than an old-school vehicle maker. But even if we compare Tesla to a leading technology company such as Alphabet — which has PS and PE ratios at 5.7 and 21.7, respectively — the former’s valuation is still unreasonably high. While everyone differs in their opinion on what constitutes a reasonable price, I will only consider Tesla when it trades at comparable multiples (or cheaper) to that of Alphabet. 

The high inflation will hit Tesla in numerous ways. One way is that inflation will reduce the discretionary income consumers spend on high-price items like cars. On top of that, an inflationary environment usually pushes interest rates higher, making it more expensive (and challenging) for average folks to get car loans — pointing to a headwind for Tesla’s EV sales in the coming months.

Long story short, I think investors need more confirmation on the sustainability of Tesla’s profitability. That means waiting for at least a few more quarterly results before making their move.

2. Valuation needs to become affordable

So is Tesla stock trading at a fair price at the moment? My answer is probably not.

There are many ways to look at this. The easiest one is to compare Tesla’s valuation ratios to those of its automobile peers, like GM. As of writing, Tesla has a price-to-sales (PS) ratio of 15.1, and a price-to-earnings (PE) ratio of 107.4. GM’s ratios are 0.4 and 6.9, respectively.

Clearly, investors are still highly bullish on Tesla’s long-term growth (even after the recent stock decline). However, from my experience, it’s usually quite dangerous to buy a stock when growth expectations are too high since that would mean little margin for error for management.

Why investors should wait before buying Tesla

There is no doubt that Tesla is a great company. It came from nowhere and, over the years, became the leader in electric vehicles, potentially expanding heavily into mega sectors like renewable energy, robotaxis, and others.

But a great company is not necessarily an excellent investment. For it to become a solid investment, it must deliver sustainable profits over long periods. And investors should not overpay for the company.

All told, it makes sense to wait for a few more quarters to get more confirmation of its profitability’s sustainability and potentially get a better entry point.

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

The post Investors should wait for these 2 signals before buying Tesla appeared first on The Motley Fool Australia.

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• Elon Musk just sold US$7 billion worth of Tesla shares. What’s going on?
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• Tesla shareholders approved a 3-for-1 stock split — is the stock a buy?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lawrence Nga 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 Tesla. 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.

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

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