Category: Stock Market

As global energy markets evaluate the fallout from a slew of macro-catalysts, the price of coal has (not so) quietly started to gain steam again.

After a huge spike to spot prices in March, prices eventually cooled off, testing the US$258-$260 per tonne mark to close out the month.

They have since bounced again, trading at US$281/tonne at the time of writing. That’s a 196% gain for the last 12 months.

Thermal coal prices are forecast to average US$193 per tonne in 2022, more than double last year’s average “as buyers scramble for supplies”, according to Bloomberg.

Meanwhile, metallurgical coal projections have been revised upwards to $65 billion. Metallurgical coal is expected to fetch $348 per tonne on average in 2022. According to projections, prices aren’t expected to cool to $151 until 2027.

ASX 200 coal shares are heating up

With numerous commodity baskets surging to record heights in 2022, it’s important to understand what’s spurring the upside.

“Commodity trade is shifting rapidly due to the [Russian-Ukrainian] war,” Bloomberg reported earlier this week.

“Russian commodities that would normally head to developed nations are now being eschewed by some users and may be diverted to China and India,” it added.

“China and India may then have less need for non-Russian cargoes and these could be diverted to developed nations.”

For Australian coal players, the scene is set for a period of record exports and cash flow to support this volume of product leaving the country.

“[Australian energy e]xports are expected to hit a record $425 billion in the year to June 30 2022 – revised up by 12% from the December estimate – before dropping to $381 billion in the following 12 months on account of falling prices amid waning demand growth and elevated global output,” according to Bloomberg analysis.

Already we’ve seen this kind of impact in Europe, after the EU proposed to ban the import of Russian commodities, coal included.

That’s no small feat. Russia is Europe’s top coal supplier, according to figures from the International Energy Agency. It also supplied around 18% of coal exports in 2020.

Hence, with coal supplies retreating and threats of a global coal shortage looming, the market is turning to Australia’s coal inventories in order to fill the gap.

With that, ASX 200 coal shares have spiked hard in 2022, leading the wider market in gains for the year.

Shares in Whitehaven Coal Ltd (ASX: WHC) have charged 66% higher this year to date and now trade at $4.38 each at the time of writing. That’s up 5.29% on the day so far.

Meanwhile, New Hope Corporation Ltd (ASX: NHC) has also climbed 65% so far in 2022. Its shares are more than 6% higher today.

The pair are joined by Yancoal Australia Ltd (ASX: YAL) which has posted a mammoth 82% gain this year to date. The company’s shares are now trading at $4.77 apiece after shooting up from $2.72 in early February.

With the nation set to realise a record year of revenues from its coal trade, it is sure to be an equally as interesting year for the players tied into the sector.

The post In a sea of red, these ASX 200 coal shares are floating above water. Here’s why appeared first on The Motley Fool Australia.

More reading

• Could these ASX shares be set to benefit from increasing Russian sanctions?
• ASX 200 commodities players were the major winners in March. Take a look
• These were the best performing ASX 200 shares during the first quarter
• What boosted the Whitehaven Coal (ASX:WHC) share price on Friday?
• Here’s a look at some ASX shares with ex-dividend dates coming up in April

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Despite its reputation as a poor performing ASX 200 share, AGL Energy Limited (ASX: AGL) shares have been on a bit of a tear lately. Investors were badly burned last year when the AGL share price fell by close to 50%. 2019 and 2020 weren’t much better for this energy generator and retailer either. AGL’s last all-time high of close to $28 is still painfully far from the company’s current share price of $8.27 at the time of writing today. 

But in saying that, AGL has actually been quite the rewarding investment of late. Its shares are now up more than 30% year to date. They are also up around 62% from the company’s last 52-week low of $5.10 that we saw back in November last year. 

So with these gains under the belt, many investors might be wondering whether AGL shares are still a buy now that we’re in April. Could AGL keep the 2022 momentum going this month and beyond?

Are AGL shares an April buy today?

Well, one ASX broker who reckons the company has a good shot is Morgans. As my Fool colleague James covered yesterday, broker Morgans has just upgraded AGL to an ‘add’ rating. That came with a 12-month share price target of $8.83. If that turned out to be the case, investors would be looking at a return of 6.9% on their AGL shares over the next year. That’s on top of any dividends investors may receive too. Morgans reportedly re-rated AGL to the upside in response to improving electricity prices. 

No doubt investors will be pleased with that assessment. But, as always, we’ll have to wait and see if it proves to be accurate. 

At the current AGL share price, this ASX 200 share has a market capitalisation of $5.54 billion, with a trailing dividend yield of 6.05%. 

The post Could April be a good month for the AGL share price? appeared first on The Motley Fool Australia.

More reading

• Why AGL, Alliance Aviation, Woodside, and Xero shares are charging higher
• These were the 5 best performing ASX hydrogen shares of the March quarter
• How did the AGL share price perform in March?
• Own AGL shares? Here’s why today is a momentous day
• Own AGL shares? Your dividend arrives today

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

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Is Newcrest Mining Ltd (ASX: NCM) a defensive ASX share? Well, you wouldn’t think so looking at today’s share price movements. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down a depressing 0.87% and back under 7,500 points in the ASX’s first major selloff in weeks. But the Newcrest share price is down a nasty 3.12% today to $26.40 a share at the time of writing.

But one day of underperformance isn’t a lot to go on.

Newcrest is an ASX 200 gold miner. On the one hand, a gold share can be considered inherently defensive for some for its connection to gold. Gold is still viewed by many investors as the ultimate ‘safe haven’ asset. It often experiences interest during times of economic or geopolitical hardship. We can even see this playing out in 2022. This year has brought some calamitous geopolitical events, none more so than the war in Ukraine.

Since the start of the year, the price of gold has risen from around US$1,832 an ounce to the US$1,922 we see today.

Since Newcrest mines and produces gold, and also owns vast reserves of gold ore, it arguably benefits from this reputation for defensiveness by extension. That is tempered by the fact that it, like all gold miners, is a leveraged play on the price of gold. Since it costs Newcrest a relatively fixed sum to extract and produce every ounce of gold it mines, Newcrest’s profitability exponentially increases if the price of gold rises. Conversely, it exponentially falls if gold prices decrease.

Can Newcrest shares be a defensive ASX investment?

But let’s see what an expert ASX investor is saying about Newcrest’s defensiveness. James Rutledge of investment manager Perpetual Limited (ASX: PPT) recently sat down for a podcast with Livewire Markets. In this interview, he shared his views on Newcrest shares. Here’s some of what he had to say:

Newcrest is a buy for us. So, typically when you see real rates move from negative to positive, gold would be a pretty challenging space to invest. But given the freezing of FX reserves from Russia, we think that’ll cause central banks to really revisit their gold holdings and that should support the gold price. Newcrest is also very cheap relative to gold majors. It benefits from a higher copper price with its byproduct. And the market’s concerned about production issues, but we think that’s more than reflected in the price.

However, his fellow podcast participant, WaveStone Capital’s Raaz Bhuyan, wasn’t as bullish. Here’s some of what Bhuyan said on Newcrest:

It’s actually a sell for us. I agree with James – the geopolitics has really taken the gold price up, despite the fact that real rates are going up. We think the moment we get some clarity around the Ukraine conflict, given where real rates have moved, the gold price is probably going to be under the pump a little bit.

So two conflicting views on Newcrest there. As with any gold miner, the fate of this company rides or dies with the price of gold itself. So if you’re keeping an eye on Newcrest for a defensive investment, make sure you consider all sides of the equation.

At the current Newcrest Mining share price, this ASX 200 gold miner has a market capitalisation of $23.56 billion.

The post Is Newcrest Mining considered a defensive ASX share? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Block and Zip sink, Paladin Energy raises $200m
• Hoping to pocket the ARB Corporation dividend? Read this
• The EML share price jumped 25% in March 2022. What happened?
• 5 things to watch on the ASX 200 on Wednesday
• What is the highest the ASX 200 has ever been?

Motley Fool contributor Sebastian Bowen owns Newcrest Mining Limited. 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 Bruce Jackson.

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The Zip Co Ltd (ASX: Z1P) share price is heading south today, nearing its 52-week low of $1.40.

This comes after the buy now, pay later (BNPL) provider announced the results of its recent Share Purchase Plan (SPP).

At the time of writing, Zip shares are swapping hands for $1.47, down 4.85%.

What were the results of Zip’s SPP?

In a statement to the ASX, Zip advised it has completed its SPP.

In total, the company raised around $23.98 million – a significant shortfall of the $50 million offered to retail investors.

It appears that concerns the Zip share price could fall further led eligible shareholders to watch from the sidelines.

And indeed, they were right.

The final issue price under the SPP is $1.48 per share.

However, the company’s shares fell to an intraday low of $1.46 today. This means you could have picked them up cheaper than the SPP.

For those who did participate under the placement, the allotment of the new shares is scheduled for this Friday. Normal trading of the new shares will commence on Monday 11 April.

Recently, the company successfully completed a $148.7 million institutional placement from a number of institutional, sophisticated and professional investors. The price listed under the placement was $1.90.

Zip previously noted that the proceeds of its capital raising efforts will go towards strengthening its balance sheet.

In addition, it is also looking to shore up funds to execute on the potential synergies from the upcoming transaction. This relates to the $491 million all-scrip acquisition of Sezzle Inc (ASX: SZL).

Zip share price summary

The Zip share price is down more than 85% since its 52-week high of $10.61 reached in April 2021.

The company’s share price has continued a downward trajectory, wiping off significant value on investor portfolios.

On valuation grounds, Zip has a market capitalisation of around $986.85 million, with approximately 669.05 million shares outstanding.

The post Zip shares sink on the release of its share purchase plan results appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Block and Zip sink, Paladin Energy raises $200m
• Why did the Zip share price get smashed in March?
• These are the 10 most shorted ASX shares
• These were the worst performing ASX 200 shares during the first quarter
• Zip share price backtracks ahead of share purchase plan closure

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. owns and has recommended ZIPCOLTD FPO. 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 Bruce Jackson.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and is tumbling lower. The benchmark index is currently down 0.75% to 7,472.3 points.

Here’s what is happening on the ASX 200 today:

Zip completes shares purchase plan

The Zip Co Ltd (ASX: Z1P) share price is trading lower today. This follows weakness in the tech sector and a subdued response to the buy now pay later provider’s share purchase plan. In respect to the latter, Zip raised an additional ~$24 million at $1.48 per new share. This is less than half the $50 million it was seeking from retail shareholders.

Tech shares slump

It isn’t just Zip that is tumbling today in the tech sector. A number of ASX 200 tech shares are under pressure and deep in the red. This includes Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO), which are dragging the S&P/ASX All Technology Index down by 2.5% at lunch. This follows a similarly sharp decline by the tech-focused Nasdaq index overnight amid fears that rate rises could slow economic growth.

Paladin Energy raises $200 million

The Paladin Energy Ltd (ASX: PDN) share price is falling on Wednesday. This morning the uranium producer announced the completion of a $200 million institutional placement. These funds were raised at an 8.9% discount of 72 cents per new share. Paladin intends to use the cash to support the restart of the globally significant Langer Heinrich Mine.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the PolyNovo Ltd (ASX: PNV) share price with a 5% gain. This follows the release of a third quarter update by the medical device company. Going the other way, the Magellan Financial Group Ltd (ASX: MFG) share price is the worst performer with a 6% decline on no news.

The post ASX 200 (ASX:XJO) midday update: Block and Zip sink, Paladin Energy raises $200m appeared first on The Motley Fool Australia.

More reading

• Hoping to pocket the ARB Corporation dividend? Read this
• Here’s why the Paladin Energy share price is sliding today
• The EML share price jumped 25% in March 2022. What happened?
• Why is the PolyNovo share price surging 13% higher today?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc., POLYNOVO FPO, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

There’s no denying that Amazon (NASDAQ: AMZN) has been one of the market’s more rewarding stocks in recent years. Up more than 20,000% since the end of the year 2000, the e-commerce giant has arguably been the market’s best large-cap performer for the timeframe in question. It would be easy to be excited about owning it now.

However, past performance is no guarantee of future results. While many investors have high hopes for Amazon stock over the next 10 years, there’s no assurance that the world is due a repeat performance. Serious competition is starting to take shape, and the company is closer to market saturation than it was a couple of decades ago.

Still, there are positive signs. While another quintuple-digit surge may not be in the cards, a triple-digit advance by 2032 is hardly out of the question.

It’s not the Amazon you know

While the company started as an online book company back in 1995, it didn’t take long for Amazon.com to become an “everything store,” selling pretty much anything anyone might want to buy when they want to buy it. Counting all of its third-party sellers’ inventories, BigCommerce says the company offers at least 350 million products at any given time. No wonder it’s seen as the first place many consumers visit to make an online purchase!

In light of its existing reach, there’s no reason to think it won’t continue growing. BigCommerce adds that nearly 200 million people shop with Amazon every month. Still, there are nearly 8 billion people on the planet, most of whom are not yet regular Amazon customers.

The problem is that the company’s consumer-facing online retailing business isn’t exactly what you’d call wildly profitable. Here’s another interesting fact: It doesn’t matter. The graphic below is telling, visually comparing Amazon’s operating income for its North American e-commerce arm, its international e-commerce unit, and its cloud computing division Amazon Web Services (AWS).

While at one time the company’s online shopping operation carried all the profit weight, since 2018 its cloud computing service’s bottom line has been just as important as its North American retailing business. Indeed, since 2019, AWS has been the biggest moneymaker by far, doing more for the bottom line than North America’s and its overseas e-commerce efforts combined.

As it turns out, the company’s customer acquisition and online shopping expansion is proving very expensive, with inflation only making matters worse. As was already noted, though, it just doesn’t matter. Amazon Web Services has become such a monster of a business that it can keep the rest of the company afloat while nascent CEO Andy Jassy works on reshaping the online shopping marketplace into something sustainable.

More of the same profit growth on the way

Yet, Amazon Web Services has only scratched the surface of its potential. Numbers from technology market research outfit Technavio puts things in perspective. Its outlook suggests the worldwide cloud computing industry will grow at an annualized pace of 17% through 2025, ending that period $287 billion bigger than when it started.

Notably, Technavio believes North America alone — where Amazon has concentrated its cloud computing efforts — will account for 40% of this growth for a business that’s already a major profit engine for the company.

And that’s still not all of Amazon’s noteworthy growth opportunities outside of conventional e-commerce. While the company has been mostly guarded about providing details of the young business, last year’s full-year report confirmed it generated $31.2 billion worth of advertising revenue, monetizing all the traffic its shopping site draws by helping third-party sellers and advertisers steer people to particular products.

While 2021 was a banner year in terms of growth, eMarketer is still calling for at least two more years of double-digit increases for the company’s ad business. For perspective, Alphabet‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google generated $43.3 billion worth of search-based advertising sales last year. Bear in mind that this is also high-margin revenue as Amazon is only monetizing a website and traffic it already had, tacking on incremental business.

Millionaire-maker alert

Bottom line? Yes, Amazon is still one of those stocks that could help your portfolio reach the million-dollar mark. But the same investing advice that applied before still applies now, of course. Namely, keep your portfolio diversified and keep your expectations in check.

It’s unlikely that Amazon shares will see massive gains again over the coming 10 years since the bulk of the 20,000% return it dished out since the year 2000 was rooted in the fact that Amazon’s growth was so unexpected. Investors see it coming now, but they didn’t then.

Nevertheless, Amazon certainly has the potential to double or even triple in value throughout the coming decade. The key is simply leaving it alone for that long and letting the stock do its thing.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool owns and recommends Alphabet (A shares), Amazon, and BigCommerce Holdings, Inc. The Motley Fool recommends Alphabet (C shares). The Motley Fool has a disclosure policy.

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

The post Could Amazon help you become a millionaire by 2032? appeared first on The Motley Fool Australia.

More reading

• Why Amazon stock rocketed off course today
• Will Amazon start paying a dividend?
• 3 differences between you and billionaires, and 1 thing you have in common
• 1 investing strategy to grow your money like magic
• Why Amazon stock was outperforming the market today

James Brumley owns Alphabet (A shares). John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Amazon, and BigCommerce Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The Australian Ethical Investment Limited (ASX: AEF) share price is down 3.56% amid news of a potential deal with Christian Super.

Australian Ethical is a fund manager that offers superannuation services.

Potential Australian Ethical merger with Christian Super?

Australian Ethical announced today that its superannuation subsidiary, Australian Ethical Superannuation, has signed an exclusive memorandum of understanding with Christian Super to explore a potential merger.

At this stage, the two parties have entered a non-binding period of due diligence and transition planning. If successfully concluded, Christian Super members will join Australian Ethical Super through a successor fund transfer in late 2022 or early 2023.

Australian Ethical expects to complete the due diligence process by the end of May 2022. The company plans to release more details once it is complete.

What’s attractive about a potential deal for Australian Ethical?

The fund manager said that both parties are confident the opportunity aligns with members’ best financial interests, offering “compelling” member benefits through increased scale, while also significantly amplifying their “combined impact as proven pioneers of ethical and responsible investing.”

If this merger goes ahead, it could see Australian Ethical manage more than $9 billion. That would be on behalf of 100,000 Australians across its range of superannuation, managed fund and exchange-traded fund (ETF) products.

According to Christian Super, it has 30,000 members and around $2 billion of funds under management (FUM).

Why is Christian Super considering this?

APRA recently imposed additional licence conditions on the trustee of Christian Super, Christian Super Pty Ltd. The conditions are to protect the best financial interests of the fund’s members.

They address concerns arising from APRA’s investigation into Christian Super’s investment oversight, governance and strategic decision making. The conditions also aim to “rectify[ing] Christian Super’s persistent investment underperformance, which culminated in the fund’s MySuper product failing the first annual performance test” in August 2021.

Under those terms, Christian Super is required to merge with a larger, better-performing fund by 31 July 2022.

Christian Super acknowledges that being part of a larger fund with more members and retirement savings is likely to deliver additional financial benefits to Christian Super members.

Why choose Australian Ethical? According to the Christian Super board, it seemed the most attractive when evaluating various factors.

Board commentary

Chair of Australian Ethical Steve Gibbs said:

We’re delighted to be exploring this opportunity with Christian Super. It is a meaningful endorsement of our purpose and investment philosophy, which remain unchanged and only strengthened by this opportunity.

Recent research shows that more Australians than ever expect their money to be invested responsibly and ethically. This comes as no surprise to us at Australian Ethical. We’ve seen extraordinary growth as Australians seek to invest in line with their values.

This opportunity not only accelerates the trajectory we are on through clear stakeholder benefits but also significantly enhances our influence as the leading ethical investment voice in Australia.

Australian Ethical share price snapshot

Since the start of the 2022 year, the Australian Ethical share price has dropped 48.8%.

The post Australian Ethical (ASX:AEF) share price in focus on possible Christian Super merger appeared first on The Motley Fool Australia.

More reading

• Are these 2 compelling ASX shares buys in April 2022?

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. owns and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and is tumbling lower. The benchmark index is currently down 0.75% to 7,472.3 points.

Here’s what is happening on the ASX 200 today:

Zip completes shares purchase plan

The Zip Co Ltd (ASX: Z1P) share price is trading lower today. This follows weakness in the tech sector and a subdued response to the buy now pay later provider’s share purchase plan. In respect to the latter, Zip raised an additional ~$24 million at $1.48 per new share. This is less than half the $50 million it was seeking from retail shareholders.

Tech shares slump

It isn’t just Zip that is tumbling today in the tech sector. A number of ASX 200 tech shares are under pressure and deep in the red. This includes Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO), which are dragging the S&P/ASX All Technology Index down by 2.5% at lunch. This follows a similarly sharp decline by the tech-focused Nasdaq index overnight amid fears that rate rises could slow economic growth.

Paladin Energy raises $200 million

The Paladin Energy Ltd (ASX: PDN) share price is falling on Wednesday. This morning the uranium producer announced the completion of a $200 million institutional placement. These funds were raised at an 8.9% discount of 72 cents per new share. Paladin intends to use the cash to support the restart of the globally significant Langer Heinrich Mine.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the PolyNovo Ltd (ASX: PNV) share price with a 5% gain. This follows the release of a third quarter update by the medical device company. Going the other way, the Magellan Financial Group Ltd (ASX: MFG) share price is the worst performer with a 6% decline on no news.

The post ASX 200 (ASX:XJO) midday update: Block and Zip sink, Paladin Energy raises $200m appeared first on The Motley Fool Australia.

More reading

• Hoping to pocket the ARB Corporation dividend? Read this
• Here’s why the Paladin Energy share price is sliding today
• The EML share price jumped 25% in March 2022. What happened?
• Why is the PolyNovo share price surging 13% higher today?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc., POLYNOVO FPO, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

There’s no denying that Amazon (NASDAQ: AMZN) has been one of the market’s more rewarding stocks in recent years. Up more than 20,000% since the end of the year 2000, the e-commerce giant has arguably been the market’s best large-cap performer for the timeframe in question. It would be easy to be excited about owning it now.

However, past performance is no guarantee of future results. While many investors have high hopes for Amazon stock over the next 10 years, there’s no assurance that the world is due a repeat performance. Serious competition is starting to take shape, and the company is closer to market saturation than it was a couple of decades ago.

Still, there are positive signs. While another quintuple-digit surge may not be in the cards, a triple-digit advance by 2032 is hardly out of the question.

It’s not the Amazon you know

While the company started as an online book company back in 1995, it didn’t take long for Amazon.com to become an “everything store,” selling pretty much anything anyone might want to buy when they want to buy it. Counting all of its third-party sellers’ inventories, BigCommerce says the company offers at least 350 million products at any given time. No wonder it’s seen as the first place many consumers visit to make an online purchase!

In light of its existing reach, there’s no reason to think it won’t continue growing. BigCommerce adds that nearly 200 million people shop with Amazon every month. Still, there are nearly 8 billion people on the planet, most of whom are not yet regular Amazon customers.

The problem is that the company’s consumer-facing online retailing business isn’t exactly what you’d call wildly profitable. Here’s another interesting fact: It doesn’t matter. The graphic below is telling, visually comparing Amazon’s operating income for its North American e-commerce arm, its international e-commerce unit, and its cloud computing division Amazon Web Services (AWS).

While at one time the company’s online shopping operation carried all the profit weight, since 2018 its cloud computing service’s bottom line has been just as important as its North American retailing business. Indeed, since 2019, AWS has been the biggest moneymaker by far, doing more for the bottom line than North America’s and its overseas e-commerce efforts combined.

As it turns out, the company’s customer acquisition and online shopping expansion is proving very expensive, with inflation only making matters worse. As was already noted, though, it just doesn’t matter. Amazon Web Services has become such a monster of a business that it can keep the rest of the company afloat while nascent CEO Andy Jassy works on reshaping the online shopping marketplace into something sustainable.

More of the same profit growth on the way

Yet, Amazon Web Services has only scratched the surface of its potential. Numbers from technology market research outfit Technavio puts things in perspective. Its outlook suggests the worldwide cloud computing industry will grow at an annualized pace of 17% through 2025, ending that period $287 billion bigger than when it started.

Notably, Technavio believes North America alone — where Amazon has concentrated its cloud computing efforts — will account for 40% of this growth for a business that’s already a major profit engine for the company.

And that’s still not all of Amazon’s noteworthy growth opportunities outside of conventional e-commerce. While the company has been mostly guarded about providing details of the young business, last year’s full-year report confirmed it generated $31.2 billion worth of advertising revenue, monetizing all the traffic its shopping site draws by helping third-party sellers and advertisers steer people to particular products.

While 2021 was a banner year in terms of growth, eMarketer is still calling for at least two more years of double-digit increases for the company’s ad business. For perspective, Alphabet‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google generated $43.3 billion worth of search-based advertising sales last year. Bear in mind that this is also high-margin revenue as Amazon is only monetizing a website and traffic it already had, tacking on incremental business.

Millionaire-maker alert

Bottom line? Yes, Amazon is still one of those stocks that could help your portfolio reach the million-dollar mark. But the same investing advice that applied before still applies now, of course. Namely, keep your portfolio diversified and keep your expectations in check.

It’s unlikely that Amazon shares will see massive gains again over the coming 10 years since the bulk of the 20,000% return it dished out since the year 2000 was rooted in the fact that Amazon’s growth was so unexpected. Investors see it coming now, but they didn’t then.

Nevertheless, Amazon certainly has the potential to double or even triple in value throughout the coming decade. The key is simply leaving it alone for that long and letting the stock do its thing.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool owns and recommends Alphabet (A shares), Amazon, and BigCommerce Holdings, Inc. The Motley Fool recommends Alphabet (C shares). The Motley Fool has a disclosure policy.

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

The post Could Amazon help you become a millionaire by 2032? appeared first on The Motley Fool Australia.

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James Brumley owns Alphabet (A shares). John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Amazon, and BigCommerce Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The Australian Ethical Investment Limited (ASX: AEF) share price is down 3.56% amid news of a potential deal with Christian Super.

Australian Ethical is a fund manager that offers superannuation services.

Potential Australian Ethical merger with Christian Super?

Australian Ethical announced today that its superannuation subsidiary, Australian Ethical Superannuation, has signed an exclusive memorandum of understanding with Christian Super to explore a potential merger.

At this stage, the two parties have entered a non-binding period of due diligence and transition planning. If successfully concluded, Christian Super members will join Australian Ethical Super through a successor fund transfer in late 2022 or early 2023.

Australian Ethical expects to complete the due diligence process by the end of May 2022. The company plans to release more details once it is complete.

What’s attractive about a potential deal for Australian Ethical?

The fund manager said that both parties are confident the opportunity aligns with members’ best financial interests, offering “compelling” member benefits through increased scale, while also significantly amplifying their “combined impact as proven pioneers of ethical and responsible investing.”

If this merger goes ahead, it could see Australian Ethical manage more than $9 billion. That would be on behalf of 100,000 Australians across its range of superannuation, managed fund and exchange-traded fund (ETF) products.

According to Christian Super, it has 30,000 members and around $2 billion of funds under management (FUM).

Why is Christian Super considering this?

APRA recently imposed additional licence conditions on the trustee of Christian Super, Christian Super Pty Ltd. The conditions are to protect the best financial interests of the fund’s members.

They address concerns arising from APRA’s investigation into Christian Super’s investment oversight, governance and strategic decision making. The conditions also aim to “rectify[ing] Christian Super’s persistent investment underperformance, which culminated in the fund’s MySuper product failing the first annual performance test” in August 2021.

Under those terms, Christian Super is required to merge with a larger, better-performing fund by 31 July 2022.

Christian Super acknowledges that being part of a larger fund with more members and retirement savings is likely to deliver additional financial benefits to Christian Super members.

Why choose Australian Ethical? According to the Christian Super board, it seemed the most attractive when evaluating various factors.

Board commentary

Chair of Australian Ethical Steve Gibbs said:

We’re delighted to be exploring this opportunity with Christian Super. It is a meaningful endorsement of our purpose and investment philosophy, which remain unchanged and only strengthened by this opportunity.

Recent research shows that more Australians than ever expect their money to be invested responsibly and ethically. This comes as no surprise to us at Australian Ethical. We’ve seen extraordinary growth as Australians seek to invest in line with their values.

This opportunity not only accelerates the trajectory we are on through clear stakeholder benefits but also significantly enhances our influence as the leading ethical investment voice in Australia.

Australian Ethical share price snapshot

Since the start of the 2022 year, the Australian Ethical share price has dropped 48.8%.

The post Australian Ethical (ASX:AEF) share price in focus on possible Christian Super merger appeared first on The Motley Fool Australia.

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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. owns and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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