Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is enduring a disappointing end to the week’s trading this Friday after yesterday’s strong gains. At the time of writing, the ASX 200 has lost 0.8% at just under 7,100 points.

But rather than letting that ruin our weekends, let’s instead check out the ASX 200 shares that are currently at the top of the ASX’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume on Friday

Telstra Corporation Ltd (ASX: TLS)

Telstra is our first share to take a look at this Friday. So far, a notable 20.64 million of this ASX 200 telco’s shares have been bought and sold on the markets today. There have been no major developments with Telstra this Friday thus far. In saying that, the company’s share price has had a weak day today, and is currently down a disappointing 0.77% at $3.85 a share. It’s possibly this move that has sparked so many shares moving around. 

Paladin Energy Ltd (ASX: PDN)

ASX 200 uranium share Paladin is next up. This Friday has witnessed a sizeable 25.98 million shares swap hands as it currently stands. Again, we’ve had no news out of the company itself. However, Paladin has had what could only be described as a wild week. Its shares remain up 8.18% over the past 5 trading days. Today, it’s up 0.58% at the time of writing at 86 cents a share. But it has been moving around a bit, with stints in both positive and negative territory. It’s probably this volatility that has Paladin on this list today. 

Nickel Mines Ltd (ASX: NIC)

This eponymous ASX 200 miner tops our trading volume list today. We have seen a whopping 43.47 million Nickel Mines shares change owners as it currently stands. This could have also been sparked by volatility. Nickel Mines shares are currently flat at $1.22 each after rising by as much as 2.5% earlier in the trading day. It’s been a big week for the company. Yesterday saw Nickel Mines halt its share purchase plan after some wild price swings. It also had a trading halt on Wednesday. All of these factors could be involved in the elevated trading volume we are currently seeing today. 

The post These 3 ASX 200 shares are topping the volume charts this Friday appeared first on The Motley Fool Australia.

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• ASX 200 (ASX:XJO) midday update: Block falls, Nickel Mines jumps
• Nickel Mines (ASX:NIC) has just withdrawn its share purchase plan. What’s going on?
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• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen owns Telstra Corporation 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 owns and has recommended Telstra 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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ASX mining shares are capitalising on the latest commodities rally since 2022 began.

The S&P/ASX 300 Metal & Mining Index (ASX: XMM) has spiked almost 5% this year to date and 10.5% over the past 12 months.

Within this buoyant sector are 2 small-cap mining shares that are outperforming their peers in the ASX resources space.

They are Siren Gold Ltd (ASX: SNG) and Firebird Metals Ltd (ASX: FRB). Take a look at their 5-day returns on the chart below.

Siren Gold Ltd (ASX: SNG) 

Shares in Siren Gold are soaring above 25% today and are currently exchanging hands at 30 cents apiece.

Investors are piling into the gold miner following a company announcement advising it has intersected gold during drilling at its Alexander River project in New Zealand.

As The Motley Fool reported earlier today, “The intercept in the drill hole returning visible gold was comprised of 2-3 metres of strong acicular arsenopyrite, followed by a 0.6 metre quartz vein with significant visible gold”.

The price of gold has shot to record highs of US$2,052 per troy ounce in recent days. Traders have since pared gains so now the yellow metal is sitting at US$1,991/t.oz.

With the gold spot and futures both rallying to new heights, investors have been piling into ASX gold shares.

In the past 12 months, Siren shares have tanked by 22% but have soared by almost 15% in the past 30 days.

Siren Gold has a market capitalisation of $23.5 million.

Firebird Metals Ltd (ASX: FRB)

Shares in Firebird Metals are also surging higher today and now trade at 39 cents apiece following a company announcement.

At one point today, Firebird shares were trading more than 20% higher at 39.5 cents each before levelling off a little.

Investors are responding positively to the company advising of a “game changing resource upgrade” at its flagship Oakover project.

Firebird announced it had delivered a 170% increase in resources at the site following completion of a 233-hole reverse circulation (RC) drilling program.

The Oakover resource has grown to 172 Mt @ 9.9% Mn (7% Mn cut-off) from 64 Mt @ 10% Mn”, Firebird said. “Importantly 58.7 Mt at 10.4% Mn at the Sixty Sixer deposit is now in the Indicated category.”

Now the company has set its next moves following the discovery. Apparently, management has made the decision to pivot the growth strategy.

From here on in, it will “focus on completing key workstreams to assess a larger long-term (20+ years) operation to create a substantial manganese hub”.

After listing on the ASX in early 2021, Firebird shares have fallen 30% into the red, but have soared 28% this week.

Firebird has a market capitalisation of $17.73 million.

The post 2 tiny ASX mining shares leaping 20% today appeared first on The Motley Fool Australia.

More reading

• Why is this ASX gold share minnow rocketing 15% 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 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 tech sector has come under pressure again on Friday. In late trade, the S&P ASX All Technology index is down a disappointing 3%, stretching its year to date decline to almost 25%.

Investors have been selling tech shares again today after a particularly strong inflation reading in the United States sparked fears of even quicker than expected rate hikes.

Rising rates are bad news for tech shares as they lead to higher discount rates (in valuation models) and lower the present value of future cash flow.

As covered here recently, tech shares that are not yet profitable have been hit the hardest and seen their shares de-rate materially.

Goldman Sachs notes: “Technology companies with low/no profitability have been hardest hit by rising rates, falling -40% on average since the Nov-21 vs -24% for profitable tech and -14% for US tech. […] with the median company de-rating -25% and NEA, NXL, NTO de-rating >50%.”

While this is disappointing, it could have created a buying opportunity for investors. For example, the two ASX tech shares listed below have just hit 52-week lows or worse but could end up being bargain buys if analysts are on the money.

Here’s what you need to know:

ELMO Software Ltd (ASX: ELO)

The ELMO share price has continued its slide and hit a four-year low of $3.34 on Friday. This means the HR technology company’s shares have lost approximately 27% of their value in 2022.

According to a recent note out of Morgan Stanley, its analysts have an overweight rating and $7.80 price target on the company’s shares. This implies potential upside of ~130%.

Nitro Software Ltd (ASX: NTO)

The Nitro share price has been under pressure again on Friday and dropped to a 52-week low of $1.16. This latest decline means the document productivity software company’s shares are now down by over 50% since the start of the year.

Goldman Sachs sees this as a buying opportunity. Last week its analysts reiterated their buying rating and $2.60 price target on Nitro’s shares. This suggests over 100% upside over the next 12 months for investors.

The post Bargain basement? 2 ASX tech shares slumping to 52-week lows today appeared first on The Motley Fool Australia.

More reading

• Analysts see almost 100% upside for these ASX shares
• Goldman says the tech selloff has made Xero (ASX:XRO) shares a buy
• 2 small cap ASX shares that are highly rated by brokers
• Buy these 2 impressive ASX shares in March 2022: experts
• Nitro (ASX:NTO) share price sinks 14% despite record result

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 Elmo Software. The Motley Fool Australia owns and has recommended Elmo Software. The Motley Fool Australia has recommended Nitro Software 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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BHP Group Ltd (ASX: BHP) shares are in focus after the S&P/ASX 200 Index (ASX: XJO) miner topped the list of highest paying dividend stocks in the world in 2021.

That’s according to data from Janus Henderson.

The Motley Fool covered off 2 other ASX 200 shares that made the top 10 dividend payer list earlier today. You can find that here.

With BHP shares coming in at number 1, Blake Henricks, deputy managing director at Firetrail, and Michelle Lopez, Head of Australian Equities at abrdn, offer their views on the miner, courtesy of Live Wire.

What’s not to like?

At the current share price, BHP pays a trailing dividend yield of 9.8%.

Now that doesn’t make BHP the highest yielding share on Earth in 2021. However, the total dividend payouts by the company in dollar terms were unmatched.

Asked whether BHP shares were a buy or hold, Lopez said:

It’s a buy for us. And, yes, it’s got to 9% and even a 6% yield going forward as commodity prices come back a little bit, which is our expectation. But clearly, we’ve got a very constructive outlook from a demand perspective.

Even with her outlook of iron ore and commodity prices retracing from the current high levels, Lopez pointed out, “We’ve got China, expectations of stimulus coming through. We’re starting to see the property market over there pick up again, and infrastructure.”

Lopez also likes the miner’s cash flows.

“I think the near term is very well supported from a cash flow perspective,” she said. “And from valuation perspective, it’s trading close to its NAV [net asset value].”

For Henricks, BHP shares are a hold. He said “there are some better opportunities out there” among resource shares.

However, turning back to BHP, he added, “But it’s net cash, huge amounts of assets, what’s not to like?”

How have BHP shares been tracking?

BHP has gone from gains to small losses today and it’s back to flat at time of writing.

That’s a fair bit better than the ASX 200, which remains down 0.9% at this same time.

Juicy dividends aside, BHP shares have also handily outpaced the index in 2022, gaining 12.4% compared to a 6.9% loss by the benchmark.

The post ‘What’s not to like’ about BHP (ASX:BHP) shares? Experts weigh in appeared first on The Motley Fool Australia.

More reading

• Guess which 3 ASX 200 shares are among the top 10 dividend payers in the world
• Is this still the dawning of the age of ASX commodity shares?
• Record $36bn in dividends could help ASX share market recovery
• 3 under-the-radar commodity prices soaring since the Ukraine crisis
• Here’s why the BHP (ASX:BHP) boss is still optimistic about China

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 Temple & Webster Group Ltd (ASX: TPW) share price just fell to a 52-week low.

At the time of writing, it is down 6%. The e-commerce business has seen a drop of 43% from the start of the year.

The ASX share market continues to suffer with growth businesses seeing a sizeable selloff since the start of 2022.

Are interest rates the cause?

Many market commentators and analysts are talking about interest rates. Why do interest rates matter?

Legendary investor Warren Buffett gave a timeless explanation about interest rates in 1994 at the Berkshire Hathaway annual general meeting (AGM):

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

Central banks could decided to increase interest rates to combat the inflation.

But only sellers of Temple & Webster shares know why they’re willing to accept a price that’s a lot lower than in 2021.

Is the Temple & Webster share price an opportunity?

Some of the leading analysts in Australia certainly think so.

The broker UBS thinks that Temple & Webster shares could have a 90% upside after its FY22 half-year result which showed that expenses and profit margins were solid, whilst revenue was even stronger than forecast. The price target is $11.80.

In the HY22 report, the company reported an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 5.1%, which was stronger than its guided range of between 2% to 4%. Not only are customer numbers increasing, but the revenue per active customer has grown for six straight quarters in a row. Half-year total revenue increased 46%.

Management said that its supply chain diversity is mitigating short-term disruptions, whilst allowing it to scale sustainably during the COVID-19 period. It sources directly from over 100 factories with its private label, whilst sourcing from thousands indirectly through the drop ship model.

The company also indicated that it’s making good progress on the next growth horizons. ‘Trade and commercial’ experienced revenue growth of 49%, representing 7% of revenue. ‘Home improvement’ revenue jumped 95%, representing 4% of total revenue.

Management is confident that it can continue winning market share. In the second half of FY22, Temple & Webster saw revenue growth of 26% for the period of 1 January 2022 to 6 February 2022.

Temple & Webster’s share price is rated as a buy by others

The brokers Morgan Stanley and Credit Suisse also think that Temple & Webster shares are a buy. They are attracted to the growing customer loyalty, the long-term growth opportunity and fast revenue growth.

Whilst Macquarie only has a rating of ‘neutral’ on the business at the moment, Macquarie’s price target of $9.70 offers upside of more than 50% because of how far the e-commerce stock has fallen.

The post Temple & Webster (ASX:TPW) share price hits 52-week low, top broker tips 90% upside appeared first on The Motley Fool Australia.

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• Leading brokers name 3 ASX shares to buy today
• What’s the outlook for ASX retail shares like Kogan (ASX:KGN)?
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• 2 great ASX shares to buy in March 2022: experts

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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Shares in Poseidon Nickel Ltd (ASX: POS) are rangebound today and down 1.11% to 8.9 cents.

ASX investors are showing a muted reaction to the company’s half-yearly results to 31 December 2021.

Yesterday’s release was labelled non-price sensitive when posted on the ASX late last night. But it’s worth a look nevertheless to see what the company got up to during this time.

Poseidon Nickel share price unmoved by half-yearly report

Key points in the report included:

• Incurred a loss of $5.87 million for the period, compared to 2020 loss of $6.02 million
• Net working capital surplus of $17.17 million, compared to $2.44 million at 30 June 2021
• Net cash outflow from operating activities of $5.75 million, up marginally from $5.73 million year on year
• Cash and cash equivalents of $21.94 million at 31 December 2021
• In August 2021, the company raised $22 million (before costs).

What else happened this half for Poseidon Nickel?

During the period, the company announced its ‘Fill the Mill’ strategy of restarting operations at its Black Swan site.

Specifically, Poseidon says the Fill the Mill strategy is based on feeding the mill with a combination of “low-grade open pit ore, high-grade underground ore and Silver Swan tailings to improve concentrate quality”.

Poseidon also says the results of site studies now provide a clearer picture of how to move forward.

“The results of an engineering study undertaken by GR Engineering Limited (GRES) concluded that the costs to refurbish the 1.1Mtpa processing plant would cost approximately $22 million”, it said.

Aside from that, the group printed a loss of $5.87 million compared to a loss of $6.02 million the year prior. This flowed through to net working capital of $17 million, boosted by a capital raise in August.

Poseidon says the working capital surplus includes “a provision for environmental rehabilitation of $3,500,000 that is cash-backed (non-current asset)”.

During the half, the Poseidon Nickel share price increased by 22%.

Management commentary

Speaking on the company’s results, Poseidon Nickel’s CEO, Peter Harold said:

The nickel price continued to remain strong during the period, peaking at just under US$9.60/lb in late November 2021 and post period end continuing its upward movement.

During first half FY2022 the Company adopted its new “Fill the Mill” strategy which focuses on restarting the Black Swan operations with high and low grade ore feed sources.

Progressing this strategy the Company released the Golden Swan Maiden Resource and the Silver Swan Tailings Maiden Resource during the period, and continued drilling Tundra Mute within the Silver Swan Channel and the Black Swan disseminated mineralised system.

Poseidon Nickel share price snapshot

In the last 12 months, the Poseidon Nickel share price has soared around 40% into the green. However, this year to date it is down 19%.

The post What’s up with the Poseidon Nickel (ASX:POS) share price on Friday? appeared first on The Motley Fool Australia.

More reading

• I personally only own 2 ASX shares: fund manager

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week deep in the red. At the time of writing, the benchmark index is down 1% to 7,061.3 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Block Inc (ASX: SQ2)

The Block share price is down 4% to $145.13. Block and a range of tech shares are in the red toady after the US tech sector pulled back on rate hike concerns. This was sparked by news that inflation in the United States has hit its highest level in 40 years. The S&P ASX All Technology index is down 3.3% at the time of writing.

Breville Group Ltd (ASX: BRG)

The Breville price is down 2.5% to $26.29. This morning the appliance manufacturer announced the acquisition of Italian premium prosumer home coffee equipment manufacturer Lelit for 113 million euros in cash and shares. However, as no details were provided in respect to Lelit’s sales or earnings, it is unclear if Breville is getting a good deal.

Megaport Ltd (ASX: MP1)

The Megaport share price is down 4% to $13.27. This may be due to weakness in the tech sector and concerns that data centre operator Digital Realty is launching a competing platform within its centres. However, the team at Citi is not concerned by the latter. This morning the broker retained its buy rating and $20.20 price target. It doesn’t expect this launch to lead to material customer churn.

Webjet Limited (ASX: WEB)

The Webjet share price is down 3% to $5.46. This follows broad market weakness which is being felt hard in the travel sector today. So much so, the sector has reversed some of the strong gains made over the last couple of days after oil prices pulled back. Traders may be taking a bit of profit off the table.

The post Why Block, Breville, Megaport, and Webjet shares are falling today appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• ASX 200 (ASX:XJO) midday update: Block falls, Nickel Mines jumps
• Breville (ASX:BRG) share price falls despite 113m euros coffee acquisition
• 5 things to watch on the ASX 200 on Friday
• Here’s why ASX 200 travel shares are having another stellar day

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. and MEGAPORT FPO. The Motley Fool Australia owns and has recommended Block, Inc. The Motley Fool Australia has recommended MEGAPORT FPO and Webjet 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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The Virtus Health Ltd (ASX: VRT) share price is currently halted after the company requested a trading pause before the market open today.

Virtus Health shares have posted solid gains so far in 2022, having shot up more than 26% over the previous 12 months of trading.

The $658 million company by market cap is also trading at its highest levels in more than five years and has thrust past its 52-week closing high during the past week or so (see below).

A quick refresher

Presumably, Virtus requested the pause in lieu of a market-sensitive announcement. It suggested this is related to the takeover saga it is currently embroiled in.

For reference, Virtus is the subject of competing takeover offers made by BGH and CapVest Partners LLP. The Virtus Health share price jumped on the news of the CapVest offer on January 20.

Just yesterday the Australian Government Takeovers Panel (AGTP) made declarations on previous orders it had made with respect to CapVest’s takeover proposal of the company.

It found “certain aspects of the exclusivity arrangements in a process deed between Virtus and CapVest had an anti-competitive effect”, and made orders to amend the deed.

After review, Virtus opted to still side with CapVest’s offer, something that BGH apparently became frustrated with.

“BGH submitted that, notwithstanding the clear intent of the Orders, the circumstances were continuing to unacceptably frustrate a proper auction process or competitive bidding environment,” the AGTP said.

“It submitted that this was evidenced by Virtus disclosing the Revised BGH Proposal to CapVest, CapVest matching or improving its existing proposal and the Virtus board then dismissing the Revised BGH Proposal in preference to continuing to deal exclusively with CapVest.”

However, the AGTP declined to comment on the matter and found no reason to conduct proceedings after its final review.

Why is Virtus on ice?

The company was granted the halt following a request made to the ASX today. Before being placed on ice, Virtus Health shares finished the day flat on Thursday at $7.70 apiece.

It says the trading halt is “necessary as the company expects to make an announcement to the market in relation to ongoing matters pertaining to proposals to acquire Virtus Health”.

“Virtus requests the trading halt to last until the earlier of the time it makes the intended announcement to the ASX concerning the material potential transaction, or until the commencement of trading on Tuesday 15 March 2022.”

Prior to the halt, Virtus finished the month well, after its share price made several steps up the ladder to set new single-year highs.

Virtus Health share price snapshot

In the past 12 months, the Virtus Health share price has climbed more than 26% and is up 12% this year to date. Over the past month, shares have walked another 5% into the green.

In fact, the company’s share price is up across all major time frames and is thus leading the broader market this year to date.

The post Why is the Virtus Health (ASX:VRT) share price frozen today? appeared first on The Motley Fool Australia.

More reading

• 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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The Northern Star Resources Ltd (ASX: NST) share price has surged this year, but is still down compared to 2020 levels.

Lately, the acceleration in the price of gold has boosted investor sentiment, causing a buy in the gold miner’s shares.

Since the beginning of 2022, the Northern Star share price has gained around 15%, making the stock one of the best performers across the sector. By comparison, the share price of fellow gold miner Newcrest Mining Ltd (ASX: NCM) increased by 9% across the same timeframe.

At the time of writing, Northern Star shares are swapping hands for $10.87, up 0.7%.

What’s happened to the Northern Star share price?

A common theme with gold mining companies, the Northern Star share price has been bought up following the improvement in gold prices.

Traditionally, ASX investors flock to the yellow metal as a safe-haven asset when there is uncertainty in the market.

While the world is slowly moving past COVID-19, geopolitical tensions between Russia and Ukraine have sparked a gold rush.

In the past month, the price of gold soared above the US$2,000 barrier, but has since fallen a touch under. Currently, gold is fetching US$1,994.45 an ounce.

At the start of the year, the precious metal was fetching US$1,829.05. This represents an increase of 9.17% in less than three months.

As such, the Northern Star share price has risen from $9.41 at the beginning of the year.

When looking at 2020, the price of gold spiked to more than US$2,072.90 on 7 August 2020. Northern Stars shares closed at $15.89 on the day.

However, you may be wondering why the company’s share price is nowhere near the level it was in 2020, given the price of gold is almost the same.

This is because of other macroenvironmental factors, such as the United States Federal Reserve’s intent to lift interest rates this year. The government body noted that inflation accelerated to 6.9%, the highest rate in nearly four decades.

Following along, the Reserve Bank of Australia signalled its next move is also up. Two rate hikes are tipped for 2022.

Rising interest rates drag down the price of precious metals and it appears investor sentiment is mixed for the moment.

What do the brokers think?

A number of brokers believe that the Northern Star share price is currently a bargain.

Last month, Macquarie slashed its outlook on Northern Star shares by 6.7% to $14 per share. Based on the current share price, this implies a potential upside of 29% for investors.

While the broker reduced its assessment on Northern Star, it still sees value in the gold miner.

On the other hand, UBS lowered its outlook on the company’s shares by 3.6% to $10.80. Its analysts believe that they are fully valued for the moment.

The post Despite its recent rally, the Northern Star (ASX:NST) share price is still trading 30% lower than in 2020 appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Rio Tinto goes ex-div, tech and travel shares rebound
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 (ASX:XJO) midday update: CSL and St Barbara charge higher
• 5 things to watch on the ASX 200 on Tuesday
• Northern Star Resources (ASX:NST) share price sparkles as gold spikes 9% in a month

Motley Fool contributor Aaron Teboneras owns Northern Star Resources 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 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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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.

The stock market continued to suffer declines on Thursday, and as we’ve seen many times in the recent past, the Nasdaq Composite (NASDAQINDEX: ^IXIC) proved to be more volatile than most other stock market indexes. As of noon ET today, the Nasdaq was down 247 points, or nearly 1.9%, to stay just over the 13,000 mark. That’s not quite 20% below its all-time high, but it hardly indicates for certain that the bear market is over.

Gaining ground today, though, was Amazon (NASDAQ: AMZN). The e-commerce giant represents a big part of the Nasdaq, and its latest announcement suggests that the company might be making its move to persuade the index managers at S&P Dow Jones Indices to admit Amazon as one of the 30 stocks in the Dow Jones Industrial Average.

Time to split?

Shares of Amazon had risen more than 5% on Thursday by midday. The company made a couple of moves that should arguably not have a huge impact on the stock. In reality, though, investors saw the announcement as a positive sign.

Amazon’s first strategic move was to authorize a 20-for-1 stock split. That will require an amendment to its certificate of incorporation, which in turn will require shareholder approval at the company’s May 25 annual shareholder meeting.

If approved, investors can expect Amazon stock to start reflecting its split-adjusted price starting on June 6. Shareholders should get credited with the 19 extra shares for each share they currently own on or around June 3. 

The other thing Amazon put into place was a massive $10 billion stock repurchase program. The authorization from the Amazon board allows for purchases through open-market transactions or with entities in private negotiations.

One thing that investors should remember, though, is that just because a company authorizes a buyback doesn’t mean that it will necessarily happen. Indeed, Amazon said that the new $10 billion program will replace an existing $5 billion program from 2016, and it had only repurchased $2.12 billion in stock in that six-year span.

Could Amazon join Alphabet in the Dow?

The news is interesting because it follows a 20-for-1 split announcement from fellow tech giant Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) just over a month ago. Like Amazon, Alphabet had long had an extremely high price above $2,000 per share, and the announced split would take its per-share price down to the $130 to $150 range.

Stock splits have no impact on the intrinsic value of the company, as each new share will have a price of roughly a 20th of its old price. But a lower stock price would allow S&P Dow Jones Indices to consider inviting Amazon to join the Dow Jones Industrials. The price-weighted index counts on its constituent stocks having similar share prices in order to avoid disproportionate influence from a small set of stocks.

To make room for Amazon, the Dow would need to expel one of its current components. With relatively low prices, Intel (NASDAQ: INTC) and Cisco Systems (NASDAQ: CSCO) would be potential candidates in the tech arena.

Alternatively, given the fact that Amazon straddles the internet-retail and the communications-infrastructure industries, replacing companies like Verizon Communications (NYSE: VZ) or Walgreens Boots Alliance (NASDAQ: WBA) might be potential options as well.

When large companies like Amazon and Alphabet aren’t part of the Dow, it makes the venerable market benchmark seem out of touch. These stock splits could change that, and it’ll be interesting to see if S&P Dow Jones Indices gets the hint. 

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

The post Amazon makes its case to join the Dow appeared first on The Motley Fool Australia.

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Dan Caplinger owns Alphabet (A shares), Alphabet (C shares), and 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, Cisco Systems, and Intel. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and Verizon Communications and has recommended the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. 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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