Category: Stock Market

The Argo Investments Limited (ASX: ARG) share price is edging higher in early trade as the benchmark index retreats.

Argo Investments closed on Friday trading at $9.90 per share and is currently trading for $9.94 per share, up 0.4%.

Below we take a look at the highlights of the listed investment company’s (LIC) half-year results for the six months ending 31 December.

Argo Investments share price gains on profit leap

• Interim profit increased 91.5% on H1 2020 to $129 million
• Earnings per share (EPS) of 8 cents, up 91.4% from 9.3 cents in the prior corresponding half
• Cash as at 31 December of $84 million, down from $190 million in H1 2020
• Interim dividend per share (fully franked) of 16 cents, up 14.3% from H1 2020

What else happened during the half?

Atop the results highlighted above, the LIC reported net tangible assets (NTA) per share increased by 18.9% in H1 2021 to $9.52. NTA in the first half of 2020 came in at $8.01.

Using the NTA return after all costs and tax as a measuring stick, Argo’s investment performance during the half year saw it return 7.3%. That compares to a 3.8% return from the S&P/ASX 200 Accumulation Index during that same time.

The Argo Investments share price did well too, gaining 15.7% during the half. Additionally, Argo reported that its shares gained 25.5% for calendar year 2021, which works out to a total shareholder return of 27%, including franking credits.

In H1 2021 the company purchased $301 million of investments and received $191 million from portfolio sales and takeovers. The total number of shares in Argo Investments’ portfolio was unchanged.

Some major purchases during the half included:

• EML Payments (ASX: EML)
• Aurizon Holdings (ASX: AZJ)
• Lendlease Group (ASX: LLC)
• CSL Limited (ASX: CSL)
• Macquarie Group (ASX: MQG)
• RAM Essential Services Property Fund (ASX: REP)

Major sales included:

• Washington H. Soul Pattinson (ASX: SOL)
• Boral (ASX: BLD)
• Crown Resorts (ASX: CWN)
• AGL Energy (ASX: AGL)

What did the company say?

In analysing the big leap in profits, Argo stated:

The rebound in first half profit was driven by increased investment income, with most companies in Argo’s portfolio raising or returning to paying dividends as the economy recovered from the initial impacts of the COVID-19 pandemic. In particular, a number of our larger holdings increased dividends by more than 100 per cent, including Macquarie Group, BHP Group, Rio Tinto and National Australia Bank.

What’s next?

While the half year just past was strong, Argo Investments sounded some cautionary notes about the months ahead.

Management pointed to surging Omicron cases hitting the labour market and supply chains amid worsening economic conditions.

In the short term, the company expects challenging conditions as investors come to grips with the reality that inflation is on the rise and interest rate rises are coming. However, “We believe this environment favours Argo’s long-term investment approach which concentrates on identifying high quality companies with solid fundamentals,” management said.

Noting the company’s strong balance sheet and lack of debt, management stated, “We are well positioned to capitalise on opportunities generated by any market volatility in the short term.”

Argo Investments share price snapshot

Alongside the wider market, the Argo Investments share price has retraced in 2022.

Year to date Argo shares are down 2.36%. That compares to a loss of 5.35% on the S&P/ASX 200 Index (ASX: XJO).

The post Rocketing returns trump souring outlook: Argo Investments (ASX:ARG) share price lifts on results appeared first on The Motley Fool Australia.

More reading

• James Hardie (ASX:JHX) share price up as company cements trading gains
• Why Bitcoin, Ethereum, Polkadot, and Solana jumped this weekend
• Watch out! These 4 ASX shares have been tipped to disappoint during earnings season
• Playside Studios (ASX:PLY) share price soars 21% amid NFT gold mine
• The Bank of Queensland (ASX:BOQ) share price has underperformed the ASX 200 by 10% over the last 6 months. Here’s why

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd., EML Payments, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended EML Payments and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Aurizon Holdings Limited and 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.

What happened 

The cryptocurrency market continued its volatility this week, but for the time being it has been working for investors. The value of many cryptocurrencies jumped double-digits this week as investors bought riskier assets across the market. 

Bitcoin (CRYPTO: BTC) made a big move this week, climbing 9.7%, and is up 2.7% over the last 24 hours. Ethereum (CRYPTO: ETH) was up as much as 3.7% in the last 24 hours as of 3:00 p.m. ET and is up 16.4% over the past week. Polkadot (CRYPTO: DOT) made an even bigger move, jumping as much as 10.6% in the last day and currently trading 5.9% higher than yesterday, while Solana (CRYPTO: SOL) rose as much as 7.2% in the last 24 hours and is currently up 2.6%. 

So what 

The rise in growth stocks and the market overall has certainly helped cryptocurrency values this week, but there’s something more meaningful happening in Washington D.C. 

A bipartisan group of representatives introduced the Virtual Currency Tax Fairness Act in Congress, which would exempt cryptocurrency transactions under $200 from taxes. This would simplify the tax code for small transactions, which are a growing part of the cryptocurrency ecosystem. 

Ethereum, Polkadot, and Solana are particularly interested in the tax code for cryptocurrency transactions because they’re where most of the market’s non-fungible tokens (NFTs), decentralized finance, and payment innovations are taking place. If buying coffee with cryptocurrencies, like Solana, were a taxable event it could be a burden on everyone in the U.S. 

Interestingly enough, a filing this week showed that Senator Ted Cruz even bought Bitcoin recently. Members of Congress are increasingly getting bullish on cryptocurrencies as usage grows and that could help push positive policy forward. 

We also got relatively strong jobs data this week, which likely means people will have more money to put into cryptocurrencies. Growing utility in the crypto ecosystem and an increasing number of users should push valuations higher long-term. 

Now what 

The battle over tax and regulatory policy has been ongoing for years but given the multi-trillion-dollar valuation of the cryptocurrency market lawmakers are taking more attention. What they’ll have to balance is putting reasonable rules in place without ending some of the innovation that’s taking place in the cryptocurrency market. Blockchains like Solana could upend the payments market with fast, low-cost transactions, which is the kind of innovation lawmakers will want to happen in the U.S. 

Long-term, I’m bullish on the value cryptocurrencies will add to the market but there’s a lot to shake out in the meantime. And the policy battle is just beginning. I think that means we will see more volatility and it’s unclear whether that means values are going up and down short-term. This is an exciting market to watch but a risky one to invest in, no doubt. 

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

The post Why Bitcoin, Ethereum, Polkadot, and Solana jumped this weekend appeared first on The Motley Fool Australia.

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Travis Hoium owns Ethereum and Solana. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. The Motley Fool Australia owns and recommends Bitcoin and Ethereum. 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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Earlier today we looked at some ASX shares that Goldman Sachs believes could surprise to the upside during this month’s earnings season.

But as readers know all too well from previous seasons, there are almost always a few companies that put out results that fall short of expectations. This is part and parcel of investing unfortunately.

With this in mind, Goldman has picked out four ASX shares that it believes could negatively surprise this month. They are as follows:

Commonwealth Bank of Australia (ASX: CBA)

This banking giant could surprise to the downside during earnings season according to Goldman. It notes that Australia’s largest bank’s first quarter update reveals that it is “not immune from the profitability pressures that the sector currently faces, particularly evident in mortgages.”

Goldman commented: “We currently forecast a 1H22E NIM decline of 16 bp to 1.88% (from 2.04% in 2H21) vs VA consensus of a 13bp decline to 1.91% but see downside risk to these numbers given a further increase in funding costs (shift higher in swap rates) which came through, starting in Oct-21.”

Mineral Resources Limited (ASX: MIN)

Goldman appears to believe the market is expecting too much from this mining and mining services company and is predicting profits well-below consensus estimates. This is due partly to margin pressures in the mining services business.

It explained: “GSe -5%/-16% below VA consensus 1H FY22 EBITDA/NPAT respectively, likely on higher expected CFR costs across Commodities operations and margin/cost pressure in Mining Services, as a result of labour and resourcing tightness, potential supply chain constraints, and broad cost inflation being experienced by the mining industry (diesel, steel).”

Monadelphous Group Limited (ASX: MND)

The broker feels this mining services company could disappoint due to labour pressures. Goldman notes that Monadelphous’ November annual general meeting update highlighted that “border restrictions in its key Western Australia market are resulting in challenges in accessing skilled labour as well as impacting operational productivity levels.”

Its analysts added: “Given that majority of MND’s E&C orderbook (c.80%) is on fixed price contracts and sizeable proportion (c.50% in normal operating conditions) of its workforce is fly-in and fly-out, we believe that the street is underestimating the impact on MND’s margin in the near term.”

Temple & Webster Group Ltd (ASX: TPW)

Finally, this online furniture retailer has been tipped to disappoint this month. Goldman’s research indicates that Temple & Webster’s growth slowed during the second quarter to a level that will fall short of half year expectations. In addition, it feels the challenging digital marketing environment could weigh on its margins.

Overall, it suspects that this “could result in a lower return on marketing investment vs. market expectations over the near term.”

The post Watch out! These 4 ASX shares have been tipped to disappoint during earnings season 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. 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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The Playside Studios Ltd (ASX: PLY) share price is soaring this morning on its latest update to the market.

In early morning trade, shares in the independent game developer are gaining stream at $1.23, up 21.18%. The company’s share price is now flirting with its 52-week high of $1.32.

This update comes after Playside Studios entered a trading halt on Friday as it prepared to provide an announcement regarding its BEANS web 3.0 non-fungible token (NFT) launch.

Playside Studios share price rides NFT launch success

Shares in the growing Aussie game developer are trading again today, with the lift of its halt. However, it’s news on the launch of the company’s first foray into its web 3.0 and metaverse strategy that’s making waves today.

According to Playside’s announcement, the company’s NFT project ‘BEANS’ by Dumb Ways to Die achieved $8.38 million in net revenue on its day of launch. The sale involved 10,000 unique 2D art assets which will be tied to a three-dimensional avatar in-game.

Playside notes the net revenue proceeds recorded on 4 February included the sale of 7,000 NFTs. Additionally, a portion of the revenue is comprised of a royalty-based fee on secondary market transactions. This success is being reflected in the Playside Studios share price today.

Moreover, the project has since gone on to sell out according to the project’s Twitter page. This means all 10,000 BEANS have been minted.

Get your BEANS on @opensea here: https://t.co/PsvVNyjA3U

BEANS will be revealed in 3 DAYS pic.twitter.com/LzKTI9njeo

— BEANS NFTs by Dumb Ways to Die (@BEANS_nfts) February 5, 2022

https://platform.twitter.com/widgets.js

What did management say?

On the success of Playside’s first NFT project, CEO Gerry Sakkas said:

Developing BEANS and bringing the DWTD universe to life was the beginning of an exciting project that demonstrates PlaySide’s ability to stay at the forefront of developing technology trends. We are extremely pleased with the outcome of our first Web 3.0 project launch which has been very well received and strongly supported by the community.

The company’s CEO went on to describe the immense popularity and positive feedback received for the brand. Notably, a strong uptake in the community on the BEANS Discord group, a digital distribution and communication platform.

Since launching on 6 January 2022, the BEANS discord community has grown to more than 80,000 members.

What’s next?

ASX-listed Playside Studios discussed its plans for the future regarding its BEANS project. At this stage, the company plans to build on top of this initial NFT launch.

Firstly, the next planned step is to create and launch ‘BEAN Pets’. These 3D NFT-based characters are planned to launch in the fourth quarter of FY22.

Secondly, Playside is working on developing a playable world for its BEANS. Code-named “Bean Land”, the metaverse will make it possible for owners of BEANS NFTs to make use of them in the digital world. This digital environment is planned to launch on PC and mobile in the second half of FY23.

Finally, the company will create the 3D avatar counterparts to their 2D NFT tokens. In turn, this will enable the community to play as their 3D BEANS.

The Playside Studios’ share price is up 254% in the last 12 months.

The post Playside Studios (ASX:PLY) share price soars 21% amid NFT gold mine appeared first on The Motley Fool Australia.

More reading

• Why is the PlaySide Studios (ASX:PLY) share price on pause today?
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• 2 growing small cap ASX shares to watch
• Playside Studios (ASX:PLY) share price rockets 18%. What’s going on?
• 2 exciting ASX tech shares that actually jumped last month

Motley Fool contributor Mitchell Lawler 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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Key points

• The Bank of Queensland share price has fallen 15.4% over the last six months
• Meanwhile, the ASX 200 is down just 5.5%, leaving the bank’s stock trailing the index by around 9.9% in that timeframe
• The Bank of Queensland’s struggles were seemingly spurred by the release of its financial year 2021 results

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The Bank of Queensland Limited (ASX: BOQ) share price still hasn’t recovered from its disastrous performance over October and November.

Its stock fell 18% over the two-month period. Since then it has recovered just 4%, leaving it 15.4% lower than it was six months ago. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has fallen 5.5%.

As of Friday’s close, the Bank of Queensland share price is $7.97.

Let’s take a look at what’s been impacting the ASX 200 bank’s stock in recent months.

What’s weighed on the Bank of Queensland share price lately?

There’s been a few notable happenings that have dragged the Bank of Queensland share price lower over the last six months.

The release of its results for financial year 2021 was the biggest culprit. The bank’s stock tumbled 4% in October after publishing its results.

While its performance was strong in financial year 2021, its outlook for financial year 2022 appeared to disappoint the market.  

The bank said it expects its net interest margin to drop by between five and seven basis points this financial year. However, it declined to provide earnings guidance because of the uncertain environment.

The Bank of Queensland hit another speedbump later that month – though, this time it was expected. It fell 2.6% when it passed its ex-dividend date.

Additionally, the bank completed the sale of its St Andrew’s Insurance business in October. Farmcove Investment Holdings paid $23 million for the business.

The sale is expected to see Bank of Queensland posting an indicative post‐tax statutory loss on sale of around $26 million in its half-year results.

Between then and now, the bank’s stock redeemed 4.2% on the release of a positive trading update. It reported strong growth in the first quarter of financial year 2022 and plans to reduce its expenses.

Though, there’s still a while to wait before the market hears more on the Bank of Queensland’s performance. Its earnings for the first half of financial year 2022 are set to be released in April.

The post The Bank of Queensland (ASX:BOQ) share price has underperformed the ASX 200 by 10% over the last 6 months. Here’s why appeared first on The Motley Fool Australia.

More reading

• Own Bank of Queensland (ASX:BOQ) shares? This broker sees 27% upside in 2022
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• What do rising bond yields mean for the Bank of Queensland (ASX:BOQ) share price in 2022?
• How are ASX bank shares performing today?

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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Highlights:

• How ASX 200 shares trade this month will likely depend on this reporting season
• The biggest winners tend to be those that beat expectations as opposed to those with big earnings
• Goldman has 6 ASX 200 shares on its buy list that it thinks will exceed market expectations

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The reporting season is ramping up and will help set the tone for S&P/ASX 200 Index (ASX: XJO) shares for the month.

Your ability to pick the winners and avoid the losers will be key to outperforming. The biggest winners from any profit season tend to be those that deliver beyond expectations. This is more so than shares with the biggest earnings growth numbers.

From that perspective, Goldman Sachs has compiled a list of ASX 200 shares that it thinks can beat the street and are rated “buy” by its analysts.

ASX 200 shares with reporting season upside

Nine Entertainment Co Holdings Ltd (ASX: NEC) could be one such hero this month. This is in part thanks to its exposure to property listing website Domain Holdings Australia Ltd (ASX: DHG).

The broker believes that property listings have performed well ahead of market expectations in the December quarter.

Further, Nine Entertainment may undertake a capital return or make a strategic investment thanks to its strong balance sheet.

The second ASX share to watch during reporting season is the global metal and electronics recycling company Sims Ltd (ASX: SGM).

Strong results from its international peers and Chinese scrap import data is helping drive Goldman’s forecast of a significant jump in Sims’ margins. The broker’s 2H earnings forecast for the company is well ahead of consensus too.

Conviction buys for the February reporting season

Goldman is also tipping great things for zircon and titanium dioxide producer Iluka Resources Limited (ASX: ILU). The company is also on its conviction buy list.

The miner has the potential to deliver above consensus as the zircon and titanium dioxide markets entered a 3-year deficit last year. This lack of supply is driving up prices for the commodities.

Another ASX 200 share that is on Goldman’s conviction list is Healthco Healthcare and Wellness REIT(ASX: HCW).

The broker believes that the market is underappreciating the real estate investment trust (REIT)‘s upside potential driven by its solid balance sheet, relatively secure income stream, and ample external growth opportunities.

ASX 200 shares that look appetising

Meanwhile, salmon producer Tassal Group Limited (ASX: TGR) could also prove to be a good catch, according to the broker.

“TGR is set to report a strong 1H22 result, with further momentum to build through FY22 as a beneficiary of significantly improved market supply/demand conditions,” said Goldman.

Finally, Domino’s Pizza Enterprises Ltd (ASX: DMP) shares could also deliver a pleasant surprise.

The fast-food chain came under pressure recently due to its disappointing performance in Japan, but Goldman thinks its results may trigger a turnaround.

The broker believes Japanese trading conditions are starting to improve and that management’s growth initiative Project Ignite will drive stronger store rollouts in Australia and New Zealand.

The post Top broker picks 6 ASX 200 shares with earnings surprise potential appeared first on The Motley Fool Australia.

More reading

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• The Macquarie (ASX:MQG) share price is down 10% in 2022, time to jump on it?

Motley Fool contributor Brendon Lau owns Iluka Resources 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 recommended Dominos Pizza Enterprises 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 Syrah Resources Ltd (ASX: SYR) share price won’t be going anywhere on Monday.

This morning the graphite producer requested a trading halt for its shares.

Why is the Syrah share price halted?

The Syrah share price was placed into a trading halt this morning so that it could launch an equity raising.

Syrah is raising funds after its Board approved the final investment decision (FID) on the initial expansion of its Vidalia active anode material (AAM) facility in Louisiana, USA to 11.25ktpa AAM production capacity.

Management notes that the Vidalia FID is a pivotal step in the company’s strategy to become a vertically integrated natural graphite AAM supply alternative for USA and European battery supply chain participants OEM customers. It also notes that it establishes Syrah as a first mover as a large-scale vertically integrated natural graphite AAM supply option outside of China.

Construction of the Vidalia facility is scheduled to be completed in the June 2023 quarter. After which, following commissioning, the start of production is expected in the September 2023 quarter with an 18-month ramp-up period to the full estimated 11.25ktpa AAM production rate.

The equity raising

Syrah is undertaking a fully underwritten institutional placement and pro rata accelerated non-renounceable entitlement offer to raise a total of $250 million (US$178 million).

This comprises a fully underwritten placement of new fully paid ordinary shares to eligible institutional shareholders and new institutional investors to raise approximately $125 million, together with a fully underwritten 1 for 5.9 pro rata accelerated non-renounceable entitlement offer of new shares to raise the other $125 million.

These funds will be raised at $1.48 per new share, which represents a 10.3% discount to its last close price.

Syrah’s Managing Director and CEO, Shaun Verner, said: “Announcing the Vidalia FID and fully funding the Vidalia Initial Expansion are pivotal steps for Syrah in its history and in its strategy to becoming a vertically integrated producer of natural graphite AAM.”

“We now have greater certainty over the project and financing for the Vidalia Initial Expansion and our path to entering the downstream AAM market, with the start of production scheduled for the September 2023 quarter. Further, funds from the Equity Raising will contribute towards studies for potential future expansion of Vidalia to a 45ktpa AAM production capacity and working capital and capital costs at Balama, and ensures that the Company will maintain a strong balance sheet,” he added.

The post Why is the Syrah (ASX:SYR) share price frozen? appeared first on The Motley Fool Australia.

More reading

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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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The Magellan Financial Group Ltd (ASX: MFG) share price has come under pressure on Monday morning.

At the time of writing, the embattled fund manager’s shares are down 11% to $16.52.

This means the Magellan share price is now down 67% over the last 12 months.

Why is the Magellan share price under pressure?

Investors have been selling down the Magellan share price on Monday following the release of two announcements.

The first reveals that Magellan’s funds under management (FUM) continued to fall during the first month of 2022.

According to the release, the company’s FUM fell 2% during January to A$93,538 million. This was despite the Australian dollar falling 3.1% over the same period, which would have boosted the value of its investments held in US dollars.

What else is happening?

Also weighing heavily on the Magellan share price is news that its Chairman and Chief Investment Officer, Hamish Douglass, has requested a period of medical leave to prioritise his health. This follows “a period of intense pressure and focus on both his professional and personal life.”

Hamish McLennan, previously Magellan’s Deputy Chairman, has been appointed as Magellan’s independent non-executive Chairman in place of Mr Douglass.

Replacing Mr Douglass’ portfolio management duties will be Chris Mackay, who was Magellan’s inaugural Chairman and its Chief Investment Officer from inception in 2006 to 2012.

The Board notes that he is a highly experienced and respected global equity portfolio manager, with a very strong long-term record of managing global equities.

Mr Mackay will continue as Managing Director and Portfolio Manager of ASX listed MFF Capital Investments Ltd (ASX: MFF). This task is made all the more easier given the fact that MFF and Magellan share offices and Mr Mackay has a long-standing and constructive working relationship with Magellan’s investment and support teams.

Magellan’s Chairman, Hamish McLennan, commented: “The Board wholeheartedly supports Hamish’s decision to prioritise his health and Magellan is committed to providing him the time and support he requires. I am grateful that Chris Mackay has agreed to oversee the portfolio management of Magellan’s global equity retail funds and global equity institutional mandates, alongside Magellan’s excellent existing global portfolio managers.”

The post Magellan (ASX:MFG) share price sinks 11% as Douglass steps down for ‘medical leave’ appeared first on The Motley Fool Australia.

More reading

• Why Boral, Magellan, REA, and SEEK shares are falling today
• Are the worst-performing ASX 200 shares turnaround opportunities?
• Turning point? Magellan (ASX:MFG) posts market-beating fund returns for December
• Here are the top 10 ASX shares today
• Dividend beasts: 5 ASX 200 shares with the highest dividend yield

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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Key Points

• A2 Milk shares are down almost 50% over last 12 months
• COVID-19 disruption has plagued the company
• Brokers Citi and Jarden see value in the A2 Milk share price

The A2 Milk Company Ltd (ASX: A2M) share price has had a year to forget. COVID-19 has severely disrupted the infant formula and fresh milk company, causing logistical challenges between Australia and China.

This has weighed heavily on investor sentiment, causing a sell-off in A2 Milk shares.

During the past 12 months, the embattled company’s shares lost around 48.85%, making it one of the worst performers across the sector. By comparison, its rival Bubs Australia Ltd (ASX: BUB)’s shares lost 30.83% across the same timeframe.

At Friday’s market close, A2 Milk shares closed 1.14% higher to $5.32 apiece. It’s worth noting the company’s shares hit a multi-year low of $4.97 on 24 January, before slightly rebounding.

Why did the A2 Milk share price stumble?

Cross-border trade issues have undoubtedly led to the deterioration of the A2 Milk share price.

As such, demand/supply volatility has caused excess inventory levels, along with a significant reduction in the growth of the Chinese infant nutrition market. It seems this trend is continuing with the release of China’s 2020 birth numbers which showed a fall in the birth rate.

In response, A2 Milk recognised stock write-downs and deliberately slowed down sales in the fourth quarter of FY21. This is due to the significant decline in its English label infant milk formula (IMF) sales through both daigou/reseller and e-commerce channels.

In addition, the company increased brand investment to drive consumer demand and bolstered its leadership team. It has reorganised its Asia-Pacific division for enhanced focus on key business opportunities.

Management noted that the market landscape has experienced unprecedented change over the past 12 months, requiring the company to adapt.

Is now the right time to buy?

A number of brokers believe that the A2 Milk share price is currently trading at a bargain price.

In mid-January, the team at Citi cut its 12-month price target for the A2M Milk share price by 2.1% to $7.15. Based on Friday’s closing price, this implies an upside of 34.4% for investors.

On the other hand, analysts at Jarden also lowered their outlook on the company’s shares by 3% to NZ$6.40 (A$6.00). While the broker reduced its assessment on A2 Milk, it still sees value in the fresh milk and infant formula company. The price target represents a potential upside of 12.8% from where it trades today.

The post The A2 Milk (ASX:A2M) share price has hit multi-year lows in 2022. Is now the time to catch the cream? appeared first on The Motley Fool Australia.

More reading

• Why has the A2 Milk (ASX:A2M) share price spilled 5% in a month?
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Motley Fool contributor Aaron Teboneras owns A2 Milk. 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 A2 Milk and BUBS AUST FPO. 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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Key Points

• Woolworths shares down 8% in 2022
• Supply chain issues and weak market sentiment dragging down the Woolworths share price
• COVID-19 cases dwindling, with possible end in sight for product limits

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What a chaotic time it has been for the Woolworths Group Ltd (ASX: WOW) share price.

The supermarket giant has been battling supply chain challenges following the recent COVID-19 outbreak.

Furthermore, macroenvironmental factors have weighed down overall investor sentiment such as the likely interest rate hikes to curb rising inflation.

At Friday’s market close, Woolworths shares ended the day at $35.05 apiece, up 0.86%. However, when looking at year to date, its shares are down 7.79%.

What are Woolworths’ current woes?

With the ASX slumping since the start of the year, investors may be wondering if Woolworths shares can recover?

The rapid spread of COVID-19 forced thousands of staff to isolate themselves at home whilst waiting for their COVID-19 test results. This created a huge disruption to Woolworths’ supply chain as affected staff were obeying stay-at-home orders.

At one point, a reported 35% of its distribution centres workers were in self-quarantine.

Notably, Woolworths shelves have been laid bare in stores across the country as a result of the staff shortages. This resulted in about 50% of delayed deliveries for major product lines.

While the supply issues have continued to impact stores, product limits have been re-introduced to prevent panic buying.

The good news is that the latest COVID-19 figures are showing that we have already hit the Omicron peak.

The number of cases is on a steady decline with both New South Wales and Victoria recording a significant drop. Each of the southern states are at the lowest number of new cases since late December.

This means that it’s only a matter of time before the supermarket shelves are stacked back to full again and product limits are dropped.

Is this a buying opportunity?

A number of brokers believe that the Woolworths share price is attractively valued.

Multinational investment bank, Macquarie slashed its 12-month price target by 3.6% to $40 for Woolworths shares. This implies an upside of around 14.1% based on the current share price.

In addition, Citi lowered its assessment on Woolworths shares by 1.3% to $39. Its analysts clearly believe that there is still significant value in the company and that a recovery is inevitable. This represents a potential upside of 11.2% from where it trades today.

Woolworths share price snapshot

It’s been a rollercoaster ride for Woolworths shares over the last 12 months, posting a small loss of around 3%.

Woolworths has a price-to-earnings (P/E) ratio of 35.26 and commands a market capitalisation of roughly $42.48 billion.

The post Price check: Woolworths (ASX:WOW) shares have already dropped 8% in 2022. Can they recover? appeared first on The Motley Fool Australia.

More reading

• Could this be the biggest issue faced by ASX retail shares heading into earnings season?
• Will supply chain issues continue to dog Woolworths (ASX:WOW) when it reports this month?
• Could this help Woolworths (ASX:WOW) withstand the current climate of uncertainty?
• Why is the Woolworths (ASX:WOW) dividend smaller than Coles?
• Are ASX consumer staples shares really ‘safe’ to hold in a market selloff?

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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