Category: Stock Market

Navigating the stock market can feel like trying to find your way through a complex maze. It’s easy to get lost amidst the twists and turns of market trends, financial jargon, and endless investment options.

However, the insights of investment legends like Warren Buffett and Peter Lynch can illuminate the path, making the journey much less daunting.

These financial experts advocate for simple yet effective strategies that any investor can embrace to enhance their investment outcomes.

Think long term

Buffett and Lynch’s wealth has been built on the principle of holding their investments over extended periods.

Warren Buffett famously said his favourite holding period is forever. Peter Lynch also noted the real key to making money in stocks is not to get scared out of them.

They recommend against the temptation of constant buying and selling in reaction to the market’s immediate fluctuations. If you’ve chosen a solid company at a fair price, allow your investment the time it needs to mature. While the market is inherently volatile, fundamentally strong companies tend to appreciate in value over the long haul.

Just consider the following two charts to see the result of long-term investing. Betashares Nasdaq 100 ETF (ASX: NDQ) shares have more than quadrupled since the ETF’s listing in May 2015. This is approximately an 18% growth every year on average.

The Vanguard Australian Shares Index ETF (ASX: VAS) share price rose from $70 to $95.82 over the past 10 years, implying a cumulative average annual return (CAGR) of about 3%. But this isn’t too bad considering its generous dividend payment of $3.74 over the last 12 months, yielding 3.9% at the current share price. Adding the capital growth and dividend yields, its total annual return is close to 7%.

Invest in what you know

Focus on businesses or sectors within your area of understanding. You don’t have to be an authority, but a solid understanding of how a company operates and its keys to success is vital.

Consider the products you enjoy or the services you find indispensable. If you have faith in these, they might be viable investment opportunities.

Your next big idea may come from where you work. You may be a plumber and like particular piping products from certain brands. Or you may be a medical professional and prefer to use products or systems from one company.

This strategy minimises risk by keeping you within your comfort zone.

Seek quality at a fair value

It’s a common error to hunt for cheap stocks thinking they are bargains. Buffett and Lynch encourage a focus on the intrinsic quality of a company and its potential for long-term growth.

Aim to discover outstanding companies at reasonable prices, rather than just any company at a discount. This approach entails a bit of research to ascertain the real value of a company and patience to invest at an opportune, fair cost.

Washington H Soul Pattinson & Company Ltd (ASX: SOL) may be in that sweet spot today after a 10% drop in the share price over the past three months, as my colleague Tristian highlighted. The company is a consistent dividend payer, offering a fully franked dividend yield of 2.8%.

Foolish takeaway

Investing wisely doesn’t have to be overly complex. These strategies might seem simple, but they’re powerful tools for creating a successful investment portfolio.

The post 3 winning tips both Warren Buffett and Peter Lynch recommend appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee 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 BetaShares Nasdaq 100 ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The lithium industry has been a tough place to invest in recent times.

But if you believe that the tide will soon change, then it could be worth taking a look at the three ASX lithium stocks listed below.

That’s because they have been named as buys and tipped to rise materially from current levels. Here’s what analysts are saying about them:

Arcadium Lithium (ASX: LTM)

Bell Potter remains very positive on this lithium giant. It likes the miner due to its diversified operations, which provide exposure to various lithium types. In addition, it highlights the company’s strong production growth potential. It said:

LTM provides the largest, most diversified exposure to lithium in terms of mode of upstream production, asset locations, downstream processing and customer markets. It is a key large-cap leverage to lithium prices and sentiment, which we expect to improve over the medium term. The group has a strong balance sheet and growth portfolio.

The broker has a buy rating and $9.50 price target on its shares. This implies potential upside of approximately 85% for investors.

IGO Ltd (ASX: IGO)

Over at Goldman Sachs, its analysts are positive on battery materials miner IGO despite being bearish on lithium.

The broker likes IGO due to the low costs of its Greenbushes operation. It feels this leaves IGO well-positioned in the current environment of low prices. It commented:

Greenbushes is the lowest cost lithium asset in our coverage. Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate). We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects.

Goldman Sachs has a buy rating and $8.10 price target on IGO’s shares. If the ASX lithium stock rose to that level, it would mean a return of 35%.

Liontown Resources Ltd (ASX: LTR)

Analysts at Bell Potter are also very positive on this lithium developer which is on the cusp of becoming a fully-fledged miner.

Liontown’s Kathleen Valley (KV) lithium project is due to begin roaring in the middle of the year, which means it is perhaps just weeks away from producing the battery making ingredient.

Bell Potter thinks very highly of the KV project. It said:

100% owned KV lithium project remains highly strategic in terms of its stage of development, long mine life and location. LTR has offtake contracts with top tier EV and battery OEMs (Ford, LG Energy Solution and Tesla). Hancock Prospecting has a 19.9% interest in LTR. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.

The broker currently has a speculative buy rating and $1.85 price target on the ASX lithium stock. This suggests that upside of 85% is possible from current levels.

The post These beaten down ASX lithium stocks could rise 35% to 85% in 12 months appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today
• Here are the top 10 ASX 200 shares today
• 2 ASX shares to buy that are at 52-week lows
• 3 ASX lithium stocks to buy in June 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 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.

ASX-listed exchange-traded funds (ETFs) can expose investors to sectors and companies that Aussies normally would need to look overseas for.

The infrastructure sector is responsible for the backbone of the US economy. Plenty of businesses are involved in owning and operating infrastructure, which can be good investments.

The US is the world’s biggest economy and more than 330 million people live there. However, according to the ETF provider Global X, the US is in “dire” need of infrastructure upgrades, with at least US$3.8 trillion ($5.76 trillion) worth of additional investment to “adequately repair existing infrastructure and keep pace with economic expansion.”

Global X also said a growing driver of demand for infrastructure investment is the increased frequency of natural disasters. In 2023, the US reportedly experienced a record-breaking 28 weather and climate disasters, each costing more than US$1 billion.

Which ASX ETFs can be used to take advantage?

Some businesses are involved with infrastructure projects’ construction, engineering, material procurement, transportation, and equipment distribution processes.

These companies can significantly benefit from the increased expenditure on US infrastructure from governments and privately-funded infrastructure projects.

The Global X US Infrastructure Development ETF (ASX: PAVE) invests in US-domiciled companies to capture the value of growing spending in the world’s largest economy.

Some businesses inside the PAVE ETF include Eaton Corp, Trane Technologies, Quanta Services, Martin Marietta Materials, Emerson Electric and Parker Hannifin. It has a total of approximately 100 holdings.

In terms of risks, Global X noted that these companies “typically face intense competition and can be adversely impacted by shifts in government regulations and actions.”

Do other funds provide infrastructure exposure?

Other ASX ETFs and investments can also provide exposure to global infrastructure. The US economy’s size leads to those funds usually having a large weighting to US shares.

Examples include Vanguard Global Infrastructure Index ETF (ASX: VBLD) (with a 68.8% US weighting), VanEck FTSE Global Infrastructure (Hedged) ETF (ASX: IFRA) (with a 57.2% US weighting) and Magellan Infrastructure Fund (currency hedged) (ASX: MICH) (with a 38% US weighting).

While these ASX ETFs have a smaller allocation to US infrastructure, they’re also not targeted at the new spending on infrastructure in the country. Instead, many of the businesses in the portfolios I mentioned have existing assets that are typically generating strong cash flows for shareholders and are hard to replicate.

The post How to get exposure to a potential $5.7 trillion US sector with ASX ETFs appeared first on The Motley Fool Australia.

More reading

• 3 winning tips both Warren Buffett and Peter Lynch recommend
• These beaten down ASX lithium stocks could rise 35% to 85% in 12 months
• Bell Potter says these ASX shares are strong buys
• Buy these ASX shares for a winning retirement portfolio
• Guess which ASX 300 share could rise over 50%

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 positions in and has recommended Emerson Electric. The Motley Fool Australia has recommended Magellan Infrastructure Fund. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of great ASX shares for investors to choose from on the local market.

To narrow things down for readers, let’s now take a look at two shares that analysts at Bell Potter rate very highly.

These shares feature on its favoured list for June, which the broker believes offer attractive risk-adjusted returns over the long term. They are as follows:

Regal Partners Ltd (ASX: RPL)

Bell Potter believes that this growing fund manager is being undervalued by the market.

Its analysts highlight that the company has strong organic and inorganic growth potential, strong performing investment funds, and accelerating inflows. The broker commented:

In recent years, Regal has expanded rapidly through strong investment performance, net flows into its funds, launches of new funds, and the acquisition or merger with VGI Partners, PM Capital and Taurus, which have expanded funds under management from $1.1bn in 2017, to over $12.1bn (March 2025). We continue to favour RPL, given its strong organic & inorganic growth potential, and entrepreneurial culture. In the last six months, and following the recent acquisition of PM Capital and Taurus (50%), the firm has shown an acceleration of inflows, strong investment performance (which will give rise to performance fees) and success in marketing new funds. We feel this strong performance is not reflected in the share price and see considerable upside.

Bell Potter has a buy rating and $4.02 price target on its shares. This implies potential upside of 11% for investors from current levels. A ~5.6% dividend yield is forecast over the next 12 months.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX share that Bell Potter is a big fan of is Universal Store. It is a youth focused apparel, footwear and accessories retailer in Australia.

It has a large number of stores under its flagship Universal Store brand. In addition, it is expanding private label brands by growing the stand-alone format of Perfect Stranger and Thrills.

Bell Potter thinks that it has a good growth trajectory thanks to its store rollout and sees scope for margin improvements. It said:

Management execution remains a key strength for UNI and we see good growth trajectory for the name given the building of core brands while growing its store rollout. In our view, the higher margin sales from the majority of private label sales should become a major driver of margin improvement and earnings growth, in an expanded store footprint. While we remain cautious on the overall consumer sentiment, given the return to positive comps while cycling elevated pcp through Jan-Feb, we think UNI is well placed as comps become supportive through the 2H.

The broker has a buy rating and $6.15 price target on its shares. This suggests that upside of 23% is possible over the next 12 months. A ~5% dividend yield is also expected over the period.

The post Bell Potter says these ASX shares are strong buys appeared first on The Motley Fool Australia.

More reading

• Why Telstra and these excellent ASX dividend stocks could be buys
• 3 under the radar ASX shares to buy this month
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Motley Fool contributor James Mickleboro has positions in Universal Store. 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.

If you are searching for retirement portfolio options this month, then you may want to look at the ASX shares listed below that have been named as buys.

Here’s why these shares could be top options for this portfolio:

CSL Limited (ASX: CSL)

When you are building a retirement portfolio, it is always a smart idea to focus on high quality companies.

Well, there are arguably few higher quality businesses out there than biotechnology giant CSL. It is the company behind the CSL Behring, CSL Seqirus and CSL Vifor businesses, which provide lifesaving therapies and vaccines to patients in more than 100 countries.

And with management always reinvesting heavily in its research and development (R&D) activities, CSL consistently has an R&D pipeline filled with potentially lucrative products.

Macquarie is a fan of the company and believes its outlook is very positive thanks to its key CSL Behring business. It currently has an outperform rating and $330.00 price target on its shares. In addition, it sees scope for them to rise to $500 within the next three years.

APA Group (ASX: APA)

Another ASX share to consider buying for a retirement portfolio is APA Group. It owns and operates energy infrastructure assets and businesses.

This includes energy infrastructure, comprising gas transmission, gas storage and processing, and gas-fired and renewable energy power generation businesses.

It could be a great option for retirees due to its defensive earnings, long track record of growth (almost 20 years of dividend increase), and big dividend yield.

In respect to the latter, analysts at Macquarie are forecasting dividends of 56 cents per share in FY 2024 and 57.5 cents per share in FY 2025. Based on the current APA Group share price of $8.33, this equates to 6.7% and 6.9% dividend yields, respectively.

Macquarie currently has an outperform rating and $9.40 price target on its shares.

Woolworths Limited (ASX: WOW)

A final ASX retirement share to consider buying is supermarket giant, Woolworths. This is due to its positive growth outlook and defensive earnings.

In respect to the former, Goldman Sachs’ analysts “forecast WOW 2-yr sales CAGR FY24-26e of +3.2% and EBIT growth of +4.8%.” This is expected to support the payment of fully franked dividends of $1.08 per share in FY 2024 and $1.14 per share in FY 2025. Based on the current Woolworths share price of $32.85, this implies yields of 3.3% and 3.5%, respectively.

Goldman also sees plenty of upside for investors. It currently has a buy rating and $39.40 price target on its shares.

The post Buy these ASX shares for a winning retirement portfolio appeared first on The Motley Fool Australia.

More reading

• How much could $10,000 invested in CSL shares be worth next year?
• 3 of the best ASX 200 blue chip shares to buy now
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25
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• Where Aussies are spending their money, and the ASX shares that could benefit

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goldman Sachs Group, and Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group and Macquarie Group. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Now could be the time to pounce on Clinuvel Pharmaceuticals Limited (ASX: CUV) shares now if you want big returns for your portfolio.

That’s the view of analysts at Bell Potter, which are feeling very positive about the ASX 300 share.

Why is it an ASX 300 share to buy?

In case you’re not familiar with Clinuvel, it is a global specialty pharmaceutical company focused on developing and commercialising treatments for patients with genetic, metabolic, systemic, and life-threatening, acute disorders.

Its lead therapy is Scenesse, which is approved for commercial distribution in Europe, the USA, Israel, and Australia as the world’s first systemic photoprotective drug for the prevention of phototoxicity (anaphylactoid reactions and burns) in adult patients with erythropoietic protoporphyria (EPP).

The ASX 300 share is also seeking to expand Scenesse’s use into other treatment areas. It is this that is getting Bell Potter excited. It commented:

CUV are conducting two Phase 3 trials to expand the label of Scenesse to include patients with vitiligo. Following recent company announcements, we have revisited vitiligo development expectations and market forecasts. The first Phase 3 trial primary readout is expected in 2H CY25 and represents one of the next major catalysts for the company excluding financial results. Assuming the Phase 3 trials proceed smoothly, we expect submission to the FDA in late CY26 for potential approval by end-CY27.

Bell Potter notes that if successful, this expansion has the potential to be a huge boost to its sales. It adds:

With ~1% of the US population affected by vitiligo, the market size is far greater than the single rare disease for which Scenesse is currently approved. We estimate a directly addressable vitiligo market in the US of ~65-70k patients (vs. ~2k patients for EPP). This translates into legitimate potential for Scenesse to increase its annual sales several fold if the Phase 3 trials succeed and regulatory approval is granted.

Big return potential

In light of the above, the broker has reaffirmed its buy rating and $22.25 price target on the ASX 300 share. Based on its current share price of $14.60, this implies potential upside of 52% for investors over the next 12 months.

The broker concludes:

We view the first vitiligo Phase 3 readout in CY25 as a significant catalyst for the company and see the current CUV price as a good entry point for those willing to take on clinical risk with downside mitigated to a degree by the existing, profitable EPP franchise.

The post Guess which ASX 300 share could rise over 50% appeared first on The Motley Fool Australia.

More reading

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

The National Australia Bank Ltd (ASX: NAB) share price has increased by more than 35% in the last 12 months, as shown on the chart below. Shareholders and other investors may wonder whether the good streak can continue in FY25.

NAB has a different reporting schedule than many other ASX shares. Its full-year ends on 30 September, while June is the last month of the financial year for Australian individuals and many businesses.

There are still three and a half months left of the ASX bank share‘s FY24, so commentary about the outlook could apply to both the end of FY24 as well as FY25.

Worsening arrears

At the beginning of May 2024, NAB reported its FY24 first-half result, which showed cash earnings of $3.55 billion (down 12.8% year over year).

One of the negatives within the result was that the percentage of its loans that were overdue by at least 90 days or impaired is increasing – it was 0.66% in the FY23 first half, 0.75% in the FY23 second half and 0.79% in the first half of FY24. This represented “higher arrears across the Australian home lending and business lending portfolios, partially offset by lower impaired assets.”

NAB said:

The Australian economy is proving resilient and most customers are faring well in the current more challenging environment. However, there remains continued uncertainty in the outlook including the impacts of global instability and the ability of customers to manage the full extent of higher interest rates and elevated cost of living pressures.

Strong competition

NAB reported in the HY24 result that revenue decreased by 3.7%, mainly reflecting “lower margins”.

The net interest margin (NIM) decreased by 5 basis points (0.05%) to 1.72%, while the underlying NIM declined 10 basis points. This reflected “lending margin competitive pressures primarily relating to housing lending, along with higher term deposit costs and deposit mix impacts.”

NAB said the benefits of a higher interest rate environment have been more than offset by competition while cost pressures remain elevated.

NAB shares its outlook

With the FY24 first-half result, the ASX bank share said the following:

With our new executive leadership team in place, we are considering how we evolve our strategic priorities. We start in a great place with strong, safe balance sheet settings and attractive growth options. While no major strategic pivots are needed, we are excited about opportunities to leverage the good work of the past several years to allow us to become even simpler and drive better outcomes for customers and colleagues while maintaining a disciplined approach. This will remain at the core of everything we do and underpin our ability to deliver sustainable growth and returns.

Forecasts

Analysts at broker UBS expect stronger results in FY25 than in FY24.

The broker currently forecasts that NAB could generate net profit after tax (NPAT) of $7 billion in FY24 and $7.15 billion in FY25. This would translate into earnings per share (EPS) of $2.21 in FY24 and $2.27 in FY25. While higher, this does not imply much growth in FY25.

UBS expects NAB shares to offer a fully franked dividend yield of around 5% over the next two financial years.

The broker currently has a sell on NAB shares because of a “fully valued” NAB share price. The price target is $30, implying a fall of 15% from where it is today.

The post Can owners of NAB shares bank on a good outlook for FY25? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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 great news for growth investors is that there are plenty of quality options to choose from on the Australian share market.

But which ones could be buys in June?

Let’s take a look at five ASX growth shares that brokers rate highly:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator has been struggling in recent years due to operational mishaps and inflationary pressures. While this is disappointing, there are signs that the worst could now be over and its fortunes could improve from FY 2025.

Morgan Stanley appears to believe this makes it a good time to make a patient investment in Domino’s. Last month, it put an overweight rating and $52.00 price target on its shares.

IPD Group Ltd (ASX: IPG)

Analysts at Bell Potter think that this distributor of electrical equipment and industrial digital technologies could be an ASX growth share to buy in June.

Its analysts expect the company to benefit from the electrification megatrend. They note that IPG is “a high quality play on the electrification growth trend which is emerging as a dominant market narrative.”

Bell Potter has the company on its preferred list with a buy rating and $5.60 price target.

Lovisa Holdings Ltd (ASX: LOV)

The team at Morgans is feeling very positive about Lovisa and sees it as an ASX growth share to buy this month.

It believes the growing fashion jewellery retailer is well-positioned to continue its strong form long into the future thanks to its large global expansion opportunity. It has previously noted that its plan to “enter mainland China in FY24, [is] paving the way for significant longer-term growth.” This expansion has since taken place and has started positively according to industry date.

Morgans currently has an add rating and $35.00 price target on its shares.

Treasury Wine Estates Ltd (ASX: TWE)

Morgans also thinks that Treasury Wine could be an ASX growth share to buy right now. This is partly due to its recent acquisition of DAOU Vineyards (DAOU) for US$900 million (A$1.4 billion).

The broker notes that “if TWE delivers on its investment case, there is material upside to our valuation.”

Morgans has an add rating and $14.03 price target on its shares.

Webjet Limited (ASX: WEB)

Finally, the team at Morgans is also bullish on online travel booking company Webjet.

It thinks Webjet could be an ASX growth share to buy thanks largely to its dominant WebBeds B2B business and the “significant market share still up for grabs.” Morgans believes this positions the company well for the future.

The broker has an add rating and price target of $11.20 on Webjet’s shares.

The post 5 top ASX growth shares to buy in June appeared first on The Motley Fool Australia.

More reading

• 2 ‘pick and shovel’ ASX stocks to cash in on the AI megatrend
• Top ASX AI stocks to buy in June 2024
• Is Guzman y Gomez stock too expensive?
• 3 under the radar ASX shares to buy this month
• Is this ASX small-cap stock an overlooked beneficiary of the AI boom?

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises, Lovisa, and Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises, Ipd Group, and Lovisa. The Motley Fool Australia has positions in and has recommended Ipd Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises, Lovisa, and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you on the lookout for some new additions to your income portfolio in June?

Well, if you are, then read on. That’s because listed below are three ASX dividend stocks that brokers have recently named as buys and tipped to offer attractive dividend yields.

Here’s what you can expect from them in the coming years:

GDI Property Group Ltd (ASX: GDI)

Analysts at Bell Potter are tipping this property company’s shares as a buy. Especially given their expectation that GDI Property is well-positioned to pay some big dividends in the coming years.

For example, the broker is forecasting dividends per share of 5 cents across FY 2024, FY 2025, and FY 2026. Based on the current GDI Property share price of 61 cents, this implies dividend yields of 8.2% for the next three years.

Bell Potter has a buy rating and 75 cents price target on its shares.

Rural Funds Group (ASX: RFF)

Another ASX dividend stock that Bell Potter is feeling bullish about is Rural Funds.

It is another property company. However, it is very different to GDI Property. It owns a portfolio of high-quality agricultural assets. This includes across industries such as orchards, vineyards, water entitlements, cropping, and cattle farms.

In respect to dividends, the broker is forecasting dividends per share of 11.7 cents in both FY 2024 and FY 2025. Based on the current Rural Funds share price of $2.00, this will mean yields of 5.85% for investors.

Bell Potter currently has a buy rating and $2.40 price target on its shares.

Telstra Group Ltd (ASX: TLS)

A third ASX dividend stock that has been tipped as a buy is Telstra. It is of course Australia’s leading telecommunications company.

The team at Goldman Sachs continues to be positive on the company. It recently reiterated that its analysts “believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive.”

Speaking of dividend growth, the broker is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 18.5 cents per share in FY 2025. Based on the current Telstra share price of $3.55, this equates to fully franked yields of 5.1% and 5.2%, respectively.

Goldman currently has a buy and $4.25 price target on its shares.

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

More reading

• Analysts name 3 high yield ASX dividend stocks to buy
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25
• Where Aussies are spending their money, and the ASX shares that could benefit
• Why Telstra and these excellent ASX dividend stocks could be buys
• 3 lower-risk ASX shares for beginner investors

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 Rural Funds Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Hopes for interest rate cuts are once again on the horizon after Canada and Europe’s rate cuts earlier this month.

Lower interest rates are often seen as making money more accessible and could potentially boost consumer spending.

Central banks are contemplating these cuts in the hope of freeing up more money for consumers, thereby stimulating economic growth.

While predicting macroeconomic trends is almost pointless, investors can certainly assess which ASX retail shares could benefit from a potential uptick in consumer spending. Let’s explore.

Nick Scali Limited (ASX: NCK)

First up is furniture retailer Nick Scali. In 1H FY24, the company reported a 20% drop in revenue to $227 million. To be fair, this was off a high base a year ago when it reported a record revenue of $284 million, as the company benefitted from increased deliveries of the previous orders.

That said, its written sales orders — a leading indicator — were just up 1.1%, and they were down slightly by 0.4% on a same-store basis.

The good news is that the company has improved its costs. Gross margins rose from 62% in 1H FY23 to 65.6%, while general operating expenses fell by $4.8 million from a year ago. Tight cost control and better logistics costs were behind such impressive margin expansion.

The company started to see an uptick in its orders. In 2Q FY24, from October to December 2023, its written sales orders rose 8.2% from a year ago.

This sales momentum may continue if potentially lower interest rates lead to better consumer sentiment.

Nick Scali recently expanded into the United Kingdom market by acquiring Fabb Furniture, as my colleague James highlighted. This may be a wild card in the short term, depending on consumer sentiment in the UK. However, for the longer term, the company believes this provides a great expansion opportunity to a bigger UK market.

Nick Scali shares are trading at 13x trailing earnings. The Nick Scali share price is down 2.46% at $13.46 at the close on Monday.

Super Retail Group Ltd (ASX: SUL)

Next up is Super Retail Group, which owns popular retail brands like Super Cheap Auto, Macpac, Rebel and BCF.

Super Retail tends to do better than other consumer discretionary companies across economic cycles, as my colleague Sebastian pointed out.

In its May trading update, the company said its like-for-like sales growth was largely flat, with BCF experiencing a 5% decline and Macpac experiencing a 3% growth.

Super Retail Group CEO Anthony Heraghty said that while store foot traffic and transaction volumes continued to grow, the ongoing cost-of-living pressure was impacting a number of items per sale.

But the resilience of the business was insufficient to keep investors excited amid overall consumption weakness.

The Super Retail Group share price has fallen 16.37% year-to-date, putting its valuation at a price-to-earnings ratio of 11.54 times based on FY24 earnings estimates by S&P Capital IQ.

This is cheap compared to its historical trading range of 8 times and 20 times. Excluding the Great Financial Crisis of 2008 and the COVID-19 outbreak in March 2020, the stock has rarely traded below 10x on a forward basis.

At the close of trading, the Super Retail Group share price was trading at $13.28, offering a dividend yield of 5.72%.

Accent Group Ltd (ASX: AX1)

Lastly, let’s talk about shoe seller Accent Group, a company behind well-known brands like The Athlete’s Foot, Platypus Shoes, Hype DC, and Skechers.

In 1H FY24, the company reported a 2.7% growth in its revenue to $811 million, but its operating profits took a bigger hit, falling 20% to $72.4 million.

The company mentioned its cost of doing business increased due to negative like-for-like retail sales, lower wholesale sales and cost inflation.

However, given its extensive store network, this could be reversed if consumers returned to their stores to buy more shoes.

Based on FY25 earnings estimates by S&P Capital IQ, Accent Group shares are trading at a P/E ratio of 14 times.

Dividends are an added bonus. Bell Potter seems to like Accent Group for its dividends. As my colleague James noted, the broker forecasted dividends of 13 cents per share (cps) in FY24 and 14.6 cps in FY25. At the current share price, these represent 6.7% and 7.5%, respectively.

The Accent Group share price closed on Monday down 1.53% at $1.93.

The post 3 ASX retail shares that could benefit from potential interest rate cuts appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee has positions in Nick Scali. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Accent Group and Nick Scali. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.