Category: Stock Market

The Treasury Wine Estates Ltd (ASX: TWE) share price has made significant ground this month.

The company’s shares have surged nearly 10% from market close on 14 February. The Treasury Wine share price is currently trading at $11.69, up 1.3% on Friday’s close.

Let’s take a look at what is happening at Treasury Wine.

Treasury Wine share price surges ahead

The Treasury Wine share price has turned its fortunes around in the past month after a tough start to the year. The wine giant’s share price fell nearly 15% between market close on 31 December 2021 and 15 February 2022 before picking up again.

On 16 February, Treasury Wine shares surged nearly 12% on the back of the company’s financial results. Despite a 7.5% drop in net profit and a 6.7% fall in EBITS, the company expressed optimism on its future outlook.

Commenting on this future agenda, chief executive officer Tim Ford said:

We have great confidence that by leveraging the unique strengths of our business – our people, our brands and our asset base – we are well placed to capitalise on the significant opportunities across the global markets in which we operate.

Treasury Wines shares dropped 2.74% on March 2. This was ex-dividend day for the company, as my Foolish colleague Aaron reported. The board maintained a fully-franked interim dividend of 15 cents per share. This will be paid on 1 April.

Morgans recently recommended Treasury Wine as an “add” with a $13.93 price target. That’s 19% more than the current share price.

The broker said:

The foundations are now in place for TWE to deliver strong double digit growth from the 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Share price snapshot

The Treasury Wine Estates share price has leapt nearly 5% in the past year, although it is down nearly 6% year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned around 5.5% in the past year.

Treasury Wine has a market capitalisation of about $8.4 billion based on its current share price.

The post Why has the Treasury Wine (ASX:TWE) share price surged 10% in a month? appeared first on The Motley Fool Australia.

More reading

• Broker names 3 of the best ASX 200 shares to buy in March
• Here’s why the Treasury Wine (ASX:TWE) share price is sliding today
• Cheers! Broker tips 20% upside for the Treasury Wine (ASX:TWE) share price
• Why Treasury (ASX:TWE) shares could be a hidden dividend trove
• 3 of the best results on the ASX 200 last week

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

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The Virtus Health Ltd (ASX: VRT) share price is soaring more than 7% higher on Monday after the release of a company announcement.

Shares in the reproductive health company and day surgery provider had been on ice since Friday pending an announcement on an acquisition offer from CapVest Partners LLP.

As a result of the share price increase today, Virtus also thrust past its 52-week trading high during the session.

Why is the Virtus health share price charging higher?

The company advised it has signed a transaction implementation deed with an entity controlled by CapVest Partners.

Under the deed, CapVest will acquire 100% of Virtus shares by a scheme of arrangement. The offer values Virtus at $8.25 cash per share, less the value of any dividends or distributions declared or paid after today.

At the time of writing, Virtus shares are trading at $8.25 apiece. They had closed the day flat at $7.70 on Thursday last week prior to being frozen on Friday.

As part of the deed, CapVest will make a simultaneous off-market takeover offer “conditional on the Scheme failing and a 50.1% minimum acceptance condition, offering total value of $8.10 per share less the Permitted Distributions”.

According to Virtus’ announcement, the company’s board unanimously recommends the offer, in the absence of a superior proposal and subject to expert review to gauge if it’s in the best interest of shareholders.

The board said it may also elect to pay a fully franked special dividend to 44 cents per share in total dividends before the implementation date.

What now?

Virtus noted that the details laid out within the transaction deed are fully funded and binding.

The deal is subject to “limited conditions, and is not subject to any conditions within the control or discretion of CapVest”, the company said.

With respect to the special dividend, there may be tax implications and the amount payable is related to the takeover offer, Virtus said.

“Eligible shareholders may receive the benefit from these franking credits, subject to their marginal tax rate,” the company remarked.

“The amount payable by CapVest under the Scheme or Takeover Offer will be reduced respectively by the amount of any such special dividend.”

In the last 12 months of trading, the Virtus Health share price has soared 37% and now is up 21% for the year to date, well ahead of the S&P/ASX 200 Index (ASX: XJO)’s return of around 4% in 2022.

The post Virtus Health (ASX:VRT) hits 52-week high, accetps CapVest bid appeared first on The Motley Fool Australia.

More reading

• Why CSL, Dicker Data, Elders, and Virtus Health shares are charging higher
• Why is the Virtus Health (ASX:VRT) share price frozen today?
• Why are investors selling the Virtus Health (ASX:VRT) share price post-earnings today?

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 recommended Virtus Health 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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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.

Warren Buffett is well known as one of the world’s all-time great investors. He made his fortune as a value-focused investor — someone who looks to buy stocks when they’re cheap and profit as they recover. As the recent market downtrend reminds us, that’s often easier said than done, as falling stocks tend to make it feel like your money is evaporating with every down day.

Still, if Buffett’s success shows us anything, it’s that a strong company that survives a down market can often come out the other side in a much better spot to deliver solid long-term returns for its shareholders.

With that in mind, we asked three successful investors to pick strong Warren Buffett stocks that are worth considering in today’s volatile market. They picked Coca-Cola (NYSE: KO), Visa (NYSE: V), and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). Read on to find out why and decide for yourself whether those companies deserve a spot in your portfolio.

Volatility goes better with Coke

Barbara Eisner Bayer — Coca-Cola (NYSE: KO): If anyone knows how to make money in all markets, including volatile ones, it’s Buffett, the famous nonagenarian who has an approximate net worth of $114 billion. And one of the Oracle of Omaha’s favorite stocks is his oldest stock position, which he started purchasing 34 years ago — The Coca-Cola Company.

Buffett is so in love with the company that he’s known to consume five cans of Coke each day. He even joked to Fortune magazine back in 2015 that his body is made up of “one-quarter Coca-Cola”. It’s no surprise, then, that Berkshire Hathaway owns about $22 billion worth of its shares, or 10% of the company.

It’s great that Buffett is so fond of Coke, but that in and of itself doesn’t make it a great buy for a volatile market. So let’s look at what does.

First, Coca-Cola’s products are consumed worldwide and embrace more than its fizzy namesake drink. Its portfolio of beverages has expanded to include changing and healthier tastes, and according to the company, includes “200 brands and thousands of beverages around the world from soft drinks and waters, to coffee and tea.” You’ve probably heard of many of them: Dasani, Fairlife, Fanta, Fuze Tea, Schweppes, Powerade, Smart Water, and Minute Maid. Because these drinks are worldwide staples, people aren’t going to stop drinking them when the stock market goes on a wild ride.

The company has survived extreme volatility in the past. Back in October 2018, during an extremely turbulent period, Coca-Cola was up 2% while the S&P 500 was down 9%. This happened because the company was, and continues to be, a huge, stable conglomerate with a solid dividend and continuing growth prospects.

While the company struggled during the coronavirus pandemic, it has finally returned to growth. During its recent fourth-quarter 2021 earnings report, Coca-Cola said net revenue had grown 10% year over year and earnings per share (EPS) were up 65% per share. And management sees brighter days ahead: 2022 revenue growth of 7.5% and EPS growth of 9% are numbers investors can get excited about for such a stable company.

But the cherry on top of these reasons why Coca-Cola is a great Buffett stock to own during volatile times is its dividend, which currently offers investors a 3% dividend yield. Coca-Cola is also a Dividend Aristocrat and has been raising its payout for 59 years in a row. If stocks start plummeting, investors will still be earning income from the dividend, which is vital when all you’re seeing is red every day in your portfolio.

If Buffett put down his bottle of Coke and spoke directly to you, he might just say that Coca-Cola — with its stable business, continuing growth prospects, and mighty fine dividend — may be the perfect stock to survive and even thrive through volatile times.

The power of plastic

Eric Volkman –Visa (NYSE: V): One of Buffett’s favorite sectors — if not the favorite — is finance. Witness Berkshire’s immense stakes in banks Wells Fargo and Bank of America, for example.

Among this crowd, one company that should continue to thrive no matter how wild global volatility becomes is one of Berkshire’s many finance industry holdings, Visa. The payment card processor has a brand that is ubiquitous throughout the world and a business model that continually produces oversize profits.

To understand why, we first have to make the distinction between open-loop card processors and their closed-loop peers. Visa and Mastercard fall into the former category, which essentially means they are payment network operators only, and not card issuers (i.e., the entities such as banks that actually extend the credit on a credit card, or draw funds from an existing account in the case of a debit card).

This contrasts with closed-loop card companies, most prominently American Express (a longtime Buffett favorite, by the way). These entities act as both the issuer and the network operator.

There are pluses and minuses to both business models, but I tend to favor the open-loopers. By sticking to facilitating transactions only, a company like Visa is basically a huge middle man, collecting a small piece of every purchase effected through its network. It assumes no credit risk while doing so; that’s for the issuer to worry about.

Like any effective middle man, Visa’s profitability is sustainably and consistently high (lately it’s boasted 50%-plus net margins).

And as the world keeps moving away from cash into plastic and digital means of payment, the company’s growth engine keeps humming. The card giant’s first quarter was typical of its recent performance — net revenue surged 24% higher year over year, to $7.1 billion, while non-GAAP (adjusted) net income enjoyed a 25% rocket ride to $3.9 billion.

No matter how jittery the world economy gets, people are always going to need to buy things. One of the most popular instruments in doing so, in this increasingly cashless environment we shop in, is a Visa card. This company is going to continue to thrive; you can bet on that.

Why not buy Buffett’s business?

Chuck Saletta — Berkshire Hathaway (NYSE: BRK.A): Imagine a company that was built from the ground up to be exactly the fortress-like investment that Warren Buffett likes to own. Now imagine that with one purchase, you can not only buy shares in a company like that but also hire Buffett and his hand-picked successors to manage it for you.

Believe it or not, you can do just that, with an investment in Berkshire Hathaway stock. Berkshire Hathaway is the insurance and investment conglomerate that Buffett runs. Between the strong insurance businesses, the wholly-owned subsidiaries, and the substantial stakes in solid public companies, it is built like a fortress to withstand tough times.

In addition to the great collection of businesses and world-class investment management team at the helm, you can buy your shares at a reasonable price. Berkshire Hathaway stock recently traded hands at less than nine times trailing earnings and only around 1 1/2 times its accounting book value. That means Buffett’s company can be purchased at a reasonable price, making it the sort of thing Buffett himself would be interested in owning.

Of course, even with a great business run by one of the greatest investors of all time, there are risks. In particular, Berkshire Hathaway trades at what looks like a cheap valuation in part because of something known as the conglomerate discount. In essence, large and diversified companies are viewed as less focused and nimble than smaller ones. As a result, the market doesn’t often put a rich valuation on companies structured like Berkshire Hathaway.

Still, that’s a small price to pay for a chance to own an incredibly strong company at a reasonable valuation in incredibly volatile times.

Great companies in troubled times

Regardless of whether Coca-Cola, Visa, or Berkshire Hathaway ever make their way into your portfolio, they are all certainly strong businesses that are built to survive a tough market and emerge stronger on the other side. That makes them worth considering as investments to help you navigate these volatile times. And with a stamp of approval from no less an investor than Warren Buffett, they certainly deserve every bit of that consideration.

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

The post 3 strong Warren Buffett stocks for a volatile market appeared first on The Motley Fool Australia.

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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Barbara Eisner Bayer owns Berkshire Hathaway (B shares). Chuck Saletta owns Wells Fargo and has the following options: long January 2024 $50 calls on Wells Fargo, short January 2024 $50 puts on Wells Fargo, short September 2022 $45 puts on Wells Fargo, and short September 2022 $55 calls on Wells Fargo. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Berkshire Hathaway (B shares), Mastercard, and Visa. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. The Motley Fool Australia has recommended Berkshire Hathaway (B shares) and Mastercard. 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 Global Lithium Resources Ltd (ASX: GL1) share price has come out of a trading halt on Monday. This comes after the emerging lithium company announced an update on its recent capital raise.

During early morning, Global Lithium shares reached an intraday and near record high of $1.825. This is slightly under the all-time high of $1.84 achieved on 20 January.

At the time of writing, Global Lithium shares have since retraced to $1.71, up 7.21%.

Global Lithium completes placement

Investors are buying up Global Lithium shares as the company seeks to progress its activities at Marble Bar and Manna Lithium Project.

According to its release, Global Lithium announced it has received firm commitments for a $29.9 million capital raising.

The company highlighted that it had strong support from global institutions as well as the introduction of cornerstone shareholder, Mineral Resources Limited (ASX: MIN). The latter is committing to invest $13.6 million for a 5% interest in Global Lithium after the capital raising is completed.

The placement will see approximately 22.18 million new ordinary shares issued at a price of $1.35 apiece. This represents a 10.8% discount to the 15-day volume-weighted average price (VWAP) before going into a trading halt.

The company will primarily use the proceeds to underpin the acceleration of its exploration programs and associated study work. This relates to the company’s Marble Bar Lithium Project (MBLP) in the Pilbara and the Manna Lithium Project (Manna) located 100 kilometres east of the Goldfields.

Global Lithium non-executive chair, Warrick Hazeldine commented:

As Global Lithium continues to advance our growth strategy with a significant West Australian lithium portfolio in Tier-1 locations, we are delighted to welcome Mineral Resources as a cornerstone investor in this capital raising. Alongside Suzhou TA&A, who continues to maintain their 9.9% stake, the Board is very excited about the depth of knowledge and lithium industry experience within the Company and through its key stakeholders.

We look forward to developing a long-term working relationship with Mineral Resources given the company’s unrivalled track record in successfully bringing operations into production quickly, processing of hard rock lithium ores and downstream processing.

Global Lithium share price summary

Adding to today’s gains, Global Lithium shares have pushed 750% higher in the past 12 months. However, when looking at year-to-date, the company’s shares are hovering around upwards of 80%.

Based on valuation grounds, Global Lithium presides a market capitalisation of around $232.77 million, with 136.12 million shares outstanding.

The post Why is the Global Lithium (ASX:GL1) share price powering ahead by 7% today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Global Lithium (ASX:GL1) share price is soaring 18% today
• Are high lithium prices here to stay? Industry insiders say yes
• Global Lithium (ASX:GL1) share price rockets 18% on ‘huge achievement’

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

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The S&P/ASX 200 Index (ASX: XJO) has started the week strongly. In afternoon trade, the benchmark index is up 1.2% to 7,147.8 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Nickel Mines Ltd (ASX: NIC)

The Nickel Mines share price is down 2% to $1.17. This morning Macquarie downgraded the nickel producer’s shares to a neutral rating and cut its price target down from $1.70 to $1.30. Its analysts expect higher coal prices to offset any benefits from rising nickel prices.

Paladin Energy Ltd (ASX: PDN)

The Paladin Energy share price is down 6% to 81.5 cents. This morning the uranium miner agreed to sell its historical mining information for the Agadez Project in Niger to Kopore Metals Limited (ASX: KMT). Outside this, sentiment has been low for uranium since Russia’s invasion of Ukraine.

Tassal Group Limited (ASX: TGR)

The Tassal share price is down almost 2% to $3.41. The catalyst for this decline has been the seafood company’s shares trading ex-dividend this morning for its interim dividend. Eligible shareholders can look forward to receiving Tassal’s 8 cents per share dividend later this month on 30 March.

Westgold Resources Ltd (ASX: WGX)

The Westgold share price has tumbled 13% to $2.12. Investors have been selling down this gold miner’s shares today following the successful completion of its $100 million institutional placement. Westgold raised the funds at a 13.9% discount of $2.44 per new share. These funds will be used to accelerate the company’s Murchison and Bryah growth strategy. Management advised that this strategy is focused on establishing a systematic pathway towards a +400,000 ounce per annum gold production rate from FY 2024.

The post Why Nickel Mines, Paladin Energy, Tassal, and Westgold shares are dropping appeared first on The Motley Fool Australia.

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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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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.

It’s a common myth that the people who do well in the stock market are investing geniuses with a knack for choosing the right companies. Sure, having that talent could yield great results for your portfolio. But if it’s not a skill you possess, fear not.

There’s another investment option you can fall back on that could be your ticket to growing serious long-term wealth. And if you’re not convinced, consider this: It’s such a viable investment that even billionaire Warren Buffett is a fan.

Invest in the broad market

Warren Buffett has famously said that for everyday investors, putting money into an S&P 500 index fund is a solid bet. Now to be clear, it’s not that Buffett himself needs to rely on index funds. Clearly, the man knows a thing or two about picking stocks, as evidenced by the billions of dollars he’s managed to accrue in his lifetime. And so for him, choosing individual companies makes more sense.

Rather, Buffett feels that S&P 500 index funds are a great choice for people who may not know that much about vetting stocks, or who don’t want to take on the risk of putting their money into the wrong companies. And that’s why it pays to consider loading up on them.

If you’re not familiar with index funds, they’re passively managed funds whose goal is to match the performance of the benchmarks they’re tied to. If you buy shares of an S&P 500 index fund, you’ll effectively own a piece of 500 different companies.

That’s a good thing, because it lends to diversification in your portfolio. And a diverse portfolio can help you minimize losses during periods of market turbulence and grow long-term wealth.

Just how much wealth are we talking? Since 1957, the S&P 500 has delivered an average yearly return of around 10.5%. This isn’t to say that the index has done well every year since 1957. (Remember the Great Recession?) Rather, that 10.5% returns accounts for both strong years and weak ones.

Now, if you put $250 a month into an S&P 500 index fund over the next 40 years, you might enjoy that same return. And if so, you’ll end up with a portfolio worth $1.5 million. That’s not too shabby — especially if you consider yourself someone who doesn’t know all that much about picking stocks.

Learn from one of the greats

Warren Buffett has proven that he’s more than capable of beating the market. But that doesn’t mean that the average investor is equipped to do the same. That’s why he recommends putting money into an S&P 500 index fund. And if you follow his advice, there’s a good chance you’ll end up pleased with the outcome.

Of course, if you’re confident in your ability to assemble a portfolio of stocks that can outperform the broad market, go for it. But if you’d rather play it a bit safer, then it definitely wouldn’t hurt to listen to the words of someone who clearly has a knack for growing wealth. 

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

The post Could this Warren Buffett recommendation be your ticket to a million-dollar portfolio? appeared first on The Motley Fool Australia.

More reading

• Why is the Global Lithium (ASX:GL1) share price powering ahead by 7% today?
• Why Nickel Mines, Paladin Energy, Tassal, and Westgold shares are dropping
• The ASX 200 is up, so why is the BHP (ASX:BHP) share price falling today?
• Why CSL, Dicker Data, Elders, and Virtus Health shares are charging higher
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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.

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

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The S&P/ASX 200 Index (ASX: XJO) is enjoying a very healthy start to the week so far this Monday. At the time of writing, the ASX 200 is up a pleasing 1.02% at over 7,100 points. So it might come as a surprise to see that the BHP Group Ltd (ASX: BHP) share price is firmly in the red today.

Yes, BHP shares are currently down by 0.4% at $47.50 each. Since the BHP share price makes up more than 10% of the ASX 200 these days, this is quite the divergence indeed.

Well, we can always point to the price of iron ore itself, BHP’s largest commodity base by far. As my Fool colleague James covered this morning, iron ore endured a slight pullback last Friday night, dropping 1.2% to US$154.50 a tonne. That saw the BHP share price fall on Friday’s trading. And this seems to be repeating today thus far.

Is the BHP share price missing out on oil’s gains?

But perhaps investors are also being pessimistic about another facet of BHP’s business: crude oil. BHP is currently a notable oil and liquified natural gas (LNG) producer. But it won’t be for long. Last year, the company agreed to offload its oil business to ASX 200 energy company Woodside Petroleum Limited (ASX: WPL). But that was inked when oil was well under US$90 a barrel. More recently, we’ve seen crude jump as high as US$130 a barrel. Today, Brent crude remains above US$110 a barrel, which is still a very high price by historical standards.

But it’s a boom that Woodside might benefit more from over the rest of the year, rather than BHP shares. The demerger of BHP’s oil assets is scheduled to be completed by the second quarter of this year. If oil remains anything close to the levels it is sitting at today for the rest of the year, it will be Woodside’s gain and BHP’s loss. 

In comments given to The Australian today, Woodside CEO Meg O’Neill said that the company is looking forward to helping fill the gaps that global sanctions against Russia have helped create in the Asian energy market. She named Japan as a key goal, saying that the world’s third-largest economy will be “leaning more towards countries like Australia” for their future energy needs.

But perhaps BHP shareholders don’t have too much to complain about as it currently stands. The BHP share price is now up more than 33% since November last year.

At the current BHP share price, this ASX 200 miner has a market capitalisation of $241.4 billion, with a dividend yield of 10.1%. 

The post The ASX 200 is up, so why is the BHP (ASX:BHP) share price falling today? appeared first on The Motley Fool Australia.

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• Is this still the dawning of the age of ASX commodity shares?

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. At the time of writing, the benchmark index is up 1% to 7,134.5 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

CSL Limited (ASX: CSL)

The CSL share price is up 2% to $261.79. Investors have been buying this biotherapeutics company’s shares following the release of an upbeat broker note out of Citi. Its analysts believe that industry data is pointing to plasma collections going beyond pre-pandemic levels in 2022. Its analysts expect this to boost sentiment and potentially drive its shares higher.

Dicker Data Ltd (ASX: DDR)

The Dicker Data share price is up 4% to $13.89. This follows the release of a broker note out of Morgan Stanley this morning. Its analysts have initiated coverage on Dicker Data with an overweight rating and $16.00 price target. The broker believes Dicker Data is well-placed for growth over the medium term thanks to industry tailwinds and its leadership position.

Elders Ltd (ASX: ELD)

The Elders share price is up 13% to $13.54. This morning the agribusiness company released a trading update which revealed that trading conditions have been strong during the first half. As a result, management advised that it is expecting its underlying earnings before interest and tax (EBIT) to increase by 20% to 30% in FY 2022.

Virtus Health Ltd (ASX: VRT)

The Virtus Health share price is up 7% to $8.23. Investors have been buying the fertility treatment company’s shares after it signed a binding transaction implementation deed with CapVest. This deal will see CapVest acquire Virtus for $8.25 cash per share less dividends. The Virtus board unanimously recommends the transaction in the absence of a superior proposal.

The post Why CSL, Dicker Data, Elders, and Virtus Health shares are charging higher appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX 200 (ASX:XJO) midday update: Elders jumps, Magellan and Zip tumble
• Why is the Elders (ASX:ELD) share price jumping 11% to a decade-high?
• $20k invested in these ASX shares 10 years ago is now worth…
• The CSL (ASX:CSL) share price has struggled to gain traction in 2022. Does that make it cheap?

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 CSL Ltd. and Dicker Data Limited. The Motley Fool Australia owns and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Elders Limited and Virtus Health 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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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.

Despite a mountain of economic data and earnings news over the past month, the biggest news for two popular FAANG stocks over the past five weeks was the announcement that they’d be enacting stock splits.

First up was Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), the parent company of internet search engine Google and streaming platform YouTube. Alphabet announced a 20-for-1 forward stock split that, as of the closing bell on March 9, would bring its share price down to around $133 (for the Class A shares, GOOGL). Shareholders still need to vote to approve the split, which is expected to take effect in mid-July.

This past week, e-commerce giant Amazon (NASDAQ: AMZN) followed suit with a 20-for-1 forward stock split announcement of its own. Assuming it receives shareholder approval, Amazon’s lofty share price will come down to around $139, based on its March 9 close. This will be Amazon’s first stock split since September 1999. 

What you need to know about stock splits

Stock splits have absolutely no effect on the operating performance of an underlying business. In other words, a company isn’t going to sell more or less of its product or service just because a split is going to take place. Rather, a stock split is merely a way for publicly traded companies to alter their share price and outstanding share count without affecting their market value.

As an example, Amazon shares are set to fall from around $2,785 to one-twentieth of their current per-share value — around $139.25. However, every existing shareholder will receive 19 additional shares for each share they own. Instead of owning 1 share at $2,785, investors would have 20 shares at $139.25. Both work out to the same market value of $2,785, but the stock split mechanism allows for the share price and outstanding share count to be altered.

Why enact stock splits? The simple reason is to make shares more affordable for retail investors. If you have $500 to invest and your online brokerage doesn’t allow for fractional-share investing, you can’t directly put your money to work in Alphabet or Amazon right now. But after their respective splits take effect, $500 would be enough to purchase a few shares of either company.

Stock splits are also often indicative of a company that’s performing well. Think of it this way: A publicly traded company’s share price probably wouldn’t be high enough to merit a split if it wasn’t executing well and out-innovating its competition.

With Alphabet and Amazon taking off following their respective stock split announcements, the three high-flying stocks below may be next to split their shares. 

Tesla

For those of you who might not recall, electric vehicle manufacturer Tesla (NASDAQ: TSLA) was one of the first brand-name stocks to see its valuation launch higher after announcing a stock split. Tesla’s 5-for-1 forward split announced in August 2020 saw the company’s shares trade higher by more than 60% in the 20 days between the announcement and enactment of the split.

One reason a stock split would make sense here is Tesla’s share price. Although some folks have the luxury of purchasing fractional shares, other investors would be forced to save up $859 (as of March 9 close) just to buy a single share of Tesla. The company’s previously announced 5-for-1 split occurred with shares at $1,374; that’s well within sight given the range Tesla has been trading in this year, of about $800 to $1,200 a share.

Another reason for Tesla to consider a stock split is that Elon Musk knows his audience. Even though institutional investors and insiders combine to hold more than 61% of outstanding shares, Musk is well aware that Tesla is a favorite holding of retail investors. To keep them happy and buying Tesla stock, Musk may be willing to encourage the company’s board to approve another stock split. Doing so would allow investors with less starting capital to take a position in Tesla.

AutoZone

In February, after Alphabet announced its stock split, I believed Amazon would be the most logical company to next take the plunge. With Amazon following suit, the honor now gets bestowed on automotive replacement parts company AutoZone (NYSE: AZO). Investors have to go back almost 28 years to find the last time (April 1994) AutoZone enacted a stock split. A single share recently set investors back about $1,885, as of March 9.

You might be wondering why AutoZone hasn’t made its shares more affordable to retail investors who don’t have access to fractional-share purchases. The answer seems to be tied to the company’s mammoth share repurchases over the past 24 years. 

As I described last month, the company has been given a green light from its board of directors to make significant share buybacks since 1998. Including the recently reported fourth quarter, AutoZone has spent more than $28 billion repurchasing its stock over 24 years. Over that stretch, the company’s outstanding share count has shrunk from 150 million to slightly below 20 million. I believe that AutoZone’s board likes to highlight its progress in reducing the company’s share count; a stock split, however, would nominally increase the share count. It’s possible that AutoZone’s board believes enacting a stock split would somehow obscure that buyback progress.

Then again, with fewer than 20 million shares outstanding, AutoZone’s ability to repurchase its own stock is shrinking. If the company wants to continue returning capital to shareholders via buybacks, a stock split may be necessary.

Broadcom

The third high-flying stock that could follow in Alphabet’s and Amazon’s footsteps and split is semiconductor solutions giant Broadcom (NASDAQ: AVGO). Although Avago Technologies — which acquired Broadcom Corp. in early 2016 and then named the combined entity Broadcom — never split its shares, the original Broadcom did so on three occasions (1999, 2000, and 2006).

There are a few good reasons for Broadcom to consider splitting its stock right now. First, as with the other companies on the list, Broadcom’s share price is becoming prohibitively high for retail investors who don’t have access to fractional-share purchases. Shares were near $600 last week and haven’t dipped below $533 in over four months.

Additionally, Broadcom hasn’t been leaning on share buybacks. In fact, Broadcom’s board only recently authorized a $10 billion share repurchase agreement. This is a company that’s focused on boosting its dividend, innovating, and acquiring other companies, rather than buying back shares. In other words, it shouldn’t have the same reluctance to split that I described above with AutoZone.

A split would also make sense given that Broadcom’s business is firing on all cylinders. Its backlog hit $14.9 billion in 2021, with CEO Hock Tan noting in December that the company’s supply was already booked through 2022 and into 2023. Considering that chip shortages are persisting, Broadcom’s share price has a very good chance of heading even higher. 

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

The post Alphabet and Amazon stock splits: 3 high-flying stocks that could split next appeared first on The Motley Fool Australia.

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Sean Williams owns Amazon. 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 Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and Broadcom.Ltd. 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 Westgold Resources Ltd (ASX: WGX) share price has come out of a trading halt to record heavy falls today. This follows the gold resource company’s update in regards to its recent share placement.

During early afternoon trade, Westgold Resources shares are down a sizeable 14.34% to $2.09 apiece.

What’s dragging Westgold Resources shares lower?

Investors are scrambling to sell Westgold Resources shares as the company prepares to dilute existing shareholder value.

According to its release, Westgold Resources advised it has received strong support to raise $100 million through a share placement.

The offer was presented to both institutional and sophisticated investors at an issue price of $2.10 per share. This equates to roughly 48 million new ordinary shares being added to the company’s registry.

The shares will fall under the company’s listing rule 7.1. This allows up to 15% of Westgold Resources shares to be issued without shareholder approval.

The funds collected from the placement will be used to accelerate Westgold Resources’ Murchison and Bryah growth strategy. This revolves around establishing a systematic pathway towards building a 400,000 ounce per annum gold production rate from FY24.

As such, Westgold Resources is targeting the following:

• Increasing existing Murchison mine production – the Bluebird UG Expansion Project
• Accelerating new Murchison mine production – the Fender UG Development Project
• Advancing strategic development assets across the Murchison and Bryah
• Tuckabianna and Fortnum mill expansions – expand group processing capacity above 4Mtpa

Westgold Resources executive director, Wayne Bramwell commented:

The scale of market support of this placement strongly endorses Westgold’s growth plans and speaks to the growing momentum and the evolution of our business.

Westgold will systematically deploy these funds to expand gold production in FY23 and FY24 from Bluebird, Fender and the Tuckabianna trend, underpinning the expansion of our processing hubs. Concurrently, and with a view to FY24 onwards we will rapidly advance the strategic and iconic high- grade Great Fingall and Golden Crown mines.

About the Westgold Resources share price

Over the past 12 months, Westgold Resources shares have moved in circles before accelerating on an upwards trajectory since February.

The company’s share price is flat since this time last year, but up by around 2.5% year to date.

Westgold Resources has a market capitalisation of roughly $889.29 million, with almost 425.5 million shares on its books.

The post Why is the Westgold (ASX:WGX) share price falling 14% today? appeared first on The Motley Fool Australia.

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

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