Category: Stock Market

Consumer discretionary has been a tough space in FY22, but there are several ASX retail shares that have delivered big returns.

These companies have managed to defy waning consumer sentiment triggered by the rising cost of living.

The higher-for-longer inflation, interest rate hikes, and falling asset prices are major risk factors for the sector.

Small-cap ASX retail shares outperforming the big end of town

This explains why some of our biggest ASX retail shares have slumped by 20% or more in the past year. This includes the JB Hi-Fi Limited (ASX: JBH) share price and Wesfarmers Ltd (ASX: WES) share price.

However, there have been a number of retail gems at the smaller end of the market that have delivered double-digit returns in the past financial year.

I am not talking about illiquid micro-caps, where a single trade can drive their share prices into the stratosphere. These are ASX consumer discretionary shares with a market cap of at least $100 million.

The top-performing ASX retail shares in FY22

What’s more, you probably haven’t heard of some of these names. And in another blow to our Aussie ego, a few of these are New Zealand businesses listed on the ASX!

The best performing ASX retail share in FY22 is Mydeal.Com Au Ltd (ASX: MYD). The online retailer surged just over 60% over the financial year.

What really helped was Woolworths Group Ltd (ASX: WOW) buying an 80% interest in the company as opposed to operational growth. But a win’s a win!

The second top performer for the year is NZME Ltd (ASX: NZM). The Kiwi media and entertainment group managed to deliver a 41% increase in share value.

This will be enough to embarrass its Aussie peers like Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven West Media Ltd (ASX: SWM). Nine fell 29% while Seven is about flat over the period.

More Kiwis beating the Aussies

But NZME isn’t the only New Zealand media share to be shooting the lights out. In third spot is the SKY Network Television Limited (ASX: SKT) share price with its gain of around 32% for the year.

Adding insult to Aussie injury is New Zealand-founded jeweller Michael Hill International Ltd (ASX: MHJ). The ASX retail share jumped around 27% in value thanks to strong sales across all of the company’s markets and its ability to hold margins.

Meanwhile, the Supply Network Limited (ASX: SNL) share price isn’t far behind with a gain of around 24%. This is no doubt helped by the Australian and New Zealand auto parts retailer issuing a pleasing FY22 sales and profit guidance.

The post Top 5 outperforming ASX retail shares in FY22 that you may not have heard of appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Chalice Mining share price leaps 13% on new exploration results
• Bendigo Bank shares rise after going long on leverage with ANZ lending acquisition
• 1 green flag for Amazon stock
• Why I think the Temple & Webster share price is on sale right now
• Bubs share price falls despite US FDA update

Motley Fool contributor Brendon Lau 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 Supply Network Limited. The Motley Fool Australia has positions in and has recommended Supply Network Limited and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8VGzCUH

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.

Amazon (NASDAQ: AMZN) has gone through a volatile stretch over the last few years. The surge in customers and sales at the pandemic‘s onset has been followed by decelerating growth and rising costs. Amid all of that was a change in CEOs and a stock split.   

But none of the above are reasons to buy. Instead, the green flag I will discuss is the massive customer commitments it has for its lucrative Amazon Web Services (AWS) segment, the primary driver of Amazon’s profitability these days.

$89 billion worth of signed contracts

As of March 31, Amazon’s web services segment has contracts with customers for a total value of $88.9 billion. In other words, customers are committed to spending $89 billion on Amazon Web Services over the next few years. To put that figure into context, in its most recent quarter (ended on March 31), AWS generated revenue of $18.4 billion. That was a 37% increase from the same quarter in the prior year. What’s more, it was an acceleration of the 32% growth it achieved in the same quarter of last year. Note that contractual obligations turn into revenue as customers use the service they agreed to buy.

Significantly, on that $18.4 billion in AWS revenue, Amazon earned an operating income of $6.5 billion. Amazon’s other two segments, North America and international, generated an operating loss of $1.6 billion and $1.3 billion, respectively, in the quarter ended in March. These two segments are suffering the effects of economic reopening as consumers spend more of their money at brick-and-mortar retailers. Besides the losses in this most recent quarter, the two segments are notoriously lower-profit-margin businesses.

AMZN Operating Margin (Annual) data by YCharts

It’s great news for Amazon that its more profitable segment is accelerating revenue growth and has a massive backlog of customer demand to fulfill. While its other segments may continue facing headwinds from the economic reopening, AWS continues to thrive. Indeed, the growth of AWS to a more considerable portion of Amazon’s overall business has boosted its operating profit margin over the last decade. 

A great time to buy Amazon’s stock 

That’s creating an opportunity for long-term investors. The market has punished Amazon’s stock, which is down 41% off its highs in 2021. Investors are concerned about decelerating growth of retail sales domestically and internationally. However, that might arguably be overlooking where the value comes from in Amazon’s stock. AWS is where the bulk of profits will come from, and that segment is accelerating.

AMZN PE Ratio data by YCharts

Amazon is trading at a price-to-earnings ratio of 53, near the lowest that investors have been able to buy Amazon stock in the last five years. The worries over its online sales deceleration have created an excellent opportunity for long-term investors to buy Amazon stock — a green flag, to be sure. 

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

The post 1 green flag for Amazon stock appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Amazon shares fell 12% in June
• Why Amazon stock rose while the market slept on Wednesday
• Why are ASX tech shares struggling today?
• 2 monster Warren Buffett stock-split stocks to buy right now
• Is Amazon a buy after the stock split?

Parkev Tatevosian has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. 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.

from The Motley Fool Australia https://ift.tt/NqwrSdc

The Temple & Webster Group Ltd (ASX: TPW) share price looks like a bargain to me after its large fall over the last few months.

Since the beginning of 2022, shares of the company have dropped around 65%. There has been a lot of volatility across the ASX share market this year, but this decline is one of the larger falls.

With investing, it’s important not to anchor ourselves to previous share prices. Just because the Temple & Webster share price was above $10 at the start of the year doesn’t mean it’s going to rapidly get back there.

The company claims to be Australia’s largest pure-play online retailer of furniture and homewares.

It sells more than 200,000 products from hundreds of suppliers. It runs a drop-ship model where products are sent directly to customers by suppliers. Temple & Webster says this enables faster delivery times and reduces the need to hold inventory, allowing for a larger product range.

Temple & Webster also has a growing private label range of products.

Not only that, but the company recently launched The Build, a website for home improvement products. The move into home improvement is one factor that makes me believe the company’s shares are worth buying at the current Temple & Webster share price of $3.79.

Home improvement market

The company’s expansion into home improvement opens up a big new market for the business.

Management said this adds a further $16.4 billion to its addressable market. However, only 5% of this market has moved online, so online adoption could help drive demand and revenue for this segment.

The kinds of products we’re talking about here include tools and equipment, garden and landscaping, paint and supplies, window furnishings, flooring, and plumbing fixtures.

Online adoption of core category

Its furniture and homewares category is also worth around $16 billion.

Management pointed out that more and more households are using online shopping. We could look to the US to see how the e-commerce adoption curve can develop.

In 2019, 15.2% of the US furniture and homewares market was online. This grew to 25.3% in 2020 in the first year of COVID-19.

However, Australia’s e-commerce journey is significantly behind. In 2019, 5.1% of Australia’s furniture and homewares category was online. This increased to somewhere between 7% and 9% in 2020. Even reaching the US’s 2019 level of 15.2% is quite a way off, giving Temple & Webster a good growth runway in my opinion.

But it’s growing strongly. In the period of 1 January 2022 to 30 April 2022, revenue rose 23% year on year.

Scale to boost operating leverage

Temple & Webster is re-investing its growing revenue and cash flow into areas like marketing, technology, product range, and the overall customer experience.

In time, the company plans to utilise its leadership position to achieve and bank those scale advantages which will help with better unit economics. It could lead to cost advantages in product sourcing, logistics, and marketing. It also won’t need to invest as much, particularly in terms of its fixed costs, which should help profit margins.

I think that when investors see rising profit margins, this will boost investor sentiment and help the Temple & Webster share price.

The post Why I think the Temple & Webster share price is on sale right now appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Temple and Webster shares tumble 8% amid bleak US consumer confidence
• Where to find value in growth? Here are 2 ASX shares I’d buy in July
• Why is the Temple and Webster share price surging 11% higher today?
• Why is the Temple & Webster share price surging 11% on Monday?
• Why the Adore Beauty share price is jumping but Kogan is falling

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/yIdj2FO

The Bubs Australia Ltd (ASX: BUB) share price is on the slide on Thursday morning.

At the time of writing, the junior infant formula company’s shares are down 2.5% to 59.5 cents.

What’s going on with the Bubs share price?

The Bubs share price is falling today despite the company releasing yet another update on its US operations.

Today’s update highlights that the US Food and Drug Administration (FDA) has announced that it is developing a new framework for continued, expanded access for US parents and caregivers to international infant formula products that it has assessed as being safe and nutritious.

While not unexpected, this is a potential positive for Bubs as the FDA’s temporary enforcement discretion policy to supply infant formula to the US runs until November.

The release notes that the FDA intends to issue further guidance in September. This will relate to how companies that have already received temporary enforcement discretion could meet the FDA requirements to continue supplying infant formula beyond that time.

Bubs has expressed an interest in helping to diversify and strengthen US infant formula supply by continuing to serve the American market permanently.

In other news, the fifth and sixth air freight shipment has been confirmed for this month. This will ship 180,000 tins of infant formula to the US.

Management commentary

Bubs Founder and CEO, Kristy Carr said:

We welcome Commissioner Cliff’s announcement today and look forward to continuing to work with the FDA over the coming months to address any additional steps required to ensure we can supply and market Bubs’ safe and nutritious formulas without interruption beyond November and over the longer term.

Bubs was one of the first international manufacturers to apply to the FDA to import infant formula under the initial enforcement discretion policy. Our long-standing commitment to the U.S. market ensured our ability to provide rapid response at the speed of safety, and satisfy the very stringent quality and safety nutrition requirements of the FDA, having first launched our toddler products in the United States in 2021 with our retail partners.

The post Bubs share price falls despite US FDA update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Beach, BHP, Bubs, and Galileo Mining shares are sinking
• Why is the Bubs share price crashing 15% today?
• Why is the Bubs share price in a trading halt?
• Why is the Bubs share price taking off today?
• Best ASX shares to buy in July 2022

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 recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/JS3Qve8

This month I’ve been looking at a number of shares that Bell Potter has rated as its top picks for FY 2023. You can read about its tech picks here and its energy picks here.

On this occasion, let’s take a look at a couple of ASX healthcare shares that Bell Potter is tipping as buys this financial year.

Bell Potter notes that the biotechnology sector has been hit hard by the market correction. This has led to some of its recommendations being crushed despite “making encouraging progress either in the clinic or in commercialisation.”

In light of this, the broker believes that now is the time for investors to invest and take advantage of this share price weakness.

Now is the time to concentrate on those names with sufficient capital to carry on through this downturn and with assets in areas of high unmet need. In our view both large pharma and private equity investors are likely to take advantage of the current depressed valuations.

With that in mind, here are two ASX healthcare shares it rates as buys:

Avita Medical Inc (ASX: AVH)

The first healthcare share that Bell Potter is bullish on is Avita Medical. It is a regenerative medicine company which has created a technology platform that allows it to address unmet medical needs in burns, chronic wounds, and aesthetics indications.

The broker currently has a speculative buy rating and $3.00 price target on the company’s shares. This compares to the latest Avita share price of $1.66.

It said:

AVH and others in the wound care space endured a very difficult two year period throughout the COVID-19 pandemic. Most of those access restrictions (for AVH clinical support staff) to US hospitals have lifted since the commencement of 2022. Access to surgeons and theatres is crucial for training purposes in the use of the Recell device, particularly in the current environment where there has been a high turnover of clinical positions within the hospital sector. We expect strong sequential quarter growth in the June quarter as more normal market conditions return. Short term catalysts include the upcoming release of headline data from clinical trials in trauma wounds and vitiligo. AVH remains well capitalised with cash of US$95m.

Telix Pharmaceuticals Ltd (ASX: TLX)

Bell Potter is also bullish on this radiopharmaceutical company. This is due largely to its Illuccix product and its significant market opportunity.

The broker currently has a speculative buy rating and $8.10 price target on its shares. This compares to the latest Telix share price of $5.19.

It commented:

Telix Pharmaceutical’s first radiopharmaceutical drug (Illuccix) for the imaging of recurrent prostate cancer was approved in late 2021. Since then the company has made stellar progress towards commercialization in the US and Australia. PSMA imaging is now included in the NCCN guidelines for management of recurrent prostate cancer and reimbursement is also now approved in the US. The addressable market is expected to be worth in excess of US$1bn annually with Illuccix being one of three competitors in the US. The company is well capitalised following a $170m raise earlier this year and revenues from product sales are expected to generate the company’s maiden profit in FY23.

The post Bell Potter names 2 of the best ASX healthcare shares to buy in FY23 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why did the Adore Beauty share price sink over 70% in FY22?
• Why experts rate these ASX growth shares as buys
• Analysts name 2 excellent ASX dividend shares for income investors to buy
• Why the end of the RBA’s $350 billion bond buying program is positive for fixed income investors: fund managers
• Players gonna play: 3 ASX shares set for a strong reporting season

Motley Fool contributor James Mickleboro has positions in TELIXPHARM DEF SET. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/pwjHtX7

One of the heaviest falls on the ASX in FY22 belonged to the Adore Beauty Group Ltd (ASX: ABY) share price as it dropped by more than 70%.

It’s not the only ASX growth share to see painful declines over that same time period as investors weigh up a number of different factors.

The company hasn’t been listed that long, but it was able to tell investors about booming sales as shoppers turned to e-commerce during lockdowns.

So, let’s start there. The first couple of months of FY22 was reporting season for FY21.

Strong trading

The FY21 result saw record revenue, profit and customer numbers. Revenue rose by 48% to $179.3 million, active customers increased 39% to 818,000 and it generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $7.6 million (up 53% year on year).

In the beginning of FY22, Adore Beauty said that revenue had increased by another 26% year on year.

So far, so good.

Next came a trading update for the first quarter of FY22. It showed revenue growth of 25% to $63.8 million, with active customers rising 24% year on year to 874,000.

Growth slows

Investors often like to look at how fast a company is growing to consider how big it could grow to in the future and what valuation it should be today. If growth slows, then this could impact the Adore Beauty share price.

In the FY22 half-year result, Adore Beauty revealed revenue growth of 18% to $113.1 million and 13% growth of active customers to 876,000. It made $3.8 million of EBITDA.

The final update we’ve heard from the business was the FY22 third quarter update where it made $42.7 million of revenue – that was growth of 9%. Active customers reached 880,000, which was growth of 7% year on year. However, one area of continuing strong growth was the 47% growth of returning customers.

Management noted that the FY22 third quarter was “strong” at a time when there was a ‘reopening environment’ after the COVID-19 lockdowns and it also had to deal with supply chain pressures.

Re-investing for growth

While it’s getting harder to deliver growth, the company is focused on growing its market share in the $11 billion beauty market.

The Adore Beauty CEO Tennealle O’Shannessy said:

We are sustainably reinvesting in the business by scaling initiatives which lay the foundation for long-term growth and further strengthen our point of difference. Our native mobile app, which now accounts for more than 10% of revenue, continues to deliver elevated levels of engagement conversion, and average order values, and we are preparing to launch our first private label products in the FY22 fourth quarter.

What next for the Adore Beauty share price?

Aside from the fact that investors are having to deal with the uncertainty of inflation and rising interest rates, the next thing will be the FY22 result where shareholders will probably also see a trading update for the first few weeks of FY23. Unless the company decides to release a trading update before reporting season in August.

The post Why did the Adore Beauty share price sink over 70% in FY22? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why the Adore Beauty share price fell another 20% in June
• Why I think the Adore Beauty share price is a great buy today
• What Adore Beauty, Bubs, Eagers Automotive, and Renascor shares are storming higher
• Why the Adore Beauty share price is jumping but Kogan is falling
• Waiting to start investing in ASX shares? Today could be a brilliant time to do it

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

from The Motley Fool Australia https://ift.tt/H0DBkvu

Looking for growth shares to buy? Listed below are two growth shares that have recently been named as buys and tipped to have major upside potential.

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

TechnologyOne Ltd (ASX: TNE)

The first ASX growth share that analysts rate as a buy is TechnologyOne. It is a leading enterprise software provider to the government, financial services, health and community services, education, and utilities and managed services markets.

Thanks to its ongoing shift to a software-as-a-service (SaaS) model and its UK expansion, TechnologyOne has been growing strongly again in FY 2022. Pleasingly, the team at Goldman Sachs expect more of the same even in the current environment. It commented:

In our view TNE is well on its way to becoming a pure SaaS business, with high recurring revenue and expanding margins (post FY22) providing visibility into medium-term earnings growth. With a potentially challenging macro backdrop on the horizon we see TNE as offering resilient earnings given its low churn, mission critical software and defensive public sector end markets

Goldman has a buy rating and $13.30 price target on the company’s shares.

Treasury Wine Estates Ltd (ASX: TWE)

Another ASX growth share to buy is Treasury Wine. It is the wine company behind popular brands including 19 Crimes, Penfolds, and Wolf Blass.

Treasury Wine has returned to form in FY 2022 after a difficult couple of years. This has been driven largely by the success of its North American business and its transformation plan.

Analysts at Morgans are expecting this positive form to continue. In fact, the broker recently said that it believes the “foundations are now in place for TWE to deliver strong double-digit growth from 2H22 over the next few years.”

Morgans has an add rating and $13.93 price target on the company’s shares.

The post Why experts rate these ASX growth shares as buys appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Top brokers name 3 ASX shares to buy today
• Broker names 3 of the best ASX tech shares to buy in FY23
• Broker names 3 of the best ASX shares to buy in July
• Brokers name 3 ASX shares to buy today
• Top broker names 3 of the best ASX 200 shares to buy in FY23

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 recommended TechnologyOne Limited and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/I56mgDf

Are you looking for dividend shares to add to your income portfolio? If you are, then the two listed below could be top options.

Analysts have rated these dividend shares as buys and tipped them to provide income investors with attractive yields in the coming years. Here’s what you need to know about them:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX dividend share that could be in the buy zone for income investors is the Charter Hall Social Infrastructure REIT.

This real estate investment trust owns a growing portfolio of social infrastructure properties. These are properties that provide social and community services. Its main focus, however, is on education, with the company currently Australia’s largest owner of early learning centres.

This focus is creating results. The team at Goldman Sachs highlights the company’ solid like for like rental growth, 100% occupancy rate, and a weighted average lease expiry of 14.6 years.

Goldman currently has a conviction buy rating and $4.24 price target on its shares and is forecasting dividends per share of 17.2 cents in FY 2022 and 18.3 cents in FY 2023. Based on its current share price of $3.58, this implies yields of 4.8% and 5.1%, respectively.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share that could be in the buy zone is Wesfarmers. It is the conglomerate behind a range of businesses such as Bunnings, Catch, Covalent Lithium, Kmart, Officeworks, and Priceline.

Although inflation and rising living costs are likely to be putting pressure on its retail businesses, the Wesfarmers Chemicals, Energy and Fertilisers (WCEF) business has been tipped to deliver a very strong result in FY 2022.

Analysts at Morgans remains very positive on the company. Its analysts actually appear optimistic the company will be able to navigate the tough retail environment due to its value offering. In light of this, the broker has an add rating and $58.40 price target on its shares.

As for dividends, Morgans is forecasting fully franked dividends per share of $1.65 in FY 2022 and $1.81 in FY 2023. Based on the current Wesfarmers share price of $44.15, this will mean yields of 3.7% and 4.1%, respectively.

The post Analysts name 2 excellent ASX dividend shares for income investors to buy appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Down almost 30% in FY22: What’s worrying investors about Wesfarmers shares?
• Why are ASX 200 retail shares getting bought up today?
• How did ASX 200 retail shares perform in June?
• Why did the Wesfarmers share price tumble 11% in June?
• What’s the outlook for Wesfarmers shares in July?

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 Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ikFsT1G

Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part 2 of this edition, we’re rejoined by Yarra Capital Management’s fixed income specialists, Darren Langer, co-head of Australian fixed income, and Chris Rands, co-portfolio manager of the Yarra Australian Bond Fund. Today they discuss the outlook for bond markets amid high interest rate expectations.

The Motley Fool: Yesterday we discussed the aggressive pace and level of interest rate rises flagged by the US Fed and the RBA. How has a rising rate environment impacted the returns of the Yarra Australian Bond Fund?

Darren Langer: We run a fixed rate fund, and it’s very sensitive to higher rates. Bond returns are the worst they’ve been since the 1980s. And it’s been quite horrific for the average bond holder who expects to get positive returns most of the time. This is the once in 20 to 30-year event when you get bond returns that are negative.

The only other time we’ve had negative bond returns in the last 30 years was in 1994, and not quite as negative as what they are at the moment. But we expect that negative return to dissipate as markets start to price in a more sensible rate hike cycle. At the moment, they’re still pricing in very aggressive rate hikes. So some of that may come off.

But, clearly, it’s been a difficult year for bond investors. Anyone in fixed income markets that’s had floating rate funds are probably doing relatively OK. They probably haven’t seen the negative returns. And they’re probably getting higher cash yields than what they have been.

MF: So it’s been a tough year not only for share investors but fixed income as well. What’s your outlook going forward?

Chris Rands: When you’re looking forward, the yield to maturity that you buy the bond at is going to be your best kind of forecast if you hold the bond to maturity. Because rates have moved so far, if you think of a three-year bond with a 4% to 4.5% yield, if you hold onto that for the three years to maturity you get a 4%, 4.5% return.

In the past 10 years, it’s been difficult to get that kind of income. Now, if rates keep rising in the short term, you can get that sort of 4.5% return. So the outlook is much healthier now, after the adjustment in bond yields, than in the past 24 months.

DL: Generally, the one year you have a sort of awful outcome in fixed rate bonds, the next couple of years are reasonably positive. You don’t get really high returns in fixed income, but you’ll be more likely to see those 3% to 4% sort of returns rather than the half to zero we’ve seen over the last 12 months.

With rates going higher this last year, it’s been quite negative. But for new investors coming in, they’ll probably see a much better outcome.

MF: Are you adjusting your investment strategies in the primary and secondary bond markets with higher rates in mind?

CR: We’re a long-only bond manager, so we’re going to be looking at the market regardless. In terms of our positioning, the best way to think about yields is the spread to cash.

If you look at the three-year bond, for example, it will typically sit about 50 basis points over cash. When the cash rate is zero, the three-year bond is probably about 0.5%. And if, somehow, the RBA was able to get the cash rate to 5%, the three-year bond rate would be above 5%.

From our strategy, we’re really trying to base our decisions on where we think the cash rate is in the future. If you think the RBA will only get to a cash rate of 2%, then you probably should be out there looking to add bonds.

As long as we believe we can forecast the RBA, we should be thinking about how we position around where the cash rate eventually ends.

DL: The one thing that’s been positive for fixed income investors is we’ve gone past the interference in the markets, which has basically dragged spreads in quite tightly. The credit margin that companies have to pay above the risk-free rate got very tight, because the RBA was buying bonds, and that drags everything down with it.

Now a lot of that’s gone out. New issuers coming to the market are actually paying a higher spread to borrow, a higher premium than they were six to 12 months ago. That’s one area where we’ve been able to pick up some good investments. There are companies coming to market with a much fairer return to investors.

As new primary issuance comes to market at higher spreads, this re-prices the secondary market and gives us the opportunity to pick up assets at better levels than we could have over the last six months or so.

MF: Should investors be concerned over the potential for rising corporate bad debts?

DL: In Australia, we think corporates are in a pretty good place. Most of them have pretty strong balance sheets. We haven’t seen the excess build-up in debt in the Australian market that you’ve had in some offshore markets, like the US.

We also tend to have a more investment-grade market, with higher-rated corporates that borrow in this market.

Where there are problems that might show up is more in the sub-investment grade, think below BBB- ratings. But Australia doesn’t have a large sub-investment grade market, so a lot of those problems are more likely to come offshore. And more so if they keep jacking interest rates higher and higher.

CR: If you think about that from the macro perspective, Australia seems to always land in this very fortunate position, where we really are the lucky country.

It looks like the world is starting to slow down, and yet commodity prices, while they have come off, are still sticking very high. So, if you’re starting to think about recession, not only do we look a little better than offshore, but also the RBA is not going as aggressive as those other central banks.

**

Tune in tomorrow for part three of our interview, where Yarra Capital’s Darren Langer and Chris Rands discuss the threats and opportunities for bond investors in the year ahead. If you missed part one, you can find that here.

(You can find out more about the Yarra Australian Bond Fund here.)

The post Why the end of the RBA’s $350 billion bond buying program is positive for fixed income investors: fund managers appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 best ASX All Ords mining shares in FY22
• Players gonna play: 3 ASX shares set for a strong reporting season
• 2 ASX shares you never heard of ready to make hay
• 5 things to watch on the ASX 200 on Thursday
• 2 top ETFs for ASX growth investors to buy in July

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.

from The Motley Fool Australia https://ift.tt/9QDWkqj

What a year it was for the S&P/ASX All Ordinaries Index (ASX: XAO). Talk about a whipsaw.

The ASX All Ords was going so well for the first half of FY22. It rose from 7,585 points at the close on 30 June 2021 to 7,926.8 points at the closing bell on the first day of trading for 2022 on 4 January.

That’s a pretty encouraging 4.5% rise over a six-month period. Then, the turnaround. The ASX All Ords went down from there, falling to 6,746.5 points at the close on 30 June 2022.

So, the benchmark index finished FY22 in the red. Down 11.05%. Eek. But it was a vastly different story for these ASX mining shares.

These ASX mining shares had a rip-roaring year

The ASX All Ords covers the 500 biggest companies on the ASX by market capitalisation. Mining shares, as part of the basic materials segment, make up about 22.5% of the All Ords index.

Here are the five best-performing ASX All Ords mining shares in FY22, according to Capital IQ figures:

• Core Lithium Ltd (ASX: CXO) up 306.4%
• Argosy Minerals Limited (ASX: AGY) up 260%
• Yancoal Australia Ltd (ASX: YAL) up 172.4%
• Whitehaven Coal Ltd (ASX: WHC) up 148.2%
• Tigers Realm Coal Ltd (ASX: TIG) up 137.5%.

Why these miners soared in FY22

Of course, these five ASX mining companies had their own milestones in FY22 that helped push their share prices higher.

But they all had one thing in common.

The commodities boom pushed up the value of the stuff they dig out of the ground and sell.

According to Trading Economics commodities data, lithium carbonate has had a year on year gain of 434%. Yep, crazy good. And that obviously benefitted Core Lithium and Argosy Minerals.

The coal price also went up big time. By 182% to be exact. It ain’t lithium-level growth, but it’s still impressive. Of course, Yancoal, Whitehaven, and Tigers Realm were beneficiaries.

Both commodities are trading at historically high levels, providing an ongoing boon for these ASX mining shares.

Today, the lithium carbonate price is A$104,026 per tonne. The coal price is A$585 per tonne.

The post 5 best ASX All Ords mining shares in FY22 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ASX lithium stocks avoid share price shock amid commodities lashing
• Whitehaven share price takes off despite climate legal challenge
• These 2 ASX lithium stocks are charging up on Tuesday
• Why did the Core Lithium share price plunge 31% in June?
• Why did ASX 200 energy shares soar today?

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.

from The Motley Fool Australia https://ift.tt/Y9tiESk