Category: Stock Market

Calls for tighter Russian sanctions following alleged war crimes in Bucha could give some ASX shares a second boost.

Our market has already been outperforming since Russia invaded Ukraine. The conflict is driving up commodity prices and a new round of global sanctions could give commodities another leg up.

This puts resource-rich ASX shares in the driver’s seat even as inflation and economic growth risks weigh on the broader market.

ASX coal shares among the sanction winners

If you are wondering which shares on our bourse are best placed to outperform, Datt Capital’s managing director Emanuel Datt has picked five to watch in an article on Livewire.

Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC) are on Datt’s list.

Whitehaven sells thermal coal to Japanese and Korean customers, while New Hope produces thermal coal from its majority-owned Bengalla mine located in NSW.

ASX shares looking cheap in this climate

“Whitehaven trades at just over 1x expected [earnings before interest, tax, depreciation and amortisation] EBITDA at current thermal coal spot prices and is currently buying back 10% of its shares on market,” said Datt.

“New Hope trades at just over 1x expected EBITDA at current thermal coal spot prices and is due to pay an interim fully franked dividend of 30c a share (equating to over 12% yield grossed up).

“The company has one of the highest franking credit balances of any company on the ASX and we expect the board to release this embedded value to shareholders in a timely manner.”

Another ASX mining share in the commodities box seat

Another ASX share to watch is South32 Ltd (ASX: S32). The diversified miner is a significant producer of base metals, aluminium, and coking coal.

“S32 is highly capital disciplined and has been buying back its shares on-market since 2017 and this continues today,” Datt explained.

“These repurchases have been highly value-accretive to shareholders and the company trades at approximately 2x EBITDA at current spot prices.”

Two ASX shares shining bright

The BlueScope Steel Limited (ASX: BSL) share price also looks cheap in this environment. The steel producer is buying back around 10% of its shares on-market and trades at circa 2x EBITDA. That’s arguably too low given its strong fundamentals and positive outlook for steel prices and demand, added Datt.

The tailwinds behind the BlueScope share price should also benefit the Vulcan Steel Ltd (ASX: VSL) share price.

Recently listed on the ASX, Vulcan is a steel distribution business operating in the ANZ region.

Is this ASX share set to double in price?

“Vulcan is experiencing excellent tailwinds from these inflationary markets with reported EBITDA per tonne of steel sold doubling in HY22 relative to FY2022,” said Datt.

“The business has several attractive qualitative factors which make the present value quite compelling and we value the business around 50% higher than present market prices.”

The post Could these ASX shares be set to benefit from increasing Russian sanctions? appeared first on The Motley Fool Australia.

More reading

• ASX 200 commodities players were the major winners in March. Take a look
• 3 ASX shares to buy in the hottest sector right now: experts
• 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 Brendon Lau owns BlueScope Steel Limited and South32 Ltd. 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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If you’re looking for a few new additions to your portfolio in April, then look no further. Analysts at Morgans have picked out a number of ASX 200 shares that they class as their best ideas for the month ahead.

These are the shares they think offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

The first three we looked at can be found here. Whereas below are three more ASX 200 shares that the broker rates highly:

Santos Ltd (ASX: STO)

If you’re looking to gain exposure to booming energy prices, then Morgans believes Santos could be a good way to do it. Its analysts have an add rating and $9.00 price target on the company’s shares.

It explained: “We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development.”

Transurban Group (ASX: TCL)

Another ASX 200 share that Morgans likes is toll road operator Transurban. The broker expects the company’s dividends to rebound strongly as traffic volumes improve post-COVID. Morgans has an add rating and $14.29 price target on Transurban’s shares.

It commented: “TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. […] Watch for rapid recovery in DPS alongside traffic recovery and WestConnex acquisition prospects.”

Wesfarmers Ltd (ASX: WES)

Morgans is very positive on this conglomerate. It currently has an add rating and $58.50 price target on the company’s shares. It rates Wesfarmers highly due to the strength of its retail portfolio and its talented management team.

The broker commented: “WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. While COVID-related staff shortages are a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the recent pullback in the share price as a good entry point for longer term investors.”

The post Broker names 3 more of best ASX 200 shares to buy in April appeared first on The Motley Fool Australia.

More reading

• Coles share price falls amid reports Wesfarmers is selling down its stake: Time to buy?
• ASX 200 commodities players were the major winners in March. Take a look
• Why now is the time to sell Santos shares: fund manager
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 5 worst-performing ASX hydrogen shares of the March quarter

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 owns and has recommended Wesfarmers Limited. 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 Ethereum (CRYPTO: ETH) price rocketed up 25% in March.

That came as welcome news to crypto investors, who’d watched the world’s number 2 crypto by market cap tumble more than 36% from 1 January through to 24 February.

Down just over 2% in the past 24 hours to US$3,321 (AU$4,551), the Ethereum price has now fallen 12% year-to-date.

With a big month of gains behind us, we asked an expert panel what could send the token higher and what might drag it lower over the coming quarter.

We’ll start with the potential headwinds.

What headwinds could send the Ethereum price lower in Q2?

Josh Gilbert, crypto analyst at multi-asset investment platform eToro, told the Motley Fool:

The biggest expected headwind for the Ethereum price is the threat of the merge and consequential upgrades being delayed. Since the start of the ETH 2.0 rollout most of its announced upgrades have been pushed back. This isn’t unusual though, as there are always associated risks when it comes to high technological upgrades.

Gilbert also pointed to rising competition from rival altcoins, particularly in the non-fungible token (NFT) space as a potential headwind:

Ethereum has started to see NFT volumes impact its price, due to the number of transactions on the network. One of the world’s biggest NFT marketplaces, Opensea recently announced that it would integrate Solana-based NFTs into the marketplace. As a direct response to this, users could choose to transition to Solana if gas fees get out of hand on the Ethereum network.

Ian Lowe, CEO of crypto wealth platform Dacxi, also pointed to the coming merge, or protocol upgrade, as something crypto investors should watch closely:

The Ethereum price may become more volatile in the coming months, mainly because Ethereum is transitioning its technology to ‘Ethereum 2.0.’ using less energy-intensive Proof-of-Stake protocols. We will have to wait to see how the wider community responds to these upgrades.

Our third crypto expert, Daniel Sekers, managing director of crypto trading platform YourPortfolio, said the Ethereum price could come under pressure if investors lose confidence in its security.

Sekers told the Motley Fool:

I think the biggest impact you will see here right now will be driven by market sentiment. As recently as last week we saw reports of a US$600 million theft of Ethereum with hackers allegedly breaching gaming platform Ronin. This would be the second-biggest theft of assets using Ethereum that we are aware of.

Whilst this recent hack should reflect on the security of the platform from where the Ethereum was stolen, what we have seen in market reactions previously to these types of hacks is that investors lose some confidence in that particular currency.

Those are some headwinds for crypto investors to keep on their radar.

But what might push the Ethereum price higher?

What are the tailwinds that could send Ether higher in Q2?

Gilbert said, “The most significant tailwind for Ethereum in Q2 will be the scheduled rollout of ETH 2.0’s highly anticipated ‘merge’ upgrade. The merge represents Ethereum’s official switch from its Proof-of-Work model, to the Proof-of-Stake model.”

Should the merge go as planned, it will make Ethereum “more scalable, secure and sustainable by eliminating the need for energy-intensive mining,” he said.

Lowe said that the recent strong run indicates a “shift in momentum [that] should continue to drive the Ethereum price in the short to medium at least, with Ethereum breaking US$3,000 early on, after breaking through prior resistance at US$3,200”.

Sekers said that Ethereum’s coming shift from Proof-of-Work to Proof-of-Stake consensus is “one of the biggest developments that we will likely see in the near future”.

According to Sekers:

This is super important to the ongoing cost of transactions and will reduce the cost of transacting on the Ethereum blockchain. In addition, this will likely reduce the energy consumption underlying the Ethereum blockchain making it more popular with mainstream investors who are considering the ESG impacts of their investments.

The post The Ethereum price just ended a stellar month. Expert panel predicts what’s next appeared first on The Motley Fool Australia.

More reading

• The Ethereum price rocketed 25% higher in March. Here’s why
• Here’s what ESG investors should know about cryptos like Bitcoin
• Why Ethereum and Dogecoin are dropping today
• This cryptocurrency just exploded 30% higher, overnight
• Ethereum price outpaces Bitcoin as crypto investors eye ‘The Merge’

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Ethereum. The Motley Fool Australia owns and has recommended Ethereum. 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 ARB Corp Ltd (ASX: ARB) share price is shedding during morning trade, erasing the 0.97% gain made this week.

This comes despite the 4×4 accessories company not releasing any price-sensitive announcements to the ASX today.

At the time of writing, ARB shares are down 1.89% to $40.57 apiece.

ARB shares set to go ex-dividend

While the company has been quiet on the news front lately, investors are selling off ARB shares.

This is regardless of the company’s shares set to trade ex-dividend tomorrow.

In comparison, the All Ordinaries Index (ASX: XAO) is currently down by 0.89% to 7,763.1 points.

It appears the benchmark index is dragging down the ARB share price. It seems investors are jittery about the Reserve Bank of Australia signalling its intent to raise interest rates as soon as next month.

Nonetheless, investors need to buy ARB shares before market close today to be eligible for the interim dividend.

It’s worth noting though that, historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out. This is because investors tend to sell off the company’s shares after securing the dividend.

When can ARB shareholders expect payment?

For those who are eligible for the ARB dividend, shareholders will receive a dividend payment of 39 cents per share on 22 April. This represents a growth of 34.5% compared to the previous corresponding dividend of 29 cents per share.

It’s also worth noting that this is the biggest interim dividend the company has ever paid.

The interim dividend is fully franked which means shareholders can expect to receive tax credits from this.

In addition, investors can elect for the dividend reinvestment plan (DRP) which will add a portion of shares to their portfolio instead.

There is a 2% DRP discount rate and the last election date for shareholders to opt in is on 13 April.

The DRP will be calculated using the five-business day daily volume-weighted average price from Thursday 7 April to Wednesday 13 April.

The latest dividend represents a payout ratio of 46% compared with the 43% in the previous corresponding year.

ARB share price summary

Over the last 12 months, the ARB share price has lifted by 14% but is down almost 23% year to date.

The company’s shares reached a 52-week high of $55.00 in January, before treading 26% lower to today’s price.

ARB commands a market capitalisation of roughly $3.3 billion and has a trailing dividend yield of 1.67%.

The post Hoping to pocket the ARB Corporation dividend? Read this appeared first on The Motley Fool Australia.

More reading

• 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?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• High voltage! Origin (ASX:ORG) share price up 3% to new 52-week high

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 recommended ARB Corporation Limited. 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 Paladin Energy Ltd (ASX: PDN) share price is falling today amid the company undertaking a share purchase plan.

The uranium miner’s shares are currently swapping hands at 76.5 cents, a 4.38% fall on yesterday’s closing price. In comparison, the S&P/ASX 200 Index (ASX: XJO) is down 1.16% at the time of writing.

Let’s take a look at what is happening at Paladin Energy.

What did Paladin Energy announce?

Paladin opened a share purchase plan (SPP) for eligible Paladin shareholders. New shares under the SPP are being offered 72 cents per share, an 8.9% discount on the last closing price before the plan was announced of 79 cents.

Funds from the equity raise will be used to restart work at the Langer Heinrich uranium mine in Namibia.

The company is hoping to raise $15 million from the share purchase plan. A fully underwritten institutional placement was also undertaken to garner another $200 million.

Following the capital raise, Paladin hopes to have pro forma cash of $259 million with no corporate debt.

Paladin said the equity raise will de-risk restarting operations at the mine and will also position the company well for more uranium marketing initiatives.

The share purchase plan closes at 5pm Perth time on 26 April.

Paladin also recently received a uranium sales tender award to supply uranium concentrates to a subsidiary of US-based Duke Energy Corporation. The deal, subject to conditions, involves the supply of up to 2.1 million pounds of triuranium octoxide over six years from 2024.

Paladin Energy share price snapshot

The Paladin Energy share price has soared 76% in the past year, although it has lost 13% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned 8% over the past year.

In the past week, Paladin shares have slid more than 4% but still remain up 3% over the past month.

Paladin has a market capitalisation of about $2 billion based on the current share price.

The post Here’s why the Paladin Energy share price is sliding today appeared first on The Motley Fool Australia.

More reading

• Why is the Paladin Energy (ASX:PDN) share price frozen today?
• These 3 ASX 200 shares are topping the volume charts on Tuesday
• Why Nickel Mines, Paladin Energy, Tassal, and Westgold shares are dropping
• These 3 ASX 200 shares are topping the volume charts this Friday
• Why has the uranium rally got this ASX share blasting 22% higher in 2 days?

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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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.

What happened

The price of the meme-inspired cryptocurrency Dogecoin (CRYPTO: DOGE) traded more than 9% higher over the last 24 hours as of 11:04 a.m. ET on Tuesday, after news came out showing that Tesla founder and Dogecoin bull Elon Musk has taken a big stake in Twitter.

So what

Yesterday, filings from the Securities and Exchange Commission (SEC) disclosed that Musk had taken a 9.2% stake in Twitter. Today, filings showed that Musk would join Twitter’s board of directors. 

Musk has been a longtime supporter of Dogecoin and is one of the main influencers who really brought the token to popularity at the beginning of 2021. He would often tweet about how he liked Dogecoin and thought it had potential, so perhaps the market sees some kind of correlation. 

Yesterday, transactions of at least $100,000 into Dogecoin jumped 110%, according to crypto analytics website IntoTheBlock.

Yashu Gola, a financial analyst for the website CoinTelegraph, wrote earlier today that Musk could potentially accelerate crypto initiatives on Twitter and perhaps lead to some kind of integration of Dogecoin on the platform. Gola also wrote that based on chart trends, a 150% rally for Dogecoin is a possibility.

Now what

I don’t personally view Dogecoin as a worthy investment, and it’s still unclear if Musk can really drive crypto initiatives at Twitter. But considering that he has been one of the main reasons behind the token’s rise to popularity, I can see why the market views this as good news for Dogecoin. 

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

The post Why the price of Dogecoin is rising today appeared first on The Motley Fool Australia.

More reading

• Why Ethereum and Dogecoin are dropping today
• Why Dogecoin was rising on Saturday
• Why Ethereum, Solana, and Dogecoin are surging higher today
• What’s driving Ethereum, Dogecoin, and THORChain higher today?
• Shiba Inu vs. Dogecoin: Which pupcoin’s more bite than bark? 

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla and Twitter. 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. 

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

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The Coles Group Ltd (ASX: COL) share price is trading lower on Wednesday morning.

At the time of writing, the supermarket operator’s shares are down 1% to $17.90.

Why is the Coles share price falling?

The weakness in the Coles share price on Wednesday is likely to have been driven by news that major shareholder and former parent, Wesfarmers Ltd (ASX: WES), has been selling down its stake in the supermarket giant.

According to a report in the AFR, the conglomerate has sold a $500 million stake in Coles for a small discount to its last close price.

After the market close on Tuesday, Wesfarmers reportedly sold 28.2 million shares via a block trade at $17.75 per share. This represents a 1.8% discount to the Coles share price at yesterday’s close.

While neither company has confirmed the transaction, a big trade was made on Tuesday, which appears to back up the report.

For example, a total of 31,042,457 Coles shares were traded during Tuesday’s session. This compares to 1,789,401 shares on Monday and 2,571,330 shares a week earlier.

Should you buy Coles shares?

While Wesfarmers may be selling shares, one leading broker that believes investors should be buying them is Morgans.

Its analysts currently have an add rating and $19.70 price target on the company’s shares. Based on the current Coles share price, this implies potential upside of 10% for investors over the next 12 months.

Morgans is also expecting fully franked yields of 3.4% in FY 2022 and 3.5% in FY 2023. If we add this into the equation, the total return stretches to over 13%.

It commented: “Trading on 22.9x FY22F PE and 3.5% yield we continue to see COL as offering good value with the company possessing defensive characteristics and a strong balance sheet (1H22 net cash $54m) allowing ongoing investment for growth.”

The post Coles share price falls amid reports Wesfarmers is selling down its stake: Time to buy? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the 5 worst-performing ASX hydrogen shares of the March quarter
• These are 2 of the most diversified ASX 200 shares
• Wesfarmers share price in the green amid overhaul news
• Humans don’t change: Expert names 2 ASX shares that exploit our urges

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 owns and has recommended COLESGROUP DEF SET and Wesfarmers Limited. 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 Core Lithium Ltd (ASX: CXO) share price is having a tough start to the day.

In morning trade, the lithium developer’s shares are down 7% to $1.37.

Why is the Core Lithium share price sinking?

The Core Lithium share price is falling on Wednesday amid weakness in the lithium sector following a poor night of trade on Wall Street.

For example, it isn’t just Core Lithum that is sliding today. The likes of Liontown Resources Limited (ASX: LTR), Pilbara Minerals Ltd (ASX: PLS), and Sayona Mining Ltd (ASX: SYA) shares are all under significant pressure as well.

What else?

While a good number of lithium miners are falling today, the Core Lithium share price is falling more than most.

This is likely to be due to traders taking a bit of profit off the table today following some very strong gains in 2022.

Thanks to a range of positive announcements, such as its agreement with electric vehicle giant Tesla, Core Lithium’s shares have been well and truly smashing the market this year.

In fact, even though the company’s shares are now trading 18% below their recent high, they are still up a staggering 117% since the start of the year and approximately 500% over the last 12 months.

The post Why is the Core Lithium share price sinking 7% today? appeared first on The Motley Fool Australia.

More reading

• These are the best ASX lithium stocks so far in 2022
• 5 ASX mining shares rocking all-time highs on Friday
• Why BHP, Core Lithium, Tabcorp, and Talga shares are racing higher
• Why is the Core Lithium (ASX:CXO) share price up 6% to a record high?
• 5 ASX lithium and green metals shares hitting new 52-week highs today

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 Bruce Jackson.

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The EML Payments Ltd (ASX: EML) share price increased by around 25% in March 2022.

Over the same period, the S&P/ASX 200 Index (ASX: XJO) rose by 6.4%. That means EML shares beat the ASX 200 by close to 20% in just one month.

However, the gains have just reversed most of the decline seen by the business since the start of the year.

In 2022, the EML share price is now down around 9%.

What have investors been concentrating on recently with the EML share price?

Every buyer and seller has different reasons for transacting at different prices.

At the end of March, brokers at Macquarie called EML a buy, with a price target of $3.95. This was an increase from the previous target of $3.80.

Rising interest rates are expected to benefit EML.

EML had $2.7 billion as stored float on 31 December 2021. Around $2.3 billion of this was held in cash and a further $400 million was in high-rated, low-risk bonds.

Based on the current banking arrangements, if rates across all jurisdictions were to rise by 1%, this would add between $14 million to $15 million to EML’s earnings before interest, tax, depreciation, and amortisation (EBITDA).

By FY24, EML could be generating $45 million of interest revenue, according to Macquarie.

In the middle of March 2022, UBS reiterated that it thinks the EML share price is a buy, with a price target of $4.55. This came after the news that EML was entering the European employee benefits market with Up Spain.

Up Spain partnership

On 16 March 2022, EML announced that it would be working with Up Spain, covering meal vouchers and employee benefit solutions, “initially” through a multi-year agreement with Up Spain.

EML said that the employee benefits market is worth more than A$88 billion globally and is expected to grow by A$20 billion between 2021 to 2025. Europe represents 35% of this market, worth more than A$30 billion per year.

Up Spain is one of the three largest providers in Spain, with over one million users across approximately 4,700 corporate clients and a network of more than 30,000 restaurants in Spain.

EML says this deal can showcase its technology and the company can use it as the basis for potential future growth in the segment within Spain and, over time, in other countries.

The ASX payments share also pointed out that Up Spain is a subsidiary of the Up Group, which offers employee benefits and incentive programs in 28 countries including Portugal, France, Germany, Belgium, Italy, Turkey, and Poland.

This program is expected to go live in the first quarter of FY23.

While EML indicated this announcement was market sensitive for the EML share price, it also said that it didn’t expect the program with Up Spain to make a material contribution to EML’s revenue or EBITDA in FY23.

However, management did say that the win validates EML’s strategy of focusing on this segment and it provides an opportunity for material future growth.

The post The EML share price jumped 25% in March 2022. What happened? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• What is the highest the ASX 200 has ever been?
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• High voltage! Origin (ASX:ORG) share price up 3% to new 52-week high
• Here’s why ASX 200 shares still have ‘a pretty good growth outlook’

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 EML Payments. The Motley Fool Australia owns and has recommended EML Payments. 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 Bruce Jackson.

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After tumbling 39% in February, the Boral Limited (ASX: BLD) share price continued to suffer through March.

Weighing it down last month was a taxation-related announcement and a guidance downgrade.

As of the end of March, the Boral share price was $3.46, 4.68% lower than it was at the end of February.

For context, the S&P/ASX 200 Index(ASX: XJO) gained 6.39% last month, indicating the Boral share price underperformed the index by 11%.

So, what impacted the building products and construction materials company’s stock in March? Let’s take a look.

Why did Boral’s stock struggle in March?

The Boral share price struggled last month, dragged lower by two price-sensitive announcements.

The first related to the company’s $3 billion capital return, announced in February.

The capital return saw investors receiving an unfranked 7-cent dividend and a $2.65 per share capital reduction. Hence, the stock tumbled 40% on its ex-dividend and ex-capital return date in February.

It didn’t stop there, though. After the market closed on 2 March, Boral released an anticipated update on the taxation of shareholders’ payouts.

The company said the Australian Taxation Office had published a class ruling concerning the capital return, as was expected.

The ruling confirmed no part of the capital return would be assessable as a dividend for tax purposes.

Shareholders were encouraged to seek professional advice on the tax implications of the payout.  

The Boral share price dipped 0.28% following the announcement. However, the worst was yet to come.

Boral’s stock tumbled when the company downgraded its earnings guidance on 22 March.

Devastating floods in parts of Queensland and New South Wales and rising fuel and coal prices dinted the company’s outlook for the financial year 2022.

It now expects its earnings before interest and tax (EBIT), excluding property, to be between $145 million and $155 million.

For context, Boral reported $78 million of EBIT excluding property for the first half of the financial year. It previously expected the second half to bring stronger earnings.

The floods are expected to dint its earnings by around $23 million.

Meanwhile, Boral’s exposure to coal prices is unhedged this half, while hedging is in place on its expected diesel usage until April.

Higher fuel prices have also worsened the company’s supply chain issues.

The Boral share price slipped 3.48% on the release of its guidance downgrade, hitting a new 52-week low of $3.21.

Boral share price snapshot

As of the end of March, the Boral share price was 44% lower than it was at the start of 2022.

Right now, it’s 39% lower than it was this time last year.

The post Why did the Boral share price have such a lousy month in March? appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares during the first quarter
• Why did the Boral (ASX:BLD) share price have such a positive day?
• Worried about how the federal budget might impact your ASX shares? Here’s what Goldman says
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Motley Fool contributor Brooke Cooper 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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