Category: Stock Market

Owning Telstra Group Ltd (ASX: TLS) shares gives investors exposure to the leading telco in Australia. That could be the sort of investment that might appeal to Warren Buffett. But, I’d suggest he would want to analyse the business before deciding to buy.

Warren Buffett is one of the world’s leading investors who has led Berkshire Hathaway to become one of the world’s largest businesses by buying quality companies with long-term growth potential. His investment returns have been an average of around 20% per annum over the decades.

There are a few different things Buffett likes to look for, so I’ll look at a couple of those factors.

Economic moat

Telstra is seen as having the strongest telecommunications network in Australia, with wider coverage, more spectrum and a greater number of subscribers. That could be the kind of economic moat Buffett likes to see.

The company has invested heavily in 5G to ensure that it continues to have the best network. According to Telstra’s FY24 first-half result, the company’s 5G population coverage reached around 87%, with 48% of mobile traffic on 5G.

Telstra’s ownership of spectrum and its vast network reach give it a strong economic moat that Warren Buffett would like, in my opinion.

In the last couple of years, we’ve seen Telstra feel confident enough in the appeal of its network and loyalty of subscribers to increase prices in line with inflation.

I think Buffett would also like the fact that almost every household and business is paying for telecommunication services, making telecommunications a very defensive industry.

Growth

Warren Buffett usually likes to look at businesses that have good long-term potential.

Telstra has a significant market share already, so I wouldn’t say it’s likely to grow its market share a lot.

However, the company is winning a lot of new subscribers. In the HY24 result, it reported its mobile services in operation (SIO) rose 4.6% year over year, which represented an increase of 625,000. If Telstra keeps winning significant numbers of new subscribers, it can deliver good profit growth for shareholders.

Telstra is investing in several areas, including fixed wireless broadband for households, intercity cable infrastructure, cybersecurity, and more.

The HY24 net profit after tax (NPAT) rose by 11.5% to $1 billion, and the areas I mentioned above could help deliver profit growth in the coming years.

Has Warren Buffett invested in US telcos?

While we’ve never heard of Buffett investing in Telstra shares before, he has previously invested in some US telco shares.

However, he chose to dump the AT&T shares quickly after acquiring them, and Verizon didn’t last much longer in the portfolio. But, in the last few years, Buffett has bought T-Mobile shares.

Those previous investments do not guarantee that Buffett would choose to invest in Telstra shares today, but they do show that he could be interested in the sector.

Are Telstra shares trading at a reasonable price?

Warren Buffett hasn’t outlined exactly what valuation metric he likes to focus on when investing within Berkshire Hathaway’s portfolio. It’s also not clear what margin of safety he’d want either when it comes to price.

According to the broker UBS, Telstra shares are valued at 20x FY24’s estimated earnings. Looking ahead to the 2028 financial year, Telstra shares are valued at 13.5x FY28’s estimated earnings.

I think Warren Buffett would be intrigued by Telstra shares after their 15% fall in the past year. However, there’s a fair chance the Omaha investor would prefer an even cheaper price before considering investing.

The post Would Warren Buffett buy Telstra shares? appeared first on The Motley Fool Australia.

More reading

• Top 10 most traded ASX shares and US stocks in May
• Telstra shares: Buy or sell?
• How to invest for retirement in an inflationary environment
• Buy Telstra and these ASX dividend stocks now
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25

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

Myer Holdings Ltd (ASX: MYR) shares are rocketing higher today.

In morning trade, the department store operator’s shares are up 20% to 77.5 cents.

This follows news that the company has tabled a proposal to fellow retailer and major shareholder Premier Investments Limited (ASX: PMV).

Its shares were up as much as 7% to $32.10 in early trade on the news.

What’s going on with Myer and Premier Investments shares?

This morning, Premier Investments announced that it has received a non-binding, indicative, and conditional proposal from Myer to explore a potential combination of the department store with Premier’s Apparel Brands business. The latter comprises the Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti brand.

According to the release, the combination would see the department store acquire Premier’s Apparel Brands business in exchange for the issue of new Myer shares.

The businesses would be contributed in proportion to their maintainable EBIT and on the same EV/EBIT multiple.

In addition, the Apparel Brands business would be contributed together with sufficient cash to ensure a consistent capital structure for each of the two businesses and to provide Myer with capital to invest in growth initiatives.

The deal would also bring an end to Premier Investments’ shareholding in Myer. It notes that Premier would distribute all of its shares in Myer to shareholders. As a result, Premier would cease to own Myer shares and Premier shareholders would become Myer shareholders directly, whilst also retaining their existing Premier shareholding.

What’s next?

The proposed transaction would require approval by Myer’s board and shareholders, Premier’s board and shareholders, and be subject to ASX, ACCC and ATO engagement.

The good news for Myer is that Premier Investments’ chair, Solomon Lew, appears to be in favour of the transaction. He has indicated that he would be prepared to take an active role as a non-executive director of Myer if the transaction proceeds.

Premier Investments has stated the following in regards to the proposed transaction. It said:

Myer has indicated that it sees significant opportunity from a combination of the businesses and that it wishes to explore whether that opportunity can be realised as part of a current review of Myer’s operations.

Premier also believes that there may be meaningful opportunity for both businesses from the proposal. The proposed combination has the potential to deliver a step change in Myer’s scale and market position, deliver synergies and drive sustainable earnings growth. Premier shareholders would benefit given Premier’s existing shareholding in Myer and because Premier shareholders would become shareholders in Myer.

Premier Investments has stated that it will be considering the proposal. However, it has warned that there is no certainty that the proposal will result in a binding offer or transaction.

In the meantime, it continues to work towards the proposed demerger of Smiggle, and to explore the demerger of Peter Alexander.

The post ASX 200 retailer and Myer shares rocket on ‘significant opportunity’ to combine powers appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX 200 shares with ex-dividend dates next week
• 6 ASX retail shares to buy this month
• Why these 4 ASX 200 shares were just rerated by top brokers

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

ASX tech stock Brainchip Holdings Ltd (ASX: BRN) has had a rocky 12 months.

After falling to a 52-week low of $0.14 a share back in October 2023, it traded mostly sideways until February, when it quickly shot up to a 52-week high of $0.54. Since then, it’s pulled back again and is currently trading at just $0.22.

Overall, the Brainchip share price has dropped almost 40% over the past year – but it’s been a wild ride getting here. So, what can Brainchip shareholders now expect from this topsy-turvy stock?

What does Brainchip do?

Brainchip is an Australian artificial intelligence (AI) company that specialises in neuromorphic computing.

The phrase ‘neuromorphic computing’ might sound like something out of a sci-fi novel, but it basically refers to computer systems and processors that are designed to mimic the way the human brain works.

For example, conventional computer processors ingest large amounts of data from many different inputs simultaneously. But, if you think about how the human brain works, it filters out unneeded inputs and focuses just on the most essential. This makes your brain a much more efficient processor of information than a standard computer chip.

Even as you sit rivetted reading this article (as I’m sure you currently are and didn’t drift off at the first mention of ‘neuromorphic computing’), there are any number of different background noises, visual distractions and other sensory inputs that your brain is ignoring – and it’s only once you actively focus on them that your conscious mind becomes aware of them again.

In other words, your brain recognises that the constant background hum of your air conditioner or the sensation of your legs touching the chair you’re sitting on aren’t important inputs for the task you’re currently focussed on.

So it doesn’t need to constantly process them. Instead, your brain alerts you to changes in your surroundings and prioritises these inputs – as these could be events you need to respond to.

This is how Brainchip has designed its flagship product, the Akida ‘neuromorphic’ computer chip. The chip is ‘event-based’, meaning it responds to changes in the environment in much the same way as the human brain does. This makes it significantly more efficient than standard computer chips, because it processes key information faster and reduces unnecessary power consumption.

What has happened to the Brainchip share price over the past year?

Brainchip shares went on a tear back in February, skyrocketing over 200% in a matter of weeks. The massive jump in its share price even prompted a ‘please explain’ notice from the ASX, but Brainchip couldn’t offer a business reason for the sudden interest in its stock.

In truth, the surge in Brainchip shares could have had more to do with events happening overseas than anything Brainchip had actually done. The sudden rise of American AI company NVIDIA Corp (NASDAQ: NVDA) inspired short-term traders to greedily gobble up shares in other AI companies, hoping to latch onto the next ‘big thing’ – even if company valuations didn’t justify the investment.

Unfortunately for Brainchip, by the end of February, its shares were already in freefall again after it reported a net loss of US$28.9 million for 2023 – an even worse result than its 2022 net loss of US$22.1 million.

So, what’s next for Brainchip?

Brainchip is the first company in the world to try to commercialise neuromorphic technology, which comes with both benefits and disadvantages.

On the one hand, Brainchip has a huge addressable market and few viable competitors – which is the ideal scenario for a strong economic moat. If Brainchip can show that neuromorphic technology can be successful, it has the first-mover advantage and can develop a loyal brand following.

On the other hand, it’s trying to convince its customers to buy a piece of highly complex technology that they have probably never heard of before. This is a hard thing to do – regardless of how groundbreaking that technology might be.

So far, its financial performance has been less than convincing. For its part, Brainchip blamed its 2023 net loss on a ‘transitional year’, in which it invested in further developing its technology and expanding its marketing and sales functions. However, it was still hard for investors to look past the whopping 95% year-on-year drop in revenues.

In its 2023 annual report, Brainchip mentioned the ‘strong levels of interest’ it had received from potential customers and the ‘encouraging pipeline’ it had built throughout the year. Investors will need to see that translated into real sales (and quickly!) before they can confidently invest in Brainchip shares.

The post Brainchip share price tumbles 40% in the past year. What’s next? appeared first on The Motley Fool Australia.

More reading

• It’s up 3,500%, but here’s why I’m still not buying Nvidia stock
• Want to buy Nvidia but don’t have a US share account? Buy these ETFs instead
• Thinking about buying Nvidia stock? Here’s why you might already own it
• Nvidia investors just got some bullish news
• Is Nvidia stock going to $200 in the wake of its 10-for-1 stock split?

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

Metcash Ltd (ASX: MTS) shares are on the move on Monday morning.

In early trade, the ASX 200 stock is down 2% to $3.68.

This follows the release of the wholesale distributor’s FY 2024 results.

ASX 200 drops on FY 2024 results

• Group revenue up 0.7% to $15.9 billion
• Revenue including charge throughs up 0.7% to $18.2 billion
• Underlying EBIT down 0.9% to $496.3 million
• Underlying profit after tax down 8.2% to $282.3 million
• Total dividends down 13.3% to 19.5 cents per share

What happened during the year?

For the 12 months ended 30 April, Metcash reported a modest 0.7% increase in group revenue to $15.9 billion. This reflects growth in the Hardware and Liquor pillars, which offset a small decline in the Food pillar. The latter was driven by lower sales in tobacco.

The company’s group underlying EBIT decreased by 0.9% to $496.3 million in FY 2024. This was due to earnings growth in Food and Liquor being offset by lower earnings in Hardware and increased corporate costs.

Management notes that the Food pillar continued to perform well in an environment of increased value-conscious shopping. It believes this provides further evidence of its shift to a sustainable and resilient business model. Food earnings increased 3% to $210.1 million for the 12 months.

Metcash’s Liquor pillar increased its earnings by 4.9% to $109.2 million. This reflects its diversified customer strategy, the ongoing preference for localised liquor offers, strategic buying, and good cost management.

Things weren’t quite so positive for the Hardware pillar, which reported a 3.8% decline in earnings to $210.9 million. This reflects rapidly slowing builder confidence and reduced market activity, as well as significantly increased competition for the Total Tools business in the second half.

This ultimately led to group underlying profit after tax falling 8.2% to $282.3 million and the Metcash board cutting its fully franked final dividend by approximately 23% to 8.5 cents per share. This brought its total dividends to 21.5 cents per share in FY 2024, which is down 13.3% year on year.

Management commentary

The ASX 200 stock’s CEO, Doug Jones, was pleased with the results. He said:

I am pleased to report that the Company has delivered strong results for FY24, a year in which there was a further decline in the external environment. The results have been underpinned by our strategy, which is clearly working, and the disciplined execution of key initiatives. Operationally, all pillars performed well, in line with their strategic positioning, demonstrating resilience in the current softer market conditions.

Outlook

Total group sales for the first seven weeks of FY 2025 have increased 2.2%. However, this includes the acquisition of Superior Foods. Excluding this business, sales were flat.

Management commented that it believes “Metcash is well positioned with the plans, platform, capabilities and diverse business portfolio for future growth and strong returns through the cycle.”

Following today’s decline, this ASX 200 stock has now dropped into the red on a 12-month basis.

The post Guess which ASX 200 stock just slashed its final dividend by 23% appeared first on The Motley Fool Australia.

More reading

• This ASX dividend share could pay an 8% yield in 2026!
• 2 ASX dividend shares offering over 5% yield
• Where Aussies are spending their money, and the ASX shares that could benefit
• 3 lower-risk ASX dividend shares for retirees
• Here’s how I’d target a $2,000 second income by investing $35 a week

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

Star Entertainment Group Ltd (ASX: SGR) shares are under pressure on Monday.

In morning trade, the struggling casino and resorts operator’s shares are down 3% to 47.5 cents.

Why are Star Entertainment shares tumbling today?

Investors have been selling the company’s shares again this morning after it released an update on its profit expectations for FY 2024.

According to the release, trading conditions have remained difficult since its last update in April.

The company notes that this reflects the challenging economic environment and cost of living pressures.

Group revenue for the fourth quarter of FY 2024 is expected to be 4.3% below the previous quarter and 3.3% below the prior corresponding period. This is being driven by revenue from Premium Gaming Rooms (PGRs) continuing to trend downwards, which is offsetting growth from Main Gaming Floor (MGF) revenue.

As a result, management expects group revenue for FY 2024 to be between $1,675 million and $1,685 million. This will be down from $1,868 million in the last financial years.

Unfortunately, it gets worse. Management notes that these conditions, together with elevated operating expenses from ongoing remediation and transformation activities, have had a big impact on its earnings.

Star Entertainment is forecasting FY 2024 normalised group EBITDA to be in the range of $165 million to $180 million. This represents a significant decline on FY 2023’s normalised EBITDA of $317 million.

In response to this new operating environment, Star Entertainment will seek to expedite a range of initiatives to further reduce its operating cost base.

Leadership update

In a separate announcement, Star Entertainment has revealed that David Foster has ceased his executive responsibilities and resigned as a director with effect on 21 June 2024.

The company has progressed its recruitment process for a new permanent group CEO and managing director. It expects to make an announcement in the near term.

As an interim measure, Star Entertainment has appointed current interim group chief financial officer, Neale O’Connell, as acting CEO. This is subject to all requisite regulatory approvals.

This appointment is in addition to Mr O’Connell’s existing duties as group CFO and will remain in place until the appointment of a permanent CEO takes effect.

The company’s chair, Anne Ward, has also assumed additional responsibilities on an interim basis. She will continue performing these additional responsibilities until the appointment of a permanent CEO takes effect.

Star Entertainment shares are now down approximately 49% over the last 12 months.

The post Star Entertainment shares tumble on disappointing earnings guidance appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 3 ASX 200 stocks leading the charge higher in June
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

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

The right ASX-listed exchange-traded funds (ETFs) can provide investors with a combination of good diversification and (hopefully) excellent returns.

While the Australian share market is weighted towards ASX bank shares and ASX mining shares, the international share market includes many companies with global growth ambitions in exciting sectors like technology.

Some of our ASX ETFs can provide pure exposure to the United States share market, which is home to numerous great businesses. However, it can also be beneficial to have some exposure to the best companies from other countries. That’s why I really like the two exchange-traded funds below.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

This ETF gives investors exposure to well over 1,000 businesses that are listed across ‘developed’ markets.

The ETF represents the following countries in descending weighting order: the US, Japan, the United Kingdom, France, Canada, Switzerland, Germany, the Netherlands, Denmark, Sweden, Italy, Spain, Hong Kong, Finland, Singapore, Norway, Israel, Belgium, and Austria.

The VGS ETF certainly ticks the box when it comes to geographic diversification.

Technology makes up around a quarter of this ETF’s portfolio, with financials (15%), healthcare (11.8%), industrials (11.2%) and consumer discretionary (10.3%) being the other sectors to provide a double-digit weighting.

Technology companies aren’t guaranteed to always deliver good returns, but that sector is capable of achieving high profit margins and faster revenue growth because of the intangible nature of many of its services.

I think the VGS ETF’s technology exposure is why it has delivered an average return of almost 13% per annum since November 2014. Having said that, a reminder that we can’t know precisely what the future returns will be.

Some of the portfolio’s biggest positions include the world’s strongest businesses: Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta Platforms.

Betashares Global Quality Leaders ETF (ASX: QLTY)

Investors may wonder if they need exposure to more than 1,000 businesses to achieve an appropriate level of diversification. I’d say probably not, but owning that many shares can help smooth out volatility.

Why not just own the good ones? Well, everyone may have different opinions on which ones are good.

The QLTY ETF takes quality metrics into consideration when deciding which stocks to invest in.

It owns 150 businesses that rank well on return on equity (ROE), debt-to-capital, cash flow generation ability and earnings stability.

Perhaps unsurprisingly, IT makes up an even bigger allocation in this portfolio (at 35%), while the industrial sector was 18.3% of the portfolio and healthcare was 14.9%, as of 31 May 2024.

Looking at the country allocations, the US has a smaller allocation in the QLTY ETF (68.7%) than the VGS ETF (72.2%), which means better geographic diversification. Other countries with a sizeable allocation inside the QLTY ETF include Japan, the Netherlands, France, Denmark, the UK and Switzerland.

Over the past decade, the index the Betashares Global Quality Leaders ETF tracks has achieved an average return per annum of 15.9%, outperforming the global share market by almost 3% per annum.

The quality screening process has led to good returns, though that may not always be the case.

The post 2 top ASX ETFs that offer excellent diversification appeared first on The Motley Fool Australia.

More reading

• Why these 5 ASX ETFs could be quality options for investors
• Records tumble! Hot ASX ETFs smash all-time highs again on Friday
• Is it too late to buy these soaring international shares ASX ETFs?
• Buy and hold these ASX ETFs until 2034
• Is the Vanguard MSCI Index International Shares ETF (VGS) a better buy for beginner investors or retirees?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor 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 Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It is fair to say that Pilbara Minerals Ltd (ASX: PLS) shares are having a tough year.

After being incredibly resilient in the face of falling lithium prices for some time, they have started to crumble in 2024.

So much so, they are now down over 20% year to date and 35% over the last 12 months.

Has this created a buying opportunity for investors, or should you give Pilbara Minerals shares a wide berth? Let’s find out what analysts are saying.

Pilbara Minerals shares: Buy or Sell?

At the end of last week, the lithium giant announced the results of the pre-feasibility study (PFS) for the expansion of production at the Pilgangoora Operation.

That study found that production capacity at Pilgangoora Operation could be expanded to more than 2 million tonnes per annum (Mtpa) with an estimated capital expenditure of $1.2 billion (-20/+30% accuracy).

Management estimates that the expansion could create significant shareholder value with a P2000 incremental net present value (NPV) of $2.6 billion and incremental internal rate of return (IRR) of 55%. This is based on the assumption of a long term spodumene 6% price of US$1,500 per tonne, which is ahead of current market prices.

Goldman Sachs has responded to the update. Unfortunately, it has seen nothing here to change its bearish view on Pilbara Minerals shares.

As a result, it has retained its sell rating and $2.80 price target on its shares. This implies potential downside of 10% from current levels.

What did the broker say?

Goldman wasn’t overly impressed with the P2000 plan. It commented:

PLS has outlined outcomes of a ‘P2000’ pre-feasibility study (PFS). In line with our Beyond P1000 scenario analysis earlier this year, we see the study result for the next leg of expansion as underwhelming vs. market expectations on a combination of capex, size, and timing.

The broker also highlights that the expansion is likely to have a major impact on its balance sheet and future dividend payments. It adds:

PLS had net cash of A$1.4bn at Mar-24, though this higher capex would likely see PLS move to a net debt position through construction with prolonged negative FCF on our lithium price outlook (prolonging uncertainty on the outlook for dividends). PLS expect to partially fund the project with new loan facilities or other sources, where Australian Federal Government financing agencies have provided non-binding Letters of Support for up to A$400mn for the project following this initial engagement.

PLS also expect to actively engage with selected participants across the battery materials supply chain to explore offtake and partnering opportunities for the expanded production, and has confidence there will be long-term demand for the product, though we reiterate recent new contracts have still been market pricing linked.

All in all, the broker appears to believe investors should stay away from Pilbara Minerals shares until they trade at much lower levels.

The post Pilbara Minerals shares: Buy or Sell? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• Why Guzman y Gomez, KMD, Mineral Resources, and Pilbara Minerals shares are sinking
• Top 10 most traded ASX shares and US stocks in May
• Pilbara Minerals shares drop on major P2000 lithium expansion news

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

The Qantas Airways Limited (ASX: QAN) share price has soared more than 21% since 6 March 2024, as investors become more positive about the ASX travel share again.

The share market is usually forward-looking, so let’s consider how FY25 is shaping up for Australia’s biggest airline company.

As expected, travel demand has returned — and boomed — in the couple of years since Australia’s borders reopened after COVID-19 restrictions.

You’d think Australians might have made up for all the holiday time lost during the pandemic by now, but that’s not what Qantas is seeing. Travel demand, it appears, is in flight mode.

Strong travel demand continues

In the Qantas FY24 first-half result, Qantas reported statutory net profit after tax (NPAT) of $869 million.

It reported that result in February 2024 and said at the time:

Travel demand remains strong across all sectors, with leisure continuing to lead and business travel now approaching pre-COVID levels.

The airline said that “intent to spend on travel among Qantas frequent flyers over the next months remains significantly higher than most other major spending categories.”

It added that it expected unit revenue to remain stable for domestic flying and continue to normalise for international flying as market capacity returned.

Qantas developments

In the last few months, the airline has experienced a number of headline events that may have impacted Qantas shares.

In April, Qantas added more than 20 million frequent flyer reward seats, enabling members to use more of their Qantas points to book flights to places like London, Tokyo, New York and Singapore. This new offering will be fully launched by the end of the 2024 calendar year, which is within FY25.

In May, it was announced that Qantas had agreed to pay $20 million to more than 86,000 customers who were sold tickets on flights that Qantas had already decided to cancel or, in some cases, were re-accommodated on flights after their original flights were cancelled. A $100 million ACCC penalty is being imposed on the airline as well. While these payments will be reflected in FY24, they are expected to be paid after the end of FY24.

The ASX travel share also revealed at the end of May what changes would occur when Perth Airport is expanded, which could lead to more flights and seats. However, this may not affect FY25 much.

Analyst forecast for the Qantas share price

The broker UBS has forecast that in FY24, Qantas can generate $21.8 billion of revenue, $2.3 billion of earnings before interest and tax (EBIT), and $1.49 billion of net profit after tax (NPAT). The airline is also expected to pay a dividend per share of 10 cents.

In FY25, the broker suggests Qantas could grow revenue to $22.1 billion, EBIT could be flat at $2.3 billion and net profit could decline to $1.44 billion. The dividend per share is projected to double to 20 cents per share.

UBS thinks that if Qantas shares do not experience any negative catalysts, the company could perform for shareholders because of its “single-digit valuation multiple.” According to UBS forecasts, the Qantas share price is valued at under 7x FY25’s estimated earnings.

The broker’s price target of $7.50 suggests a possible rise of more than 20% in the next 12 months.

The post Can the Qantas share price keep flying higher in FY25? appeared first on The Motley Fool Australia.

More reading

• Buy these ASX 200 shares that could rise 30%+ before it’s too late
• What’s ahead for ASX 200 travel shares in FY 2025?
• How AI can help Qantas shares fly higher
• Could Qantas shares be poised to catch some Chinese tailwinds?
• 3 reasons to be positive on ASX 200 shares in FY25 (and 3 to be wary)

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.

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Pilbara Minerals Ltd (ASX: PLS) continues its long run as the most shorted ASX share with short interest of 20.8%. This is down week on week but still significantly higher than second place. The prospect of lithium prices remaining at current levels for years is spooking investors.
• IDP Education Ltd (ASX: IEL) has 13.5% of its shares held short, which is up week on week again. This language testing and student placement company has come under pressure after revealing that it is being negatively impacted by student visa changes in a number of key markets.
• Liontown Resources Ltd (ASX: LTR) has 11.3% of its share held short, which is up week on week again. This lithium developer is potentially only a matter of weeks away from commencing production at the Kathleen Valley Lithium Project. Given how low lithium prices are, this may not be the best time to start activities.
• Westgold Resources Ltd (ASX: WGX) has short interest of 10.5%, which is up for a seventh week in a row. This appears to have been driven by doubts over the gold miner’s proposed merger with Canada-based Karoa Resources. Nevertheless, Westgold Resources shares are up 76% over the last 12 months.
• Sayona Mining Ltd (ASX: SYA) has short interest of 9.8%, which is up since last week. Short sellers have been going after this lithium miner after it revealed that it is paying more to produce lithium than it receives from buyers.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest ease to 9.6%. Doubts over its ability to achieve revenue margin expectations could be weighing on this travel agent’s shares.
• Syrah Resources Ltd (ASX: SYR) has short interest of 9.5%, which is down week on week. This graphite miner is being negatively impacted by weak battery materials prices. This has led to production suspensions and further cash burn.
• Chalice Mining Ltd (ASX: CHN) has short interest of 9.4%, which is down week on week. This mineral exploration company’s shares are down almost 80% over the last 12 months and short sellers appear to believe further declines are coming.
• Strike Energy Ltd (ASX: STX) is back in the top ten with 8.5% of its shares held short. This gas company’s shares have been hammered in 2024 amid disappointment over drilling at the SE-3 well.
• Australian Clinical Labs Ltd (ASX: ACL) has short interest of 8.4%, which is flat since last week. This health imaging company is expecting to report another sizeable decline in earnings in FY 2024.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

More reading

• Pilbara Minerals shares: Buy or Sell?
• 5 things to watch on the ASX 200 on Monday
• What’s ahead for ASX 200 travel shares in FY 2025?
• These ASX shares could rise 20% and ~40%
• Why Guzman y Gomez, KMD, Mineral Resources, and Pilbara Minerals shares are sinking

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 Idp Education. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Westpac Banking Corp (ASX: WBC) is a popular ASX dividend stock because of its large dividends and major market presence in the banking sector.

In fact, I’d guess some investors have heavily weighted their portfolios to include Westpac and other ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB). It could be a good idea to diversify.

I think investing in banks is largely a bet on Australian property. If Aussies have most of their wealth tied up in owning one or more properties, then investing in ASX bank shares as well doesn’t add much diversification to the underlying risks.

If investors want some dividend diversification, I’d suggest the below two stocks as options.

GQG Partners Inc (ASX: GQG)

GQG is one of the largest listed fund managers on the ASX. It is headquartered in the United States but expanding to places like Australia and Canada.

The business is able to achieve a high dividend yield because it’s committed to a dividend payout ratio of 90% of distributable earnings.

It’s focused on growing funds under management (FUM) through strong investment performance and attracting more funds. The strong returns are helping GQG appeal to investors and get them to allocate more money to the fund manager.  

GQG reported that its FUM had grown to US$150.1 million as at 31 May 2024 and that it had experienced net inflows of US$9.1 billion in the calendar year to date.

The ASX dividend stock’s payout has been climbing since it started paying a dividend in 2022. According to Commsec, it’s projected to pay a dividend yield of 8.5% in FY26.

Universal Store Holdings Ltd (ASX: UNI)

I think Universal Store is one of the more impressive ASX retail shares because it has continued to grow its dividend despite challenging conditions.

It is utilising its brands well to grow its sales and profit. The company is best known for its Universal Store stores which sell premium youth clothes. Universal Store also has a business called CTC, which trades under the THRILLS and Worship brands. It’s also rolling out Perfect Stranger as a standalone format.

In the FY24 first-half result, Perfect Stranger sales increased by approximately 60% to $6.6 million, helping the company’s total sales rise by 8.5% to $158 million. The statutory net profit after tax (NPAT) rose 16.7% to $20.7 million, showing the company’s scalability.

The ASX dividend stock’s payout has grown each year since it first started paying a dividend in 2021.

According to the estimate on Commsec, Universal Store is expected to pay a grossed-up dividend yield of 7.3% in FY24 and 9.25% in FY26.

The post Overinvested in Westpac shares? Here are two alternative ASX dividend stocks appeared first on The Motley Fool Australia.

More reading

• Here’s when Westpac says the RBA will now cut interest rates
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• Top 10 most traded ASX shares and US stocks in May
• Buy these ASX dividend shares for 5% to 6% yields
• 2 ASX 200 bank shares smashing new multi-year highs today

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.