Category: Stock Market

ASX mining shares have been the worst hit by the Iran war, with the materials sector falling 14.15% so far this March.

A stronger indicator of the decline is the S&P/ASX 300 Metal & Mining Index (ASX: XMM), which has dropped 14.6% this month.

The US and Israel began hitting Iran on 28 February (US time), sending oil prices skyrocketing and ASX shares lower.

As we reported earlier, ASX shares have experienced their steepest fortnightly fall since June 2022, when inflation surged to 6.2%.

Energy is the only riser among the 11 market sectors since the war broke out, while materials is the biggest faller.

The Iran war has caused a global fuel crunch, which has direct implications for mining operations.

Mining companies need fuel to run large machinery and processing plants.

They now face higher fuel costs, and there may be shortages if the conflict continues much longer, potentially impacting production.

There are market impacts, too.

ASX mining shares have been on a tear as Australian investors embrace what appears to be the dawn of a new long-term mining boom.

However, the war in Iran has dampened investor sentiment.

This is potentially prompting some investors holding ASX mining shares to take their impressive short-term profits now.

Lower sentiment is driving a ‘risk-off’ appetite, leading some investors to prefer to ‘wait and see’ before investing further.

Warwick Grigor from mining specialist Far East Capital notes the trend, particularly in relation to ASX gold mining shares, commenting:

After being surprisingly resilient to the fluctuations in the gold price whilst toying with a market correction, the downward movement in many stocks accelerated last week, reflecting a heavy downward shift in sentiment.

Interestingly, the hardest hit stocks were in the gold sector. The doesn’t quite make much sense. Maybe it was profit taking.

Since the war began, the gold price has fallen by 5%, while the S&P/ASX All Ords Gold Index (ASX: XGD) has declined by 20.8%.

Should you buy the dip?

Buying the dip means buying ASX shares that have experienced a share price decline.

Arguably, the best time to buy the dip is when ASX shares have fallen due to poor short-term sentiment, not company-specific issues.

As we’ve reported, Australia appears to be at the dawn of a new mining boom, with 5 key factors driving a new commodities supercycle.

Those five factors are unchanged by the war in Iran. In fact, the war has highlighted the growing importance of several of them.

What’s happening with the major ASX mining shares?

The market’s largest ASX mining share has fallen significantly since the Iran war began.

This month, the BHP Group Ltd (ASX: BHP) share price has decreased by 15.4%.

Today, the BHP share price is $49.42, up 0.47%, but well down on its historical record of $59.39 reached on 3 March.

Bank of America retains a buy rating on BHP shares with a 12-month price target of $68.

Several other brokers rate the mining stock a hold.

Last week, RBC Capital reiterated its hold recommendation on BHP shares and raised its target from $55 to $57.

The Rio Tinto Ltd (ASX: RIO) share price has fallen 6.3% since the war broke out.

Today, Rio Tinto shares are $156.74, up 1.3%.

Morgan Stanley kept its hold rating on Rio Tinto shares last week and lifted its target from $140 to $146.

The Fortescue Ltd (ASX: FMG) share price has dropped 7.4% in March so far.

Today, Fortescue shares are $19.59, down 0.5%.

Last week, RBC Capital reiterated its hold recommendation on Fortescue shares and reduced its price target from $23 to $21.

The market’s largest ASX gold mining share, Northern Star Resources Ltd (ASX: NST) has fallen 33.2% in March, however, company-specific issues have contributed to the dramatic drop.

Today, the Northern Star Resources share price is $20.19, down 2.1%.

Yesterday, Morgans kept its buy rating but reduced its 12-month target from $35 to $30 after the miner’s second guidance downgrade.

The market’s largest ASX lithium mining share, PLS Group Ltd (ASX: PLS), has fallen 10.7% since the war began.

The PLS Group share price is $4.64 today, down 2.6%.

Last week, UBS reiterated its hold rating with a $4.95 target, while RBC Capital kept its buy rating and raised its target from $5.20 to $5.40.

The post Should you buy the dip on ASX mining shares? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Collins Foods, Liontown, and Northern Star shares
• Rio Tinto shares charge higher on big copper news
• Northern Star Resources shares crash 22% in 2 days – These brokers say buy the dip
• Should I invest $2,000 in the VAS ETF?
• Should you buy BHP shares for passive income?

Bank of America is an advertising partner of Motley Fool Money. 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Commonwealth Bank of Australia (ASX: CBA) shares are fairly flat in Tuesday lunchtime trade. At the time of writing, the ASX bank stock is down 0.1% to $175.35.

Despite today’s softer share price, CBA stock is still 8.83% higher for the year-to-date and 21.22% higher over the year.

CBA shares spiked over 12% in 48 hours mid-February after the bank posted an unexpectedly-positive half-year FY26 result. Since then, the bank shares have remained in the spotlight but have been relatively stable. 

But I don’t think the latest share price gains will continue. CBA shares are significantly overvalued relative to its peers and aren’t supported by the bank’s core business strength or earnings. 

At the same time, the bank is facing ongoing net interest margin pressure thanks to intense market competition and regulatory changes.

More interest rate hikes could also put even more pressure on banks to compete.

I think CBA shares will suffer more overall weakness this year. In fact, I think CBA shares could possibly crash below $100 in 2026.

The good news is that there is another ASX bank stock that analysts are tipping for huge upside.

The ASX bank shares tipped to soar higher

Analysts expect all the big four banks’ shares to drop in 2026. Data shows that experts think CBA shares carry the most downside risk, with a downside of up to 48.67% at the time of writing. This could see CBA shares tumble down to just $90 a piece.

But the outlook for Judo Capital Holdings Ltd (ASX: JDO) is another story.

Australian-based Judo Bank provides financial services and lending to small and medium enterprises (SMEs) with annual turnovers of up to $100 million. Its business lending starts at $250,000, and it also offers personal term deposit products and home loans.

The bank was founded in 2016 and received its banking license in 2019, and was listed on the ASX in 2021. So it’s relatively new in comparison to majors like CBA. 

Judo Bank has also had a strong start to FY26. At its latest AGM, it said lending momentum was strong over the first quarter and that it’s confident it can achieve FY26 guidance of $180-$190 million. Guidance was confirmed again when it posted its first-half FY26 results in mid-February.

The bank posted a 32% hike in net profit at $59.9 million. It also confirmed it had delivered “above system growth” in gross loans and advances, with $13.4 billion, up 7% over the half and 15% year on year.

At the time of writing, Judo Bank’s shares are down 0.54% to $1.46 a piece. For the year-to-date, the shares are 18.78% higher, and they’re down 23.05% over the past month alone.

Analysts aren’t spooked, though. The latest strong results announcement suggests the share price plummet is likely due to investors taking their gains off the table after a strong price rally. Judo shares soared over 31% between November and early February this year.

What do the analysts expect next?

TradingView data shows 12 out of 13 analysts have a buy or strong buy rating on Judo shares. The average target price is $2.25, while the maximum is $2.50 per share over the next 12 months.

At the time of writing, that implies a potential 53.67% to 71% upside for investors.

The post Forget CBA shares, this ASX bank stock is tipped to soar another 70% appeared first on The Motley Fool Australia.

More reading

• Should I invest $2,000 in the VAS ETF?
• 5 things to watch on the ASX 200 on Tuesday
• New to investing? Start with ASX ETFs and quality ASX stocks
• No savings at 50? I’d follow Warren Buffett’s method to build retirement wealth
• 2 ASX 200 shares I’m never selling

Motley Fool contributor Samantha Menzies 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.

Insurance Australia Group Ltd (ASX: IAG) shares are 0.41% higher in early-afternoon trade on Tuesday. The uptick means the shares have jumped around 12% over the past week, to $7.28 a piece. 

IAG shares are now 9.01% lower for the year-to-date and 3.2% lower than 12 months ago.

What has happened to IAG shares so far in 2026?

IAG shares have been volatile over the past 12 months, fluctuating between $6.39 and $9.18 per share. 

Most recently, the shares crashed nearly 18% last month. 

There was no price-sensitive news out of the company at the time, so it’s possible the share price decline started with investors taking gains off the table ahead of the company’s first-half FY26 results mid-month.

The company’s half-year FY26 results showed a significant drop in profit. For the six months to 31st December 2025, IAG’s revenue was up 23.3%, but its net profit after tax dropped 35.1%. 

Despite the decline, IAG maintains its FY26 profit guidance of between $1,550 million and $1,750 million. But investor sentiment had already been dented, and the share price continued tumbling to a two-year low of $6.44 in early March.

At the same time, extreme country-wide weather conditions such as bushfires and widespread flooding have created headwinds for the insurance business.

Many have raised concerns about the number of insurance claims and reinsurance costs. And investors are apprehensive about what this might mean for the business.

There isn’t any more price-sensitive news out of IAG to explain the latest turnaround. But analysts reiterated their buy ratings on the stock following the results announcement last month, flagging that the shares are now undervalued and oversold. Perhaps investor sentiment is finally following suit?

And there could be a lot more to come…

Earlier this year, IAG successfully integrated its RACQ Insurance (RACQI) business into its main catastrophe cover and expanded its WAQS arrangements to cover 35% of the consolidated business. 

The company has maintained RACQI’s separate, standalone reinsurance program, which includes quota share and catastrophe protections.

For 2026, IAG’s total catastrophe reinsurance program provides main catastrophe cover for two events up to $10 billion, with an attachment point at $500 million.

And analysts expect that the combined impact of recent catastrophes and broader claims inflation will influence upcoming renewals as insurers manage loss ratios and capital requirements.

This means that if weather conditions normalise or decline, earnings could rebound quickly, potentially leading to higher dividends, a share buyback, and increased investor confidence in IAG shares.

TradingView data shows analysts are very bullish on IAG shares. Out of 11 analysts, 7 have a buy or strong buy rating. The maximum target price is $9.80, which implies a 36.36% upside at the time of writing. 

The post IAG shares jump 12%: Buy, sell or hold? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Experts say IAG shares and 2 other stocks are buys at 52-week lows this week
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Motley Fool contributor Samantha Menzies 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 S&P/ASX 200 Index (ASX: XJO) is having a subdued session on Tuesday and is trading marginally higher ahead of the RBA meeting. At the time of writing, the benchmark index is up a fraction to 8,588.9 points.

Four ASX shares that are acting as a drag on the market today are listed below. Here’s why they are falling:

New Hope Corporation Ltd (ASX: NHC)

The New Hope share price is down 5.5% to $5.00. Investors have been selling this coal miner’s shares following the release of its half-year results. New Hope posted a 20.1% decline in revenue to $814.4 million and an 84% decline in net profit after tax to $54.3 million. This was driven by a 20.4% decline in its average realised selling price, its exposure to increased prime overburden movement, and lower non-regular gains. In light of New Hope’s falling profits, the company slashed its fully franked interim dividend to 10 cents per share (from 19 cents per share a year ago).

Pepper Money Ltd (ASX: PPM)

The Pepper Money share price is down 10% to $1.90. This follows an announcement from Challenger Ltd (ASX: CGF) relating to its takeover approach. The annuities company revealed that it has amended its takeover offer and reduced the offer price from $2.60 per share to $2.25 per share. This is less the final fully franked Pepper Money 2025 dividend of 7.8 cents per share and any special dividend. Challenger notes that the revised proposal represents its best and final offer, in the absence of a superior proposal. Pepper Money’s independent board committee advised that it will consider the revised proposal.

Pro Medicus Ltd (ASX: PME)

The Pro Medicus share price is down 3% to $127.50. This is despite there being no news out of the health imaging technology company. However, it seems that AI disruption concerns are continuing to weigh heavily on the tech sector on Tuesday. This has seen the S&P/ASX All Technology Index underperform with a 1.3% decline this afternoon.

Reece Ltd (ASX: REH)

The Reece share price is down over 2.5% to $14.11. The catalyst for this has been the plumbing parts company’s shares going ex-dividend today for its latest payout. Last month, Reece released its half-year results and declared a fully franked 5.4 cents per share dividend. This will be paid to eligible shareholders next month on 1 April.

The post Why New Hope, Pepper Money, Pro Medicus, and Reece shares are falling today appeared first on The Motley Fool Australia.

More reading

• Why Challenger, Meeka Metals, Vulcan Energy, and West African Resources shares are rising today
• Should you buy New Hope shares for passive income today?
• Pepper Money shares plunge 10% after Challenger slashes takeover offer
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Motley Fool contributor James Mickleboro has positions in Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Challenger and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is fighting to stay in positive territory. In afternoon trade, the benchmark index is up slightly to 8,588.2 points.

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

Challenger Ltd (ASX: CGF)

The Challenger share price is up 2.5% to $7.87. This follows news that the annuities company has amended its takeover offer for Pepper Money Ltd (ASX: PPM). Challenger has reduced the offer price from $2.60 per share to $2.25 per share, less the final fully franked Pepper Money 2025 dividend of 7.8 cents per share and any special dividend. It notes that the revised proposal represents Challenger’s best and final offer, in the absence of a superior proposal. The company also reminded investors that discussions remain incomplete and there is no certainty that the revised proposal will lead to a transaction. Pepper Money’s independent board committee advised that it will consider the revised proposal.

Meeka Metals Ltd (ASX: MEK)

The Meeka Metals share price is up 4% to 17.2 cents. This morning, the gold miner revealed that it is upgrading its processing facilities to unlock ~200ktpa of additional mill capacity. This increases throughput to ~800ktpa. Meeka’s managing director, Tim Davidson, said: “Ore sorting unlocks an additional 200,000 tonnes per annum of milling capacity and effectively doubles the head grade of Andy Well ore entering the plant, delivering a meaningful increase in annual gold production.”

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price is up 1% to $3.01. This has been driven by an announcement from the lithium developer which revealed that it has been issued its first lithium production permit for the flagship Lionheart Project. This is the first such licence to be granted in the Upper Rhine Valley Brine Field, and in the state of Rhineland-Palatinate. Vulcan’s managing director and CEO, Cris Moreno, commented: “Securing the first lithium production licence within the Lionheart Project marks another important milestone, and we thank the Mining Authority in the state of Rhineland-Palatinate for their excellent and timely collaboration during this process.”

West African Resources Ltd (ASX: WAF)

The West African Resources share price is up 6% to $2.95. This follows the release of the gold miner’s full-year results. West African Resources reported revenue of $1.54 billion and a net profit after tax of $567 million. This was underpinned by gold sales of 280,065 ounces with an average realised price of US$3,525 per ounce and all-in sustaining costs of US$1,488 per ounce.

The post Why Challenger, Meeka Metals, Vulcan Energy, and West African Resources shares are rising today appeared first on The Motley Fool Australia.

More reading

• Why New Hope, Pepper Money, Pro Medicus, and Reece shares are falling today
• Why the Vulcan Energy share price is rising today
• Pepper Money shares plunge 10% after Challenger slashes takeover offer
• Challenger revises Pepper Money bid to $2.25 in latest update
• Why is this $3 billion ASX 200 gold stock leaping higher on Tuesday?

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

In 2022 and 2023, amid surging global coal prices, New Hope Corp Ltd (ASX: NHC) shares were paying out record amounts of passive income as the miner’s profits swelled.

Indeed, taken together, the final 2022 dividend and interim 2023 dividend, both fully franked, came out to 96 cents a share.

With New Hope shares averaging around $5.80 in the early months of 2023, this saw the S&P/ASX 200 Index (ASX: XJO) coal stock trading on a fully franked dividend yield north of 16%.

But, as you’re likely aware, coal prices came down significantly since that price spike, which followed on Russia’s invasion of Ukraine. And so have New Hope’s profits and dividend payouts.

Which brings us back to our headline question.

Are New Hope shares a good passive income buy today?

New Hope paid its final fully franked dividend of 15 cents a share on 8 October.

The miner will pay its fully franked interim dividend of 10 cents per share on 20 April.

That last passive income payout is still up for grabs, by the way. The ASX 200 coal stock reported its half year (H1 FY 2026) before market open today. If you want to bank the interim New Hope dividend, you’ll need to own shares at market close on Monday, 30 March. The stock trades ex-dividend on 31 March.

Taken together then, New Hope has paid (or will shortly pay) 25 cents a share in dividends over 12 months.

Shares in the ASX 200 coal miner are down 5.7% in early afternoon trade today following the release of its half year results, trading for $5.00 each.

This sees New Hope share trading on a fully franked dividend yield (partly trailing, partly pending) of 5.0%.

Now, that’s a long way from the 16% plus yield the coal miner was offering three years ago.

But it’s still a solid passive income payout.

And it’s worth noting that thermal coal prices have risen more than 17% so far in 2026, fuelled in part by the conflict in the Middle East.

Should coal prices remain elevated, and New Hope not face any unexpected operational issues, there’s a good chance that investors will be rewarded with a bigger final dividend this October.

What did the ASX 200 coal stock report for H1?

With coal prices down over the half year, New Hope reported an 84.0% year on year fall in net profit after tax (NPAT) to $54.3 million.

That saw a lesser reduction in the coal miner’s passive income payout, with the 10 cent interim dividend down 47.4% from last year’s payment.

“The group achieved 5.5 million tonnes of saleable coal production for the half year, which was supported by the continued ramp up of production at New Acland Mine,” New Hope CEO Rob Bishop said.

“In a lower coal price environment, our assets remain resilient and continue to generate solid margins,” he added.

As for that passive income Bishop said, “As a result of our performance, we are able to reward shareholders with a fully franked interim dividend of 10.0 cents per ordinary share.”

The post Should you buy New Hope shares for passive income today? appeared first on The Motley Fool Australia.

More reading

• Why New Hope, Pepper Money, Pro Medicus, and Reece shares are falling today
• Why I invested $3,000 into this great ASX share last week
• New Hope shares crash 12% on profit crunch and big dividend cut
• New Hope Corporation 1H FY26: Profit falls, interim dividend declared
• Here’s why ASX 200 energy shares were the only risers last week

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.

Shares in Vulcan Energy Resources Ltd (ASX: VUL) are edging higher on Wednesday after the lithium developer released an update to the market.

At the time of writing, the Vulcan Energy share price is up 3.33% to $3.10 following the announcement.

However, despite today’s gain, the stock has had a difficult year and is still down roughly 30% in 2026.

Vulcan secures key lithium production licence

According to the release, Vulcan has been issued its first lithium production permit for its flagship Lionheart Project in Germany.

The permit relates to Vulcan’s LiThermEx lithium extraction facility in the Upper Rhine Valley Brine Field in Germany’s Rhineland Palatinate.

This marks the first lithium production licence granted in the region.

Lionheart is designed as an integrated lithium and renewable energy project targeting annual production of 24,000 tonnes of lithium hydroxide monohydrate (LHM).

To put that into perspective, Vulcan says this volume could supply enough material for roughly 500,000 electric vehicle batteries each year.

The project is also expected to generate renewable energy alongside lithium production. This includes about 275 GWh of renewable electricity and 560 GWh of renewable heat each year for local consumers over an estimated 30-year project life.

Construction already underway

The company noted that the permit comes shortly after Vulcan secured a 2.2 billion euro (A$3.9 billion) financing package in December 2025, which fully funded the first phase of development.

Construction of the project is now underway.

The licence applies to Vulcan’s Insheim geothermal production area, which already produces renewable heat and electricity. This means the lithium facility will sit within an existing energy-producing site.

Further production licences are expected to follow as Vulcan progresses development across the wider Lionheart licence area.

Management believes the approval represents an important step toward establishing a domestic lithium supply chain in Europe.

Vulcan managing director and CEO Cris Moreno said:

Securing the first lithium production licence within the Lionheart Project marks another important milestone.

Moreno added that the licence was granted alongside the project’s financing package, which supports construction activities now underway.

Foolish takeaway

Vulcan is attempting something few companies have done at scale.

Rather than mining hard rock lithium, the company plans to extract lithium from geothermal brines while producing renewable energy at the same time.

The goal is to create what Vulcan calls the world’s first carbon neutral lithium project.

If successful, the Lionheart development could become one of Europe’s largest domestic sources of battery grade lithium. This could help reduce reliance on imports as electric vehicle demand grows.

The post Why the Vulcan Energy share price is rising today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.

Orica Ltd (ASX: ORI) announced some big news this week: it had settled a major litigation in the US and would also forge ahead with a related acquisition.

Macquarie has had a look at the impacts of this and still retains a bullish price target on the stock, but we’ll get to that later.

Firstly, let’s look at what Orica announced this week.

Simplifying the business

The major chemicals and explosives company said it had settled litigation with CF Industries for US$169.5 million, “following careful consideration of the best interests of shareholders and customers”.

The company said the settlement removes litigation uncertainty and also allows it to establish a new, diversified supply base in the US.

The settlement will be funded from existing cash and undrawn bank debt facilities.

Orica also reached an agreement with its joint venture partner, Nelson Brothers, to acquire its explosives business for US$25 million, plus the retirement of US$48 million in debt.

Orica said it expected the combination of the legal settlement and the company acquisition to be earnings per share accretive in the first full financial year of ownership, and that the US business would be simplified, with growth potential and greater operational resilience.

The acquisition is expected to boost EBIT by about $35 million per year once fully integrated, “with further opportunities to grow revenue and realise additional business cost synergies”.

Orica Managing Director Sanjeev Gandhi said:

Orica has agreed to settle this litigation with CF following careful consideration and in the best interests of shareholders and customers. Our focus remains on executing our strategy, advancing our growth initiatives and delivering sustainable value for customers and shareholders. Importantly, our actions have ensured there has been no disruption to customer supply, and we remain committed to strengthening security of supply for our customers through a diversified and resilient sourcing strategy in North America. The combination of the settlement and the acquisition of Nelson Brothers’ US Explosives business will further strengthen our North American region, deliver immediate earnings benefits and support our strategy to grow in attractive downstream markets.

Orica shares looking cheap

The Macquarie team ran the ruler over this week’s transactions and said the settlement removed litigation overhang, estimating that legal action had cost the company $100 million over the past two years.

Macquarie has reduced its price target on Orica shares slightly from $25.50 to $25.40 on minor earnings per share changes; this is still well above the current share price of $19.63.

If achieved, the Macquarie price target would constitute a 29.4% gain, and Orica is also expected to pay a 3.2% dividend yield.

Orica was valued at $8.99 billion at the close of trade on Monday.  

The post How high does Macquarie think Orica shares will go? appeared first on The Motley Fool Australia.

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

Australia’s fuel prices are soaring as the conflict in the Middle East continues to disrupt the global supply of oil. And Australia’s major airlines, Qantas Airways Ltd (ASX: QAN) and Virgin Australia Holdings Ltd (ASX: VGN), are feeling the pinch.

How does tight oil supply affect Qantas and Virgin Australia?

The largest operating cost for airlines is jet fuel, which is refined from crude oil. 

Australia produces very little of its own refined fuel and instead imports more than 90% of the fuel it uses. This means local prices closely follow global oil prices and currency movements. 

So when oil prices rise due to tight supply or geopolitical tensions, the cost of jet fuel also increases. 

If tight oil supply continues and jet fuel prices climb higher, airlines like Qantas and Virgin Australia face higher operating costs, which can pressure profits and potentially weigh their share prices.

Airlines could increase ticket prices or add fuel surcharges to help recover some costs, but if raised too high it could also reduce travel demand.

What has happened to Qantas and Virgin Australia shares?

Qantas shares are 0.64% higher at the time of writing on Tuesday morning, trading at $8.62 a piece. But for the year to date, the airline’s stock is down 17.79%. Since conflict in the Middle East ramped up at the beginning of the month, Qantas shares have shed 13.57% of their value.

Virgin Australia’s share price movements show an almost identical pattern. At the time of writing, the airline stock is 0.95% higher at $2.66 a piece, but it is 23.71% lower year to date. Virgin Australia shares have tumbled 15.45% in March alone.

It’s not only global oil supply concerns that have created headwinds for the two major airline businesses. News that Qantas has reached an agreement to settle the class action regarding flight credits during the global COVID pandemic has also dampened investor confidence.

Meanwhile, reports indicate that Virgin Australia’s partnership with Qatar Airways is being tested as the conflict in the Middle East continues to affect aviation routes. Qatar Airways currently owns 25% of Virgin Australia and provides aircraft and crew for several services under a wet lease arrangement.

What can we expect next?

As the market stands, analysts remain optimistic about the outlook for Qantas and Virgin Australia shares, with most tipping strong upside ahead.

TradingView data shows that 12 out of 15 analysts still have a buy or strong buy rating on Qantas shares. The average target price is $12.29, which implies a potential 42.73% upside at the time of writing.

Meanwhile, six out of eight analysts have a buy or strong buy rating on Virgin Australia shares. The average target price is $3.89, implying a significant 46.91% upside at the time of writing.

The post What’s next for Virgin Australia, Qantas shares as fuel prices surge? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.

While a large part of my portfolio is focused on high-quality businesses with dependable earnings, I also think there can be a place for higher-risk companies that offer significant upside potential.

These types of shares can be volatile and may not suit every investor. But if the underlying businesses execute well, the potential rewards can sometimes be substantial.

Here are three ASX shares that I think fit the high-risk, high-reward category.

Zip Co Ltd (ASX: ZIP)

Zip has been on a rollercoaster ride over the past few years.

The buy now, pay later (BNPL) industry went through an enormous boom during the pandemic before sentiment turned sharply as interest rates rose and investors began focusing more on profitability.

That shift sent many BNPL shares sharply lower, including Zip.

However, the company has spent the past couple of years reshaping its business. Management has focused heavily on improving margins, reducing costs, and strengthening the balance sheet.

At the same time, demand for flexible payment solutions continues to grow globally, particularly in large markets such as the United States.

If Zip can continue improving profitability while expanding its customer and merchant networks, the upside from current levels could be significant. But like many fintech businesses, it remains a higher-risk investment.

DroneShield Ltd (ASX: DRO)

DroneShield operates in a rapidly emerging segment of the defence technology industry.

The company develops counter-drone technologies designed to detect and neutralise unmanned aerial systems. As drones become increasingly common in both military and security environments, demand for this type of technology is growing quickly.

Recent geopolitical tensions have also increased global defence spending, which could create additional opportunities for companies operating in this space.

DroneShield has secured a number of contracts in recent years and continues to develop new products for defence and security agencies around the world.

However, the company is still relatively small compared to large defence contractors, which means earnings can be volatile. That makes it a higher-risk investment, but one with potentially large upside if demand continues to grow.

Megaport Ltd (ASX: MP1)

Megaport is a network-as-a-service provider that allows businesses to connect to cloud services and data centres through a flexible, software-defined network.

The company’s platform enables organisations to quickly establish and manage connections between their infrastructure and major cloud providers such as Amazon Web Services and Microsoft Azure.

As more companies shift their operations to the cloud and leverage artificial intelligence tools, the need for flexible and scalable connectivity solutions continues to increase.

Megaport has been expanding its global network footprint and recently moved into the compute-as-a-service market following its acquisition of Latitude.sh.

That move could significantly expand its addressable market and create new growth opportunities.

However, Megaport has also experienced periods of volatility as it balances growth investment with the push toward profitability, which is why it remains a higher-risk stock.

Foolish takeaway

Higher-risk shares can experience significant volatility, and they are not always suitable for conservative investors.

However, companies such as Zip, DroneShield, and Megaport operate in industries with meaningful growth potential. If their strategies continue to gain traction, the long-term rewards could outweigh the risks for investors who are comfortable with a bit more uncertainty.

The post 3 high risk, high reward ASX shares to buy ASAP appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Megaport and is short shares of 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.