Category: Stock Market

With the end of a financial year and the beginning of a new one this week, it’s pertinent to look back on some of our share market’s best and worst stocks over the past 12 months and assess whether we should buy these ASX shares.

On the weekend, my Fool colleague James named the worst-performing shares for FY24. They included Fletcher Building Ltd (ASX: FBU), Healius Ltd (ASX: HLS), Star Entertainment Group Ltd (ASX: SGR) and IGO Ltd (ASX: IGO). However, the worst performer on the index over FY24 was lithium stock Liontown Resources Ltd (ASX: LTR).

These shares were dastardly performers over the 12 months to 30 June 2024. Liontown, in particular, lost its investors a painful 68%.

As it happens, Liontown shares rallied more than 10% yesterday before news of a funding deal halted the shares. Still, this move comes too late to save the company from taking out the crown of thorns as the worst ASX 200 stock of FY24.

But the more value-inclined investors out there might be sizing up these FY24 laggards today. After all, it was the legendary Waren Buffett who famously told us to “be greedy when others are fearful”. And investors were clearly mighty fearful of Fletcher Building, Healius, Star Entertainment, IGO and Liontown last financial year.

Well, the good news for these value investors is that most of these shares are currently being eyed off by some ASX experts for their value potential.

ASX experts rate some of the worst ASX shares of FY24 as a buy

As reported in the Australian Financial Review (AFR) this week, Richard Coppleson, director of institutional sale and trading at Bell Potter, reckons the lithium sector is undervalued. Coppleson’s pick in lithium is the poor FY24 performer Pilbara Minerals Ltd (ASX: PLS) rather than Liontown:

I own this and like it a lot… I think it’s a super buy at these levels – when lithium does recover, this is back to $5 – only question is when will that be?

Star Entertainment is another beaten-down stock that has an enthusiastic backer. Atlantic Pacific Capital is reportedly a big fan of Star shares at their recent pricing. Fund manager Nicolas Bryon recently stated:

If one were to read popular media, social media or the anonymous on chat forums, you would be convinced that this is potentially the worst decision in the world…

Often those who don’t understand distressed investing will dump positions. This is true of institutional and retail investors alike … ultimately these assets are premium entertainment precincts. If operated well, they can earn above their cost of capital.

Atlantic Pacific Capital joins other fund managers like Cooper Investors and L1 Capital in holding Star shares.

Healius also has some fans amongst the ASX professional investing class. Maple-Brown Abbott, Perpetual Ltd (ASX: PPT) and Argo Investments Ltd (ASX: ARG) all retain significant stakes in Helius within their portfolios.

But before we go, it’s worth keeping in mind another one of Warren Buffett’s best quotes:

Mr. Market [the stock market] is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.

Just because a share has had a disastrous year doesn’t mean it will bounce back in value. Sure, some beaten-down shares will end up getting oversold and might represent buying opportunities. But others are sold off for a very good reason and might end up being value traps.

So make sure you follow Buffett’s advice and avoid getting ‘guidance’ from the share market. As he says, letting it guide our investing decisions is a path to disaster.

The post Is it time to buy FY24’s worst-performing ASX shares? appeared first on The Motley Fool Australia.

More reading

• Top broker says Pilbara Minerals shares are ‘a super buy at these levels’
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Liontown share price roars 17% higher on funding update and ‘tremendous endorsement’
• Why Lovisa, Mayne Pharma, Pilbara Minerals, and RPMGlobal shares are falling today

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are trying to decide which ASX dividend stocks to add to your income portfolio, then it could be worth looking at three listed below that analysts are bullish on.

Here’s what you need to know about these income options:

Healthco Healthcare and Wellness REIT (ASX: HCW)

Analysts at Bell Potter think that Healthco Healthcare and Wellness REIT could be an ASX dividend stock to buy. It is a property company with a focus on health and wellness assets. This includes hospitals, aged care facilities, and primary care properties.

The broker believes it is well-positioned to provide investors with some big dividend yields in the coming years. It is forecasting dividends per share of 8 cents in FY 2024 and then 8.3 cents in FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.08, this will mean yields of 7.4% and 7.7%, respectively.

Bell Potter has a buy rating and $1.50 price target on its shares.

Stockland Corporation Ltd (ASX: SGP)

Another ASX dividend stock that has been tipped as a buy is Stockland. It is Australia’s largest community creator, delivering a range of masterplanned communities and medium density housing in growth areas across the country.

Citi is positive on the company and sees a lot of positives from its plan to acquire the communities business of Lendlease Group (ASX: LLC). It expects the addition to give Stockland’s earnings a boost in the near term.

For now, though, the broker is forecasting dividends per share of 26.2 cents in FY 2024 and 26.6 cents in FY 2025. Based on the current Stockland share price of $4.17, this will mean yields of 6.3% and 6.4% yields, respectively.

Citi has a buy rating and $5.10 price target on its shares.

Woolworths Limited (ASX: WOW)

Analysts at Goldman Sachs think that supermarket giant and Big W owner Woolworths could be an ASX dividend stock to buy. In fact, the broker is so positive on the retailer that it has its shares on its coveted conviction list.

Goldman believes Woolworths’ shares are undervalued at current levels. Particularly given its belief that the company is positioned to deliver solid earnings and dividend growth in the coming years.

In respect to the latter, the broker is forecasting fully franked dividends per share of $1.07 in FY 2024 and $1.13 in FY 2025. This equates to dividend yields of 3.2% and 3.4%, respectively.

Goldman has a buy rating and $40.20 price target on its shares.

The post Buy Woolworths and these ASX dividend stocks appeared first on The Motley Fool Australia.

More reading

• Can Wesfarmers shares keep beating the ASX 200 index?
• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy now
• Supermarket concerns ‘overdone’: Buy Woolworths shares
• Bell Potter names the best ASX real estate shares to buy in FY25

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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.

In the last financial year the ASX 200 index delivered a return of 7.8% before dividends.

While this was a great performance, there were a number of exchange-traded funds (ETFs) that achieved market-beating returns over the 12 months.

For example, the three ASX ETFs listed below all made their unitholders smile in FY 2024. And the good news is that they could continue this trend long into the future. Here’s why:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

This hugely popular ASX ETF continued its winning ways in the last financial year. During the 12 months, the BetaShares NASDAQ 100 ETF delivered a return of approximately 30%.

This was driven by strong performances from many of its 100 holdings during the period. One of those was of course Nvidia (NASDAQ: NVDA), which almost tripled in value during the year. This made the graphics processing units company the largest on Wall Street at one stage with a market capitalisation above US$3 billion.

Looking to the future, this ETF looks well-positioned thanks to the positive long-term outlooks of many of the companies held by the fund. These are the tech behemoths that provide the search engines, streaming services, mobile phones, spreadsheets, electric vehicles, and online shopping platforms we use daily.

Betashares Global Quality Leaders ETF (ASX: QLTY)

Another ASX ETF that beat the market in the last financial year was the Betashares Global Quality Leaders ETF.  It achieved a return of 23% over the 12 months.

It seems that the fund’s focus on investing in the highest quality companies in the world is working wonders for investors. Betashares’ chief economist, David Bassanese, will no doubt be pleased with this return. He recommended the ETF last year.

At present, there are approximately 150 companies included in the fund. These companies rank highly on four key metrics: return on equity, debt-to-capital, cash flow generation, and earnings stability. Given its success last year, it wouldn’t be surprising if this ETF continues its strong form

Vanguard MSCI Index International Shares ETF (ASX: VGS)

The popular Vanguard MSCI Index International Shares ETF outperformed with a gain of almost 19% during the last financial year.

It isn’t hard to see why this ASX ETF delivered the goods for investors. That’s because it is focused on buying 1,500 of the world’s largest listed companies from major developed countries.

This means that you are buying a slice of high-quality global giants from a range of industries. This includes Apple, Johnson & Johnson, JP Morgan, Nestle, and Visa.

The post Buy these market-beating ASX ETFs in FY25 appeared first on The Motley Fool Australia.

More reading

• 2 of the best reasons to buy ASX ETFs
• Why it’s a big day for ASX ETFs
• Top ASX shares to buy in July 2024
• Could these be the best ASX tech ETFs to buy for FY25?
• Here’s how the ASX 200 market sectors stacked up last week

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, JPMorgan Chase, Nvidia, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and Nestlé. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Nvidia and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) had another poor session and dropped into the red. The benchmark index fell 0.4% to 7,718.2 points.

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

ASX 200 expected to rebound

It looks set to be a good day for the Australian share market on Wednesday after a positive session in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 20 points or 0.25% higher. On Wall Street, the Dow Jones was up 0.4%, the S&P 500 pushed 0.6% higher, and the Nasdaq climbed 0.85%.

Oil prices fall

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a poor session after oil prices dropped overnight. According to Bloomberg, the WTI crude oil price is down 0.4% to US$83.04 a barrel and the Brent crude oil price is down 0.15% to US$86.47 a barrel. This may have been driven by profit taking after oil hit a two-month high.

Buy Liontown shares

The Liontown Resources Ltd (ASX: LTR) share price is undervalued according to analysts at Bell Potter. In response to its funding news, the broker has retained its speculative buy rating and $1.85 price target on the lithium developer’s shares. It said: “The LG CN funding is a pragmatic solution to remove the onerous terms associated with traditional bank debt and increase the company’s cash liquidity headroom. […] Under our modelled assumptions, we expect that LTR is fully funded to free cash flow.”

Gold price relatively flat

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch following a flat night for the gold price. According to CNBC, the spot gold price is up a fraction to US$2,339.5 an ounce. This follows an update from the US Federal Reserve which revealed that it isn’t ready to cut rates yet.

BHP rated as a buy

Analysts at Goldman Sachs think BHP Group Ltd (ASX: BHP) shares would be a good option for investors. This morning, the broker has reaffirmed its buy rating and $48.40 price target on the mining giant’s shares. Goldman notes that BHP’s shares have an “attractive valuation, but at a premium to RIO. Although we believe this premium can be partly maintained due to ongoing superior margins and operating performance.”

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

More reading

• Shares vs. property: Which delivered the best growth in FY24?
• Here are the top 10 ASX 200 shares today
• Liontown share price roars 17% higher on funding update and ‘tremendous endorsement’
• Could beaten-up Woodside shares offer ‘Safe buying with limited downside’?
• What the RBA minutes imply for the ASX 200 and higher interest rates

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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 Telstra Group Ltd (ASX: TLS) share price just closed out a financial year to forget.

Shares in the S&P/ASX 200 Index (ASX: XJO) telco ended FY 2023 trading for $4.30 apiece. On Friday, the final trading day of FY 2024, shares closed at $3.62.

That saw the Telstra share price down a painful 15.8% over the 12 months.

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

Now, shareholders will have gotten some reprieve from the two fully franked dividends the company paid out over the year. Telstra shares currently trade on a trailing yield of 4.85%.

Here’s what put the ASX 200 telco under pressure in FY 2024.

Why did the Telstra share price go backwards in FY 2024?

Among the headwinds hitting the Telstra share price over the financial year just past is ongoing inflationary pressure.

In February, Telstra CEO Vicki Brady indicated that sticky inflation was making the company’s cost reduction plans more difficult.

“While our cost reduction ambition is being challenged by high inflation, we still expect to achieve the large majority of this by FY25,” she said.

Telstra since revealed its plans to cut as many as 2,800 employees as part of that cost-cutting initiative. And in a move that’s divided analysts, the ASX 200 telco has said it will no longer increase its monthly mobile charges in line with inflation, as it has been doing.

Investors also appeared displeased when Telstra announced on 17 August that it would not sell its holdings in InfraCo Fixed.

“After thoroughly examining alternatives, we have concluded that the greatest value to be created for shareholders is by maintaining the current ownership structure of InfraCo Fixed, for at least the medium term,” Brady said.

Some analysts had expected the asset sale to unlock additional value for the company. The Telstra share price closed down 2.8% on the day.

Investors also didn’t react positively to Telstra’s half-year results, released on 15 February. Despite the company reporting a 1.2% year on year increase in income to $11.7 billion, and an 11.5% boost in net profit after tax, which came in at $1.0 billion for the six months to 31 December, the Telstra share price closed down 2.3% on the day.

The selling was spurred by the underperformance of the telco’s NAS (network applications and services) business, which negatively impacted its guidance.

Brady said on the day:

Given the performance in our NAS business, we are tightening our FY24 underlying EBITDA guidance range to $8.2 to $8.3 billion. FY24 guidance across other measures is reaffirmed.

Prior guidance was for earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be between $8.2 billion and $8.4 billion.

As for the new financial year, Telstra finished trading on the second day of FY25 yesterday at $3.61.

The post How come the Telstra share price crashed 16% in FY 2024? appeared first on The Motley Fool Australia.

More reading

• What is the outlook for ASX 200 dividend shares in FY25?
• 3 ASX dividend shares to buy with 5%+ yields
• Do Telstra shares have a strong outlook for FY25?
• 4 ASX 200 dividend giants to buy in July
• Here are 3 ASX retirement shares to buy in July

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 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 performance of ASX 200 mining shares in FY24 was mixed amid some commodity prices rising while others were volatile and fell (or absolutely tanked in the case of lithium).

At the time of writing, silver is up 28% and gold is up 21% over the past 12 months, according to Trading Economics. Copper is up 16.5% and platinum is up 8%.

On the flipside, lithium is down by more than 70% and iron ore is off 5%.

So, perhaps it’s no surprise that the top three fastest-rising ASX 200 mining stocks are involved in one of the star commodities of FY24.

And that’s gold.

The gold price reached all-time record highs repeatedly throughout FY24. Last night, the market reset the peak price once again at about US$2,338 per ounce.

The apparent peaking of interest rates around the world was one factor in the gold price’s rise over FY24.

Another was global geopolitical tensions, which encouraged investors and central banks to take on extra exposure to this traditional safe-haven asset.

3 best ASX 200 mining shares for price growth

Data from S&P Global Market Intelligence shows these are the top three ASX 200 mining shares for FY24.

Red 5 Limited (ASX: RED)

Red 5 is a gold explorer and producer with assets in Western Australia’s Eastern Goldfields area. They include the Darlot Gold Mine and the King of the Hills project.

Red 5 was the most outstanding of the ASX 200 mining shares for price growth in FY24. The Red 5 share price rose by 89.5% over FY24.

There were two significant surges for the Red 5 share price in FY24.

The first was in August after the company announced outstanding drilling results and the completion of 95% of the FY24 mine plan at the King of the Hills mine.

The second run was sparked in February after Red 5 released its 1H FY24 results. The company reported significant lifts in gold production and a 77% bump in sales revenue. Its net profit after tax (NPAT) was $29 million compared to a loss of $28.5 million in 1H FY23.

In other news, Red 5 announced a proposed merger with fellow ASX 200 gold producer Silver Lake Resources Ltd (ASX: SLR) in February.

West African Resources Ltd (ASX: WAF)

West African Resources has a 90% interest in the Sanbrado Gold Operations and Kiaka Gold Projects in West Africa. The Government of Burkina Faso owns the remaining 10% in both projects. The company also owns the Toega Gold Deposit, which is 14km away from Sanbrado.

The West African Resources share price rose by 86.1% over FY24. The share price ramped up mostly in the second half of FY24 after the miner issued a resource, reserve and 10-year production update in February.

The miner forecasts production of 4.03Moz of gold between 2024 and 2033. This was 415,000 ounces higher than the previous forecast. The mine plans extend to 2034 at Sanbrado and 2042 at Kiaka, assuming an average gold price of US$1,400 per ounce. It expects peak gold production in 2029.

The company increased its mineral resources estimate by 181,000 ounces to 12.8Moz of gold and decreased its ore reserves estimate by 275,000 ounces to 6.1Moz of gold.

Construction costs at Kiaka are on-budget, with first production expected in 3Q FY25. The company is fully funded via a US$265 million debt facility till that point.

Emerald Resources NL (ASX: EMR)

Emerald Resources owns projects in Cambodia and Australia. Its flagship mine, Okvau, is 100% owned and located 275km northeast of Phnom Penh.

The Emerald Resources share price rose by 72.2% over FY24. It rose pretty steadily throughout the year.

In the last production update issued in April, Emerald Resources reported gold production of 28,539 ounces. That was at the upper end of its guidance of 25,000 ounces to 30,000 ounces per quarter.

The company reported sales of 28.5koz of gold in the March 2024 quarter at an average price of US$2,069 per ounce.

In other news, the company completed its takeover of Bullseye Mining via compulsory acquisition last month.

The post 3 best-performing ASX 200 mining shares of FY24 appeared first on The Motley Fool Australia.

More reading

• Shares vs. property: Which delivered the best growth in FY24?
• How these three ASX gold stocks soared above the rest in FY 2024
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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.

When we compare the capital growth of ASX 200 shares vs. property in FY24, bricks and mortar comes out on top… but only just.

The S&P/ASX 200 Index (ASX: XJO) rose from a closing value of 7,203.3 points on the last trading day of FY23 to a closing value of 7,767.5 points on the last trading day of FY24, delivering a 7.83% gain.

Meantime, the national median home value, which reflects all types of property in a single data point, rose by 8% over the 12 months, according to CoreLogic data.

In dollar terms, that’s equivalent to a $59,000 increase per home across Australia over the financial year.

The national median house price rose by 8.4%, and the median apartment price lifted by 6.5% over FY24.

If we drill down to look at the capital gains across all eight of the capital cities and their regional counterparts, we see significant disparities.

The most glaring is the outstanding strength of Perth, Brisbane, and Adelaide and the regional markets of those states, compared to the weak performance of Melbourne, Hobart, and their regional counterparts.

A key factor in their performance variance is that the strongest markets have tight supply and demand, while the weakest markets have the opposite situation.

We’ll also take a look at the top 10 performing ASX 200 shares for the financial year. As usual, not even the strongest property markets grew by as much as those top-performing stocks!

Why are home values rising when interest rates are high?

It’s unusual to see home values rising when interest rates are doing the same.

It’s even more surprising given the 13 rate rises imposed by the Reserve Bank between May 2022 and November 2023 represented the fastest and largest rate hiking cycle in Australia’s history.

However, the housing shortage has become so acute in this country that its impact is actually trumping interest rates in the marketplace.

Demand is so strong, and the number of homes for sale is so low in those strongest markets that prices are continuing to rise despite high interest rates making affordability worse.

How shares vs. property performed in FY24

Here we compare the capital growth rate for houses in each city and regional property market in FY24.

Property market	Capital growth of houses in FY24
Perth	23.7%
Regional Western Australia	16.9%
Brisbane	15.2%
Adelaide	15.1%
Regional Queensland	12.3%
Regional South Australia	11.4%
National	8.4%
Sydney	6.8%
Regional New South Wales	4%
Canberra	3.2%
Darwin	3.1%
Melbourne	1.2%
Regional Tasmania	0.2%
Hobart	(0.3%)
Regional Victoria	(0.4%)
Regional Northern Territory	(2.9%)

Best performing ASX 200 shares of FY24

Here we compare the capital growth of the top 10 ASX 200 shares in FY24.

ASX 200 shares	Capital growth in FY24
Pro Medicus Limited (ASX: PME)	118.3%
Life360 Inc (ASX: 360)	115.4%
Red 5 Limited (ASX: RED)	89.5%
West African Resources Ltd (ASX: WAF)	86.1%
Altium Ltd (ASX: ALU)	84.3%
Hub24 Ltd (ASX: HUB)	82.9%
Deep Yellow Limited (ASX: DYL)	77.5%
SiteMinder Ltd (ASX: SDR)	74.3%
Neuren Pharmaceuticals Ltd (ASX: NEU)	73.6%
Goodman Group (ASX: GMG)	73.1%

The post Shares vs. property: Which delivered the best growth in FY24? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• What the RBA minutes imply for the ASX 200 and higher interest rates
• How ASX shares vs. property performed in June
• 2 ASX All Ords shares smashing new multi-year highs on big news
• These 2 ASX 200 stocks just scored substantial broker upgrades

Motley Fool contributor Bronwyn Allen has positions in Goodman Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Goodman Group, Hub24, Life360, Pro Medicus, and SiteMinder. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool Australia has recommended Goodman Group, Hub24, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• Liontown share price roars 17% higher on funding update and ‘tremendous endorsement’
• Could beaten-up Woodside shares offer ‘Safe buying with limited downside’?
• 9 ASX All Ords shares lifted to ‘strong buy’ consensus ratings in June
• Why Arafura Rare Earths, Ora Banda, Superloop, and Whitehaven Coal shares are rising today
• What the RBA minutes imply for the ASX 200 and higher interest rates

Motley Fool contributor Sebastian Bowen 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 ARB Corporation, Johns Lyng Group, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended ARB Corporation, Johns Lyng Group, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Liontown Resources Ltd (ASX: LTR) share price has returned from its trading halt with a bang.

In afternoon trade, the lithium developer’s shares were up as much as 17% to $1.04.

They have pulled back since then but remain up 10% to 98 cents at the time of writing.

What’s going on with the Liontown share price?

This morning, Liontown requested a trading halt until Thursday while it prepared an announcement relating to the funding of the Kathleen Valley Lithium Project in Western Australia.

It turns out the company didn’t need the two days to make the announcement and has returned early this afternoon following its release.

According to the announcement, Liontown Resources has secured a US$250 million investment and 10-year offtake extension from foundational partner, LG Energy Solution.

Investment secured

These funds will be raised through the issue of five-year convertible notes at a coupon equal to a reference rate of the secured overnight financing rate (SOFR) to maturity. They can be converted or redeemed earlier at a conversion price of $1.80 per share. If converted today, the convertible notes would convert into an approximate 8% shareholding in Liontown.

The company’s total cash balance increases to approximately A$501 million following this investment, which provides balance sheet strength to fund the Kathleen Valley ramp-up to 3Mtpa steady state production.

It will also allow the company to progress early enabling works in the underground mine to preserve the 4Mtpa expansion option on a 2027 timeframe and to support 3Mtpa production. Liontown continues optimisation studies for both the mine and the processing plant as part of its review of the 4Mtpa expansion case.

In respect to the offtake, the extension means it is now a lengthy 15-year agreement. It will start with LG Energy Solution taking 100ktpa in the first year and then increases to an average of approximately 150ktpa thereafter.

‘A tremendous endorsement’

Liontown Resources’ managing director and CEO, Tony Ottaviano, was very pleased with the investment. He believes it demonstrates the quality of the project. Ottaviano said:

I am very pleased to announce that we have taken a major step forward in our strategic partnership with foundational customer LG Energy Solution, one of the world’s leading battery producers. LG Energy Solution’s long-term investment in Liontown is a testament to the world-class quality of the Kathleen Valley Project and a tremendous endorsement of the capability of our team. The funding will be instrumental in supporting the production ramp up to 3Mtpa and early works necessary to preserve the potential 4Mtpa expansion case for Kathleen Valley.

Lithium refinery

Also giving the Liontown share price a boost today could be news that the two parties are looking into the viability of developing a lithium refinery. This would allow the company to process Kathleen Valley spodumene into battery-grade lithium chemicals. Ottaviano commented:

I am pleased to announce that the strategic partnership with LG Energy Solution will also include entering into a new downstream collaboration agreement to investigate the establishment of an IRA-compliant lithium refinery to process Kathleen Valley spodumene into battery-grade lithium chemicals.

These developments pave the way for Liontown to pursue our long-term strategy to be a globally significant provider of battery minerals as the world transitions to a low-carbon future. We believe this partnership and investment will deliver substantial value to our stakeholders and position us at the forefront of the lithium industry.

The Liontown share price remains down 66% over the past 12 months.

The post Liontown share price roars 17% higher on funding update and ‘tremendous endorsement’ appeared first on The Motley Fool Australia.

More reading

• Why are Liontown shares in a trading halt today?
• Bell Potter names the best ASX mining stocks to buy in FY25
• These are the 10 most shorted ASX shares
• These were the five worst ASX 200 shares to own in FY24
• Here are the top 10 ASX 200 shares today

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 Scott Phillips.

BrainChip Holdings Ltd (ASX: BRN) shares were one of the weakest performers on the ASX in FY 2024. In the past 12 months, the ASX AI stock plunged nearly 39% in the red.

The company’s shares are swapping hands at 22 cents apiece at the time of writing, having peaked at a closing high of 49 cents per share on 26 February.

Now that we’ve entered the new financial year, investors are left wondering what lies ahead for BrainChip in FY 2025. Let’s take a closer look.

Why have BrainChip shares fallen so drastically?

BrainChip shares had a turbulent time last financial year – and that’s putting it lightly.

Stock in the AI company went from trading at yearly lows of 14 cents per share in October last year, before hitting the 52-week highs in February, outlined earlier. This surge was short-lived, and the stock now languishes near prior lows.

Several factors contributed to this rollercoaster ride, in my view.

For one, the significant rise in February was likely influenced by the soaring stock of US-listed AI giant NVIDIA Corp (NASDAQ: NVDA).

Investors went on an AI-stock feeding frenzy after NVIDIA’s Q1 2024 results. This prompted speculative trading in ASX tech companies, including BrainChip shares.

However, BrainChip’s financial performance didn’t justify such a surge. The company reported a net loss of US$28.9 million for 2023.

Perhaps this wouldn’t have been an issue if the company hadn’t reported a loss of US$22.1 million the year prior. And the fact sales declined 95% over the period.

Stocks are priced on fundamentals. This financial result from BrainChip saw the stock plummet in the days and weeks following.

Which is interesting, given the company’s specialty in neuromorphic computing – a highly differentiated AI segment. The company released the second generation of this technology, Akida, in FY 2024. Neuromorphic computing replicates the human brain’s processing power in data analysis.

Investors were obviously expecting more from the company in this highly differentiated domain. Especially as management didn’t obtain royalty agreements for any sales related to the IP of the technology.

Were investors expecting too much? BrainChip shares have sunk 16 cents apiece since then, so it’s difficult to tell.

What’s next for BrainChip?

Analysts remain cautious about BrainChip. Niv Dagan from Peak Asset Management recently recommended selling BrainChip shares, citing disappointing financials and high cash outflows, according to The Bull.

Dagan noted the company’s cash reserves had decreased from US$14.3 million in the prior quarter to US$13 million, whilst operating cash outflows were on the rise:

This artificial intelligence company ended the recent March quarter with $US13 million in cash compared to $US14.3 million in the prior quarter. Net operating cash outflows in the March quarter were higher than the prior quarter. Cash inflows from customers were lower in the March quarter compared to the prior quarter. The shares have fallen from 49 cents on February 26 to trade at 21 cents on June 20. We prefer other stocks at this stage of the cycle.

Despite reporting significant interest from potential customers, the company has yet to translate this into substantial sales.

At its recent AGM, CEO Sean Hehir expressed optimism about ongoing licensing discussions and potential sales in the audio and microcontroller segments. Time will tell.

Foolish takeaway

BrainChip shares have had a rough year, and the road ahead remains uncertain. While the company’s innovative technology holds promise, it needs to deliver on its revenue potential to regain investor trust.

Investors might want to weigh the potential rewards against the risks. Some experts currently advise looking at other opportunities.

The post BrainChip shares struggle in FY24 – what’s ahead for FY25? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.