Category: Stock Market

A good passive income portfolio should do more than pay dividends today.

It should be built to keep paying through different market conditions, different interest rate cycles, and different stages of life.

That is the real goal. Not just finding a few high-yielding shares today, but creating an income stream that can last.

Think like a landlord

The first mindset shift is to treat ASX shares like income-producing assets.

A landlord does not usually sell a property because its market value falls one month. They focus on the rent, the quality of the tenant, and whether the asset can keep producing cash.

Dividend investing can be approached in a similar way.

A share price will move around. But what matters more over the long term is whether the business can keep generating profits and returning some of that cash to shareholders.

That could mean owning companies with essential services, strong brands, infrastructure assets, defensive demand, or long records of disciplined capital management. APA Group (ASX: APA) and Transurban Group (ASX: TCL) spring immediately to mind as great examples.

Build around reliability first

A lifetime passive income stream should never be built entirely around the biggest yields.

Very high dividend yields can sometimes be warning signs. They may reflect falling earnings, stretched payout ratios, high debt, or a market that expects the dividend to be cut.

A stronger starting point is reliability. That might include infrastructure businesses with long-life assets, supermarkets with recurring household demand, healthcare companies with defensive earnings, or property trusts with quality tenants and long leases.

These ASX shares may not always produce the highest income on day one. But they can provide a stronger foundation to build out from.

Add dividend growth

The next focus is growth. A dividend that never increases can lose value over time as inflation pushes living costs higher. That is why investors should look for companies that can grow earnings and gradually lift dividends.

Dividend growth can come from higher profits, expanding markets, better margins, or reinvestment in the business.

This part of the portfolio may include lower-yielding shares with stronger growth prospects. They may not produce as much income immediately, but they can help the income stream become larger over time.

Reinvest your dividends

The best time to strengthen a passive income stream is before it is needed.

While an investor is still working, reinvesting dividends can accelerate the process. Each dividend payment can buy more shares, which can then produce more dividends of their own.

This turns the portfolio into a compounding machine.

Only later, when the income is needed, does the investor need to switch from reinvesting dividends to spending them.

Foolish takeaway

Building a passive income stream for life is not about finding one perfect share. It is about owning a collection of businesses that can keep sending cash back to shareholders, while still having enough strength to grow.

Done patiently, ASX shares can become a lifelong income engine.

The post How to build a passive income stream for life with ASX shares appeared first on The Motley Fool Australia.

More reading

• 3 safe ASX dividend shares to buy for income
• The ASX shares I’d pick in a FIFA World Cup first eleven
• How I’d aim to build $10,000 a year in passive income from ASX shares
• Transurban, Aurizon, Ampol shares hit fresh multi-year highs: Buy, sell or hold today?
• 5 ASX dividend stocks for passive income investors

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 Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Warren Buffett has built one of the greatest investing records in history.

But I do not think his approach needs to feel out of reach for everyday investors.

At its core, Buffett-style investing is about buying easy to understand businesses, paying sensible prices, staying patient, and letting compounding do the work. I think those ideas can be applied just as easily to ASX shares as they can to US stocks.

Here is how I would use some of Buffett’s golden rules to build wealth on the ASX.

Buy businesses, not share prices

One of Buffett’s best lessons is to think like a business owner.

That means I would not start by asking which ASX share might jump next week. I would ask whether I would be happy owning part of the business for many years.

This can change the way investors look at the market.

Take Woolworths Group Ltd (ASX: WOW). Its share price will move around, but the business is tied to weekly grocery shopping, loyalty, supply chains, online convenience, and household essentials.

Or consider Hub24 Ltd (ASX: HUB). Its value is not only in today’s share price. It comes from the role its platform plays for financial advisers, the growth in funds under administration, and the chance to keep benefiting as wealth management becomes more technology-driven.

That does not mean every quality business is worth buying at any price. But it does mean the starting point should be the business itself.

Stay inside the circle of competence

Warren Buffett often talks about staying within a circle of competence.

For me, that means buying ASX shares I can explain in plain English.

I do not need to understand every technical detail of a company. But I do need to understand how it makes money, why customers use it, what could go wrong, and what might make the business larger over time.

That is one reason I like Sigma Healthcare Ltd (ASX: SIG). The business is connected to everyday health, pharmacy retail, distribution, value-focused shopping, and repeat customer demand. There are still risks around execution, margins, regulation, and competition, but the basic customer need is easy to grasp.

Look for durable advantages

Another Buffett-style rule is to look for businesses with strong competitive positions.

On the ASX, I would search for companies that have scale, trusted brands, hard-to-replicate assets, network effects, or specialist expertise.

Goodman Group (ASX: GMG) is a good example. It is more than a property owner. It has global relationships, development capability, scarce locations, and exposure to logistics and data centre demand.

Cochlear Ltd (ASX: COH) is another. It has built a global position in implantable hearing solutions, supported by specialist technology, surgeon relationships, research, and a long-term healthcare need.

These types of advantages can help businesses keep earning attractive returns, even when conditions become tougher.

Be patient with compounding

Buffett’s approach is also built on patience.

I think this is where many investors struggle. They buy a quality ASX share, then become frustrated when the share price does little for six months. But wealth is rarely built in a straight line.

A company may spend years reinvesting, expanding, improving margins, strengthening customer relationships, and building scale before the full benefit becomes obvious.

That is why I would rather own a smaller group of high-quality ASX shares for a long time than constantly trade in and out of whatever is popular.

Patience does not mean ignoring problems. If the investment case breaks, I would reassess. But if the business is still improving, a flat or falling share price can sometimes be an opportunity rather than a reason to panic.

Foolish takeaway

Warren Buffett’s rules are simple, but they are not always easy to follow.

They require patience, discipline, and the willingness to think beyond the next market update.

For ASX investors, I think the lesson is clear. Focus on businesses that are understandable, well positioned, and capable of becoming more valuable over time. Pay attention to price, but do not let short-term share price moves dominate the decision.

That is how I would try to build wealth with ASX shares. Not by chasing every trend, but by owning quality businesses and giving compounding enough time to work.

The post How I would use Warren Buffett’s golden rules to build wealth with ASX shares appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy right now
• Down 60%, are Cochlear shares now a bargain buy?
• 2 incredible ASX 200 shares to buy and hold for 10 years
• 3 safe ASX dividend shares to buy for income
• Interested in investing in AI? Check out this new $350 million trust

Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear, Goodman Group, and Hub24. The Motley Fool Australia has recommended Cochlear, Goodman Group, and Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares are a popular option for investors hunting for a reliable passive income.

The Australian mining giant isn’t a classic defensive stock or a major bank, but it does have a strong operational history and a reputation for paying a consistent dividend payout to investors.

At the time of writing, BHP shares are around 32% higher for the year-to-date and roughly 57% higher than 12 months ago.

But it looks like many analysts think the shares are now trading around fair value after the latest rally. TradingView data shows that 13 out of 18 analysts rate the mining giant’s shares as a hold, another four rate the stock as a strong buy and one rates BHP shares as a strong sell.

The average $59.57 implies a small 1% downside at the time of writing. However, some expect the shares to fall 33% to $40.10, while others think BHP shares have the potential to climb 16% higher to $69.79.

As far as analyst data goes, BHP shares aren’t a compelling buy for investors chasing a quick return. But the mining stock is still a strong passive income play.

Why are BHP shares a good buy for passive income?

BHP is a premier blue-chip ASX 200 stock with a market capitalisation of around $306 billion and a strong operational history. At the time of writing, BHP is the largest company trading on the Australia share market.

BHP is a cyclical stock, primarily exposed to iron ore, copper, and other key commodities.

Unlike classic defensive stocks, cyclical stocks are closely tied to the broad economic cycle and commodity fluctuations.

This means BHP is at risk from value fluctuations and can experience a share price fall or spike in times when the market booms and contracts.

But the benefit of cyclical stocks is that they usually outperform during periods of economic recovery.

The large-scale but low-cost miner has a long history of regular dividend payments, dating back to around 2006. And its commodity exposure is diversified, too. This means it is able to maintain its dividend payouts even when commodity prices fluctuate.

What does the miner pay its shareholders?

BHP pays two fully franked dividends to shareholders per year. One in March and another in September. 

The miner’s most recent $1.0385 per share fully franked interim dividend was paid to shareholders in March. This translates to a dividend yield of around 3.5% at the time of writing.

Analysts forecast BHP to pay an annual dividend of $1.91 per share in FY26, and a slightly lower $1.80 per share in FY27. That translates to a forward dividend yield of around 3.2% and 3% respectively, at the time of writing.

The post Are BHP shares a good buy for passive income? appeared first on The Motley Fool Australia.

More reading

• Why is the BHP share price so volatile this week?
• Time to cash out? Why this expert is bearish on Goodman and BHP shares
• Is this ASX mining stock a better buy than BHP shares?
• Up 58% in a year, are BHP shares still a good buy today?
• Do experts rate BHP, Cochlear, and ResMed shares as buys, holds, or sells?

Motley Fool contributor Samantha Menzies 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 BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The end of the financial year presents an opportune time to get your financial house in order, and that goes for superannuation as much as other matters such as tax.

Before-tax payments strategy

If you’re looking to maximise your superannuation contributions for the year, and potentially reduce your tax bill, it’s worth having a look at the amount of concessional contributions you have made, and whether you can top that up.

Concessional contributions are contributions made to superannuation from your before-tax salary, and include the super guarantee contributions made by your employer, which are 12% of your salary.

Each year you are allowed to make concessional contributions of up to $30,000. Extra contributions made beyond what your employer contributes can serve to reduce your tax load, as contributions are taxed at 15%.

In terms of figuring out how much extra you can put into your super in this way, it is possible to keep track of your concessional contributions by using the Australian Taxation Office’s online services.

Your superannuation fund might also be able to show you where you stand with regards to concessional contributions.

If you do put extra into your super and want it to be a concessional contribution, you need to also lodge a notice of intent to claim, which alerts your super fund that it is a concessional contribution and they will take the 15% tax out as necessary.

This is necessary as it is also possible to make non-concessional contributions of up to $130,000 per year.

How to safely go over the one-year cap

If you do have extra money you’d like to put into super which would put you over the $30,000 yearly concessional cap, it’s worth checking whether you have any unused concessional cap amounts from previous years.

If you have less than $500,000 in super at 30 June of the previous financial year, and unused concessional contributions cap amounts for up to the past five years, these can also be claimed.

As the ATO website explains:

If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. The oldest available unused cap amounts are carried forward first. For example, unused cap amounts from 2019–20 would be used to increase your cap first before unused cap amounts from 2020–21. Unused concessional cap amounts are applied automatically once you exceed the cap in any year.

It is important not to go over the caps otherwise extra tax can be payable, the ATO says.

While this strategy might be useful, it might not be for everyone, and this article does not constitute financial advice. It’s always prudent to consult a financial adviser when setting up a new investment strategy.

The post Don’t forget to consider this key superannuation strategy before 30 June appeared first on The Motley Fool Australia.

More reading

• Why is the ASX 200 surging nearly 2% today?
• Magellan Financial Group shares: ACCC backs merger and rebrand plans
• DigiCo Infrastructure REIT boosts liquidity via US sale and reaffirms FY26 earnings
• Woodside Energy lifts Browse JV stake under pre-emption deal
• Vault Minerals lodges key permit, on track for Sugar Zone restart

Motley Fool contributor Cameron England 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.

The best investing strategy, in my opinion, is to own wonderful ASX shares for the long-term.

When we let a great company carry out its plans, we give it the best chance of delivering great profit growth. Compounding is a powerful force, as long as we let it run its course without prematurely interrupting.

I’m going to highlight two ASX shares that could significantly outperform the market over the next decade (or longer). Let’s get into it.

Siteminder Ltd (ASX: SDR)

Siteminder is a leading ASX tech share that provides software for hotels to manage operations and maximise revenue.

The business is winning thousands of new hotels as subscribers each year, and recently it’s targeting larger hotels, which can generate more revenue for Siteminder.

It aims to increase its annual recurring revenue (ARR) by 30% per year, an incredible rate of growth. I don’t know whether it’ll be able to continue growing at that pace for the entire next decade, but I think it’s being dramatically underrated by the market.

The company is rolling out its smart platform, helping subscribers connect with distribution platforms, analyse their performance and room demand, and even manage room prices. This helps unlock more revenue per subscriber when they sign up for those modules.

Siteminder’s growing scale is improving its operating leverage, boosting profit margins and strengthening its bottom line.

I believe the ASX share will significantly outperform the ASX share market in the coming years, making the current value look very attractive.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is a leading exchange-traded fund (ETF) that invests in 100 of the largest non-financial companies listed on the NASDAQ, a US stock exchange.

It’s rare to find a portfolio of this high-quality and deliver such strong returns.

I think it’s great for Australians to have exposure to incredible businesses like Nvidia, Apple, Alphabet, Microsoft, Micron Technology, Amazon.com and Advanced Micro Devices. Many of the businesses involved are driving change in how we live.

These companies (and the rest of the ETF’s 100 holdings) are among the best in the world at what they do, with market-leading products and services, enabling them to win an enormous customer base, achieve strong profit margins, maintain a strong balance sheet, and still have plenty of growth prospects.

The NDQ ETF portfolio holdings are leaders in areas such as AI, smartphones, computer software, online shopping, online video, cloud computing, driverless vehicles, and much more.

I don’t know what the future returns of this fund will be, but the ASX ETF has performed extremely strongly for Aussies. It delivered an average annual return of 21% over the last decade. It’s definitely one to look at during market volatility.

These aren’t the only two ASX shares I’d be excited to own for the next decade, though.

The post 2 top ASX shares to buy and hold for the next decade appeared first on The Motley Fool Australia.

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• 5 ASX ETFs for beginners with $500
• SpaceX starts trading today. Here’s what ASX investors need to know
• 3 ASX ETFs for investors who want global winners
• Why might Pro Medicus shares soon be under pressure?
• Which ASX ETF should I buy?

Motley Fool contributor Tristan Harrison has positions in SiteMinder. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF and SiteMinder. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and SiteMinder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It has been a busy week for many of Australia’s top brokers. This has led to a number of broker notes hitting the wires.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone right now:

Goodman Group (ASX: GMG)

According to a note out of Citi, its analysts have retained their buy rating and $40.00 price target on this industrial property company’s shares. The broker has been looking at Goodman’s data centre developments and believes things are going well. It highlights that hyperscale customers are in negotiations in key markets, which could mean that lease agreements are signed in the near future. Citi believes this could lead to the company’s earnings growing ahead of consensus estimates. The Goodman share price is trading at $31.66 on Friday afternoon.

Nick Scali Limited (ASX: NCK)

A note out of Morgans reveals that its analysts have initiated coverage on this furniture retailer’s shares with a $17.84 price target. The broker believes investors should look past near-term consumer weakness and focus on its positive long-term growth outlook. It highlights the company’s best-in-class margins, operating leverage, strong cash generation, and robust balance sheet, which leave ample cash flow for dividends, property purchases, and growth ventures. In addition, looking to the future, the broker believes that further Plush and Nick Scali rollouts in the ANZ region and the Nick Scali rollout opportunity in the UK provide an attractive growth leg. The Nick Scali share price is fetching $15.47 at the time of writing.

WiseTech Global Ltd (ASX: WTC)

Analysts at Bell Potter have retained their buy rating on this logistics software company’s shares with a trimmed price target of $71.75. According to the note, the broker believes that WiseTech could be having difficulty moving its large customers over to CargoWise Value Packs this financial year. As a result, it has reduced its CargoWise revenue forecasts in the short to medium term given it expects this transition to provide a boost to revenue with the shift to transaction-based pricing. Nevertheless, Bell Potter remains positive and highlights that its valuation is a significant premium to the share price. It also believes the lack of progress with CargoWise Value Packs is already reflected in the share price as well as the risk of a revenue result at the low end of guidance. The WiseTech Global share price is trading at $37.56 today.

The post Brokers name 3 ASX shares to buy right now appeared first on The Motley Fool Australia.

More reading

• Morgans names 3 ASX shares to buy in June
• 2 incredible ASX 200 shares to buy and hold for 10 years
• Buy, hold, sell: Nick Scali, Nyrada, Wesfarmers shares
• 3 buy-rated ASX growth shares tipped to rise 30%+
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor James Mickleboro has positions in Goodman Group and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Goodman Group and Nick Scali. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

CSL Ltd (ASX: CSL) shares have finally shown some life.

The biotechnology giant’s share price has risen around 15% since this time last week. That is a big move in a short period, particularly for a company that has been under such heavy pressure.

The question now is whether the recent bounce has taken away the opportunity, or whether it is simply the first sign that investors are starting to reassess the risk/reward.

I think it is the latter.

CSL shares still look reasonably valued

The first thing that stands out to me is the valuation.

Even after that rebound, CSL shares are trading around $108 and are down 55% over the past 12 months.

This means that based on consensus earnings per share estimates, CSL is trading on around 13.4 times FY26 earnings. That falls to about 12.9 times FY27 earnings and around 12.8 times FY28 earnings.

For a global healthcare company with CSL’s scale, those multiples do not look demanding to me.

Of course, the market is applying a lower valuation for a reason. Investors have become more cautious about earnings growth, execution, guidance, margins, and the pace of recovery.

But a lot of that caution now appears to be reflected in the share price.

At previous points in its history, CSL often traded at a far richer valuation because investors were willing to pay up for reliability and growth. The market is taking a much more sceptical view today.

That creates a different type of opportunity. Investors do not need the company to regain its old premium immediately. They need CSL to stabilise, improve execution, and show that earnings can start moving in the right direction again.

The dividend is more appealing

The dividend also looks more interesting after the share price falls.

Using consensus dividend per share estimates, CSL is forecast to pay $3.57 per share in FY26, $3.72 in FY27, and $3.79 in FY28.

At a $108 share price, that implies forward dividend yields of around 3.3%, 3.4%, and 3.5%, respectively.

CSL has rarely been viewed as an income stock. Investors have usually owned it for growth, global healthcare exposure, and long-term compounding.

But the yield now adds another layer to the investment case. It gives shareholders a reasonable income stream while they wait for the business to rebuild confidence.

Foolish Takeaway

I do not think the recent rebound means investors have missed the chance to buy CSL shares.

The share price has moved higher quickly, but it remains far below where it was a year ago. The valuation still looks reasonable, the dividend yield has become more attractive, and expectations are much lower than they used to be.

CSL still has work to do, and this is unlikely to be a smooth recovery story. But if the business starts rebuilding earnings momentum, today’s share price could still prove to be an attractive entry point.

The post Up 15% in a week, is it too late to buy rebounding CSL shares? appeared first on The Motley Fool Australia.

More reading

• The ASX shares I’d pick in a FIFA World Cup first eleven
• Where to invest $50,000 in ASX 200 shares in FY27
• Here are the top 10 ASX 200 shares today
• 8 ASX 200 shares with renewed buy ratings this week
• How much does UBS think CSL will bounce back?

Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is enjoying one of its strongest sessions in months on Friday.

At the time of writing, the benchmark index is up 1.82% to 8,790 points after reaching an intraday high of 8,809 points.

That leaves the ASX 200 within 4.3% of its 52-week high and on track to finish the week comfortably higher.

The buying has also been spread widely across the market. Around 154 companies are trading higher, compared with only 38 fallers and 8 unchanged stocks.

Let’s take a closer look at what is driving the market today.

Wall Street sets the tone

Australian shares followed Wall Street higher after a strong overnight session.

The gains came after US President Donald Trump said a deal with Iran could be signed as early as this weekend.

The Dow Jones Industrial Average Index (DJX: .DJI) rose 1.9%, the S&P 500 Index (SP: .INX) gained 1.8%, and the Nasdaq Composite Index (NASDAQ: .IXIC) climbed 2.5%.

Investors are hoping a deal could bring the conflict to an end and reduce the risk of further disruption to oil supplies through the Strait of Hormuz.

Oil prices have fallen as those concerns ease, with Brent crude dropping below US$89 a barrel. That has taken some pressure off inflation expectations after weeks of concern about higher energy costs.

Excitement surrounding the US listing of Elon Musk’s SpaceX (NASDAQ: SPCX) is also helping the mood. The company raised US$75 billion through its initial public offering (IPO), valuing it at around US$1.77 trillion.

Miners and banks lead the rally

During mid-afternoon trade, 9 of the ASX’s 11 sectors are trading higher, with resources leading the way after jumping 3.11%.

BHP Group Ltd (ASX: BHP) shares are up 3.22% to $62.76, while Rio Tinto Ltd (ASX: RIO) shares have gained 2.67% to $184.80.

Fortescue Ltd (ASX: FMG) shares are also 2.63% higher at $20.12.

The major banks are also helping push the index higher. Commonwealth Bank of Australia (ASX: CBA) shares are up 2.26% to $159.96, while National Australia Bank Ltd (ASX: NAB) shares have climbed 2.09% to $36.43.

ANZ Group Holdings Ltd (ASX: ANZ) shares are 2% higher at $34.51, and Westpac Banking Corp (ASX: WBC) shares have gained 1.65% to $35.07.

There’s also plenty of strength in consumer discretionary shares, with Wesfarmers Ltd (ASX: WES) shares up 2.58% to $86.49.

Energy shares miss out

Unfortunately, the rally is not helping every part of the market.

The S&P/ASX 200 Energy Index (ASX: XEJ) is shedding 1.13% as falling oil prices weigh on producers.

Woodside Energy Group Ltd (ASX: WDS) shares are down 1.84% to $30.94, making the company one of the few ASX 200 shares trading lower.

The post Why is the ASX 200 surging nearly 2% today? appeared first on The Motley Fool Australia.

More reading

• Magellan Financial Group shares: ACCC backs merger and rebrand plans
• DigiCo Infrastructure REIT boosts liquidity via US sale and reaffirms FY26 earnings
• Woodside Energy lifts Browse JV stake under pre-emption deal
• Vault Minerals lodges key permit, on track for Sugar Zone restart
• 5 things to watch on the ASX 200 on Friday

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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended BHP Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to stock picking it can pay to listen to the experts.

I’ve had a look through the research reports issued by Macquarie over the past week and filtered out a handful which the analyst team thinks will outperform over the next year.

Let’s see who they like.

Megaport Ltd (ASX: MP1)

This company is in the midst of a major capital raise under which it is looking to raise $827 million, including $309 million from existing shareholders.

Despite the raise being conducted at $14.30 per share, Megaport shares have held up well and are currently changing hands for $18.88.

This can be explained by the fact that the company also announced some major contract wins at the same time as it announced the capital raise.

The new contracts were worth about $458.9 million and would require $369.5 million in infrastructure spending, “primarily for high-performance NVIDIA GPUs, network, and storage infrastructure”.

Macquarie said Megaport provides AI exposure for investors with shorter lead times and less capital expenditure than data centre operators.

Macquarie has a price target of $27.80 on Megaport shares.

Viva Energy Ltd (ASX: VEA)

This company had a setback with a fire at its Geelong refinery in April, but Macquarie expects that repairs should be nearing completion.

Macquarie says Viva could deliver its best refining half in four years, even taking into account the fire impact.

A new head of the convenience division is also set to start soon, to help drive growth in what has been a “troubled” part of the business.

Macquarie has a $3.40 price target on Viva shares compared to $2.24 currently.

Fineos Corporation Ltd (ASX: FCL)

This company develops software for use by the global health insurance sector and has had recent contract wins in Australia and overseas.

The company recently reaffirmed revenue guidance in the range of €147m to €152m, and its closing cash balance at the end of March was €47.1m, up by €11.7m over the quarter.

Macquarie said the company was trading at a discount to one of its peers, GWRE, and its “medium-term revenue mix targets imply an acceleration in revenue vs Macquarie forecasts”.

Macquarie has a price target of $3.50 on Fineos shares compared to $2.15 currently.

 Ebos Group Ltd (ASX: EBO)

Ebos Group shares are down almost 50% over the past 12 months; however, the Macquarie team believes the company is well-placed for share price gains.

The company is also paying a dividend yield of 5.9% this year, with that figure expected to increase to 6.9% in 2028.

EBOS in April downgraded its FY26 underlying EBITDA guidance to $610 to $620 million, down from a previous range of $615 to $635 million, due to higher fuel and energy costs.

Macquarie said on the positive side of the ledger, a new First Pharmaceutical Wholesaler Agreement has been struck with the Federal Government, which will benefit EBOS’ Symbion division.

Macquarie has a price target of NZ$36.44 on the stock compared with NZ$20.66 at the time of writing.

The post 4 ASX shares Macquarie says could return more than 40% appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 5 ASX 200 shares downgraded by the experts this week
• 2 ASX tech shares I’d buy that aren’t Xero or WiseTech
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The S&P/ASX 200 Index (ASX: XJO) is charging higher on Friday as investors look ahead to next week’s Reserve Bank of Australia (RBA) interest rate decision.

At the time of writing, the benchmark index is up 1.93% to 8,800 points.

The market appears confident that the RBA will leave the cash rate unchanged at 4.35% on Tuesday after three increases since February.

But what happens after next week is less clear.

Some economists now believe the rate-hiking cycle is finished and the next move will be a cut. Westpac Banking Corp (ASX: WBC), however, is sticking with its forecast for another two increases.

So, could Australian borrowers really be heading towards lower interest rates?

Westpac still expects more rate hikes

Westpac Chief Economist Luci Ellis expects the RBA to keep rates unchanged next week before raising the cash rate again at its August and September meetings.

Ellis said inflation and labour market data had been mixed enough to support a pause. However, she believes higher fuel costs, stronger wages, and continued spending on data centres could keep inflation elevated.

Australia’s annual inflation rate eased from 4.6% in March to 4.2% in April. However, trimmed mean inflation edged higher from 3.3% to 3.4%, keeping it above the RBA’s target range.

Westpac still expects two more rate rises as the RBA tries to bring inflation back under control, despite signs that the economy is slowing.

Other economists see a rate cut coming

National Australia Bank Ltd (ASX: NAB) Chief Economist Sally Auld has dropped her previous forecast for another rate rise in August.

She now believes the next move will be a cut, although she is less certain about when it will happen.

NAB expects the cash rate to fall to 3.6% by the end of 2027 as slower economic growth and tighter financial conditions weigh on housing and credit demand.

HSBC Chief Economist Paul Bloxham has gone further, arguing that the hiking cycle is already over. He expects interest rate cuts to begin during the second half of next year.

The latest employment figures have added some weight to that view. Australia’s unemployment rate rose from 4.3% to 4.5% in April, while employment fell by 18,600.

What should investors expect next?

A rate cut still looks unlikely in the near-term while inflation remains above the RBA’s target range.

The central bank is expected to leave rates unchanged next week as it waits for more inflation, employment, and wage data.

But the big question is what happens after that, especially if inflation stays high while the economy continues to slow.

The post Could the RBA really cut interest rates next? appeared first on The Motley Fool Australia.

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HSBC Holdings is an advertising partner of Motley Fool Money. 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 recommended HSBC Holdings. 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.