Category: Stock Market

It’s fair to say that Fortescue Ltd (ASX: FMG) shares have had a fairly rough year in 2024 so far. Since the beginning of January, the Fortescue share price has lost a chunky 23.14% of its value, dropping from around $29.39 to the $22.59 we see today.

That doesn’t look great against the performance of the S&P/ASX 200 Index (ASX: XJO), which has risen by 4.87% over the same period.

But whilst this has no doubt been painful for Fortescue investors to endure, it has done wonders for the ASX 200 iron ore giant’s dividend yield.

Right now, Fortescue shares are trading on a whopping trailing dividend yield of 9.21%.

If we consider that Fortescue’s dividend payments usually come with full franking credits attached, this yield grosses up to an even more impressive 13.16% with the value of that full franking included.

So, is that all that needs to be said? Does Fortescue’s 9.21% dividend yield make this stock a screaming buy today? Let’s break it down.

Are Fortescue shares a screaming buy for that 9.2% dividend yield?

Well, to start off with, that massive dividend yield is no joke.

It comes from Fortescue’s two most recent dividend payments. The first was the miner’s final dividend of $1 per share, which we saw doled out in September last year. The second was the interim dividend of $1.08 per share, which was paid out in March.

As we mentioned above, both of these payments came fully franked. Together, they give Fortescue shares that 9.21% yield we see today.

However, just because Fortescue has coughed up that amount over the past 12 months doesn’t mean it will continue to do so going forward.

No company is ever under any kind of obligation to keep its dividends at the levels they were in the previous year. Indeed, as a miner, Fortescue’s dividends are even less reliable than those of most other ASX shares.

Any company’s ability to pay out dividends depends on its profitability from year to year. As Fortescue is completely reliant on the global price of iron ore for its own profits, its dividends are fundamentally unstable.

We can see this play out if we look back at the company’s past dividend payments. While the dividends that shareholders have enjoyed over the past 12 months are still substantial, Fortescue’s raw dividends have been volatile for years.

For example, over the 2021 calendar year, the company paid investors $3.58 in dividends per share. But just two years earlier, the annual total was a far less impressive $1.14.

Foolish takeaway

So long story short, it would be naive to buy Fortescue shares today with the expectation of receiving a 9%-plus yield going forward.

Saying that, I would still happily buy Fortescue today for its dividend income potential. This is one of the best-run iron ore miners on the ASX, with a very low-cost base for extracting and processing its ore.

When iron prices are low, the dividends may slow. But over the long term, I think investors can expect a lot of income from this company.

So, if maximising income was a primary goal of my investing strategy, I would happily buy Fortescue shares today as part of a diversified dividend portfolio.

The post Is the 9.2% dividend yield on Fortescue shares too tempting to pass up? appeared first on The Motley Fool Australia.

More reading

• Why are BHP and other ASX 200 mining shares getting hammered on Tuesday?
• It’s official, Aussies are getting richer! Here’s how
• Top 10 most traded ASX shares and US stocks in June
• I’d buy Fortescue shares today to generate $2,000 of monthly passive income
• Is it time to dive back into ASX lithium shares?

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 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 Vanguard Australian Shares Index ETF (ASX: VAS) was the most traded exchange-traded fund (ETF) among investors using the SelfWealth trading platform last month.

The Vanguard Australian Shares Index ETF is an index-based ETF that tracks the performance of the S&P/ASX 300 Index (ASX: XKO).

This gives VAS investors exposure to major stocks like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia Ltd (ASX: CBA), CSL Ltd (ASX: CSL), and Wesfarmers Ltd (ASX: WES).

ETFs are an increasingly popular investment vehicle for Australian investors.

Value of ASX exchange-traded funds exceeds $200 billion

ASX ETFs now represent more than $200 billion in assets under management, according to ETF provider BetaShares’ half-year review.

Co-founder of Betashares, Ilan Israelstam, said: “The ETF industry continues to go from strength to strength, as investors increasingly adopt ETFs to build their portfolios.”

One of the benefits of exchange-traded funds is they provide instant diversification in a single trade. 

Let’s review the top 10 ETFs traded in June, according to SelfWealth.

Top 10 most traded ASX ETFs in June

Here are the top 10 most traded exchange-traded funds in June by volume (thus incorporating both buy and sell orders), according to Selfwealth Ltd (ASX: SWF).

We have also included the percentage of buy orders next to each exchange-traded fund.

Rank	Top ASX ETFs by trading volume	Percentage of buy orders
1	Vanguard Australian Shares Index ETF (ASX: VAS)	73.1%
2	Vanguard Msci Index International Shares ETF (ASX: VGS)	81.7%
3	Vanguard Diversified High Growth Index ETF (ASX: VDHG)	71.4%
4	Betashares Nasdaq 100 ETF (ASX: NDQ)	77.5%
5	iShares S&P 500 AUD ETF (ASX: IVV)	83%
6	BetaShares Australia 200 ETF (ASX: A200)	75.6%
7	Vanguard US Total Market Shares Index AUD ETF (ASX: VTS)	69.6%
8	BetaShares Diversified All Growth ETF (ASX: DHHF)	81.5%
9	BetaShares Geared Australian Equity ETF (ASX: GEAR)	57.8%
10	Global X Fang+ ETF (ASX: FANG)	70.4%

Which ETF attracted the most buyer interest?

The iShares S&P 500 AUD ETF attracted the most buy orders among the top 10 most traded ETFs in June.

The iShares S&P 500 ETF is an index-based ETF that tracks the performance of the 500 largest United States companies comprising the S&P 500 Index (SP: .INX).

It appears investors remain confident that US shares will continue to outperform the ASX 200.

In FY24, the S&P 500 rose by 22.7% while the S&P/ASX 200 Index (ASX: XJO) lifted 7.83% (or 12.1% with dividends included).

The IVV exchange-traded fund is among the 10 cheapest ETFs on the market.

We note that the ninth most traded ETF in June was the GEAR ETF.

GEAR delivered the best three-year returns among ASX ETFs, according to recently published data.

Check out the ASX global shares exchange-traded funds that delivered 50% to 70% returns last year.

The post Top 10 most traded ASX ETFs in June appeared first on The Motley Fool Australia.

More reading

• 5 ways ASX shares investors define financial success
• Own the Vanguard Australian Shares Index ETF (VAS)? Here’s how much you’ll get paid today
• Why I’d still call the FANG+ ETF a buy
• Buy and hold these ASX ETFs until 2030
• Should Aussies choose Vanguard Australian Shares Index ETF (VAS) or a term deposit for passive income?

Motley Fool contributor Bronwyn Allen has positions in BHP Group, CSL, Commonwealth Bank Of Australia, Vanguard Australian Shares Index ETF, Vanguard Diversified High Growth Index ETF, and Vanguard Us Total Market Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, CSL, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Wesfarmers. The Motley Fool Australia has recommended CSL, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Guzman y Gomez (ASX: GYG) shares have been a hot topic among ASX investors following their successful initial public offering (IPO).

Since its listing, the stock has surged more than 20% into the green and now trades at $26.52 apiece. But the room is split on what to do with GYG shares from here.

With the buzz around this Mexican fast-food chain, it’s worth exploring why GYG shares might be a good addition to your portfolio—and one reason you might want to hold off. Here’s what the experts are saying.

Should you consider buying GYG shares?

GYG shares were all the rage in the first half of CY 2024. They were also a key contributor to the June returns of Firetrail Investments’ Absolute Return Fund.

In its monthly report, the firm said GYG was a “positive contributor” to its June return of 2.75%, bringing its second-quarter return to 7.3%.

The investment management boutique outlined four reasons for owning GYG shares.

1. Strong financials underneath GYG shares

Firetrail says Guzman y Gomez has shown impressive growth, with network sales compounding at nearly 30% annually over the past decade.

The company now operates 210 restaurants globally, with 70% as franchises and 30% as corporate stores.

This franchise model is highly profitable, with a typical GYG drive-thru turning over approximately $6 million annually and boasting a 22% profit margin. This is one reason it owns GYG shares.

These restaurant economics place GYG second only to McDonald’s in Australia, Firetrail says:

With an average build cost of $2 million, a new corporate GYG store generates an approximately 60% return on investment and pays itself off in just over 18 months.

We expect restaurant performance to continue to improve over time as ongoing same-store-sales growth drives operating leverage on a relatively fixed cost base

2. Significant growth potential

GYG currently has fewer than 200 stores in Australia but envisions the potential for over 1,000, with plans to open 30-40 new stores annually. Firetrail says this gives the company a 20-year growth runway in Australia alone.

It says this expansion is underpinned by the solid performance of existing stores, with ongoing same-store sales growth driving operating leverage.

As it stands, McDonald’s and Subway are the only two major quick service restaurant (QSR) companies with more than 1,000 stores (1,031 and 1,227 each, respectively).

3. Expansion opportunities abroad

It’s not just the Australian market that supports Firetrails’ investment thesis on GYG shares. The company has global ambitions, too.

GYG operates a small number of restaurants in Singapore and Japan and has begun expanding in the USA. Although it’s early days, “the prize is large,” it says and is confident in the brand’s international appeal.

We believe the investment thesis is underpinned by the Australian opportunity alone. However, management have global ambitions. The company has a small presence in Singapore and Japan today. Both markets could be materially larger over time.

Additionally, GYG has opened 4 restaurants in the USA and intends to open an additional 3-5 each year to prove out the brand appeal and unit economics.

4. Healthy franchisee network

A key strength of GYG is its profitable franchisee network, Firetrail says. Every GYG franchisee is currently profitable, with the median franchisee making a 50% return on investment.

This is “underpinned by a simple and transparent royalty model which ensures franchisees are treated fairly”.

The fund manager believes this trend drives a strong incentive to open new stores, ensuring a steady stream of royalty income for GYG.

“Unsurprisingly, the waitlist to become a franchisee is long”, it concluded.

One reason to potentially sell GYG shares

Despite the strong growth prospects, some analysts believe GYG shares are overvalued. Bell Potter recommends to sell the stock as it may be overvalued.

According to The Bull, Bell Potter analyst Christopher Watt says that investors may “want to consider trimming their positions to pocket some profits”.

He said GYG shares gave a “handsome windfall” on their first day on the ASX, closing the session at $30 after the initial public offering at $22.

Watt added:

We like the business, but believe the August 2024 reporting season will more than likely highlight a challenging year ahead for restaurants and discretionary retailers.

Time will tell which broker got it right.

Foolish takeout

GYG shares delivered gains for many investors in the first half of CY 2024. However, potential investors should be mindful of the current high valuation and the associated risks.

If GYG can continue to execute its growth strategy effectively, its shares could offer substantial returns in the long run. Always remember to conduct your own due diligence and that past performance is no indication of future results.

The post 4 reasons to buy GYG shares (and one reason to sell) appeared first on The Motley Fool Australia.

More reading

• Top broker slaps $33 price target on Guzman y Gomez (GYG) shares
• ASX 200 re-writes history. Which companies are leading the charge?
• Here’s what ASX brokers are saying about Guzman y Gomez shares right now
• 2 ASX shares I’d give a wide berth to in today’s stock market
• 5 reasons I’d throw Guzman y Gomez shares in the bin like a bad burrito

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.

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

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• 5 things to watch on the ASX 200 on Tuesday
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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 Block, PolyNovo, and Reliance Worldwide. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended PolyNovo. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Many people share the dream of earning a lifelong passive income in a world of financial uncertainties. However, without any savings to start with, this goal may seem distant, if not impossible, to achieve. That’s where the wisdom of legendary investor Warren Buffett comes into play.

Known for his simple yet profoundly effective investment philosophy, Buffett’s approach can be adapted by anyone looking to make their way into the world of investments.

Warren Buffett, often referred to as the “Oracle of Omaha,” has built his fortune through making wise investments in undervalued companies with strong business models and potential for long-term growth.

Save, educate, and invest

For individuals starting from scratch, the first step towards employing the Buffett method is saving money. Buffett is known for his frugality. He still lives in the same house he bought in 1958 and enjoys McDonald’s breakfast. By leading a simple and frugal lifestyle, you can achieve two goals: better focus on important things in life and creating the initial capital to invest.

The second step, or what you can do in parallel, is education. In the early days, Buffett used to read the Moody’s Manual, a thick book introducing all listed shares, one company per page, from A to Z, twice.

He emphasises understanding the businesses you invest in. This means looking beyond share price fluctuations and focusing on the company’s fundamentals, such as its competitive advantages, management quality, financial health, and potential for growth.

What to consider in choosing ASX dividend shares

Patience is crucial when using the Warren Buffett method. Buffett is known for his long-term investment strategy, often holding onto his investments for decades. Dividend-paying stocks can be a great way to achieve this long-term investing goal.

Buffett’s investment vehicle, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), collects billions of dollars in annual dividends from a handful of companies, including Bank of America Corp, Occidental Petroleum Corp, and Apple Inc.

In his 2022 shareholder letter, Buffett highlighted:

In August 1994 – yes, 1994 – Berkshire completed its seven-year purchase of the 400 million shares of Coca-Cola we now own. The total cost was $1.3 billion – then a very meaningful sum at Berkshire.
The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.

American Express is much the same story. Berkshire’s purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase.

ASX dividend shares

Once you have saved some money to invest, it is time to look for ASX dividend shares similar to Buffett’s. For this purpose, I looked for ASX companies with a solid dividend history, robust business fundamentals, and inexpensive valuations.

• Washinton H Soul Pattinson (ASX: SOL) has increased its dividends for more than a decade. Currently offering a fully franked dividend yield of 2.6%, it is one of the most loved ASX dividend shares.
• BHP Group Ltd (ASX: BHP) boasts a dividend yield of 5.5% after the recent weakness in its share price. While the near-term outlook is murky, the mining giant has a time-tested history of dividend payments.
• Steadfast Group Ltd (ASX: SDF) is a leader in the insurance broking industry, with a current dividend yield of 2.5%. Its earnings and dividends have demonstrated consistent growth year after year.
• Brickworks Limited (ASX: BKW) shares currently offer a fully-franked dividend yield of 2.3%. Based on management estimates, they are valued below the company’s net asset value (NAV).

While the first step can be daunting, let’s remember that Buffett made his first stock purchase—three shares of Cities Service preferred shares at $38 per share—when he was 11.

The post No savings? I’d use the Warren Buffett method to earn lifelong passive income with ASX shares appeared first on The Motley Fool Australia.

More reading

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• This ASX stock is 13% of my portfolio and I don’t lose a second of sleep over it
• BHP share price marching higher amid legal cost sharing agreement with Vale
• It’s official, Aussies are getting richer! Here’s how
• Top 10 most traded ASX shares and US stocks in June

American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Kate Lee has positions in Brickworks and Occidental Petroleum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bank of America, Berkshire Hathaway, Brickworks, Steadfast Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has positions in and has recommended Brickworks, Steadfast Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX shares investors say being debt-free and owning a home are their most important definitions of financial success, according to new research.

These are the findings of a survey conducted by online trading platform Stake in May.

Stake surveyed more than 2,000 Australian investors who held either ASX shares or overseas stocks.

The most popular definition of financial success was being debt-free, according to 86% of respondents.

It’s likely that being debt-free is even more appealing during today’s cost-of-living crisis!

Owning a home was the second most popular definition of financial success, with 85% of respondents agreeing that this was a key aspiration.

Debt-free home ownership is considered essential for a comfortable lifestyle in retirement in Australia.

But as we all know, getting into the property market can be difficult for many reasons.

One of them is that values continue to rise faster than most people can save a deposit. For example, in FY24, the median home price rose by $59,000, according to CoreLogic data.

On top of that, 13 interest rate rises between May 2022 and November 2023 have made it not only difficult to service a loan but also hard to get finance in the first place.

When assessing loan applications, banks typically add a 3% serviceability buffer. This means most customers today have to prove they can afford an interest rate of 8% or 9% to get a home loan.

What are the other definitions of financial success?

The third most popular definition of financial success, with 77% support among ASX shares investors, was being able to live in an area of their choosing.

This definition may reflect the compromises people are making in the property market as values continue to increase and buyers are forced to seek more affordable accommodation.

The fourth most desired milestone of financial success is having the capacity to support family members. Three-quarters of survey respondents said this represented financial success to them.

This reflects the rising role that the Bank of Mum and Dad is playing in Australia’s property market.

Finally, the fifth most common definition of success among ASX shares investors is having the flexibility to reduce working hours, or quit altogether, and live off one’s investments.

If you also aspire to this, check out this article by my colleague Sebastian: How much cash do you need to quit work and live off ASX dividend income?

You can also check out these 7 tips for successful ASX shares investing.

Which ASX shares are attractive to investors today?

The Stake survey explored the top investment themes exciting ASX shares investors today.

Gold was at the top of the list. This was not surprising given the year that ASX gold stocks had in FY24.

The top three ASX 200 mining shares for price growth last financial year were all gold stocks.

The survey also revealed the five most popular ASX shares bought by investors over the 12 months to May.

They included ASX lithium share Pilbara Minerals Ltd (ASX: PLS) and the Vanguard Australian Shares Index ETF (ASX: VAS).

On Tuesday, S&P/ASX All Ordinaries Index (ASX: XAO) shares are down 0.16%.

The post 5 ways ASX shares investors define financial success appeared first on The Motley Fool Australia.

More reading

• Own the Vanguard Australian Shares Index ETF (VAS)? Here’s how much you’ll get paid today
• Here’s the lithium price forecast through to 2027
• Should Aussies choose Vanguard Australian Shares Index ETF (VAS) or a term deposit for passive income?
• Are AGL or Pilbara Minerals shares a better buy?
• Top 10 most traded ASX shares and US stocks in June

Motley Fool contributor Bronwyn Allen has positions in Vanguard Australian Shares Index ETF. 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 Vanguard Australian Shares Index ETF (ASX: VAS) is a popular exchange-traded fund (ETF) on the ASX. It’s so widely held, in fact, that VAS has long held the title of the most popular ETF and index fund on the ASX by funds under management for a number of years.

As such, there will be many ASX investors who will be receiving a paycheque today. That’s because it’s dividend payday for the Vanguard Australian Shares ETF this Tuesday.

The Vanguard Australian Shares ETF typically pays quarterly dividend distributions rather than the six-month interval that is common on the ASX.

We first got an idea about what the latest VAS dividend distribution would be late last month. Back on 28 June, Vanguard announced that the latest investor payment for this ETF would be worth 67.21 cents per unit – an amount later confirmed on 1 July.

That was the same day that VAS units traded ex-dividend on the ASX. So if you didn’t own this ETF at the end of trading on 30 June, you won’t be eligible to receive this latest dividend distribution.

But for those lucky investors who did make the cut, today is your lucky day.

If you haven’t already received this cash payment, you will see 67.21 cents for every VAS unit owned arrive sometime today. Like most VAS dividends, this payment will come partially franked, reflecting the mixed nature of its underlying holdings.

VAS’ latest ASX dividend goes low

However, this payment might not be as enthusiastically welcomed as some of VAS’s former ASX dividend distributions. That’s because this 67.21 cents per unit payment is well below what VAS’s ASX investors would be used to.

For one, it pales in comparison to this ETF’s last three quarterly dividend distributions. The quarter ending 31 March saw investors bag 84.79 cents per unit, for example. Before that, investors enjoyed payments worth 71.62 cents and $1.29 per unit, respectively.

2024’s June quarter distribution is even smaller than the payment investors received this time last year. 2023’s June distribution came to 88.9 cents per share. So this year’s paycheque is in effect a 24.4% pay cut from last year.

But there’s not a lot Vanguard could have done about that. Like all ETFs, VAS can only pass on what it receives in dividend income from its underlying holdings. So the fact that this month’s distribution is so low is more of a reflection of the dividends it has enjoyed from its top holdings, like the big four banks, BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), and Wesfarmers Ltd (ASX: WES).

But saying that, the passive income from an ASX index fund like VAS is usually quite volatile. So long-term investors would be used to their dividend distributions coming in ebbs and flows.

This latest dividend distribution from VAS takes this ASX ETF’s annual distribution total to $3.52 per unit. At the current VAS unit price of $99.06 (at the time of writing), this gives the Vanguard Australian Shares Index ETF a dividend yield of 3.55%.

The post Own the Vanguard Australian Shares Index ETF (VAS)? Here’s how much you’ll get paid today appeared first on The Motley Fool Australia.

More reading

• 5 ways ASX shares investors define financial success
• Should Aussies choose Vanguard Australian Shares Index ETF (VAS) or a term deposit for passive income?
• Buying shares and 5 other ways investors intend to spend tax cuts: report
• The 5 most popular ASX shares bought by investors
• Should I buy ASX shares now or wait? See what Lazard says

Motley Fool contributor Sebastian Bowen has positions in CSL, Wesfarmers and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. 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.

It’s been a fairly ho-hum day on the ASX so far this Tuesday. Fresh from cracking a new all-time record of 8,281.4 points yesterday, the All Ordinaries (ASX: XAO) Index is currently down 0.07%. But let’s talk about what’s happening with the DroneShield Ltd (ASX: DRO) share price. 

As one might expect, most ASX All Ords shares are having a pretty average day, apart from some new highs from the ASX banks. But the Droneshield share price’s day has been anything but ordinary. Unfortunately, it’s not good news for the true believers in this ASX defence stock.

Droneshield closed at $2.60 a share yesterday afternoon after enjoying an 11.11% bounce on Monday’s session. But today, it has been a very different story. Things started well for the company, with Droneshield opening at $1.71 before hitting yet another fresh new record high of $2.72 soon after open.

But that’s when the selling started. After less than 30 minutes of trading, the Droneshield share price was back in the red. Things didn’t look too dire by midday, which had the company drop down to $2.53 a share.

However, investors seemed to have gotten a bad case of the afternoon blues soon after. Selling quickly accelerated. The Droneshield share price dropped below $2.40, then $2.20 and finally $2.

At the time of writing, the company has gone into a trading halt, but not before losing an astonishing 28.5% of its value and coming to a stop at $1.86 a share. That’s after getting as low as $1.79 in earlier trading, a drop worth more than 31%.

So what on earth is going on with the Droneshield share price that has caused investors to wipe off more than a quarter of this company’s value in just a few short trading hours?

Why have DroneShield shares tanked by 31% today?

Unfortunately for lovers of certainty and logic, it’s a gosh darn mystery. Prior to the request for the trading halt, Droneshield had not made any fresh news or announcements today. In fact, we haven’t had any major news from the company for almost a month.

There doesn’t appear to be any other news out regarding Droneshield either.

So all we can do at this point is speculate and wait for further updates.

It is possible that some investors have finally decided to take some gains off the table, sparking a rush to get out of the stock today.

Today’s drop does look dire. But investors have been raking in the profits (at least on paper) from Droneshield for months now.

Remember, this is a company that has risen from 38 cents a share at the start of 2020 to the record high of $2.72 that we saw this morning. That’s a gain worth over 615%. Even after today’s drop, the Droneshield share price remains up by around 400% year to date.

As of yesterday’s close, the Droneshield share price was also up close to 80% over the past month alone and had risen 20% just last week. Check all of that out for yourself below:

Too hot to handle?

Deep down, most investors know that gains like these are rare on the ASX and don’t typically last too long without a pullback. So it was arguably only a matter of time before some investors started to blink and pull money off the table. This could have caused a cascade effect, sparking a rush for the exits.

At this point, that’s the best explanation we have as to why Droneshield has suddenly cratered in value today after such a strong run.

Even so, long-term investors are still up substantially here. It will be interesting to see what happens with this hot (until this afternoon) ASX All Ords stock next. I, for one, will be watching closely for more updates from the company, and what happens when trading resumes.

The post Big ASX news! DroneShield share price crashes 31% appeared first on The Motley Fool Australia.

More reading

• Top 10 most traded ASX shares and US stocks in June
• Are ASX small-cap shares back in vogue amid a big shift?
• Would I be crazy to buy DroneShield shares now at over $2?
• 3 ASX small-cap shares that soared 250% to 675% in FY24
• Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today

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 DroneShield. 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 200 mining shares including BHP Group Ltd (ASX: BHP) are tumbling on Tuesday after Rio Tinto Ltd (ASX: RIO) released second-quarter results that fell short of some consensus expectations.

Investors appear to feel that Rio’s report does not bode well for other ASX 200 mining shares.

The S&P/ASX 200 Materials Index (ASX: XMJ) is the worst performer of the day so far, down 1.12%.

Meantime, the S&P/ASX 200 Index (ASX: XJO) is down 0.13% today.

What’s happening with the ASX 200 mining shares today?

At the time of writing:

• The Rio Tinto share price is down 2.15% to $117.26
• The BHP share price is down 1.63% to $42.96
• The Fortescue Ltd (ASX: FMG) share price is down 0.27% to $22.42
• The Champion Iron Ltd (ASX: CIA) share price is down 2.16% to $6.33

What did Rio Tinto report today?

Rio Tinto released its 2Q FY24 update before the market open on Tuesday.

As my colleague James covered earlier, some of Rio’s results fell short of consensus expectations. This has led to a fall in the share price of the ASX 200 mining share.

Rio Tinto reported iron ore production of 79.5Mt in 2Q FY24, up 2% on 1Q FY24 and down 2% on 2Q FY23. This took 1H FY24 production to 157.4Mt, down 2% on 1H FY23.

Iron ore shipments in 2Q FY24 totalled 80.3Mt, up 3% on 1Q FY24 and up 2% on 2Q FY23. This took 1H FY24 shipments to 158.3Mt, representing a 2% decline on 1H FY23.

Consensus expectations among analysts had been 82Mt in shipments for 2Q FY24.

The ASX 200 mining major explained that a train collision in mid-May impacted production and shipments.

Aluminium production was flat at 824kt over 2Q FY24 compared to 1Q FY24 and up 1% compared to 2Q FY23. This took production for 1H FY24 to 1,650kt, up 3% on 1H FY23.

Copper production rose 10% in the second quarter to 171kt and increased 13% over 1H FY24 to 327kt. Consensus estimates were 175kt for 2Q FY24.

Falling iron ore price weighs on ASX 200 miners in 2024

The iron ore price has fallen dramatically in 2024 due to concerns over the Chinese economy.

At the beginning of the year, the iron ore price was about US$144 per tonne. Today, it’s US$109.58.

As a result, ASX 200 mining share prices have weakened in the year to date.

Analysts at Trading Economists said the 62% fe iron ore price held steady overnight as investors considered the latest economic data from China.

According to Trading Economics:

Data showed that China’s economy grew less than expected in the second quarter amid a persistent property downturn, weak domestic demand and rising trade tensions with the West.

Investors now await the outcome of a key political meeting in Beijing this week where traders are hoping for further stimulus to support the economy.

Westpac Banking Corp (ASX: WBC) forecasts the iron ore price will weaken further in 2024 and 2025.

Rio shares are down 14%, and BHP shares are down 15% year to date. Fortescue shares have lost 23.5%, and ASX 200 mining junior Champion Iron has lost 26.5%.

The post Why are BHP and other ASX 200 mining shares getting hammered on Tuesday? appeared first on The Motley Fool Australia.

More reading

• Why Champion Iron, Core Lithium, Encounter Resources, and Rio Tinto shares are dropping
• Rio Tinto shares fall on soft second quarter update
• 5 things to watch on the ASX 200 on Tuesday
• Leading brokers name 3 ASX shares to buy today
• BHP share price marching higher amid legal cost sharing agreement with Vale

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Guzman Y Gomez Ltd (ASX: GYG) share price has seen plenty of volatility in its early listed life. It’s up 21% from the initial public offering (IPO) price but down 11% from the first-day-of-trading price of $30, as shown on the chart below.

With such a volatile stock, it’s hard to say where the valuation is going to go next.

Some experts think the GYG share price is going to sink while others see a long-term opportunity. One of Australia’s leading broker has just put a very optimistic price target on the Mexican food business.

Bullish price target on the Guzman y Gomez share price

According to reporting by The Australian, the broker Barrenjoey has initiated its coverage on GYG shares with a price target of $33.

A price target is where the broker thinks the share price is going to go over the next 12 months. Of course, these price targets are just guesses – no one actually knows where share prices are going in a year.

If the Guzman y Gomez share price increased to $33, it’d represent an increase of approximately 24% over the next 12 months.

Of course, Barrenjoey has a close connection with GYG. Barrenjoey acted as a joint lead manager, bookrunner, and underwriter during the IPO process. The broker also owns around 10% of Guzman y Gomez, so it would benefit substantially if the GYG share price rose to $33.

However, as I mentioned, not every expert is positive on the company.

Sell call on GYG stock

Writing on The Bull, Jabin Hallihan from Auburn Capital called the Mexican food ASX share a sell.

He noted that the business has done well for IPO investors, but Hallihan suggested “investors may want to consider trimming their positions to pocket some profits”.

The Auburn Capital investment team likes the business but suggests that the reporting season of August 2024 “will more than likely highlight a challenging year ahead for restaurants and discretionary retailers.”

In the Guzman y Gomez prospectus, it disclosed it’s expecting to report FY24 revenue of $339.7 million (up 31%), $25 million of earnings before interest, tax, depreciation and amortisation (EBITDA) and a net loss after tax of $16.2 million.

In FY25, the company projects revenue of $428.2 million (up 26%), EBITDA of $59.9 million (up 136%), and a net profit of $6 million (up $22.2 million).

The post Top broker slaps $33 price target on Guzman y Gomez (GYG) shares appeared first on The Motley Fool Australia.

More reading

• ASX 200 re-writes history. Which companies are leading the charge?
• Here’s what ASX brokers are saying about Guzman y Gomez shares right now
• 2 ASX shares I’d give a wide berth to in today’s stock market
• 5 reasons I’d throw Guzman y Gomez shares in the bin like a bad burrito
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tristan Harrison has positions in Guzman Y Gomez. 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.