Category: Stock Market

Could the Zip Co Ltd (ASX: Z1P) share price fall to just $5.50 by Christmas?

Some brokers have had their say on the prospects of the buy now, pay later business.

For shareholders that have been investors in Zip for several months already, it has been a pretty volatile ride.

Since the middle of February 2021, the Zip share price has fallen by around half.

In three months it has fallen around 16%.

Looking over the 2021 time period, the payments business has actually been reporting a significant amount of operational growth, particularly in the FY21 result and with its acquisitions. The numbers that Zip reports can have an effect on the Zip share price.

Zip FY21 result

In the latest financial year, Zip revealed triple digit growth.

It said that revenue increased 150% year on year to $403.2 million, with a 176% increase of transaction volume to $5.8 billion.

The number of customers increased by 248% to 7.3 million, whilst merchants on Zip’s network went up 109% to 51,300.

It also said that growth continued to accelerate in FY22, with FY22 year to date transaction volume up 58% year on year in Australia and 240% year on year in the US.

Zip also revealed that it was maintaining “strong unit economics” while investing for, and delivering, “strong growth” with a cash transaction margin of 3.5%.

The buy now, pay later business also said that it delivered a “strong” credit performance in light of COVID-19, driven by repeat customer usage and investments in its decisioning capabilities. Net bad debts as a percentage of transaction volume was 1.28%.

Global growth

Not only is Zip growing in the US with Quadpay, but it has been busy with expansion into other areas.

At the time of the FY21 result, it was operating in 12 markets, across five continents, with the additions of the UK, Canada and Mexico, plus the regional market entries into Europe, the Middle East and Southeast Asia. Zip also agreed to acquire the remaining shares in the South Africa BNPL business, Payflex, which has “access to a sizeable underbanked, young and fast growing African population.”

But that’s not the only thing Zip has been doing. It recently also announced an acquisition in India. It has bought an investment in ZestMoney, another BNPL business.

Zip says that India has the potential to become one of the largest markets globally and by FY26 is forecast to have US$300 billion in BNPL payment volume. It’s attracted to the younger Indian population with the “aspirational individuals’ view of credit and how they engage with financial services”. Online shopping growth also has a long way to go.

The buy now, buy later business also recently signed an agreement with Microsoft to integrate Zip within the Microsoft Edge shopping experience.

Could the Zip share price fall to $5.50?

Price targets are for the next 12 months, not just the next two or three months, so it may not hit the below price targets by Christmas.

However, with that in mind, the broker UBS actually has a price target of $5.40. This suggests the Zip share price could drop by more than 20% over the next year. Whilst the broker acknowledges that Zip is growing strongly, this is also coming with higher expenses.

However, there are other brokers with a positive outlook on its long-term growth potential. For example, Morgans rates Zip as a buy with a price target of $8.87.

The post Could the Zip (ASX:Z1P) share price sink to $5.50 by Christmas? appeared first on The Motley Fool Australia.

More reading

• How did the Zip (ASX:Z1P) share price perform last quarter?
• Why the Zip (ASX:Z1P) share price is storming 5% higher this Thursday
• These are the 10 most shorted ASX shares
• ASX 200 (ASX:XJO) midday update: Afterpay & Zip sink, energy shares rise
• Why the Zip (ASX:Z1P) share price is down 4% today

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 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 Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price has been a strong performer in 2021.

Since the start of the year, the banking giant’s shares have risen a sizeable 21%.

Can the ANZ share price hit $35.00 by Christmas?

The good news for shareholders is that despite its strong gain so far this year, one leading broker appears to believe the ANZ share price has the potential to climb close to $35.00 by Christmas.

According to a note out of Morgans, its analysts have retained their add rating and $34.50 price target on the bank’s shares.

Based on the current ANZ share price of $27.96, this implies potential upside of 23% before dividends.

Morgans has also pencilled in a $1.65 per share fully franked dividend in FY 2022. This represents a 5.9% yield at current prices. If you add this into the equation, the total potential return stretches to 29%.

Why does Morgans like ANZ?

Morgans believes the ANZ share price is attractive. In fact, it believes it offers the most value among the major banks right now.

In addition to this, the broker is a fan of the bank’s cost reduction plans and the de-risking of its loan book.

The broker commented: “We believe ANZ is the most compelling of the major banks on a valuation basis. We expect ANZ to continue to focus on absolute cost reduction over the medium term. ANZ has de-risked its loan book over recent years – particularly its institutional loan book – such that the quality of its loan book has improved. While ANZ’s Australian home loan book has been growing below system over recent months, we expect a disciplined margin performance from ANZ.”

All in all, this could make the ANZ share price one to consider if you’re looking for exposure to the banking sector.

The post Could the ANZ (ASX:ANZ) share price reach $35 by Christmas? appeared first on The Motley Fool Australia.

More reading

• How did ASX bank shares perform in the last quarter?
• 2 ASX 200 dividend shares to buy next week
• Westpac and other ASX 200 banks face renewed shareholder pressure over climate policies
• ASX 200 (ASX:XJO) midday update: EML crashes, mining shares rise
• ANZ (ASX:ANZ) share price flat despite BNPL plans

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 Ampol Ltd (ASX: ALD) share price and the Z Energy Ltd (ASX: ZEL) share price will be on watch on Monday.

This follows news that several months after Ampol first made an approach, the two parties have finally agreed on a takeover transaction.

What was announced?

According to the release, Ampol and Z Energy have entered into a binding scheme implementation agreement under which Ampol will acquire all the shares of Z Energy for NZ$3.78 cash per share. In addition, Z Energy shareholders will receive NZ$0.05 per share of the interim FY 2022 dividend without adjusting the cash offer price.

This brings the overall value for the transaction to NZ$3.83 per share, which represents an 18.9% premium to the Z Energy share price at Friday’s close.

Furthermore, the release notes that if the scheme has not been implemented by 31 March 2022, the final cash consideration will be progressively increased to reflect Z Energy’s FY 2023 performance. This allows for an increase of up to NZ$0.10 per share.

What now?

The Z Energy Board unanimously recommends that shareholders vote in favour of the scheme. This is subject to the scheme consideration being within or above the valuation range specified by the independent advisor and in the absence of a superior proposal being made for Z Energy.

The release also notes that the scheme is subject to a number of conditions including regulatory approvals from the New Zealand Commerce Commission (NZCC) and New Zealand Overseas Investment Office (OIO).

Z Energy’s Chair, Abby Foote, said: “The Z Board is unanimous in recommending this offer to Z shareholders. The Board has been focussed on the best interest of Z shareholders and has engaged constructively with Ampol over several months to secure additional value beyond the initial approach in June. The Board took the opportunity to obtain feedback from shareholders on the proposal and that has played an important role in finalising the terms of the deal.”

Why is Ampol acquiring Z Energy?

Ampol highlights that Z Energy is the market leader in New Zealand with a 40% share of all fuel volumes. It expects this to create a “Trans-Tasman fuel champion” with a combined network of ~2,400 sites and supplying ~23.5 BL of fuel per annum to customers in the Asia-Pacific region.

In addition, management sees material transition and synergy opportunities totalling NZ$60 million to NZ$80 million. These are expected to come from fuel procurement and overhead cost reductions.

All in all, Ampol believes the acquisition could be double digit earnings per share accretive and +20% free cash flow accretive in 2023.

The Z Energy share price is up 8% on the NZX in early trade.

The post Ampol (ASX:AMP) share price on watch after Z Energy takeover agreement appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX growth shares named as buys
• Here are 2 ASX dividend shares analysts rate highly
• 5 things to watch on the ASX 200 on Monday
• Why did the Rio Tinto share price struggle in the September 2021 quarter?
• Could the NAB share price hit $30 before the end of 2021?

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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If you’re looking for growth shares, then look no further. Listed below are two ASX growth shares which have been tipped for strong growth in the future.

Here’s why analysts have rated them as buys:

NEXTDC Ltd (ASX: NXT)

The first ASX growth share for investors to consider is NEXTDC. From a collection of Tier III and Tier IV data centre facilities in key locations across Australia, NEXTDC provides colocation services to local and international organisations.

Over the last decade, NEXTDC has been growing its sales and operating earnings at a consistently strong rate. This has been driven by increasing demand for its data centre services thanks to the structural shift to the cloud.

The good news is that demand continues to grow as the shift accelerates. So much so, NEXTDC is bringing forward capacity additions and new centre developments to meet it. In addition, the company sees an opportunity to expand into the Asian market and has opened up offices in Singapore and Tokyo.

Goldman Sachs is very positive on the company’s outlook. It believes NEXTDC will grow its EBITDA by ~20% per annum through to at least FY 2024.

Its analysts have a buy rating and $14.40 price target on the company’s shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share to look at is Temple & Webster. It is one of Australia’s leading online retailers with a focus on furniture and homewares.

As with NEXTDC, Temple & Webster has been growing at a strong rate in recent years and appears well-placed to continue this trend in the years to come. This is particularly the case given the ongoing shift to online shopping.

Analysts at Credit Suisse are confident in the company’s future. The broker currently has an outperform rating and $15.73 price target on Temple & Webster’s shares.

Credit Suisse has previously revealed that it sees scope for online furniture sales to account for 13% of industry sales by FY 2025. And due to its leadership position, this bodes well for the company’s growth over the next few years.

The post 2 excellent ASX growth shares named as buys appeared first on The Motley Fool Australia.

More reading

• 3 fantastic ASX growth shares to buy
• Why the Zip (ASX:Z1P) share price is down 4% today
• 2 leading ASX e-commerce shares that could be buys in October 2021
• These were the worst performing ASX 200 shares last week
• Why this broker sees 23% upside for the NEXTDC (ASX:NXT) share price

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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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With low interest rates still at very low levels, it remains a difficult period for income investors.

The good news is there are plenty of ASX dividend shares that can help you overcome low rates.

Two such dividend shares are listed below. Here’s what you need to know about them:

Healius Ltd (ASX: HLS)

The first ASX dividend share to look at is Healius. It is a healthcare company with a focus on pathology, diagnostic imaging, day hospitals, and IVF.

Healius has been a very strong performer over the last 18 months thanks largely to its pathology business, which is experiencing significant demand for COVID-19 testing services. And with demand unlikely to soften for some time to come, the company has been tipped to generate strong earnings and dividends again in FY 2022 by the team at Macquarie.

According to a recent note, the broker has an outperform rating and $5.55 price target on its shares.

Macquarie is forecasting fully franked dividends per share of 19.5 cents in FY 2022 and 13.9 cents in FY 2023. Based on the current Healius share price of $4.82, this will mean yields of 4% and 2.9%, respectively.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend share to consider is Super Retail. It is the retail conglomerate behind four leading store brands – BCF, Macpac, Rebel, and Super Cheap Auto.

As with Healius, Super Retail was on form in FY 2021, delivering stellar sales and profit growth over the 12 months. For example, the company reported a 22% increase in sales to $3.45 billion and a 107% jump in normalised net profit after tax to $306.8 million. This was driven by a favourable shift in consumer spending.

The team at Credit Suisse are positive on the company’s medium term outlook and have an outperform rating and $14.41 price target.

The broker is also forecasting fully franked dividends per share of 53 cents in FY 2022 and 50 cents in FY 2023. Based on the current Super Retail share price of $12.77, this will mean yields of 4.1% and 3.5%, respectively.

The post Here are 2 ASX dividend shares analysts rate highly appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Which ASX 300 shares are the biggest winners and losers on Thursday?
• Why Collins Foods, Pilbara Minerals, Sezzle, & Super Retail are pushing higher
• ASX 200 (ASX:XJO) midday update: Pilbara Minerals jumps, Whitehaven Coal sinks
• Top broker upgrades the Super Retail (ASX:SUL) share price to buy

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 Super Retail Group Limited. The Motley Fool Australia owns shares of and has recommended Super Retail 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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On Friday the S&P/ASX 200 Index (ASX: XJO) was on form and finished the week on a positive note. The benchmark index rose 0.9% to 7,320.1 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge lower

The Australian share market looks set to start the week on a subdued note. According to the latest SPI futures, the ASX 200 is expected to open the day 4 points or 0.05% lower this morning. This follows a soft end to the week on Wall Street, which saw the Dow Jones edge slightly lower, the S&P 500 fall 0.2%, and the Nasdaq drop 0.5%.

Oil prices rise

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a solid start to the week after oil prices rose on Friday night. According to Bloomberg, the WTI crude oil price is up 1.05% to US$79.35 a barrel and the Brent crude oil price has risen 1.2% to US$82.39 a barrel. Prices rose 3.9% and 4.6%, respectively, over the five days amid supply concerns.

PointsBet named as a buy

The Pointsbet Holdings Ltd (ASX: PBH) share price could be in the buy zone according to analysts at Goldman Sachs. This morning the broker retained its buy rating and $14.75 price target on the sports betting and iGaming provider. Goldman was recently at a conference in Las Vegas where the management teams of PointsBet and other gaming companies were attending. It notes that the companies reported stronger near-term top-line trends in online even as challenging comparisons are lapped.

Gold price edges lower

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged lower on Friday night. According to CNBC, the spot gold price fell 0.1% to US$1,757.40 an ounce. The precious metal hit a two-week high at one stage after US jobs data fell short of expectations.

Iron ore prices charge higher

BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) shares could have a good day after the spot iron ore price strengthened. According to Metal Bulletin, the benchmark iron ore price jumped 5.4% to US$123.38 a tonne on Friday night.

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

More reading

• Why did the Rio Tinto share price struggle in the September 2021 quarter?
• 2 buy-rated ASX dividend shares with big yields
• Here’s what happened to the CSL (ASX:CSL) share price in the FY22 first quarter
• 3 fantastic ASX growth shares to buy
• Why this expert reckons the Woolworths (ASX:WOW) share price is on special

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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In the quarter for the three months to 30 September 2021, the Rio Tinto Limited (ASX: RIO) share price has been struggling. What has been going on?

The September 2021 quarter represents the third quarter of Rio Tinto’s financial year because its financials align with the calendar year.

Between 1 July 2021 and 30 September 2021, Rio Tinto shares fell by just over 20%.

A few days after reporting its half-year result, the Rio Tinto share price actually reached a peak of $134.40. So, up until early August, it had actually risen during the quarter.

FY21 result

That half-year report actually included a lot of growth. Net operating cash generated jumped 143% to US$13.66 billion. Underlying earnings went up 156% to US$12.17 billion. Free cashflow surged 262% to US$10.18 billion. Reported net earnings soared 271% to US$12.3 billion.

All of that growth allowed the board to declare a total dividend per share of US$5.61 for the result, an increase of 262%. That included a special dividend per share of US$1.85.

Of the total underlying earnings, Rio Tinto generated US$10.2 billion of that from iron ore. The other two sizeable contributors were aluminium (US$921 million of net earnings) and copper (US$885 million of net earnings).

As readers can see, iron ore plays a big part in the profits (and dividend) of the business.

Looking at the six months to 30 June 2021, Rio Tinto said that the average realised price for its iron ore increased 97% to US$168.4 per dry metric tonne.

So, what may be hurting the Rio Tinto share price?

Whilst the miner benefited from the rising iron ore price during the first half of 2021. It appears to be suffering from the reversal of strength of iron. The iron ore price has roughly halved between May 2021 and now.

All things being equal, the lower iron ore price likely means Rio Tinto can’t generate quite as much profit.

Analysts may point to lots of different reasons for iron weakening such as the Evergrande crisis in China, steelmakers in China being told to reduce production and higher production coming back online in Brazil.

The iron ore price is certainly not at the lowest price it has been over the past decade, but it’s materially lower than where it was a few months ago.

What could help the Rio Tinto share price in the future?

Commodities like iron ore often move in cycles. Peaks and troughs could continue for iron ore.

Rio Tinto is also looking to diversify its earnings.

On 27 July, the board committed $2.4 billion of funding for the Jadar lithium-borates project in Serbia, one of the world’s largest greenfield lithium projects, subject to receiving all relevant approvals, permits and licences.

This lithium asset is expected to operate in the first quartile of the cost curve, with a 40-year mine life. First saleable production is expected to take place in mid-2026 at a time of strong market fundamentals with lithium demand forecast to grow 25% to 35% per year over the next decade.

Following ramp-up to full production in 2029, the mine is expected to produce approximately 58,000 tonnes of battery-grade lithium carbonate, 160,000 tonnes of boric acid and 255,000 tonnes of sodium sulphate annually.

Rio Tinto said that Jadar could supply all the necessary lithium to power over one million electric vehicles per year.

The post Why did the Rio Tinto share price struggle in the September 2021 quarter? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Rio Tinto (ASX:RIO), BHP and Fortescue share prices are surging today
• US warns Evergrande crisis could affect ‘entire world’
• ASX 200 (ASX:XJO) midday update: EML crashes, mining shares rise
• CBA (ASX:CBA) warns iron ore price will fall by 27% in the next year
• Could the Rio Tinto (ASX:RIO) share price reach $123 by the end of 2021?

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 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 National Australia Bank Ltd (ASX: NAB) share price was on form last week.

The banking giant’s shares rose almost 2% over the five days to end the period at $28.38.

This means the NAB share price is now up 24% since the start of the year.

Could the NAB share price hit $30.00 before the end of the year?

One leading broker that believes the NAB share price could rise further from here is Goldman Sachs.

A note out of the investment bank last week reveals that its analysts have retained their conviction buy rating and $30.62 price target on the bank’s shares.

Based on the current NAB share price, this implies potential upside of 7.9% over the next 12 months.

In addition, the broker is forecasting a fully franked $1.40 per share dividend in FY 2022. This represents a 4.9% dividend yield, which brings the total potential return to almost 13%.

Based on this, Goldman appears to believe there’s potential for the NAB share price to hit $30.00 by the end of the year.

What did the broker say?

NAB is the broker’s top pick among the major banks for a number of reasons. One of those is its cost management initiatives. It recently explained:

“i) NAB’s cost management initiatives, which seem further progressed relative to most of its peers, should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure (3Q21 update shows NAB is tracking well against this).”

Goldman also likes NAB due to its strong position in business banking. Its analysts commented:

“ii) given NAB’s position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes (3Q21 update showed continued volume momentum).”

Finally, Goldman has been pleased with the way it manages its margins. It said:

“iii) NAB continues to effectively manage the balance between volumes and margins as well as any peer.”

The post Could the NAB share price to hit $30 before the end of 2021? appeared first on The Motley Fool Australia.

More reading

• How did ASX bank shares perform in the last quarter?
• Westpac and other ASX 200 banks face renewed shareholder pressure over climate policies
• Is the NAB (ASX:NAB) share price a buy?
• 5 things to watch on the ASX 200 on Thursday
• What happened for the NAB (ASX:NAB) share price in the FY22 first quarter?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $5.50 price target on this infant formula company’s shares. While it acknowledges that infant formula prices are stabilising, it isn’t enough for any changes to its rating. Particularly given its concerns over slowing birth rates in China and market share losses in stage 1 formula. The A2 Milk share price finished the week at $6.02.

Magellan Financial Group Ltd (ASX: MFG)

A note out of UBS reveals that its analysts have retained their sell rating and cut their price target on this fund manager’s shares to $29.00. This follows the release of another disappointing funds under management update, which revealed further fund outflows. The broker suspects this is being driven by the poor performance of its flagship Global Fund and fears that there could be further outflows to come. Particularly on the retail side due to its poor performance and high fees. The Magellan share price was trading at $33.90 at Friday’s close.

Unibail-Rodamco-Westfield CDI (ASX: URW)

Analysts at Ord Minnett have retained their sell rating and $4.00 price target on this shopping centre operator’s shares. While Ord Minnett notes that Unibail-Rodamco-Westfield’s shares have pulled back meaningfully in recent months. It still doesn’t see enough value in them to change its rating. Particularly given how it is yet to see proof that a rebound in trading conditions is taking place. As a result, it is holding firm with its sell rating for the time being. The Unibail-Rodamco-Westfield share price ended the week at $4.94 today.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Which shares are set to finish the week as the top movers on the ASX 300?
• Top brokers name 3 ASX shares to sell today
• Why Fletcher Building, Magellan, Sezzle, & Starpharma are racing higher
• Here’s why these top brokers reckon the Magellan (ASX:MFG) share price is cheap

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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If you’re wanting to construct a balanced portfolio, owning a few ASX 200 shares could be a smart move.

But which ASX 200 shares should you buy? Two that could be in the buy zone are listed below:

Coles Group Ltd (ASX: COL)

The first ASX 200 share for investors to consider is Coles. It is one of the big two supermarket operators in the ANZ market. In addition to this, it has a number of complementary businesses such as its convenience stores, flybuys loyalty program, and Liquorland.

Due to the strength of these businesses and their positive long term outlooks, Coles has been tipped as an ASX share to buy. This is particularly the case for income investors due to its attractive yield and favourable dividend policy.

Morgans is positive on the company and is forecasting generous dividend payments in the coming years. Its analysts are expecting dividends per share of 61 cents in FY 2022 and 62 cents in FY 2022. Based on the current Coles share price of $17.03, this will mean fully franked yields of 3.6% and 3.65%, respectively, over the next two years.

Morgans has an add rating and $19.80 price target on its shares.

ResMed Inc. (ASX: RMD)

Another ASX 200 share to look at is ResMed. It is one of the world’s leading sleep treatment-focused medical device companies.

ResMed has been growing its revenue and earnings at a very strong rate over the last decade. This has been underpinned by its industry-leading products, growing software business, the increasing awareness of sleep disorders, and its investment in research and development (R&D).

Pleasingly, the company’s growth outlook remains very positive. This is thanks to its huge addressable market and the shift to home healthcare. The latter is being supported by its comprehensive out-of-hospital software platforms that allow people to stay healthy in the home or care setting of their choice.

Another positive is that one of its biggest rivals is currently battling with a major product recall. This is expected to allow ResMed to gain market share this year.

The team at Credit Suisse are very positive on the company. The broker currently has an outperform rating and $44.00 price target on its shares.

The post 2 high quality ASX 200 shares named as buys appeared first on The Motley Fool Australia.

More reading

• Top broker names 2 of the best ASX shares to buy in October
• Why this broker sees 17% upside for the Coles (ASX:COL) share price
• 5 defensive ASX shares to guide you through the market correction
• 2 highly rated ASX dividend shares to buy
• 2 ASX 200 dividend shares named as buys for October

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 recommended ResMed. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended ResMed Inc. 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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