Category: Stock Market

Guzman y Gomez (GYG) is planning to become an ASX business by the end of the month, through an initial public offering (IPO).

GYG sells Mexican-inspired, made-to-order food across drive-through restaurants and outlets on shopping strips, food courts and universities. The quick-service restaurant (QSR) has been thinking about an IPO for years and it is finally making the jump.

GYG aims for $2.2 billion valuation

The company is aiming to raise approximately A$242.5 million in the ASX IPO, by selling 11.1 GYG shares at a price of $22 per share. This includes existing shareholders selling $42.5 million of shares during the process.

Guzman y Gomez plans to use the $200 million of primary proceeds to fund its growth strategy over the coming years, with a focus on the “significant expansion” of its corporate restaurant network in Australia. The funds will provide flexibility to accelerate its growth strategy if “appropriate opportunities arise”.

If GYG is successful with its ASX IPO, the offer price will value the company at approximately $2.2 billion.

There is no offer for the general public. However, GYG shares are available to institutional investors, clients of some brokers, other eligible GYG shareholders and certain investors, eligible employees of GYG in Australia and eligible franchisees. The general public can buy GYG shares on the market once shares are trading later in June.

GYG has received “considerable support” and demand from existing shareholders including Aware Super, Cooper Investors, Hyperion Asset Management, Firetrail Investments and QVG Capital.

According to Guzman y Gomez, the board, senior management and existing substantial investors will own 62% of the business after the ASX IPO.

The offer is reportedly fully underwritten by Barrenjoey and Morgan Stanley Australia.

GYG shares are expected to start trading on 20 June 2024, initially on a conditional and deferred settlement basis under the ticker ‘GYG’.

Guzman y Gomez’s plans for growth

The business opened its first restaurant in Sydney in 2006, and it now has 210 restaurants across four countries, with 185 restaurants in Australia, 16 in Singapore, five in Japan and four in the US.

GYG expects to open 30 new Australian restaurants in FY25 and believes it can increase this to opening 40 restaurants per year within five years. GYG thinks it can grow its Australian network to more than 1,000 restaurants over the next two or so decades.

Of Guzman y Gomez’s 185 Australian restaurants, 62 are corporate restaurants and 123 are franchise restaurants. The Singapore and Japan restaurants are owned and operated by separate master franchisees, while the four in the US are corporate restaurants.

Between FY15 and FY23, GYG’s global network sales have increased from $101 million to $759 million. The Mexican food business is expecting global sales of $1.14 billion in FY25 thanks to “strong comparable sales growth and ongoing network expansion.”

It’s expecting to improve the guest experience and leverage the benefits of scale to enable its underlying/pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) to grow from $29.3 million in FY23 to $59.9 million in FY25.

Management believes there is a large growth opportunity in the US fast food market, but it will adjust the pace of restaurant expansion to ensure “robust restaurant economics”. All four of its US stores are in the suburbs of Chicago.

GYG said the health and profitability of its franchisees are “fundamental.” According to GYG, its Australian franchisee return on investment is 51%.

Management comments

The GYG founder and co-CEO Steven Marks said:

Over the last 18 years, the team at GYG have been obsessed with providing our guests with the freshest, cleanest and fastest made-to-order Mexican-inspired food. I am incredibly proud to say that we now do this across more than 200 restaurants in Australia, Singapore, Japan and the US. And the most exciting part is that we are just getting started.

As we commence the next chapter as an ASX-listed company, our vision to reinvent fast food and change the way the masses eat will remain central to what we do. We truly believe that fast food doesn’t have to be bad food and we look forward to sharing our food with more guests across Australia and overseas as we look to realise the opportunity we have to grow our network to more than 1,000 restaurants over the next 20+ years.

What next for the potential GYG shares?

The Guzman y Gomez ASX IPO offer opens on 10 June 2024, and GYG shares are expected to start trading on 20 June 2024 on a conditional and deferred settlement basis. Normal trading is expected on 25 June 2024.

The post Guzman y Gomez (GYG) is set for an ASX IPO. Here’s what we already know appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Which ASX mining share did Gina Rinehart inject another $20 million into?
• Here’s why the Newmont share price is making big ASX news today
• The worst three performing ASX 200 shares in May unmasked
• Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid

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.

It’s a big day for ASX gold share Newmont Corporation (ASX: NEM) this Monday. Not that you’d know it from looking at the Newmont share price right now.

This gold miner is having a decent, if uninspiring, session so far this Monday. At the time of writing, Newmont shares are up 0.1% at $62.51 each. That’s a gain of a fraction of the size of the S&P/ASX 200 Index (ASX: XJO)’s lift of 0.81%.

But that’s not why it’s a big day for Newmont shares, if that isn’t obvious. No, today is the day that Newmont stock has traded ex-dividend for its upcoming quarterly shareholder dividend payment.

Because Newmont is a US-domiciled company with its ASX shares only a secondary listing, it adheres to an American-style dividend policy. That means its dividends come without franking credits, but are paid out every three months. That’s instead of the six-month interval that is common on the ASX.

The latest dividend from Newmont will be worth 25 US cents per share (worth around 38 cents at today’s exchange rates). It will be doled out later this month on 27 June. This dividend will come in right between Newmont’s previous two ASX payments. These were worth 41.6 cents (paid out in December) and 26.5 cents per share (March) respectively.

However, as we warned last week, today is the day that Newmont has traded ex-dividend for this upcoming payment. This means that anyone who didn’t own Newmont shares as of market close on Friday is now ineligible to receive this dividend. So even if you buy Newmont stock today, you’ll miss out on this latest payment. Instead, you’ll have to wait until the company’s next dividend is declared to receive any cash flow.

What about the Newmont share price?

As many ASX dividend investors would know, it is normal to see a dividend share fall substantially in value upon its ex-dividend date. This reflects the inherent loss of value for the investors buying the stock without the rights to receive the latest dividend attached.

However, this doesn’t seem to be occurring today. The Newmont share price closed at $62.45 each last Friday but opened at $62.88 this morning. The gold miner is currently sitting at $62.51. That’s up 0.1% for the day thus far, as we touched on earlier.

All we can conclude from this strange stock price movement is that Newmont shares would be even higher today if not for the company trading ex-dividend.

Newmont investors can all now look forward to bagging the company’s dividend payment on 27 June.

The post Here’s why the Newmont share price is making big ASX news today appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Sebastian Bowen has positions in Newmont. 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 200 Index (ASX: XJO) closed up 0.5% in May, but it certainly wasn’t helped by these three ASX 200 shares.

Below we look at the three companies on the benchmark index receiving the ignominious prize as the worst performers over the month just past.

Three ASX 200 shares down 16% to 19% in May

Starting with the best of the worst three performers, in terms of share price, we have Tabcorp Holdings Ltd (ASX: TAH).

The Tabcorp share price ended April trading for 74 cents. When the closing bell rang on 31 May, shares were swapping hands for 62 cents, putting the ASX 200 share down 16.2% over the month.

There was no fresh price sensitive news from the wagering and gaming products and services company in May. There were a few media reports on potentially inappropriate workplace language taking place at the company, as well as a minor being allowed to gamble at one of its venues.

But Tabcorp’s big May fall largely looks to be in line with the selling trend that commenced in September 2023. Despite a slight uptick today, the Tabcorp share price is now down 46.8% over 12 months.

Moving on to the second-worst performing ASX 200 share in May, we have Fletcher Building Ltd (ASX: FBU).

The Fletcher Buildings share price closed out April trading for $3.47 and ended May at $2.84 a share, down 18.2%.

Most of the pain for the building and materials company came on 13 May following an uninspiring market update.

Shares closed the day down 10.9% after the New Zealand-focused company reported on “weakened” market conditions in its materials and distribution divisions.

This led to a significant reduction in the company’s FY 2024 earnings before interest and taxes (EBIT) guidance. Management’s revised guidance of EBIT before significant items of $500 million and $530 million came in well below the prior guidance of $540 million to $640 million.

Up 3.0% today, the Fletcher Buildings share price is down 36.6% over 12 months.

Which brings us to the worst-performing ASX 200 share in May, Eagers Automotive Ltd (ASX: APE).

The Eagers Automotive share price ended April at $12.64 and closed out May at $10.12, down a painful 19.9%.

Most of those losses came on 22 May, when shares in the auto retailer closed down 15.0%.

That dramatic fall came on the heels of a trading update, which highlighted expected ongoing headwinds from inflation, interest rates and competition.

Eagers Automotive CEO Keith Thornton noted that given the difficult market conditions, “We expect to achieve an underlying trading performance for the first half of 2024 that is approximately 85% of the underlying profit before tax for the first half of 2023.”

Edging higher today, the ASX 200 share is now down 20.1% over 12 months.

The post The worst three performing ASX 200 shares in May unmasked appeared first on The Motley Fool Australia.

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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 recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The APM Human Services International Ltd (ASX: APM) share price has jumped 10.4% to $1.38 today after the All Ordinaries (ASX: XAO) stock accepted a $1.3 billion takeover bid.

Today’s acquisition news and subsequent share price boost follow a challenging period for the employment and human services business as low unemployment rates chipped into client flows.

Let’s take a look at the news.

Takeover bid accepted

In today’s announcement, APM advised it has entered into a scheme implementation deed with Ancora BidCo Pty Ltd, an entity controlled by US-based private equity outfit Madison Dearborn Partners (MDP).

The accepted agreement means MDP will buy all remaining APM shares it doesn’t already own for $1.45 cash per share, valuing APM at $1.3 billion.

While a previous bid from CVC Asia Pacific in February of $1.60 per share was higher than today’s accepted offer, APM rejected it for being too low at the time, and CVC walked away.

In the latest deal, eligible APM shareholders will have the option to receive either 90% or 100% of their takeover consideration in unlisted shares in the acquisition entity.

If the scheme is implemented, executive chair Megan Wynne and APM CEO Michael Anghie intend to receive 100% unlisted shares in the acquisition entity for their APM shares.

Why is APM accepting this offer?

The APM independent board committee (IBC) unanimously recommends that shareholders vote in favour of the takeover in the absence of a superior proposal. This recommendation is subject to an independent expert concluding and continuing to conclude that the scheme is in the best interests of APM shareholders.

The IBC is positive on the offer, saying it provided a “significant premium” to the undisturbed APM share price and delivered certainty of value. It noted the APM share price may trade at a significantly lower price in the absence of the takeover offer, and there were no alternative viable proposals.

The IBC cited the “uncertainty of the near-term outlook” as a key reason to accept the offer. It added that the ASX All Ords stock “continues to operate in an environment of extended low levels of unemployment and client flows, with increased support provided to achieve sustainable employment.”

While APM thinks these factors will “normalise over time” and that its other businesses can continue to grow, it is uncertain when this will occur.

The IBC also noted this offer allowed for shareholders to remain invested in APM, if they chose to do so.

Trading update

Also in a short trading update today, APM revealed it had experienced low client flows in Australia and the United Kingdom during April and May this year.

The company expects its FY24 profit to be “around the bottom” of its profit guidance range. FY24 underlying net profit after tax (NPATA) had been guided at between $95 million and $105 million, and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was previously guided to between $280 million and $290 million.

Additionally, APM expects the activity levels in the second half of FY24 to be “likely to continue into FY25.” It also noted that the completion of the refinancing of certain existing bank facilities was expected to result in a higher interest expense in FY25 compared to FY24.

What next?

APM will send shareholders a scheme booklet in July 2024, which will include information about the offer, the reasons for the IBC recommendation, an independent expert’s report, and details of the scheme meeting.

A meeting will likely be held in September 2024 for shareholders to vote on the proposal. If accepted, implementation is expected to occur in October 2024.

APM share price snapshot

The APM share price has lifted more than 9% since the start of 2024, but it’s been a bumpy ride for shareholders this year, as we can see in the graph below.

The post Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid appeared first on The Motley Fool Australia.

More reading

• Why APM, Fletcher Building, Navigator Global, and Strike Energy shares are storming higher
• APM share price grinds to a halt as investors await update on takeover offer

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

One of the great things about investing in shares is that you don’t have to do anything with them, while you hold them. There’s no rent to collect, no bills to pay, and no agents to deal with.

The companies just… do their thing.

It was that thought which prompted this tweet, on Saturday afternoon:

So, the ASX was closed today, because it’s a Saturday.

Yet, listed companies went about their business: mining,  selling groceries, processing transactions, collecting rents, providing insurance, generating electricity, and more.

The market is a sideshow.

I followed it up with:

When you own shares, you own small pieces of real businesses. If you only see them as things to buy, swap and sell, you’re missing the point, and being distracted from the real value creation.

Focus on the company, not the stock.

And then this:

Honestly, I’d be happy if the market opened for an hour, once a week.

Or a month, for that matter.

The minute-by-minute volatility is noise and action… but not much more.

Like my woodwork teacher’s sign:

“Don’t be like a rocking horse: plenty of movement, but no progress”

I figured it was a pretty stock-standard few tweets, and I didn’t expect much engagement.

But I was wrong.

More than a few people told me that Bitcoin was better, because it could be traded 24/7.

Uh-huh.

A couple of others told me they wanted the market open longer because it’d mean they could trade on the back of US news, or to avoid big share price movements at the beginning and end of the trading day.

In response?

I told them I couldn’t care less.

Truly, who needs to trade shares at 2.47am?

Or on a Saturday?

Sure, you can buy and sell Bitcoin 24/7 but… so what? 

Because let me remind you that there is no correlation between activity and success in the stock market.

Those who trade more don’t do better. In fact the research suggests exactly the opposite.

I can’t emphasise this enough, either: if you think you need the market open longer, or that you want to be able to trade more often, I think you’re missing the point.

(Too harsh? Sorry, but it’s true.)

The money in investing isn’t made in the trading. It’s made in the waiting.

Waiting while Woolworths Group Ltd (ASX: WOW) goes from $4.72 in 1999 to $31 today.

Waiting while BHP Group Ltd (ASX: BHP) goes from $4.91 to $45 over the same timeframe.

Waiting while REA Group Ltd (ASX: REA) goes from $1.09 to $184.

Do all companies do that? Nope. 

But let me remind you that according to fund manager Vanguard, an investment in the ASX over 30 years to June 30 last year turned a hypothetical $10,000 into over $130,000 in three decades – that’s with both the winners and the losers included.

The market didn’t have to be open 24/7 over that 30 year period.

In fact, if it was, it would have just tempted more people to trade more often… rather than just biding their time.

Yes, the ASX will probably eventually go 24/7. But it won’t be to help investors. It’ll be to help the exchange, and stock brokers, make more money from more activity.

Note: not more ‘wealth creation’, but ‘more activity’. You didn’t think most brokers were on your side, did you? (There are some noble exceptions… but not many.)

In the meantime? My investment strategy – and investment actions – wouldn’t change one iota if the stock market was only open for an hour, once a month. 

Why would they?

I buy quality companies when they’re available for good prices, then hold them for as long as it makes sense to do so… hopefully for years and decades to come.

That’s investing.

Everything else is noise.

(Oh, and speaking of noise, there are some fake social media ads going around, using a video of me and dubbing some dodgy offers over the top. And others using fake accounts in my name. Please be careful if you see them – always check the source!) 

Fool on!

The post Why I don’t want to trade 24/7 appeared first on The Motley Fool Australia.

More reading

• The worst three performing ASX 200 shares in May unmasked
• Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid
• How the CBA share price defied the bears to surge in May
• Leading brokers name 3 ASX shares to buy today
• What a pay rise for 2.6 million Aussies could mean for ASX shares

Motley Fool contributor Scott Phillips 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 REA Group. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price shook off bearish overvaluation concerns to charge higher again in May.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed out April trading for $114.54 apiece. When the closing bell rang on 31 May, those same shares were swapping hands for $119.54, up 4.4%.

That saw the CBA share price race ahead of the ASX 200, with the benchmark index gaining a more modest 0.5% in May.

Here’s what happened in the month just past.

CBA share price hits new record highs

ASX 200 investors who paid heed to bearish analysts cautioning that Australia’s biggest bank is trading at an unjustifiably high premium to its peers and sold their holding will have missed out on the record high share price.

On 16 May, the CBA share price gained 1.9% to close at $122.26, marking a new all-time closing high.

The big four bank looks to have caught some tailwinds from the federal budget. With a number of cost-of-living relief measures packed in, the budget could ease the outlook for non-performing loans over the year ahead.

Investors’ primary focus this month was CBA’s quarterly update for the three months ending 31 March.

Although the CBA share price closed down 2.2% on the day, the ASX 200 bank stock made up for those losses, and a good bit more, over the following five trading days.

Investors initially favoured their sell buttons after CommBank reported a 1% decline in operating income and a 2% increase in operating expenses.

This, in turn, saw a 5% fall in the bank’s unaudited statutory net profit after tax (NPAT), which came in at $2.4 billion for the quarter. Although NPAT still came in slightly ahead of consensus expectations.

And investors will have noted CBA’s very solid Common Equity Tier 1 (CET1) ratio of 11.9%, which is safely above the minimal 10.25% ratio stipulated by the Australian Prudential Regulation Authority (APRA).

Also likely helping buoy the CBA share price over the following days was the relative resilience of the bank’s net interest margins (NIMs), which should help support profits.

And longer term, the bank remains a favourite with passive income investors for its reliable fully franked dividends. While the rising share price has seen CBA’s dividend yield dip to 3.8%, CommSec forecasts the dividend payouts will continue to tick higher over the next two years.

CBA is also engaged in a billion-dollar share buyback, which has been helping support the share price.

The post How the CBA share price defied the bears to surge in May appeared first on The Motley Fool Australia.

More reading

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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.

With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Brickworks Limited (ASX: BKW)

According to a note out of Bell Potter, its analysts have upgraded this building products company’s shares to a buy rating with an improved price target of $29.50. The broker made the move on the belief that there is an attractive look-through opportunity with Brickworks relating to its investment in Washington H Soul Pattinson & Company Ltd (ASX: SOL). It notes that its mark to market valuation of Soul Patts is indicating that the stock is currently trading at a 3.6% discount to pre-tax NTA. In addition, with the broker positive on Brickworks’ rental growth outlook, it feels now is the time to buy and has upgraded its shares. The Brickworks share price is trading at $26.28 on Monday.

Champion Iron Ltd (ASX: CIA)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $9.30 price target on this iron ore miner’s shares. This follows the release of the Canada-based miner’s FY 2024 results last week. Goldman highlights that Champion Iron reported record EBITDA of C$553 million, which was up 11% year on year and comfortably ahead of the market’s expectations. The good news is that more records are expected to be broken next year. Goldman notes that with Bloom Lake operating above nameplate and management ramping up Phase II, its analysts are expecting this to support 50%+ EBITDA growth in FY 2025. The Champion Iron share price is fetching $7.14 this afternoon.

Xero Ltd (ASX: XRO)

Analysts at Macquarie have retained their outperform rating and $180.70 price target on this cloud accounting platform provider’s shares. This follows news that Xero is lifting prices and updating plans in the United Kingdom in September. Macquarie was pleased with the changes, which mirror those undertaken in the Australia market recently. It believes the new plans will support a higher average revenue per user metric in the UK market through the simplification of its offering and increased bundling. The Xero share price is trading at $134.24 at the time of writing.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

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

Many Australians woke up to some happy news today – they would be getting a pay rise, and a hefty one at that. This news could have some significant impacts on ASX shares.

Yes, this morning, the Fair Work Commission announced that both award wages and the minimum wage would increase by 3.75% from 1 July this year.

This decision will affect up to 2.6 million Australians, or 20.7% of the country’s entire workforce, who are employed on award wages.

This decision will be welcomed by these workers, as it delivers a rise in wages that comes in just above the rate of inflation over the year. Inflation came in at 3.6% over the 12 months to 30 April 2024. So if price rises keep to this rate or fall even further, workers are in line for a real rise in living standards.

Here’s some of what the Fair Work Commission said on its decision:

Modern award minimum wages remain, in real terms, lower than they were five years ago, notwithstanding last year’s increase of 5.75 per cent, and employee households reliant on award wages are undergoing financial stress as a result.

This has militated against this Review resulting in any further reduction in real award wage rates. At the same time, we consider that it is not appropriate at this time to increase award wages by any amount significantly above the inflation rate, principally because labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory.

So good news for any Australian worker on an award wage today.

But how will this decision impact ASX shares and the Australian share market?

How does a minimum wage hike impact ASX shares?

Well, on one level, it will be a definite positive. More money in workers’ pockets means more money is available to spend in the economy. The fact that the rise comes in just above the rate of inflation means that this decision should have a stimulatory effect on consumer spending.

That should bode well for almost all sectors of the share market. But especially so for companies that sell goods and services that consumers tend to buy more of as their disposable income rises. That would include most ASX shares in the consumer discretionary sector, but perhaps also those in the consumer staples, healthcare, communications, industrial, financial, tech, utility and real estate sectors.

However, another factor we must consider is the impact that any broad rise in wages might have on inflation and, thus, on interest rates. As any attuned investor would know, the markets are particularly sensitive to interest rates right now. April’s inflation numbers ended up coming in higher than most commentators expected, dashing hopes of an imminent cut in interest rates.

In fact, some experts stated that these inflation numbers increased the likelihood that the Reserve Bank of Australia’s next move will be a rate hike.

From this lens, an above-inflation wage hike might not be the best news, as it arguably has the potential to add fuel to the inflation fire by increasing consumer spending at the wrong time.

Fortunately, one ASX expert doesn’t think this is a realistic scenario.

ASX expert: Inflation will keep falling

As reported in The Australian today, JPMorgan economist Tom Kennedy reckons that today’s decision won’t “move the needle on the Bank’s inflation/wage forecast or change its thinking on current monetary policy settings”.

Kennedy is predicting that the hike to award wages “will be neutral for aggregate wage growth, with a contribution very close to zero”. As such, JPMorgan is still pencilling in at least one RBA interest rate cut from early 2025.

No doubt this rosy outlook will come as music to ASX investors’ ears. Perhaps investors have already taken it to heart, judging by today’s healthy 0.76% rise for the S&P/ASX 200 Index (ASX: XJO) at present. But we’ll have to wait and see what happens.

The post What a pay rise for 2.6 million Aussies could mean for ASX shares appeared first on The Motley Fool Australia.

More reading

• Should you buy this defensive ASX 200 stock on a pullback?
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• These were the best performing ASX 200 shares in May 2024
• If you were born in the 1970s or later, your superannuation is delivering the best returns

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

Some might argue the frenzy on ASX artificial intelligence (AI) stocks has well and truly begun.

Since NVIDIA Corporation’s (NASDAQ: NVDA) epic financial results last month and similar impressive returns for other companies in the AI space, experts are constructive on the outlook for ASX AI stocks.

But it’s always wise to tread with caution. More thought is needed than to simply ‘ride the AI wave’.

If you’re hunting for an ASX AI stock with significant growth potential, I think Life360 Inc (ASX: 360) is one to consider closely.

Life360 shares have surged 105% this year to date and climbed from a 52-week low of $6.71 per share in December last year to today’s price of $15.34 at the time of writing.

Here’s why I think it is well-positioned for future growth.

Why Life360 is a top ASX AI stock

Life360’s core product is a smartphone app for location sharing. This app has become a reliable way for families to track children, frail individuals, and those with special medical needs.

The ASX AI stock’s recent financial performance has been sound, in my view. For instance, company revenues were up 15% year over year and increased to US$78.2 million in Q1 CY2024. Life360 also grew operating cash flow to US$10.7 million, an improvement of nearly $20 million from last year.

Broker Morgan Stanley has expressed its bullish sentiments on Life360. It cited the company’s extensive data collection as a potential AI advantage in a recent note.

Through its “huge volumes of user data,” Life360 has unique insights into what customers do with their time and money. Because of this, it sees “significant potential” for the company in the AI scene.

Solaris Investment Management also likes the growth outlook for the ASX AI stock. Talking to The Australian Financial Review, chief investment officer Michael Bell said the company had been a “very, very strong performer”, and that “importantly, [its] revenue has been growing”.

“Life360 [has] 66 million subscribers, and [it has] been growing aggressively over the last eight years”, he added, echoing Morgan Stanley’s statements.

Bright future prospects

Life360 also has the ability to enter new markets, a point highlighted by Bell Potter in a recent note. The company’s launch of ‘Driver Protect’, a subscription-based roadside assistance service, is a prime example of this, the broker says.

This new product is just one example of how the company has the “potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents.”

Bell Potter labels potential future markets for the ASX AI stock as insurance, home security, and identity theft protection, to name a few. If they prove correct, I believe these opportunities could significantly boost the company’s growth trajectory.

The firm has a buy rating and a price target of $ 17.75 for Life360. This represents a potential upside of nearly 15% from the time of publication.

ASX AI stock Foolish takeaway

In my opinion, Life360 stands out as a top ASX AI stock well positioned to capitalise on Al-related tailwinds. It is looking to expand into new markets and boasts a substantial user base. This data can be used in specialty ways going forward.

While analysts are also constructive on the stock, it’s essential to remember the risks involved with investing and that past performance is no guarantee of future results.

The post I think this is the best ASX artificial intelligence (AI) stock to buy right now 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 positions in and has recommended Life360. 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 200 Index (ASX: XJO) is having a strong start to the week. In afternoon trade, the benchmark index is up 0.8% to 7,761.1 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are storming higher:

APM Human Services International Ltd (ASX: APM)

The APM Human Services International share price is up 10% to $1.37. Investors have been buying the human services company’s shares after it accepted a takeover offer. According to the release, APM has entered into a scheme implementation deed with Madison Dearborn Partners. Under the scheme, APM shareholders will receive $1.45 cash per share. The APM Independent Board Committee unanimously recommends that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert’s report.

Fletcher Building Ltd (ASX: FBU)

The Fletcher Building share price is up almost 4% to $2.95. This morning, this building materials company announced amendments to its banking agreements which will extend the tenor of its debt facilities. In addition, the amendments will allow Fletcher Building to rely on more favourable terms for covenant testing through to the end of calendar 2025 if required. The company’s acting CEO, Nick Traber, said: “Given the current market environment and outlook, we have taken pre-emptive steps to reinforce the Company’s resilience for the medium term to position ourselves to navigate the tougher trading conditions.”

Navigator Global Investments Ltd (ASX: NGI)

The Navigator Global Investments share price is up 13% to $2.09. Investors have been buying this investment company’s shares after it upgraded its earnings guidance for FY 2024. Full year adjusted EBITDA is now expected to be between US$85 million to US$89 million, representing an increase of between 76% and 84% on FY 2023’s adjusted EBITDA. Management advised that strong profit distributions from its partner firms is driving a significant second half earnings uplift. The company’s CEO, Stephen Darke, believes “this underscores both the resilience and earnings potential of NGI’s diversified portfolio of global alternative investment managers.”

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is up 6% to 21.2 cents. The catalyst for this has been an update on the Walyering-7 (W7) well within the Perth Basin. According to the release, W7 has intersected a high-quality conventional gas accumulation to the north-east of the currently producing Walyering gas field. A total of 23m of net gas pay with an average porosity of 16% has been measured.

The post Why APM, Fletcher Building, Navigator Global, and Strike Energy shares are storming higher appeared first on The Motley Fool Australia.

More reading

• APM share price grinds to a halt as investors await update on takeover offer
• Here are the top 10 ASX 200 shares today
• ASX 200 energy stock rockets 8% on ‘significant’ milestone
• Why Playside Studios, Pro Medicus, Strike Energy, and Winsome shares are charging higher
• Why AIC Mines, Fletcher Building, Nufarm, and Wesfarmers shares are dropping

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