Category: Stock Market

I think that buy and hold investing with ASX shares is one of the best ways to grow wealth.

Let me now demonstrate why.

Buy and hold ASX shares

Over the long term, the share market has delivered investors an average annual return of 10% per annum.

And while there is no guarantee that it will continue doing the same in the future, we’re going to assume that it does for the purpose of this article.

Based on that return, if you are able to invest $10,000 into ASX shares each year and earned the market return, you would grow your portfolio to $175,000 after 10 years thanks to the power of compounding.

But why stop there? Compounding really starts to work its magic the longer you leave it. So, if we fast forward another 10 years of doing the same, your portfolio would have become worth almost $650,000.

But which ASX shares would be good options for a buy and hold investment? Three to consider are as follows:

CSL Ltd (ASX: CSL)

The first ASX share that could be a great buy and hold option is CSL.

It is the biotechnology giant behind the CSL Behring, CSL Vifor, and CSL Seqirus businesses. These are leaders in their respective fields and provide world-class plasma therapies, iron deficiency and nephrology treatments, and vaccines.

UBS thinks investors should be buying its shares at present. The broker currently has a buy rating and $330.00 price target on CSL’s shares.

Nextdc Ltd (ASX: NXT)

Another ASX share that could be a great long term option for investors right now is NextDC.

It is a leading data centre operator with world class operations across the Asia Pacific. Thanks to the shift to the cloud and the artificial intelligence boom, demand for data centre capacity is growing rapidly. This has many analysts predicting that NextDC will grow its earnings very strongly over the next decade.

One of those is Morgans, which has an add rating and $19.00 price target on its shares.

Pro Medicus Limited (ASX: PME)

Finally, this health imaging technology company could be a quality option for investors.

It is a leading provider of radiology information systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualisation solutions across the globe.

Goldman Sachs is very bullish on the company’s long term outlook. So much so, it recently put a buy rating and $134.00 price target on its shares.

The post Aussie investors: 3 ASX shares to buy and hold forever appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares I want to buy if the stock market crashes again
• Here are the top 10 ASX 200 shares today
• Morgans names the best ASX 200 stocks to buy in May
• 3 reasons CSL stock is a great long-term investment
• Here are the top 10 ASX 200 shares today

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

Through the Australian share market, we can buy passive interests in a diversified set of operations via a single investment.

With an investment in Wesfarmers Ltd (ASX: WES) stock, we have just that. The holding company boasts a portfolio containing some of Australia’s strongest retail, healthcare, and chemicals brands.

These include Bunnings, Kmart/Target, Officeworks, Priceline Pharmacy, and Flybuys just to name a select few. When you own Wesfarmers stock, you own pieces of these companies, too.

Wesfarmers has a long history of creating value for its shareholders. Its share price is up 81% since May 2019. A $10,000 investment back then is now worth $18,100, plus $1,667 in dividends.

But what about the future? Here, I’ll explain.

Diversification: Good for risk and value

One major reason for Wesfarmers’ success is its highly diversified operations. Most people think of diversification as spreading their risk across a number of assets.

But diversification also provides many sources of value. Wesfarmers has 37 brands operating under its wings. It has fingers in many pies.

Goldman Sachs touched on this in a recent note, stating many Wesfarmers’ divisions remained “under-appreciated by the market”, including digital, retail media and the WES health platform.

Goldman also expects a respective 6% and 11% growth in sales and earnings before interest and tax (EBIT) for the Bunnings franchise in FY 2025/2026.

This could generate “strong annual free cash flow of $2.5 billion–$3 billion to fund two new high-growth and high-return platforms, Health and Lithium…”.

These are two points to take note of.

Speaking of Bunnings and Kmart

Wesfarmers’ portfolio is filled with low profit margin, high sales volume companies. They have wide consumer penetration, as a result.

Goldman cited volume and consumer penetration in its view on Wesfarmers stock. It said the company had the “largest volume of consumer data assets”, which included “14.2 million total loyalty members across Flybuys, Priceline and PowerPass”.

Both Bunnings and Kmart fit this mould, too. For instance, Bunnings made up 44% of the company’s revenues in the six months to 31 December 2023 but comprised 58% of the group’s EBIT. Kmart was 22% and 29%, respectively.

Bunnings’ H1 FY 2024 EBIT margin was 12.9%, whereas Kmart’s was 10%.  But sales volume was tremendously high — $9.9 billion and $5.9 billion respectively.

Both companies subsequently have stellar returns of capital (ROC), tallying 66% for Bunnings and 59% for Kmart. That means every $1 Wesfarmers invests into Bunnings and Kmart returns 66 and 59 cents on that dollar, respectively. This is a competitive advantage.

Dividends increasing

Aside from the capital appreciation, a final tailwind for Wesfarmers is the company’s dividend. The fully franked payment of $1.94 per share gives an ungrossed dividend yield of around 2.84%, as I write.

However, it’s the recent increase that’s worth noting.

The company’s half-year sales growth was flat at 0.5%. But it grew net profit after tax (NPAT) by 3%. That means each $1 of new revenues brought in $6 of additional profit for the half – quite the result.

The Wesfarmers board increased its dividend by 3.4% to $0.91 per share. Goldman Sachs sees this trend continuing through FY 2025/2026 as “cost optimising and digitalisation initiatives drive margin expansion”.

Foolish takeaway

Wesfarmers stock has proven to be a superb long-term investment. Based on performance, I believe it can continue to beat the S&P/ASX 200 Index (ASX: XJO) over time.

Since January this year, the Wesfarmers share price has climbed more than 20% into the green.

The post Is Wesfarmers stock a good long-term investment? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares I want to buy if the stock market crashes again
• Would I still buy Wesfarmers shares as they hit all-time highs?
• New record high: Is it too late to buy Wesfarmers shares?
• Where will the next $75 billion come from for Wesfarmers shares?
• If you invested $10,000 in Wesfarmers shares a decade ago, here’s what it would be worth now

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 Goldman Sachs Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are looking for an easy way to invest your hard-earned money, then exchange traded funds (ETFs) could be the answer.

Especially if you’re just wanting to take a set and forget or buy and hold approach to investing.

This is because ASX ETFs allow investors to buy large groups of companies in one fell swoop.

This means you don’t have to pick individual stocks to buy, nor do you really need to keep a close eye on the companies you’re invested in. You can just put your money to work and watch your investments grow.

But which ASX ETFs could be quality options for investors looking to make buy and hold investments? Let’s take a look at two:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

When investing for the long term, it is never a bad idea to invest in the highest quality companies the world has to offer.

The BetaShares NASDAQ 100 ETF certainly ticks this box. It provides investors with access to 100 of the largest non-financial companies on the famous NASDAQ index. These are the giants of Wall Street (and the world) and include iPhone maker Apple (NASDAQ: AAPL), Facebook and Instagram owner Meta (NASDAQ: META), software giant Microsoft (NASDAQ: MSFT), graphics card behemoth Nvidia (NASDAQ: NVDA), and electric vehicle leader Tesla (NASDAQ: TSLA).

Over the last 10 years, the index this ETF tracks has delivered investors a stunning average total return of 22.25% per annum. This would have turned a $10,000 investment into almost $75,000.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ASX ETF that could be a great buy and hold option is the VanEck Vectors Morningstar Wide Moat ETF.

This fund has a focus on companies that are deemed to have sustainable competitive advantages (wide moats) and fair valuations.

These are the qualities that the king of buy and hold investing, Warren Buffett, looks for when he is making investments for Berkshire Hathaway (NYSE: BRK.B).

And given how the Oracle of Omaha has consistently outperformed the market since all the way back in 1965, I think it is fair to say that a focus on companies with wide moats and fair valuations has its merits.

The companies that the fund invests in will change periodically. But at present it includes tobacco giant Altria Group Inc (NYSE: MO), food company Campbell Soup (NYSE: CPB), beauty products company Estee Lauder (NYSE: EL), sportswear leader Nike (NYSE: NKE), and entertainment juggernaut Walt Disney (NYSE: DIS).

Over the past 10 years, the index the fund tracks has generated an average total return of 17.1% per annum. This would have turned a $10,000 investment into over $48,000.

The post 2 ASX ETFs to buy and hold forever in your investment portfolio appeared first on The Motley Fool Australia.

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More reading

• 5 ASX ETFs to invest $10,000 into next week
• Here’s why the ASX’s VanEck Wide Moat ETF had such an awful April
• 3 ASX ETFs I’d buy to try to become a millionaire
• If you invested $10,000 in VanEck Wide Moat ETF (MOAT) nine years ago, here’s what it would be worth now
• Buy these ASX ETFs to supercharge your investment portfolio

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 James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, BetaShares Nasdaq 100 ETF, Meta Platforms, Microsoft, Nike, Nvidia, Tesla, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $47.50 calls on Nike, long January 2026 $395 calls on Microsoft, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nike, Nvidia, VanEck Morningstar Wide Moat ETF, and Walt Disney. 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) stock Lovisa Holdings Ltd (ASX: LOV) has already delivered enormous profit growth over the past several years and it’s predicted to see even more in the coming years.

This is a retailer of affordable jewellery with a global store network. At the end of the FY24 first-half period, it had at least ten stores in the following countries: Australia, New Zealand, Singapore, Malaysia, South Africa, the UK, France, Germany, Belgium, Poland, USA and Canada.

Store growth continues for ASX 200 stock

The business has added many stores to networks in its existing countries, while also expanding into new countries.

For example, in the last couple of years, it has expanded into a number of countries including Mexico, Canada, the UAE, Romania, Hungary, Spain, Botswana, Vietnam, mainland China and Taiwan. Many of these countries have much bigger populations than Australia, so there’s plenty of growth potential for Lovisa’s store network.

Australia had 175 stores at the end of HY24, with its total network being 854 stores.

With the HY24 result, Lovisa said:

With a footprint now in over 40 markets and increased support structures in place we are well placed to continue our global rollout across both existing and new markets.

The ongoing store growth is helping the ASX 200 stock’s total sales. Trading in the first seven weeks of FY24 saw comparable store sales growth of 0.3% year-over-year. Total sales were up 19.6% year over year, thanks to those new stores.

In HY24 it opened another 53 stores and in the first several weeks of the second half of FY24 it had opened another nine stores and it recently opened a new store in Dublin, Ireland.

Huge profit growth expected for ASX 200 stock

The broker UBS has predicted that Lovisa can deliver huge profit growth in the next few years.

In FY23, the business generated revenue of $596 million and earnings per share (EPS) of $0.62. UBS suggests that Lovisa could grow its revenue by 18% to $703 million and improve EPS by 12.9% to 70 cents per share in FY24.

Ongoing store growth could help the ASX 200 stock grow its EPS by 134% to $1.45 in FY28 compared to FY23, according to UBS.

The broker suggests Lovisa’s revenue could grow by 15.5% to $812 million in FY25 and EPS could rise by 21.4% to 85 cents.

In FY26, UBS suggests Lovisa’s revenue could increase by 15.1% to $935 million and EPS could rise 24.7% to $1.06.

FY27 could see the revenue rise by another 15% to $1.075 billion and EPS go up 17.9% to $1.25.  

FY28 could see Lovisa’s revenue rise by 13.2% to $1.2 billion, while EPS could go up 16% to $1.45.

Foolish takeaway

There is no guarantee that Lovisa’s store network growth will continue at the same growth rate as it has over the past several years.

Lovisa shares have been a strong performer – in the past five years they have risen around 220%. If the store count, revenue and profit keep rising, then Lovisa could be one to watch. However, it has risen significantly in the last six months, so it’s not as cheap as it was in November. The market is expecting a lot of success from this business.

The post Leading broker thinks this top ASX 200 stock’s earnings can soar 130% by FY28 appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today
• 3 compelling ASX shares for investors in their 20s
• Here are the top 10 ASX 200 shares today
• ASX experts: Lovisa share price has 28% upside

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

Investing in S&P/ASX 200 Index (ASX: XJO) shares is a great source of wealth-building. That translates to the broad market typically moving in a general state of incline over time.

But share markets move in cycles, and purchase prices matter. Under this lens, a stock market crash – while not ideal – opens a window of buying opportunities.

The great investing icon Warren Buffett says it best: “Widespread fear is your friend as an investor because it serves up bargain purchases.”

If there were another market crash, here are three of the ASX 200 shares I would go bargain-hunting for.

Wesfarmers Ltd (ASX: WES)

Say the market were to crash, a recession is likely to precede or follow suit.

The diversified retail conglomerate Wesfarmers has a competitive advantage here due to its broad offering of portfolio brands. Many of its companies are in competitive industries with low profit margins but have high market share and equally high revenues.

That’s because they are the low-cost provider in many instances, beating the competitors on price and operating margin – highly attractive in a high-inflation world. Bunnings, Kmart, and Priceline Pharmacy are three cases in point here.

But when times are tough, consumers also turn to low-cost providers as their preferred providers. So, if the economy is slow, Wesfarmers’ competitive advantage increases.

Goldman Sachs has tipped Bunnings to deliver $2.5 billion to $3 billion in free cash flow for Wesfarmers this year, which will be used to finance its growth ventures in health and lithium.

Wesfarmers touched a record trading high of $71.11 on Wednesday. Any move into the $50-$55 per share range would be an attractive entry point in my books.

CSL Ltd (ASX: CSL)

Global biotechnology giant CSL continues to cement its position as a market leader in various complex disease segments.

The company’s technologies are used in laboratories throughout the globe, and its three core units, CSL Behring blood plasma therapy, CSL Vifor iron deficiency and nephrology therapies, and Seqirus for vaccines, are here to stay.

A market crash would make this ASX share really attractive to investors due to the cyclical tailwinds building in its plasma collections and immunoglobulin divisions.

Research conducted by Global Market Insights projects the global immunoglobulin market to grow at 7.7% per year to 2030, reaching US$32 billion by then.

Analysts at UBS agree, forecasting “double-digit earnings growth over the coming years” from this division, according to my Foolish colleague James last week. UBS has a price target of $330 on the CSL share price, 20% upside potential.

If the stock slipped back to $225 per share, the upside potential would increase to 46% at UBS’ valuation.

National Australia Bank Ltd (ASX: NAB)

ASX banking shares have rallied in 2024. NAB hasn’t missed the boat, up 12% in the past four months. NAB also had a return on equity (ROE) of 12.9% in 2023, the second highest in the banking majors.

The rally has pushed NAB shares toward many analyst price targets. Goldman Sachs and Morgans value NAB at $33 and $30 apiece, respectively, whereas Citi analysts have a $28 valuation.

Despite this, NAB has plenty going for it. It recently announced a number of leadership changes that caught investor attention.

As I write, its dividend of $1.68 per share provides a trailing dividend yield of 4.85%, which would spike sharply in a market crash. A pullback to $25 per share, for instance, would give NAB shareholders a 6.7% yield at that dividend rate. 

This characteristic is easy to ignore at the wrong price. That’s why, if the market were to suddenly crash, NAB is firmly on my radar.

The post 3 ASX 200 shares I want to buy if the stock market crashes again appeared first on The Motley Fool Australia.

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More reading

• Would I still buy Wesfarmers shares as they hit all-time highs?
• Why Judo Capital, NAB, Paladin Energy, and Perpetual shares are falling today
• 3 reasons CSL stock is a great long-term investment
• Why Graincorp, Lindsay Australia, NAB, and Sims shares are sinking today
• Why is the NAB share price sinking today?

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 CSL, Goldman Sachs Group, 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.

New Hope Corp Ltd (ASX: NHC) shares have handed out some very tidy gains over the past three years.

How tidy?

I’m glad you asked!

Here’s what an $8,000 investment in New Hope shares three years ago would be worth today.

How have New Hope shares been tracking?

Three years (and two days ago) ago, on 7 May 2021, you could have bought New Hope shares for $1.18 apiece.

Meaning you could have bought 6,779 shares with your $8,000 investment.

Not coincidentally, May 2021 was also when we saw coal prices begin to really lift off.

At the time thermal coal, primarily used for generating electricity, was trading for approximately US$98 per tonne. But fuelled by strong demand amid limited new supplies, and following Russia’s February 2022 invasion of Ukraine, thermal coal prices hit all-time highs of some US$440 per tonne by September 2022.

This also saw New Hope shares trading at all-time highs in October of that year.

Although the ASX 200 coal stock has retreated from those record highs, investors who bought three years ago will still be sitting very pretty.

New Hope shares closed yesterday trading for $4.70 apiece.

That gives the S&P/ASX 200 Index (ASX: XJO) coal miner a market cap of right around $4.0 billion.

And it means that the 6,779 shares you bought three years ago for $8,000 would now be worth a cool $31,861.30.

But that’s not the extent of the gains you would have booked.

New Hope shares also have been paying out some very juicy dividends.

Don’t forget the dividends

New Hope shares gained a lot of attention among passive income investors in recent years amid the coal miner’s soaring dividend payments.

Since May 2021 the ASX 200 coal stock has made a total of six fully franked dividend payments.

All told these come out to $1.80 a share in dividends that you would have received if you’d bought the stock three years ago.

Now we’ll assume here that you decided to spend those dividends rather than reinvest them, which could have netted you even more gains.

OK.

If we add the $1.80 a share in total dividend payouts to yesterday’s closing price of $4.70, then the total accumulated value of New Hope shares since May 2021 works out to $6.50 a share.

Which means – drum roll please – that the 6,779 shares you bought three years ago for $8,000 would be worth $44,063.50 today.

Or a gain of 451%!

The post Invested $8,000 in New Hope shares 3 years ago? Here’s how much you have now! appeared first on The Motley Fool Australia.

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More reading

• ASX coal shares higher despite major superannuation fund walking away
• Here are the top 10 ASX 200 shares today
• Here’s how I’d aim for a tonne of passive income from $20,000 in an ASX share portfolio
• Own New Hope shares? It’s dividend payday today
• What’s driving New Hope shares’ gigantic 8.4% dividend yield?

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.

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

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More reading

• Why Flight Centre, Nine Entertainment, Polynovo, and QANTM shares are pushing higher
• This ASX 200 healthcare stock is rocketing 8% following a record month!
• Morgans names the best ASX 200 stocks to buy in May
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares 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 Johns Lyng Group, PEXA Group, Pinnacle Investment Management Group, PolyNovo, and Pro Medicus. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Johns Lyng Group and Pro Medicus. 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 lacklustre day for most ASX shares this Wednesday. At the close of trading, the All Ordinaries Index (ASX: XAO) had clawed back some ground to end the day 0.14% higher.

But there were two ASX gold shares that sat out of trading this morning. Oh, and one of them clocked a 135% gain just before it was halted.

But first, let’s talk about De Grey Mining Ltd (ASX: DEG). This ASX gold share last traded yesterday, and its share price is currently frozen at yesterday’s close of $1.26.

Just before market open this morning, De Grey revealed it would conduct a capital raising program to finance its Hemi Gold Project.

De Grey will raise an estimated $600 million from this capital raise. Of that figure, approximately $343.9 million will be raised from an institutional share placement, with the remaining $256.1 million coming from an entitlement offer for existing shareholders.

De Grey plans to issue 545.5 million new shares to fund this program, which represents around 29.5% of the company’s current share count. These new ASX gold shares will be issued at a price of $1.10 each.

It will be interesting to see what the market makes of these plans when De Grey shares eventually return to trading.

But let’s get to the 135% share price spike.

How is this ASX gold share up 300%?

That’s precisely what occurred with the shares of Iceni Gold Ltd (ASX: ICL) this morning. Iceni shares closed at 2.3 cents each yesterday but opened at 3.9 cents this morning before a trading halt took effect just before 11am. By that time, this ASX gold share was trading at 5.4 cents.

After the shares were halted, Iceni revealed that the company had struck gold… literally. Iceni has made a major discovery at the gold explorer’s 14 Mile Well Project in Western Australia.

In a subsequent release, Iceni confirmed that fieldwork at the site had resulted in the discovery of “multiple spectacular gold-bearing quartz veinlets” within a small area. Iceno was able to produce a 9.5-ounce gold dore bar from just one sample at the site.

Here’s some of what Iceni managing director Wade Johnson had to say on this development:

The shallow excavation and sampling activities at Christmas Gift [within the 14 Mile Well Project]  exposing the rich gold-bearing quartz veinlets within the shear zone is an exciting development for the company.

The additional fieldwork has improved our knowledge of the host structure… but also provides a geological model that we can apply elsewhere in the Everleigh Well area.

The strike length of the structure is open, drill sites have been prepared and we are looking forward to commencing drilling shortly to evaluate the down dip extent of the structure and rapidly advance this priority target.

This afternoon, Iceni shares returned to trading, and investors haven’t been mucking around. The company exploded to a high of 11 cents before retreating to 9.2 cents on the close of trade. That’s still a whopping 300% higher than when it started the day

It’s a pretty good day to be an Iceni shareholder.

The post 2 ASX gold shares making big news today (one up 300%!) appeared first on The Motley Fool Australia.

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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 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.

ASX copper shares have been lighting up the boards this year amid the red metal’s bull run towards new record highs.

With demand growth outpacing supply growth, the copper price has surged from US$8,197 per tonne on 15 February to US$10,030 per tonne today.

As you’d expect, that’s offered some heady tailwinds for miners with a strong copper focus.

The Aeris Resources Ltd (ASX: AIS) share price, for example, has rocketed 189% since 15 February.

And S&P/ASX 200 Index (ASX: XJO) copper share Sandfire Resources Ltd (ASX: SFR) is up 39% over that same period. This is a company with a market cap of almost $4.5 billion.

The booming global demand for copper also saw now dual-listed, Canadian-based Capstone Copper Corp (ASX: CSC) begin trading on the ASX on 8 April. Since then, the ASX copper share has gained 12%.

Then there’s BHP Group Ltd (ASX: BHP).

While iron ore brings in the biggest slice of BHP’s revenue, copper comes in at number two. And BHP is actively looking to increase its copper exposure, lobbing a roughly $60 billion takeover bid for copper-focused Anglo American (LSE: AAL) last month.

That offer was rejected by Anglo American’s board. The market is now waiting to see if BHP comes back with a better offer.

Why ASX copper shares are enjoying near-record prices

Looming interest rate cuts from the US Federal Reserve, supply disruptions at various mines across the world, and strong demand growth have all worked to send the copper price — and ASX copper shares — skywards.

These dynamics have seen Goldman Sachs boost its year-end price target for copper to US$12,000 per tonne, up from the prior forecast of US$10,000 per tonne.

According to Goldman analyst Nicholas Snowdon (quoted by Bloomberg), “We continue to forecast a shift into open-ended and mounting metal deficits from 2024 onwards.”

Snowdon noted the possibility that global inventories could dip to very low levels in the fourth quarter of 2024.

AIs, EVs, and the great energy transition

In late April, Nick Pashias, head of Equities and portfolio manager of Antares’ High Growth Shares Fund, highlighted the range of factors driving rising global copper demand and, in turn, supporting ASX copper shares.

According to Pashias:

In an era where the world is increasingly reliant on electricity, copper emerges as a critical component in meeting the surging demand.

As the backbone of power infrastructure and a key enabler of technological advancements such as EVs, AI, and data centres, copper stands at the forefront of the energy revolution.

Highly conductive copper has benefited from the rapid increase in electricity consumption.

Addressing this unprecedented surge in electricity use, Pashias said:

Data centres, fuelled by the AI boom, have become the fastest-growing consumers of power. As AI applications continue to evolve, the demand for data processing and storage escalates, placing significant strain on power grids worldwide.

With data centres increasingly adopting AI technologies, the need for robust power infrastructure, including copper-based systems, becomes indispensable.

He noted that data centres currently consumed around 1% to 2% of total electricity production, with median forecasts suggesting “data centre energy usage will grow at 11%” every year through 2030.

And this booming demand growth comes amid limited new supplies.

“Factors such as geopolitics, production halts, delays, and aging mines contribute to a tightening supply-demand imbalance, amplifying the attractiveness of copper as an investment opportunity,” Pashias said.

So, is it too late to buy ASX copper shares like Sandfire Resources?

Putting the pieces together, I think not.

The post Is it too late to buy surging ASX copper shares like Sandfire? appeared first on The Motley Fool Australia.

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More reading

• How important is copper for the future of BHP shares?
• Here are the top 10 ASX 200 shares today
• Buy BHP and these ASX dividend shares in May
• 2 ASX mining stocks to buy now for returns of 18% to 34%
• Here’s what moved BHP shares in April

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.

The Wesfarmers Ltd (ASX: WES) share price reached another all-time high today, marking an impressive rise of more than 20% since the start of 2024. As we can see on the chart below, the last six months has been a period of strong growth for shareholders.

The owner of Bunnings, Kmart and Officeworks is benefiting from the overall economy remaining stronger than feared. Some households are doing it tough, so this is where the value on offer from the Kmart and Bunnings products can shine through.

However, no ASX share is a buy at any price, so investors should be cautious about paying at an increasingly high price.

Time to be cautious?

As the share price rises, it pushes up the price/earnings (P/E) ratio, making it seem more expensive (if the earnings projections aren’t also increasing).

If we look at the projections on Commsec, Wesfarmers is projected to see profit growth in each of the next three annual results. It’s predicted to grow earnings per share (EPS) to $2.26 in FY24, $2.44 in FY25 and $2.71 in FY26.

This would put the Wesfarmers share price at 31x FY24’s estimated earnings and 29x FY25’s estimated earnings. This is fairly elevated considering Wesfarmers is only projected to grow its EPS by 8% in FY25 and 11% in FY26. Ideally, an attractive investment will see the P/E ratio and earnings growth at a fairly similar number.

This comes at a time when the Reserve Bank of Australia (RBA) is expecting inflation (and the interest rate) to remain elevated for a while yet. We may not have seen the last of the volatility of the stock market this year.

Is the Wesfarmers share price still a buy?

I’d be less excited to buy Wesfarmers shares today than in December or January 2024.

However, it’s important to keep in mind that this business has been generally growing for decades. And what happens in 2024 is unlikely, in my mind, to disrupt the company’s long-term earnings trajectory.

Wesfarmers’ Kmart and Bunnings businesses have plenty of potential to keep growing, particularly if the Australian population keeps increasing at a good pace. More people means more potential customers and more houses required (which need construction materials).

The business is growing into other sectors such as lithium and healthcare. I think healthcare is very promising for the company – not only is it a huge market, with multiple areas of growth (eg digital healthcare, and the wellness category), but Wesfarmers can bring some of its expertise and scale to its subsidiaries in the healthcare space, such as Priceline.

While I wouldn’t call it cheap, this is the sort of quality business that could keep growing profit for a long time to come.

I’d be happy enough to start a position today and then buy more if the Wesfarmers share price falls or if the earnings can grow to reduce the P/E ratio.

The post Would I still buy Wesfarmers shares as they hit all-time highs? appeared first on The Motley Fool Australia.

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More reading

• New record high: Is it too late to buy Wesfarmers shares?
• Where will the next $75 billion come from for Wesfarmers shares?
• If you invested $10,000 in Wesfarmers shares a decade ago, here’s what it would be worth now
• Should I buy Westpac or Wesfarmers stock?
• Which asset class are self-managed superannuation funds abandoning in favour of shares?

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