Category: Stock Market

The Xero Limited (ASX: XRO) share price will be one to watch today.

This follows the release of the cloud accounting company’s half year results.

Xero share price on watch after reporting further strong growth

• Operating revenue up 23% to NZ$505.7 million (26% in constant currency)
• Annualised monthly recurring revenue (AMRR) grew 29% to NZ$1,132 million
• Total subscribers increased 23% to 3.0 million
• Total subscriber lifetime value (LTV) growth of 61% to NZ$9.9 billion
• Free cash flow down to NZ$6.4 million from NZ$54.3 million
• Gross margin increased by 1.4 percentage points to 87.1%
• EBITDA down 19% to NZ$98.1 million

What happened during the half?

For the six months ended 30 September, Xero reported a 23% increase in operating revenue to NZ$505.7 million. This was underpinned by a 23% lift in subscribers to 3 million and improvements in its average revenue per user (ARPU) and churn. This ultimately helped drive its AMRR beyond NZ$1 billion for the first time.

The Australia segment was once again a key driver of Xero’s growth during the half. Australian revenue increased 22% to NZ$224.9 million following the addition of 124,000 net subscribers. This brought its total to 1.24 subscribers in the country.

Things were positive in New Zealand, with revenue increasing 13% to NZ$72 million. Xero added 34,000 net subscribers to reach a total of 480,000 subscribers. Management was pleased with this performance, noting that delivering double digit subscriber growth in a market where cloud adoption is relatively high points positively to the potential of other markets.

Over in the UK, Xero’s revenue increased by a solid 24% to NZ$132.8 million following the addition of 65,000 net subscribers. This took total subscribers in the UK to 785,000. While deadlines for the implementation of Making Tax Digital (MTD) in the UK for income tax were deferred, Xero continues to invest in readiness for upcoming phases of MTD. These changes are expected to impact millions of UK small businesses.

One slight disappointment was the performance of Xero’s North America segment. It delivered revenue growth of just 5% (or 14% in constant currency) to NZ$30.1 million. Xero added 23,000 net subscribers to reach a total of 308,000 subscribers. Management advised that it continues to focus on developing the partner channel in North America and signed with a number of US and Canadian accounting firms to make Xero a preferred solution for their practices.

Finally, the Rest of World (ROW) segment performed strongly, reporting revenue growth of 72% to NZ$45.9 million. This segment was boosted by the first time inclusion of Planday and a 26,000 net increase in subscribers to 201,000. Xero notes that it continues to see strong progress within Xero’s South Africa business which is scaling a large base of subscribers. Singapore has also continued to be a strong performer within ROW.

LOCATE acquisition

Xero has continued its acquisition spree by announcing a deal to acquire LOCATE Inventory.

LOCATE is a US cloud-based inventory management provide which better supports the inventory needs of small business and enhances ecommerce capability.

The acquisition will embed LOCATE’s inventory and ecommerce talent and capability within Xero to enhance its inventory management offering. Management expects this to help meet increased small business demand for inventory and cash flow management tools.

Total consideration for the purchase and subsequent employee incentive payments will be US$19 million. Transaction, integration and operating costs are expected to have a minimal impact on Xero’s FY 2022 EBITDA.

Outlook

Xero plans to continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value.

While no sales or earnings guidance was given for the full year, management provided investors with an idea of its spending plans.

It commented: “Total operating expenses (excluding acquisition integration costs) as a percentage of operating revenue for FY22 are expected to be in a range of 80-85% which is consistent with levels seen in the second half of FY21 and the pre-pandemic period. Integration costs, relating to all the acquisitions announced since the start of FY21, are expected to increase total operating expenses as a percentage of operating revenue by up to 2% for FY22.”

The Xero share price is trading flat in 2021.

The post Xero (ASX:XRO) share price on watch after delivering strong first half growth appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
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• Could the Xero (ASX:XRO) share price be a quality buy?
• 3 explosive ASX tech shares to buy in November

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

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Fidelity International portfolio manager Kate Howitt reveals the 2 ASX shares to buy at the moment.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now?

Kate Howitt: The two I came up with were Evolution Mining Ltd (ASX: EVN) and Synlait Milk Ltd (ASX: SM1).

Evolution is a gold company. I put this in the category of buying umbrellas when it’s not raining. Gold is one of those things that goes in and out of fashion kind of with how worried the investment community is. And when the investment community is worried, the gold price goes up and the gold stocks go on a tear and you sit there looking, thinking why don’t I own more gold? 

Buy umbrellas when it’s not raining — buy gold when people are confident about the world and gold stocks are unloved, which is pretty much where they are now.

The big shift that came out of the pandemic is that every government in the world got comfortable with doing a lot of fiscal support. Even parties like our own Coalition, which is based on being the party of economic fiscal responsibility, turned the taps on. And that’s going to be really hard to reverse.

That kind of generalised increase in money supply historically has always led to inflation, currency debasement, and in those environments, gold does well. So Evolution is a great operator in the Australian scene. They’ve proven themselves to be very, very good operators.

MF: I’m a long-suffering shareholder of A2 Milk Company Ltd (ASX: A2M), so please tell me a bit about Synlait.

KH: I think part of the argument for Synlait is it’s diversified beyond A2. [Until now] it’s kind of been seen as a derivative of A2 — A2 goes up, it goes up; A2 goes down, it goes down. 

Ironically, it’s been even worse for Synlait because they recognised the need to diversify away from A2. So they made some large investments in building new facilities. And they’re kind of at the point of maximum financial stretch on those, but they haven’t got the new non-A2 client volumes coming through those yet. 

Then just while they’re going through that process of stretching their own balance sheet to give them some further growth, they had this collapse in A2’s volumes, on both the English language and the China label. 

So they had excess supply that didn’t go to A2, they had put that through to ingredients. The ingredients are lower margin, and it’s sold in US dollars, not New Zealand dollars. So then the currency moved against them. It was almost a perfect storm.

They’ve gone through that now, and the market is just saying the China infant formula trade is over — there’ll never be any more growth. We think they will be great — A2 is not their only client even for infant formula, they’re diversifying beyond dairy. 

So we think there’s a potential, the kind of turnaround and bottoming that you’ve seen from Blackmores Limited (ASX: BKL) when it was very unloved, it was tied to old brands that no one was ever going to buy again.

Well, we’ve seen that, with a good management team, that company has started its turnaround process, and we think Synlait is going to follow in that direction.

The post 2 unloved ASX shares ready to skyrocket appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns shares of 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 owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended A2 Milk. 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 Wesfarmers Ltd (ASX: WES) share price has been a positive performer in 2021.

Since the start of the year, the conglomerate’s shares have risen 16% to $59.84.

Investors may now be wondering where next for the Wesfarmers share price, particularly given the recent announcement of the acquisition of Australian Pharmaceutical Industries Ltd (ASX: API).

Is the Wesfarmers share price heading higher?

Unfortunately for shareholders, one leading broker doesn’t expect the acquisition of the Priceline pharmacy chain operator to lift Wesfarmers’ shares.

In fact, the team at Citi believes the company’s shares can still tumble meaningfully despite this agreement.

According to a note from this week, the broker has retained its sell rating but lifted their price target slightly to $50.00.

Based on the current Wesfarmers share price, this implies potential downside of over 16% for the company’s shares.

What did the broker say?

While Citi expects the deal to give Wesfarmers’ earnings a small boost, it isn’t enough for a more positive rating.

Citi continues to believe that the Wesfarmers share price is overvalued based on current multiples.

It commented: “Wesfarmers has entered a scheme implementation deed with API at a $1.55 per share acquisition price, net of dividends declared. The transaction is set to be completed by first quarter calendar year 2022, subject to shareholder, court and ACCC approval. Given Sigma has dropped their bid and the relatively lower concern over competition regarding a Wesfarmers owned API, we view the transaction as likely to go ahead and therefore factor the new business into our model for Wesfarmers.”

“Contribution from API is expected to lift EPS by ~1.5% from FY22e onwards with no synergies expected. We lift our Target Price by 2% to $50.00 per share but remain Sell rated on valuation basis. At 27.9x FY23e earnings, Wesfarmers is trading on ~15% premium to the market ex-resources,” it concluded.

The post Citi tips Wesfarmers (ASX:WES) share price to dip 16% following API deal 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 owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Goodman Group (ASX: GMG) share price has risen by around 24%. Can the e-commerce boom continue to help the business?

In-fact, Goodman shares have gone up by around 14% in the last month alone.

Many brokers believe that the business is still a buy, despite its strong run up of value. For example, Credit Suisse thinks it’s a buy with a price target of $25.01.

The brokers at Macquarie Group Ltd (ASX: MQG) believe that Goodman is a buy with a price target of $26.45.

Morgan Stanley thinks it’s a buy with a price target of $26.50 for the Goodman share price.

All of those brokers recently updated their thoughts on the real estate giant after the latest quarterly update from Goodman.

Financial strength and growth in FY22 Q1

Goodman said that at 30 September 2021, its total assets under management (AUM) had grown to $62 billion.

The business experienced 3.2% like for like net property income (NPI) growth in its managed partnerships. The occupancy across the partnerships was 98.4%. The development pipeline of work in progress (WIP) had grown to $12.7 billion.

Goodman noted that COVID-related disruptions in FY22 have been managed so that they have had less impact on the full year projections than initially assumed.

In addition, given the strength of its development projects, leasing success and the stronger-than-expected performance of its partnerships, the outlook for FY22 is ahead of previous forecasts.

It’s now expecting operating earnings per share (EPS) growth to be more than 15%.

E-commerce boom

Goodman made a number of observations that explained why it is seeing such a strong operating environment, which may be helping the Goodman share price.

The real estate business said that well-located industrial real estate is recognised as essential infrastructure for the digital economy and making it a highly sought-after asset class. Recent market transactions and strong demand is driving asset values higher. Combined with “significant” rental growth, this is expected to support further valuation growth similar to FY21.

By June 2022, Goodman is expecting its AUM to rise to around $70 billion. Investors often like to think about the upcoming financial year when considering the Goodman share price.

The business also said that the significant level of customer demand, combined with supply restrictions in its markets, is creating a shortage of available space. It’s focusing on infill markets, to deliver sustainable opportunities for customers and investors, while securing cashflow growth for the long-term.

The boss of Goodman, Greg Goodman, said:

The results of the deliberate positioning of our portfolio over the last decade to adapt to and leverage the changes in the digital economy, are now being realised. Customer demand for high-quality properties close to consumers has never been greater.

High utilisation of space, barriers to entry and limited supply in our markets are underpinning occupancy and cash flow growth in our portfolio, with strong rental growth occurring globally…We remain focused on regeneration of existing land and buildings in our portfolio, supporting future development work and reducing our impact on the environment.

The value added to our properties through intensification of use, and strong investor appetite for logistics real estate will drive further positive revaluation outcomes in FY22.

Valuation of the Goodman share price

Using Morgan Stanley’s estimates, Goodman is valued at 32x FY22’s estimated earnings.

The post Can the e-commerce boom keep helping the Goodman (ASX:GMG) share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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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Commonwealth Bank of Australia (ASX: CBA) has enjoyed a strong run over the past year.

Atop a big leap in the CBA share price in the last 12 months, the bank also pays a trailing dividend yield of 3.18% fully franked.

But how has CommBank performed compared to its 3 biggest peers?

How has the CBA share price performed compared to its peers?

You won’t find shareholders complaining about CommBank’s performance over the past 12 months. Or at least, you shouldn’t!

In fact, the CBA share price gains sit right at the top the leader board when compared to the other 3 dominant Aussie banks.

Over the past 12 months, CommBank shares have gained 50.6%.

National Australia Bank Ltd (ASX: NAB) comes in number 2. The NAB share price is up 41.9% since this time last year. NAB pays a trailing dividend yield of 3.11%.

Coming in at number 3 is Australia and New Zealand Banking Group Ltd (ASX: ANZ). ANZ shares have gained 38.9% over 12 months. The bank pays a trailing dividend yield of 3.65%.

And at number 4, with a still respectable 22.4% share price gain, is Westpac Banking Corp (ASX: WBC). And Westpac easily leads its competitors when it comes to dividends, with a trailing dividend yield of 6.52%.

CBA’s share price gain tops the board. But it’s worth noting that all big 4 banks outperformed the 17% gain posted by the S&P/ASX 200 Index (ASX: XJO) over this same period. And that’s without including their dividends.

Is CommBank still good value?

Following an almost 51% increase in the CBA share price over the past full year, investors may be wondering if the bank still presents good value.

The answer to that question varies depending on who you ask.

While there are a few bearish brokers and analysts reporting on CommBank, Kardinia Capital’s portfolio manager Kristiaan Rehder is not among them.

In an interview with The Motely Fool (which will be published in its entirety next week), Rehder said:

CBA has had strong core volumes growth, which is being maintained.

It’s really dominating in the home lending and the retail deposit market. It has very strong overall net interest margins, with high asset quality. The capitalisation rate is undeniable. We believe that CBA remains the highest quality name in the banking sector.

The post How does the CBA share price performance stack up against the other big banks? appeared first on The Motley Fool Australia.

More reading

• Why does NAB’s (ASX:NAB) CEO want house prices to fall?
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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.

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The Zip Co. Ltd (ASX: Z1P) share price has dropped by more than 12% over the last month. Could it be a buy now, or should investors wait until later?

Zip shares are actually 31% lower than the peak of the last six months of $8.78 in July 2021.

What do brokers think of the Zip share price?

Despite the heavy decline, some analysts remain bearish on the BNPL business.

For example, analysts at both Macquarie Group Ltd (ASX: MQG) and UBS rate Zip as a sell, with price targets of $5.40 and $5.70 respectively.

UBS notes the recent negative that regulators are now thinking that it would be a good idea if merchants are able to add BNPL fees onto the costs for consumers, if that merchant wants to.

However, the broker Morgans has a much more positive outlook on the business. This broker rates Zip as a buy, with a price target of $8.56 on the Zip share price. The broker was thinking about Zip’s recent quarterly update as well as the potential growth over the coming years.

Zip’s quarterly update

The buy now, pay later business reported a high level of growth in the first quarter of FY22.

It said that it achieved record group quarterly revenue of $136.8 million, an increase of 89% year on year. The transaction volume growth was 101% year on year to $1.9 billion.

This growth was helped by the 82% growth of customer numbers year on year to 8 million. Merchants on the platform went up by 71% to 55,200.

Profitability margins

Zip said that it has maintained market leading buy now, pay later margins with revenue as a percentage of total transaction value (TTV) at 7%.

Looking at the cash transaction margin in FY21, this reduced by 40 basis points from 3.8% in FY20 to 3.4% in FY21.

However, in the first quarter of FY22, the arrears increased. Arrears are accounts that have been delinquent for more than 60 days. At 30 September 2020, arrears were 0.9%. This had risen to 1.87% at 30 September 2021.

Profitability can be a key area that investors look at when deciding what to value the Zip share price.

International growth

Zip continues to make moves to expand globally.

For example, it has entered into an agreement with Microsoft to integrate Zip’s instalment payment technology into the shopping experience within the Microsoft Edge web browser.

Zip has also continued its global expansion strategy with a move to India with a strategic investment in ZestMoney. ZestMoney is one the largest and fasting-growing BNPL platforms in India, with over 11 million registered users and more than 10,000 online merchants.

The buy now, pay later business also said that Zip Mexico is now live and processing transactions. It recently signed Claro Shop, one of the largest online marketplaces in Mexico.

Zip Canada also continues to grow, with Canadian consumers shopping through Zip’s large US merchants.

Another broker thought on the Zip share price

There are a range of opinions on Zip shares. One rating is ‘neutral’ by Citi, though it still has a price target of $7.40 on the company. The broker notes that growth is slowing, but arrears are rising.

Zip management believe that re-investing for growth will generate the greatest value for shareholders over the long-term.

The post Is the Zip (ASX:Z1P) share price a buy now, or wait for later? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. The Motley Fool Australia owns shares of and 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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As almost all investors would be aware of, the past few years have given Australian property investors unprecedented returns. Anyone who currently owns a property has likely seen it go up in value over the past year, and by quite a large margin too.

But with years of double-digit growth rates under the belt, many investors are wondering where to from here? Well, one ASX CEO has a fairly decisive view about what will, or should, happen next.

According to recent reporting in the Australian Financial Review (AFR), CEO of National Australia Bank Ltd (ASX: NAB) Ross McEwan has told investors that “we can’t afford” property prices to keep going up, lest we find ourselves in a similar house price crisis:

We cannot see another 20 per cent house price growth over the next 12 months. We cannot afford to have that happen in the Australian marketplace.

NAB CEO says ‘we can’t afford houses to keep rising’

The report finds that Sydney property prices have risen by a staggering 25% over just the past 12 months, mostly due to interest rates being at the record low of 0.1%. But Mr McEwan doesn’t think lifting rates is the answer to cooling the property market. He backs the Reserve Bank of Australia’s decision not to raise rates until economic conditions improve and wage growth picks up.

Instead, McEwan reckons the “fairest and most effective way” to pump the housing market brakes is for the Australian Prudential Regulation Authority (APRA) to “double the rise in the serviceability buffer” for new loans.

The serviceability buffer is the gap between the mortgage interest rate a property owner is offered on their loan and a predetermined ‘buffer’ that the bank uses to assess the lendee’s ability to service the loan should rates rise.

On 31 October, APRA raised this buffer to 3%, meaning that if a customer gets a mortgage at an interest rate of 2%, the bank will assess their ability to service the loan at a 5% interest rate.

“They could always move that again,” Mr McEwan said of the serviceability buffer. “My view, and discussions with the regulator, have been that it is the simplest way to have an impact.”

So it seems Mr McEwan is cheering on a fall in house prices. That might make him both very popular and very unpopular with different demographics of Australian society.

The post Why does NAB’s (ASX:NAB) CEO want house prices to fall? appeared first on The Motley Fool Australia.

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

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It’s a massive week for ASX listings this week, as Friday will see the second billion-dollar company debut.

In fact, APM Human Services International Limited (ASX: APM) will start its public life with a $3.26 billion market capitalisation. That dwarfs Siteminder Limited (ASX: SDR)’s $1.36 billion valuation at the time of its listing on Monday.

The initial public offer (IPO) alone will have raised $982 million for APM Human Services.

APM is a disability services provider with headquarters in Perth. The business was established in 1994 by executive chair Megan Wynne, who will become a billionaire on Friday with her 34.2% stake.

“I started my career as an occupational therapist and it is our allied health and rehabilitation foundations that shape the way we approach working with our clients,” she said in a letter to investors.

“Regardless of their circumstances, age, or stage of life, our evidence-based practice supports people to live a fulfilling life, recover from injury or illness, gain sustainable employment, or maintain their quality of life as they age.”

APM shares were issued during the IPO at $3.55 each. They start trading on a conditional and deferred settlement basis on Friday, while general trading will commence Wednesday.

APM is profitable, but reliant on government programs

Although broadly labelled as a disability services provider, the company also lists “sole parents, youth, aged workers, ex-offenders, and people from culturally or linguistically diverse backgrounds” as beneficiaries of its services.

Technically, the customers are institutions, mainly government employment agencies.

The prospectus indicates the main reasons for raising $982 million are to pay off debts and provide existing investors with a liquid market to trade their shares.

APM has business spread across 10 countries, with 52.2% of its revenue coming from Australia. Europe raked in 26.8% of the 2021 financial year revenue, while North America brought in 12.5% and Asia-Pacific 8.5%.

The last financial year saw $1.03 billion of revenue come in, resulting in a net profit after tax and amortisation of $48.9 million.

“For FY22, the directors forecast that APM will generate pro forma revenue of $1.3 billion, pro forma EBITDA of $295 million and pro forma NPATA of $155 million, representing growth of 31%, 26% and 21% respectively over FY21-FY22,” said Wynne.

Fund managers have reportedly been cautious about APM’s float, as its business is heavily dependent on the federal government’s Disability Employment Services scheme.

That program has been under fire for the underwhelming results realised in return for increasing annual costs, as detailed in a Boston Consulting Group report last year.

The post Another billion-dollar baby lists on ASX this Friday appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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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Are you looking to add some dividend shares to your portfolio in the near future? Then take a look at the ones listed below.

Both dividend shares have been tipped to grow their distributions over the coming years by analysts. Here’s what you need to know about them:

Bapcor Ltd (ASX: BAP)

The first ASX dividend share to look at is Bapcor. It is the Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service and solutions.

Thanks to its strong market position, growing store footprint, a favourable redirection in consumer spending, and robust demand for used cars, Bapcor was a very positive performer in FY 2021. This led to elevated sales across all its brands and underpinned strong group sales and profit growth.

The good news is that Citi believes Bapcor is well-placed to continue its growth over the long term. This is due to its store rollout plans, supply chain optimisation initiatives, and private label penetration.

Citi expects this to allow Bapcor to grow its fully franked dividend to 23 cents per share in FY 2022, 25 cents per share in FY 2023, and then 32 cents per share in FY 2024. Based on the current Bapcor share price of $8.29, this will mean yields of 2.8%, 3%, and 3.9%, respectively.

Citi has a buy rating and $8.75 price target on the company’s shares.

South32 Ltd (ASX: S32)

Another ASX dividend share to look at is this mining giant. Unlike Fortescue Metals Group Limited (ASX: FMG), which has exposure to just a single commodity, South32 has operations across a number of commodities.

South32 has exposure to a range of commodities including alumina, aluminium, coal, manganese ore, nickel, silver, and very shortly, copper. The latter follows the recent earnings accretive agreement to acquire 45% of the Sierra Gorda copper mine for US$1.55 billion.

All in all, the team at Goldman Sachs believe that these operations and current commodity prices and forecasts leave South32 well-placed to pay huge dividends over the coming years. In fact, the broker is forecasting growing fully franked dividend yields greater than 11% from FY 2022 through to FY 2026.

Goldman has a conviction buy rating and $4.50 price target on the company’s shares.

The post 2 buy-rated ASX shares with growing dividends 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 owns shares of and has recommended Bapcor. 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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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped lower. The benchmark index fell 0.15% to 7,423.9 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to fall again

The Australian share market looks set to fall on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 6 points or 0.1% lower this morning. This follows a poor night on Wall Street, which in late trade sees the Dow Jones down 0.55%, the S&P 500 down 0.75%, and the Nasdaq down 1.6%. The highest US inflation reading in 30 years appears to have spooked investors and caused a spike in bond yields.

Oil prices sink

Energy shares including Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could come under pressure today after oil prices tumbled overnight. According to Bloomberg, the WTI crude oil price is down 2.9% to US$81.72 a barrel and the Brent crude oil price has fallen 2.2% to US$82.91 a barrel. Traders were selling oil after U.S. crude inventories rose by 1 million barrels in the most recent week.

Xero’s half year results

The Xero Limited (ASX: XRO) share price will be one to watch on Thursday when it releases its half year results. According to a note out of Goldman Sachs, it is expecting the cloud accounting platform provider to deliver revenue growth of 33% in FY 2022. Its analysts will therefore be looking for a first half growth rate that positions the company to achieve this.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good day after the gold price pushed higher. According to CNBC, the spot gold price is up 1% to US$1,848.2 an ounce. Traders were buying gold despite the higher than expected US inflation reading and rising bond yields.

AGMs being held

A number of ASX 200 companies are holding their annual general meetings today and could provide updates on their performances. Among the companies holding their meetings are BHP Group Ltd (ASX: BHP) (after market), Breville Group Ltd (ASX: BRG), Nearmap Ltd (ASX: NEA), and Nine Entertainment Co Holdings Ltd (ASX: NEC).

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• CSL (ASX:CSL) share price is the latest to be upgraded by a top broker
• Investors are buying up ARB (ASX:ARB) shares this month, but the company chair has been selling
• Why are ASX 200 mining shares having such a lousy 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 shares of and has recommended Nearmap Ltd. and Xero. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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