Category: Stock Market

Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

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

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

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted ASX share despite its short interest easing to 15.6%. There are concerns that higher airfares and rising living costs could impact consumer spending on leisure travel.
• Nanosonics Ltd (ASX: NAN) has short interest of 12.3%, which is flat week on week. This medical device company’s shares have come under pressure amid concerns over a major and disruptive sales model change in the key United States market.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest remain flat at 11.8%. Short sellers aren’t giving up on this betting technology company despite it recently announcing a share buyback.
• Block Inc (ASX: SQ2) has short interest of 10%, which is down slightly week on week. This mirrors the short interest of the payment company’s shares on Wall Street.
• Lake Resources N.L. (ASX: LKE) has entered the top ten with short interest of 8.9%. The sudden exit of the lithium developer’s CEO without comment appears to have spooked the market.
• PolyNovo Ltd (ASX: PNV) has seen its short interest rise to 8.8%. This medical device company’s mixed performance over the last 12 months appears to be behind this.
• EML Payments Ltd (ASX: EML) has short interest of 8.6%, which is down week on week. Short sellers appear to believe this payments company’s underperformance in the third quarter could continue into the fourth.
• Regis Resources Limited (ASX: RRL) has short interest of 8.5%, which is down week on week. Short sellers will have been disappointed to see this gold miner’s shares surge higher last week following a record quarter.
• Kogan.com Ltd (ASX: KGN) is back in the top ten with short interest of 8.4%. Inventory mismanagement, supply chain headwinds, higher marketing costs, and Amazon’s growing presence in Australia appear to be behind this short interest.
• Webjet Limited (ASX: WEB) has short interest of 8%, which is down slightly week on week. Cost of living pressures appear to have investors concerned that the travel market recovery could take longer than expected.

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

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More reading

• Top broker names the ASX travel shares to buy before it’s too late
• Why did some ASX BNPL shares plummet more than 90% in FY22?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Flight Centre share price fails to lift-off amid recovering aircraft engine demand
• Why Block, Bubs, Infomedia, and Zip shares are dropping

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group Ltd, Block, Inc., EML Payments, Kogan.com ltd, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has positions in and has recommended Block, Inc., EML Payments, Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, 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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It has been an encouraging past couple of weeks for the Metcash Limited (ASX: MTS) share price.

Since the release of the company’s full-year results on 27 June, the wholesale distributor’s shares are up 4.4%.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has gained around 1.5%.

Let’s take a look below at what’s driving Metcash shares forward lately.

Ex-dividend around the corner for Metcash shares

Despite the recent volatility on the ASX, Metcash shares have continued to climb following the company’s outstanding financial scorecard.

This has led investors to take up positions in Metcash shares as the upcoming ex-dividend date approaches.

At Friday’s market close, Metcash shares finished at $4.31.

Investors will need to buy the company’s shares before market close today to be eligible for the final dividend. The ex-dividend date falls on Tuesday 12 July (tomorrow).

Historically, when a company reaches its ex-dividend day, its shares tend to fall after shareholders lock in the latest dividend.

When can Metcash shareholders expect payment?

For those eligible for Metcash’s final dividend, shareholders will receive a payment of 11 cents per share on 10 August.

This brings its full-year dividend to 21.5 cents, which represents a 22.9% improvement from the previous financial year.

For context, the final FY21 dividend came to 9.5 cents per share.

Management noted that the company’s strong FY22 underlying earnings led to the board’s decision to increase the shareholder distributions.

The dividend is fully franked which means that you’ll receive franking credits to put towards your next tax bill.

Metcash share price summary

Over the last 12 months, the Metcash share price is up 10% after registering wild price swings on the ASX.

The company’s shares reached a 52-week high of $4.90 in early May, before sharply declining in the following weeks.

Metcash commands a market capitalisation of roughly $4.16 billion and has a dividend yield of 4.67%.

The post Time is running out to secure the Metcash dividend. Here’s what you need to do appeared first on The Motley Fool Australia.

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More reading

• 4 ASX dividend shares to buy that aren’t banks or miners: expert
• Here are the top 10 ASX shares today
• Why Liontown, Metcash, Star, and Weebit Nano shares are charging higher
• Why Imugene, Link, Metcash, and Sayona shares are racing higher
• ASX 200 midday update: Metcash and Imugene jump, Evolution downgrades guidance again

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 ASX All Technologies Index (ASX: XTX) fell hard in FY22, dropping by around 35%. That’s a big fall for a whole group of ASX tech shares.

Some of the names in the index include Block Inc (ASX: SQ2), REA Group Limited (ASX: REA), WiseTech Global Ltd (ASX: WTC), Xero Limited (ASX: XRO), Computershare Limited (ASX: CPU), SEEK Limited (ASX: SEK), Carsales.com Ltd (ASX: CAR), NextDC Ltd (ASX: NXT), Pro Medicus Limited (ASX: PME) and Altium Limited (ASX: ALU).

The return of an index is dictated by the performance of the underlying holdings – like Block, REA, WiseTech and so on.

Technology business valuations were running hot near the end of the 2021 calendar year. However, things have certainly come back down with a bump.

It is common for share prices to move up and down in shorter periods. That’s a key function of the share market. Not every buyer and seller is going to want to transact at the same price as last week or last month.

However, the falls we’ve seen since the beginning of 2022 have been savage for some ASX tech shares.

Inflation and interest rates could be key contributors to the volatility and valuation changes we’ve seen this year.

Interest rates

Investing is not always easy. Knowing how much to pay for a business that is growing quickly, or is expected to grow quickly, can be tricky.

For some investors, the interest rate has a major impact on the premium they’re willing to pay on today’s earnings with regard to how large future earnings are expected to be. In other words, the valuation of the ASX All Technologies Index can be significantly influenced by interest rate changes.

I think that Warren Buffett has previously explained this concept very well:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

Interest rates are now rapidly climbing higher. The Reserve Bank of Australia (RBA) has increased the interest rate by 100 basis points (or 1.00%) since the beginning of June with two hikes of 50 basis points.

The United States Federal Reserve increased its interest rate by 75 basis points (0.75%) in June. The next increase, whatever size it is, is due soon.

However, the market is largely expecting further interest rate increases over the rest of 2022. So they won’t be a surprise, unlike the scale of the first few increases.

Only time will tell how high central banks have to push interest rates to control inflation. If inflation calms down quicker than expected, that could be beneficial for the ASX All Technologies Index.

The post Why did the ASX All Technologies Index have such a dire FY22? appeared first on The Motley Fool Australia.

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More reading

• Broker names 2 ASX 200 dividend shares to buy in July
• The NAB share price outperformed the ASX 200 by 16% over 12 months
• Expert names ASX share that could fly 67% higher
• 5 things to watch on the ASX 200 on Monday
• Broker names 2 blue chip ASX 200 shares to buy this month

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Block, Inc., Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc., Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has recommended REA Group Limited, SEEK Limited, and carsales.com 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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If you’re looking for ASX 200 dividend shares to buy, then you may want to check out the two listed below.

Both have recently been named as buys by the team at Morgans. Here’s why its analysts rate them highly this month:

BHP Group Ltd (ASX: BHP)

The first ASX 200 dividend share to look at is mining giant BHP. Morgans rates the Big Australian very highly due to its diverse operations, strong balance sheet, and resilient dividend profile. The broke currently has an add rating and $48.30 price target on its shares.

It commented:

We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP’s operations also supplies some defence against direct Covid-19 impact on earnings contributors. While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.

In respect to dividends, the broker has pencilled in a $3.99 per share dividend in FY 2022 and then a $3.22 per share dividend in FY 2023. Based on the latest BHP share price of $39.22, this equates to yields of 9.8% and 8.2%, respectively.

Macquarie Group Ltd (ASX: MQG)

Another ASX 200 dividend share that could be in the buy zone is investment bank Macquarie. Morgans believes Macquarie is well-placed for growth over the long term thanks to structural tailwinds. It currently has an add rating and $215.00 price target on the company’s shares.

The broker said:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while the company continues to gain market share in Australian mortgages.

As for dividends, the broker is forecasting partially franked dividends of $7.07 per share in FY 2023 and $7.47 per share in FY 2024. Based on the current Macquarie share price of $170.69, this will mean yields of 4.1% and 4.4%, respectively.

The post Broker names 2 ASX 200 dividend shares to buy in July appeared first on The Motley Fool Australia.

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More reading

• Own BHP shares? Top broker warns of looming oversupply of iron ore in 2H 2022
• Why BHP and other ASX mining shares are making strides on Friday
• 4 ‘quality’ ASX shares to buy in scary times: expert
• I’m sticking by this ‘quality’ ASX share that’s fallen 20%: expert
• What’s the outlook for ASX 200 dividend shares 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The end of the 2022 financial year for most individuals and businesses could be a good time to assess the performance of the National Australia Bank Ltd (ASX: NAB) share price.

NAB doesn’t have a financial year end date of 30 June 2022. September 2022 is the last month of NAB’s financial year.

At the time of writing, over the prior 12 months, the NAB share price has gone up 8% while the S&P/ASX 200 Index (ASX: XJO) has fallen by 8%. That’s outperformance of 16%.

NAB is one of the big four ASX bank shares along with Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).

However, NAB has been executing on its strategies to try to grow profit.

Making profit and growing profit can be a key influence on the NAB share price, so let’s look at how the latest profit update went.

FY22 half-year result

A couple of months ago, NAB told investors about how it had performed for the six months to March 2022.

It said that it generated $3.48 billion of cash net profit after tax (NPAT). This was an increase of 4.1% year on year. Revenue rose by 4.6%, benefiting from “pricing discipline and strong growth in lending and deposits” which increased by 10% and 12% respectively.

The big four ASX bank said that focused investment was key for the performance in the result.

NAB said that the recent shift to a higher growth outlook provides greater scope to keep investing while continuing to deliver productivity benefits.

However, the investing and higher inflation environment means that it’s now expecting costs to rise by between 2% to 3% over the year. This is to drive growth opportunities while maintaining cost discipline.

The bank has enacted share buybacks totalling $5 billion. This had the effect of lowering the capital held to a more effective level and improving shareholder return statistics such as earnings per share (EPS).

The company also decided to increase its interim dividend per share by 21.7% to 73 cents per share.

FY22 projections

In FY22, NAB is expected to generate $2.17 of EPS according to CMC Markets. The annual dividend per share is predicted to be $1.48 per share.

At the current NAB share price, this means that it’s valued at 13x FY22’s estimated earnings with a projected grossed-up dividend yield of 7.5%.

The post The NAB share price outperformed the ASX 200 by 16% over 12 months appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Experts say these ASX dividend shares are buys this month
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• These 3 ASX 200 lithium stocks are exploding on Friday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Pessimism has never been more rife than in share markets right now.

High inflation, surging fuel prices, rising interest rates, a war in Ukraine and the threat of recession are all conspiring to make investors pretty anxious.

“Investors will have to navigate a period where economic and earnings growth could be vulnerable to downward revisions,” Wilsons head of investment strategy David Cassidy said in a memo to clients.

“We have already seen a downward revision in the S&P/ASX 300 (ASX: XKO) in June, and we think this will continue as we get closer to reporting season in August.”

In this type of macroeconomic climate, you might want to “turn down the noise” for a bit.

If you put the economy aside, one thing you may have noticed is that airports in Australia and the US have been jam-packed.

In fact, both the April and current school holidays have seen such long, chaotic queues at Sydney Airport that travellers are actually missing their flights.

When a particular industry is enjoying such pent-up demand, surely it has to be worth a look.

Qantas shares are dirt cheap compared to a month ago

Despite the massive thirst for travel, the fear of a recession has really pulled back the share price for Qantas Airways Limited (ASX: QAN).

This ASX airline share has lost more than 18% over the past month.

Cassidy reckons this presents “good value” to buy right now.

“Despite Qantas being a high beta stock, we believe near-term demand will be bolstered by pent-up leisure and corporate demand and outweigh the impacts of an economic slowdown,” he said.

“We think Qantas will be more resilient to a decline in economic conditions with its leaner cost base, stronger balance sheet, and higher loyalty contribution than in previous cycles.”

Besides, Cassidy personally thinks the market is now overestimating the risk of an economic downturn.

“Our view is that the outlook is not as bleak as what the market has priced in,” he said.

“As a result, we believe that in the broadening market sell-off, investors now have a good opportunity to buy quality stocks that are well priced.”

With the travel industry surging, the Wilsons team reckons the airline’s price-to-earnings (P/E) ratio based on the 2024 financial year could rise to 10. It currently trades at 6.

That’s a 67% upside.

“If Qantas can achieve consensus earnings of $0.68 per share in FY24 (which we think it can) then the stock should be priced at the end of June 2023 at $6.80 using a 12-month forward PE multiple of 10,” he said.

“As the market gets more focused on the FY24 earnings over the next 12 months we think the stock can rerate towards this price target.”

Qantas shares closed Friday down 0.22% at $4.44.

The post Expert names ASX share that could fly 67% higher appeared first on The Motley Fool Australia.

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More reading

• Qantas share price slides as engineers plan strike action
• How did the Vanguard Australian Shares Index ETF perform in June?
• Why did the Qantas share price outperform the ASX 200 in FY22?
• How did ASX travel shares perform in June?
• ASX 200 travel shares leap as Australia scraps COVID-19 vaccine mandates for international arrivals

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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.45% to 6,678 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to start the week with a gain after a mixed night on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 20 points or 0.3% higher this morning. On Wall Street, the Dow Jones was down 0.15%, the S&P 500 fell 0.1%, and the Nasdaq climbed 0.1%.

Oil prices rise

Energy producers Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a decent start to the week after oil prices pushed higher on Friday. According to Bloomberg, the WTI crude oil price climbed 2% to US$104.79 a barrel and the Brent crude oil price climbed 2.3% to US$107.02 a barrel. This couldn’t stop oil prices recording a weekly decline amid recession fears.

Woolworths given conviction buy rating

The Woolworths Group Ltd (ASX: WOW) share price could be great value according to analysts at Goldman Sachs. This morning the broker reiterated its buy rating and added the retail giant’s shares to its conviction list with a $40.50 price target. Goldman commented: “WOW now has a higher upside of 10% (3rd highest in our consumer/retail coverage, but with clear catalysts to re-rating)”

Gold price edges higher

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a positive start to the week after the gold price edged higher on Friday night. According to CNBC, the spot gold price was up 0.15% to US$1,742.3 an ounce. Despite this, the gold prices recorded its fourth successive weekly decline.

Domino’s downgraded to sell

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price could have a tough day after being the subject of a bearish note out of Goldman Sachs. According to the release, the broker has downgraded the pizza chain operator’s shares to a sell rating and cut the price target on them to $59.20. Goldman believes consensus earnings estimates are too high because of potentially “lower earnings in Japan and Europe due to lower store growth and not being able to fully pass through cost-inflation.”

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

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More reading

• Top brokers name 3 ASX shares to buy next week
• How did Beach Energy shares pull off a 40% return in FY 2022?
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why is the Santos share price glowing green at the end of the week?

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 Dominos Pizza Enterprises 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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If you’re looking to strengthen your portfolio with some new blue chip ASX 200 shares, then you may want to consider the two listed below.

Both have recently been named as buys by the team at Morgans. Here’s what the broker has to say about these ASX 200 shares:

South32 Ltd (ASX: S32)

The first blue chip ASX 200 share that Morgans rates highly is South32. It is a mining giant with exposure to a range of commodities such as aluminium and copper. The broker has been pleased with the way South32 has transformed its portfolio and boosted its ESG credentials. It commented:

S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32’s risk and ESG profile. Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

Morgans has an add rating and $6.10 price target on South32’s shares. This implies potential upside of 63% from the current South32 share price of $3.73.

Treasury Wine Estates (ASX: TWE)

Another blue chip ASX 200 share that Morgans rates highly is Treasury Wine. Morgans believes the wine giant’s shares are great value in comparison to peers and sees strong growth ahead for the company.

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The foundations are now in place for TWE to deliver strong earnings growth from the 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Morgans has an add rating and $13.93 price target on the company’s shares. Based on the current Treasury Wine share price of $11.43, this implies potential upside of 22% for investors.

The post Broker names 2 blue chip ASX 200 shares to buy this month appeared first on The Motley Fool Australia.

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More reading

• Here’s why experts are tipping these ASX growth shares as buys
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Is now the time to be buying beaten down ASX 200 mining shares?
• Why experts rate these ASX growth shares as buys

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 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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A new financial year is here, so what better time to consider making some portfolio changes.

If you’re interested in ETFs, then you may want to consider the three listed below.  Here’s why they could be top options for investors in FY23:

iShares Global Consumer Staples ETF (ASX: IXI)

The first ETF for investors to look at this financial year is the iShares Global Consumer Staples ETF. As its name implies, this ETF provides investors with exposure to a large number of global consumer staples companies. These are companies that produce essential products such as food, household items, and tobacco. Among its holdings are the likes of Coca-Cola, Nestle, PepsiCo, Procter & Gamble, Unilever, and Walmart.

iShares S&P 500 ETF (ASX: IVV)

Another ETF for ASX investors to consider in FY23 is the iShares S&P 500 ETF. This ETF gives investors exposure to 500 of the top U.S. stocks. This could make it a good option for investors that are wanting to add some diversity to their portfolio. In addition, the fund manager, Blackrock, highlights that the ETF offers long-term growth opportunities for investors thanks to its quality holdings. These holdings include companies such as Amazon, Apple, Disney, Facebook, JP Morgan, Johnson & Johnson, Microsoft, Tesla, and Visa.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

A final ETF for ASX investors to look at this financial year is the VanEck Vectors Video Gaming and eSports ETF. This increasingly popular ETF provides investors with exposure to the growing video gaming market. This includes hardware giant Nvidia and game developers such as Roblox, Take-Two and Electronic Arts. VanEck notes that these companies are in a strong position to benefit from the increasing popularity of video games and eSports.

The post Here are 3 ETFs for ASX investors to buy in FY23 appeared first on The Motley Fool Australia.

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More reading

• Here are 2 top ETFs for ASX investors next week
• 3 excellent ETFs for ASX investors to buy in July
• 3 quality ETFs for ASX investors to buy next week
• 2 quality ETFs to buy for the long-term
• 2 fantastic international ETFs for ASX investors to buy

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 iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF and iShares Trust – iShares Core S&P 500 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 AVZ Minerals Ltd (ASX: AVZ) share price may have ended the last financial year suspended, but that couldn’t stop it from absolutely smashing the market during the 12 months.

The lithium developer’s shares rose from 16 cents to 78 cents over the period, recording a whopping 388% gain for investors that were lucky enough to snap them up at the start of it.

Why did the AVZ share price smash the market?

There were a number of catalysts for the outperformance of the AVZ Minerals share price.

This includes its inclusion in the illustrious ASX 200 index, optimism over its Manono Lithium and Tin project, and booming lithium prices.

In respect to the latter, lithium prices have been breaking records in 2022 amid supply constraints and insatiable demand for the white metal from electric vehicle manufacturers. This has sparked hopes that when AVZ finally commences production, it will be generating significant free cash flow.

Will FY 2023 be just as good?

What happens in FY 2023 will depend largely on a couple of factors.

The first is the future price of lithium. Analysts at Goldman Sachs are predicting a sharp decline in lithium prices in the coming years. So, by the time that AVZ does start selling the battery material ingredient, it may not be commanding prices anywhere near what Pilbara Minerals Ltd (ASX: PLS) is receiving today. This could put pressure on the company’s shares.

There’s also something else to worry about before then. Something even bigger. That is the company’s ownership of the Manono Lithium and Tin project in the Democratic Republic of the Congo.

The reason the AVZ share price was suspended for the final month of the financial year was its court battle with Jin Cheng Mining. There are concerns that if things don’t go to plan, the company could ultimately be left with just a 36% ownership of the project. This would have obvious consequences for the valuation of the company and its shares.

All in all, the next 12 months certainly will be interesting. But only time will tell if the company’s shares are market-beaters again.

The post Why did the AVZ share price thump the market in FY22? appeared first on The Motley Fool Australia.

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More reading

• Guess which 2 ASX shares were the best and worst All Ordinaries performers of FY22
• The AVZ Minerals share price went nowhere in June. Here’s why
• ASX 200 midday update: Regis Resources jumps, BHP and Rio Tinto drop
• AVZ share price remains suspended, but a return is in sight
• 5 things to watch on the ASX 200 on Friday

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 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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