Category: Stock Market

If you want to bolster your portfolio with some blue chip ASX 200 stocks in FY 2025, then you’re in luck!

Listed below are two high-quality blue chips that analysts have rated as buys. Here’s what they are saying about them:

Challenger Ltd (ASX: CGF)

Goldman Sachs thinks that this annuities company could be a blue chip ASX 200 stock to buy this financial year.

The broker currently has a buy rating and $7.50 price target on its shares, which implies potential upside of 11% for investors. It is also expecting dividend yields of 3.7%+ through to at least FY 2026.

Goldman likes the company due to its exposure to the growing superannuation market and its belief that higher yields will support sales of retail annuities and boost its margins. The broker commented:

CGF is Australia’s largest retail and institutional annuity provider across Term and Lifetime annuities with a funds management business. We are Buy rated on the stock. We like CGF because: 1) it has exposure to the growing superannuation market across Life and Funds Management; 2) higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins; 3) its annuity book growth looks well supported through a diversified distribution strategy.

Coles Group Ltd (ASX: COL)

Analysts at Bell Potter think that this supermarket giant could be a great option for investors in the new financial year.

The broker currently has a buy rating and $19.00 price target on its shares. This implies potential upside of 11.5% for investors from current levels. In addition, its analysts are expecting Coles’ shares to provide investors with 4%+ dividend yields in the coming years.

Bell Potter believes the blue chip ASX 200 stock could be well-placed for growth as inflation pressures ease and its supply chain modernisation starts to pay off. It said:

Coles Group is a diversified company with operations in food, liquor, petrol retailing and financial services. Coles also retains a 50% ownership interest in Flybuys. Costs are expected to remain elevated but should moderate through FY24 and FY25 as general inflation tapers off. In the medium term, 1) higher immigration should support grocery spending, and 2) Coles is entering a period of elevated capex intensity as it reinvests to modernise its supply chain and to catch up to competitors on online and digital offerings, which should help Coles maintain its market position.

The post 2 outstanding blue chip ASX 200 stocks to buy for FY25 appeared first on The Motley Fool Australia.

More reading

• Here’s the earnings forecast through to 2028 for Coles shares
• Why did Coles shares underperform the ASX 200 so much in FY24?
• Forget CBA and buy these ASX dividend stocks
• Australian dividend machines: 3 ASX shares that generate reliable passive income
• Why these losing ASX stocks could be a better buy than AI right now

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

So you want to build a second income but don’t currently have any money invested in ASX shares? Well, you’ve come to the right place.

ASX shares provide one of the best and easiest paths to a source of secondary, passive income.

Dividends are passive income in the purest sense of the word. The paycheques that dividend shares send us every few months arrive regardless of whether we are working or retired, young or old, healthy or sick.

The only variable in this equation is the ASX dividend share itself  – whether the company is financially capable of funding its next dividend.

So today, let’s map out how a would-be ASX investor starting from scratch can build up a meaty second stream of income to supplement their day job.

How to build a second income with ASX shares from scratch

The first step in building up a stream of secondary dividend income from ASX shares is to get your financial house in order. There is little benefit in investing in shares if you already have significant debts.

A mortgage is fine, but if you have personal or car loans or outstanding credit card accounts, you’d almost certainly get a better bang for your buck by paying these off as soon as possible before you start deploying cash into the stock market.

Provided your debts are under control, the next step is to budget for investing. There’s no way around this one: building wealth and passive income in the stock market requires regular, meaningful investments of money.

So, before you get started, take a look at your income and expenses. You’ll need to be in a position where you habitually spend less than you’re earning and invest the difference.

If you do manage to get yourself into a position where you can reasonably rely on some surplus cash flow every pay cycle, you’re ready to invest for a second income.

The next task to tick off is picking the dividend shares to buy. The ASX is full of dividend payers, but new investors should start simple, in my view. Picking a mature, dividend-paying blue chip stock like one of the big four ASX banks, Telstra Group Ltd (ASX: TLS) or Woolworths Group Ltd (ASX: WOW), would be a fine start.

But I think an even better option is to go with an investment that takes care of portfolio management for you, at least until you gain some confidence in how the markets work.

Choosing the right dividend shares

A great choice would be a simple index fund like the BetaShares Australia 200 ETF (ASX: A200) or the Vanguard Australian Shares High Yield ETF (ASX: VHY).

Both of these exchange-traded funds (ETFs) invest in a basket of dozens of the largest stocks on the ASX. They are inherently diversified and require little effort after you buy them. And they’ll typically pay you a generous stream of secondary income to boot.

You could also go a different route and pick a listed investment company (LIC) like Argo Investments Ltd (ASX: ARG). A LIC like Argo specialises in providing investors with an underlying portfolio of blue chip stocks, which are conservatively managed for solid returns and hefty dividend income.

Make sure to accelerate this process by reinvesting your dividends at first as well. Secondary income is great. But using it to buy even more income-producing shares will get you to your passive income goals faster than taking the cash and blowing it on a night out.

Once you make your first investment, try and invest what you can, when you can, going forward. It will take some time. But if you follow a regular investing plan religiously, and put as much of your spare cash into your investments as possible, you’ll be able to build up a substantial stream of second income before you know it.

The post Here’s how ASX investors can build a meaty second income starting from scratch appeared first on The Motley Fool Australia.

More reading

• Should you buy the cheapest ASX share ETF?

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you own Rio Tinto Ltd (ASX: RIO) shares, then you will no doubt be aware that it won’t be long until the mining giant releases its highly anticipated quarterly update.

Ahead of the release on Tuesday 16 July, let’s take a look at what the market is expecting from the miner’s second quarter update.

Rio Tinto Q2 preview

According to a note out of Goldman Sachs, its analysts believe that Rio Tinto will fall short of expectation for iron ore shipments during the quarter.

This is because of a train derailment early in the quarter. However, the good news is that it thinks the company will be able to make up for this in the second half and achieve its guidance. It explains:

[W]e expect RIO’s 2Q Pilbara iron ore shipments of 79Mt vs Consensus 82Mt as a result of train derailment early in the Q. However, we think RIO can make up the lost shipments in 2H, and we model 330Mt (vs. 332Mt in 2023), in the middle of the 323-338Mt guidance range. We expect realised prices of US$107/dmt for 1H24. RIO will provide 2025 guidance for all commodities in Jan 2025.

For copper, Goldman Sachs is forecasting production of 180kt for the three months. This is ahead of the consensus estimate of 175kt. In addition, the broker expects that Rio Tinto’s realised copper price will be higher than the market thinks at US$412 per pound (compared to US$395 per pound).

It is a similar story for aluminium, with Goldman expecting Rio Tinto to report production of 832kt (cons. 829kt) and a realised price of US$2,818 per tonne (cons. US$2,770 per tonne).

At the end of the period, the broker expects this to leave the mining giant with a net debt position of US$4.9 billion versus the consensus estimate of US$4.5 billion.

Should you buy Rio Tinto shares?

Goldman continues to see value in Rio Tinto shares at current levels. It has a buy rating and $137.00 price target on them, which implies potential upside of almost 14% from current levels.

Commenting on its bullish view, the broker said:

We remain Buy rated on: (1) compelling relative valuation vs. peers, (2) attractive FCF and Div yield, (3) strong production growth in 2024-2025E of ~5% CuEq driven by the ramp-up of the Oyu Tolgoi UG copper mine & a recovery at Escondida and Bingham, higher Pilbara Fe shipments with the ramp-up of new mines, (4) potential for FCF/t improvement in the Pilbara, and (5) high margin low emission aluminium business.

The post Own Rio Tinto shares? Here’s your Q2 preview appeared first on The Motley Fool Australia.

More reading

• Here’s what the iron ore price will be this time next year: Westpac
• Are Rio Tinto shares worth digging into amid the miner’s FY25 outlook?
• Guess which ASX All Ords stock just received another $18 million investment from Rio Tinto
• What is the outlook for ASX 200 dividend shares in FY25?
• Rio Tinto share price marching higher amid $426 million ‘industry-leading’ step

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 positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

The ASX lithium share Pilbara Minerals Ltd (ASX: PLS) share price has been through enormous pain in the last year. As shown in the chart below, it’s down close to 40% over the past 12 months.

Brokers, such as UBS, have been worrying about the company’s valuation in recent times. The latest UBS notes suggest that the Pilbara Minerals share price implied a higher lithium price than the broker thought was possible for the foreseeable future.

Since 20 May 2024, the Pilbara Minerals share price has dropped close to 30%. Shareholders may be worrying about whether the ASX lithium share will keep on sinking. But there may be some light at the end of the tunnel.

Broker upgrade on Pilbara Minerals shares

According to reporting by The Australian, JPMorgan analyst Al Harvey upgraded the rating on Pilbara Minerals shares to neutral from underweight. In other words, it’s gone from a sell to a neutral rating in the minds of JPMorgan’s analysts.

The Australian said JPMorgan’s 12-month Pilbara Minerals share price target on the ASX lithium share was $2.95. Since that is virtually where it is today, JPMorgan is essentially suggesting that the Pilbara Minerals share price has finished falling.

Of course, a price target is just a broker’s best guess of where the share price is going to be in 12 months from now. The share price could be better – or worse – than what the broker expects.

Are any brokers optimistic about the ASX lithium miner?

According to Factset, seven analysts currently rate Pilbara Minerals as a buy, six have neutral ratings, and seven have sell ratings.

That’s a very mixed group of ratings on the company. While the consensus/average rating is a hold, there are more buy ratings and sell ratings than hold ratings.

Forecast for FY24 results

Regarding the lithium price, the broker UBS thinks “continued downside risk remains while supply out of Africa is strong and demand for PHEV [plug-in hybrid electric vehicles] stagnates”.

According to UBS numbers, Pilbara Minerals is still pricing in a rebound in the lithium price. However, UBS suggests it may take a while before the price returns to its long-term forecast of US$1,400 per tonne.

Increasing supply could keep the lithium price near current marginal cost support levels, according to UBS.

The broker thinks that in FY24, Pilbara Minerals could generate revenue of $1.27 billion, $525 million of earnings before interest and tax (EBIT) and $359 million of net profit after tax (NPAT). After a year of investing in growing its production, the balance sheet could see net cash decline to $942 million.

The post This top broker thinks Pilbara Minerals shares are done falling appeared first on The Motley Fool Australia.

More reading

• Why Bowen Coking Coal, Clinuvel, Meteoric Resources, and Pilbara Minerals shares are falling
• These are the 10 most shorted ASX shares
• If I’d invested $5,000 in Pilbara Minerals shares in FY24 what would I have now?
• ASX lithium shares: Screaming bargains or falling knives?
• Down 42%: Are Pilbara Minerals shares good value now?

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 Scott Phillips.

There are plenty of exchange-traded funds (ETFs) for investors to choose from on the ASX, but which ones could be top picks in July?

Let’s have a look at five excellent options that could be worth considering this month:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ASX ETF for investors to consider buying in July is the BetaShares Global Cybersecurity ETF. This popular fund gives investors access to a global cybersecurity sector that is predicted to grow materially over the next decade. This is being underpinned by the rising threat of cybercrime as more services and data shifts to the cloud. Among the companies included in the fund are industry leaders Accenture, Cisco, and Palo Alto Networks.

Betashares Global Uranium ETF (ASX: URNM)

Another ASX ETF to look at in July is the Betashares Global Uranium ETF. As you might have guessed from its name, this fund offers investors easy exposure to a portfolio of leading companies in the global uranium industry. This could be a great place to be right now. With uranium demand expected to surge over the next decade and outstrip supply, the companies included in the ETF may be well-positioned to benefit greatly. Among its holdings are local uranium miners Boss Energy Ltd (ASX: BOE) and Paladin Energy Ltd (ASX: PDN).

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

The BetaShares S&P/ASX Australian Technology ETF could be another excellent ASX ETF for investors to look at this month. This fund provides investors with access to leading Australian companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology. It was recently named as one to buy by the team at Betashares. The fund manager commented: “With the nascent adoption of AI, cloud computing, big data, automation, and the internet of things, there’s a good chance that the next decade’s major winners will come from the tech sector. Despite Australia’s sharemarket skewing heavily towards financials and resources, investors can gain direct exposure to Aussie tech stocks via ATEC.”

iShares Global Consumer Staples ETF (ASX: IXI)

Another ASX ETF for investors to look at is the iShares Global Consumer Staples ETF. This fund gives investors access to many of the world’s largest consumer staples companies. This could make it a good option if you have a low tolerance for risk. That’s because consumer staples are generally regarded as low risk options and companies that perform well whatever is happening in the global economy. Among the fund’s holdings are global giant Coca-Cola, Nestle, Procter & Gamble, and Unilever.

iShares S&P 500 ETF (ASX: IVV)

A final ASX ETF that could be a top pick for investors this month is the iShares S&P 500 ETF. This fund give you access to the 500 of the largest companies on Wall Street. This means that you will be buying a slice of a diverse group of shares from a range of different sectors. This includes countless household names such as Apple, Microsoft, and Nvidia.

The post 5 excellent ASX ETFs to buy this month appeared first on The Motley Fool Australia.

More reading

• How did the iShares S&P 500 ETF (IVV) race ahead of the ASX 200 in FY 2024?
• The 5 best ASX ETFs of FY24 revealed!
• Why it’s a big day for ASX ETFs
• Own the iShares S&P 500 ETF (IVV)? Here’s your next ASX dividend
• Top ASX shares to buy in July 2024

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 positions in and has recommended Accenture Plc, Apple, BetaShares Global Cybersecurity ETF, Cisco Systems, Microsoft, Nvidia, Palo Alto Networks, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Unilever and has recommended the following options: long January 2025 $290 calls on Accenture Plc, long January 2026 $395 calls on Microsoft, short January 2025 $310 calls on Accenture Plc, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF and iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Apple, Betashares Global Uranium Etf, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) grabs a lot of investor attention, partly because it’s the biggest company on the ASX by market capitalisation, but also due to the size of the dividends it pays out. However, I believe there’s a lot more to reliable passive income than just the current dividend yield. I think it takes a certain level of stability for a stock to be regarded as a reliable ASX dividend titan.

If an investor is seeking dependable passive income, I believe they’d benefit from owning ASX shares that can continue paying decent dividends through all economic conditions. For example, it can be very distressing for an investor’s dividends to dry up precisely when they most need them to flow during times of recession.

Admittedly, BHP’s profits and dividends are not intrinsically linked to Australia’s economic performance, but they are, to a significant extent, reliant on iron ore prices. And the iron ore price can be extremely volatile – it’s down by over 20% so far this year. This may not bode well for BHP’s dividends to be maintained at their current levels.

Where I’d look for defensive passive income

I believe ASX healthcare stock Sonic Healthcare Ltd (ASX: SHL) could be a better pick than BHP shares for long-term dividends.

For starters, Sonic Healthcare’s board has a ‘progressive dividend policy’. In other words, the directors are focused on growing the dividend, if the company can afford to do so.

Furthermore, healthcare is a sector that can deliver defensive earnings, in my opinion. After all, we don’t choose when to get sick, and most people place a high value on their health.

Sonic provides pathology services in multiple countries including Australia, Germany, the UK, the USA, and Switzerland. The company could benefit from ongoing population growth in those countries, technological advancements and geographic expansion. Sonic has also made a number of acquisitions in the last few years to boost its scale.

Impressively, the company has grown its dividend almost every year for the last 30 years, with only a handful of years when the dividend was maintained during that period.

Sonic has grown its annual dividend every year since 2013, so it has delivered a sustained decade of dividend growth.

What is this ASX dividend titan’s yield?

Excluding franking credits, the last two dividends declared by Sonic amount to a dividend yield of 4.05%.

According to Commsec, the company’s dividend is expected to keep growing. The projection translates into a dividend yield of 4.1% in FY26.

I think that’s a solid starting yield, with room for long-term growth.

The post An ASX dividend titan I’d buy over BHP shares appeared first on The Motley Fool Australia.

More reading

• Here’s what the iron ore price will be this time next year: Westpac
• Why is the BHP share price starting the week with a whimper?
• Best 5 ASX 200 energy shares for price growth in FY24
• Why are BHP shares trudging lower on Friday?
• Buy BHP and these ASX dividend shares

Motley Fool contributor Tristan Harrison has positions in Sonic Healthcare. 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 Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Telstra Group Ltd (ASX: TLS) share price was on form on Tuesday.

The telco giant’s shares ended the day 2% higher at $3.73.

Why did the Telstra share price rise?

Investors were buying Telstra’s shares after it announced an increase to its mobile prices.

The changes will see prices on most Telstra mobile plans increase by between $2 to $4 per month. Management noted that these changes aimed to balance cost of living pressures “with its need to continue to invest to manage technology evolution and continued strong customer demand on its mobile network.”

Based on its share price performance yesterday, it seems that the market believes the company has got it just right with these increases.

Analysts at Goldman Sachs appear to believe this is the case. They also see the price increases as a sign that competition in the telco market remains rational. The broker commented:

These plan changes highlight: (1) mobile market rationality remains (particularly when combined with the recent Optus increase); (2) TLS mobile earnings growth remains strong, driven by subscribers and ARPU, despite the uncertainty created by TLS May-24 update; (3) flexibility benefits of a non-CPI linked pricing mechanism (i.e. greater than CPI price rises on core plans, but no price increase on the more price sensitive Starter plans, which we believe should also help mitigate any concerns around price gauging); (4) Telstra TLS FY25 guidance should likely be narrowed to $8.5-$8.7bn at its Aug-24 result (from $8.4-8.7bn) which would be its typical $200mn range, now the company has much greater certainty around its mobile pricing outlook.

Goldman estimates that the changes will have a positive impact on its average revenue per user metric (ARPU) and its earnings and dividends per share. Its analysts add:

We estimate the postpaid plan changes to drive a blended A$2.50 ARPU increase for Telstra. Adjusting for GST, consumer mix (i.e. 2/3 of base) and c.9 month impact, we expect this to contribute $1.14 of ARPU growth, before any potential spin-down. When combined with the significant JB-HiFi and smaller Belong mobile plan changes (noting that JB-HiFi plan changes take significant time to wash-through the base), we now expect $1.20 ARPU growth (from $0.80) and marginally stronger mobile ARPU trends into FY26 (GSe Postpaid +1.5% growth, from +1.0%, Prepaid +1.0%, from 0%). Collectively, this drives our FY25 EBITDA to $8,595mn, FY25/26 EPS +1/3% and DPS to 19.0/20.0c (from 18.5/19.5c).

Time to buy?

The broker thinks that this is another signal to buy the company’s shares and continues to see a lot of value in the Telstra share price.

In response to the update, Goldman has retained its buy rating and lifted its price target to $4.30. This implies potential upside of 15% for investors over the next 12 months. It also expects dividend yields of 5.1% in FY 2025 and then 5.35% in FY 2026.

The post Is the Telstra share price good value in July? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• How much cash do you need to quit work and live off ASX dividend income?
• Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today
• Telstra share price lifts off alongside its mobile pricing 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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The iShares S&P 500 ETF (ASX: IVV) smashed the returns delivered by the S&P/ASX 200 Index (ASX: XJO) in the financial year just past.

Shares in the exchange-traded fund (ETF) closed out FY 2023 trading at $44.45. On 28 June, the last trading day of FY 2024, shares were swapping hands for $55.43.

That saw the IVV share price up an impressive 24.7% over the financial year, racing ahead of the 7.8% gains posted by the ASX 200 over this same time.

And these strong gains don’t include the 66 cents a share in unfranked dividends the ASX ETF paid out in four quarterly instalments over the year. These see IVV currently trading on an unfranked trailing dividend yield of 1.2%.

So, how did the ETF manage to reward shareholders so well?

I’m glad you asked!

Why did the IVV share price outpace the ASX 200 in FY 2024?

As its name implies, the iShares S&P 500 ETF aims to track the performance of the S&P 500 Index (INDEXSP: .INX).

And it did a very good job of it, with the S&P 500 gaining 22.7% during FY 2024.

IVV currently holds 503 United States listed stocks, with the US tech giants making up its biggest holdings.

At the time of writing, the ASX ETF’s top five holdings are:

• Microsoft Corp (NASDAQ: MSFT)
• Apple Inc (NASDAQ: AAPL)
• Nvidia Corporation (NASDAQ: NVDA)
• Amazon.com Inc (NASDAQ: AMZN)
• Meta Platforms Inc (NASDAQ: META)

A look at these five stocks alone goes a long way to explaining IVV’s strong showing over the past financial year.

These tech giants are at the forefront of the global artificial intelligence (AI) revolution that’s been grabbing global and ASX investor interest.

But it’s not just companies like Nvidia and Apple that stand to benefit from the efficiencies delivered by AI. The rapidly evolving tech has been credited for much of the big boost enjoyed by many of the companies listed on the S&P 500.

Adding in that inflation in the US is cooling faster than here in Australia, and investors have been upping their bets of at least one interest rate cut from the Federal Reserve in 2024.

That’s also helped the S&P 500 and, by connection, the IVV share price race ahead of the ASX, with the US benchmark notching a lengthy series of new record highs over the past months.

As for FY 2025, the iShares S&P 500 ETF share price is currently down 0.52% half-way into week two of the new financial year.

The post How did the iShares S&P 500 ETF (IVV) race ahead of the ASX 200 in FY 2024? appeared first on The Motley Fool Australia.

More reading

• Why it’s a big day for ASX ETFs
• Own the iShares S&P 500 ETF (IVV)? Here’s your next ASX dividend
• The iShares S&P 500 ETF (IVV) is slowly becoming a dividend powerhouse. Here’s why
• 4 of the best ASX ETFs to buy and hold for a decade
• Looking to ‘get rich quick’? Use the Warren Buffett approach instead

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woolworths Group Ltd (ASX: WOW) share price just finished a rather dismal financial year.

Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed out FY 2023 trading for $39.73. On 28 June, the final trading day of FY 2024, shares ended the day changing hands for $33.79 apiece.

That saw the Woolworths share price down a painful 14.9% over the 12 months.

For some context, the ASX 200 gained 7.8% over this same period.

Now the 14.9% loss doesn’t include the $1.05 a share in fully franked dividends Woolies paid out over the 2024 financial year. Woolworth stock currently trades on a fully franked trailing dividend yield of 3.09%.

Here’s what put the ASX 200 supermarket under selling pressure.

Why did the Woolworths share price tank in FY 2024?

The Woolworths share price was in a downtrend for much of FY 2024, with inflation impacting customer shopping habits while also driving up the costs of doing business.

ASX 200 investors have also been mulling over the possibility that the government could force Coles and Woolworths to split off some of their businesses in a bid to increase the competitive landscape among Australia’s oligopolistic supermarket operators.

But as you may have noted in the price chart up top, a big part of the pain for the Woolworths share price came on 21 February.

That’s when Woolies reported its half-year results and announced the unexpected departure of long-serving CEO Brad Banducci. Banducci will be replaced by top Woolies executive Amanda Bardwell on 1 September.

Among the positives in those financial results, revenue for the six months was up by 4.4% year on year to $34.64 billion.

However, losses after significant items were $781 million, down from a profit of $845 million in the prior corresponding half-year. Much of that was due to a $1.5 billion non-cash write-down of the supermarket’s New Zealand business.

And management reported that with inflationary pressures making customers more cautious, sales over the first seven weeks of Q3 had continued to moderate.

Investors responded by sending the Woolworths share price down 6.6% on the day.

Fast forwarding to that third-quarter update, released on 2 May, and Woolies reported achieving a 2.8% increase in total sales to $16.8 billion.

But with consumers tightening their belts, the company’s Big W business saw sales fall 4.1% over the three months.

Outgoing CEO Brad Banducci admitted that conditions were challenging.

“It was a challenging quarter across the group with a noticeable shift in customer sentiment and shopping behaviours since Christmas,” he said on the day.

Looking ahead, Banducci added:

We expect trading conditions to be challenging for the next 12 months due to competition for customer shopping baskets and as inflation returns to a very low single digit range.

As for FY 2025, the Woolworths share price is up 0.44% in the nascent new financial year, currently at $33.94.

The post Why did the Woolworths share price sink 15% in FY 2024? appeared first on The Motley Fool Australia.

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• How much cash do you need to quit work and live off ASX dividend income?
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Motley Fool contributor Bernd Struben 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 Scott Phillips.

The S&P/ASX All Ordinaries Index (ASX: XAO) moved 8.27% higher in FY24, which is a perfectly respectable return. But it ain’t nothin’ compared to these superstar ASX small-cap shares.

ASX small-cap shares have a market capitalisation ranging from a few hundred million to $2 billion. 

They are typically younger, growing companies. They can offer ASX investors potentially superior share price growth (if all goes well). But the trade-off is higher risk given their early business development.

Let’s check out three of the best performers among the ASX All Ords small-cap shares in FY24.

3 ASX small-caps that rocketed in FY24

Clarity Pharmaceuticals Ltd (ASX: CU6)

ASX small-cap healthcare share Clarity Pharmaceuticals has a market cap of $1.59 billion.

The Clarity Pharmaceuticals share price went stratospheric in FY24, rising by 674.29%. Investors are keen to be part of Clarity’s story as it continues to have success with its highly targeted radiopharmaceuticals in the diagnosis and treatment of serious diseases, including cancer.

Among the company’s highlights in FY24 was the first patient ever to be dosed with two cycles of 67Cu-SAR-bisPSMA at 8GBq maintaining undetectable levels of prostate cancer for almost six months.

Droneshield (ASX: DRO)

ASX small-cap defence share Droneshield has a market cap of $1.53 billion.

Droneshield shares certainly flew in FY24, rising 647.83%. The share price got a big kick in January after the company launched its Expeditionary Fixed-Site (EFS) Kit for the DroneSentry-X Mk2.

Another piece of news that moved the Droneshield share price substantially higher was a repeat order of A$5.7 million from a US Government customer for several of its CUxS (Counter-UxS) systems in May.

Zip Co Ltd (ASX: ZIP)

ASX small-cap buy now, pay later (BNPL) share Zip has a market cap of $1.96 billion.

The Zip share price lurched 256.1% higher during FY24. This was welcome news for long-term investors who have held on through some very difficult years. The company has undergone a major transformation since abandoning plans for global growth in order to focus on growing revenue in a few key markets.

First-quarter results and the half-year update gave the ASX small-cap stock some exciting price boosts.

What are the trends among ASX small-cap shares right now?

In a recent update, the portfolio managers of the Blackwattle Small Cap Quality Fund said there were opportunities to buy high-quality industrial small caps in today’s choppy market.

Robert Hawkesford and Daniel Broeren wrote:

As investors digest the likelihood of fewer (if any) rate cuts in 2024, we expect equity markets to remain choppy.

Many cyclical sectors have already seen meaningful corrections from the very elevated valuations at the end of February.

We are now seeing opportunities to selectively increase exposure to good-quality industrial businesses that are performing well.

The portfolio managers said the fund remained overweight in ASX small-cap mining shares. But they have banked some profits from big gains in the prices of some ASX gold and copper stocks.

The post 3 ASX small-cap shares that soared 250% to 675% in FY24 appeared first on The Motley Fool Australia.

More reading

• Up 327% in a year, the Zip share price just smashed new multi-year highs!
• Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today
• Zip shares FY24 recap: Up 256%, what’s next for FY25?
• Guess which 2 ASX All Ordinaries shares were the best and worst performers of FY24?
• What will it take for DroneShield shares to enter the ASX 200?

Motley Fool contributor Bronwyn Allen has positions in Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Zip Co. 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 Scott Phillips.