Category: Stock Market

The Transurban Group (ASX: TCL) share price has dropped 15% in the past year, significantly underperforming the S&P/ASX 200 Index (ASX: XJO), which is up almost 8% in the same period.

As a toll road operator in Australia and North America, investors may wonder whether the ASX 200 stock is a buying opportunity, considering its potential to be a defensive ASX share.

The first step is to examine Transurban’s operational performance and then consider whether its valuation is cheap enough to invest in. Let’s dig in.

Quarterly recap

In its quarterly report for the three months to 31 March 2024, Transurban reported that group average daily traffic (ADT) increased by 0.9% year over year compared to the third quarter of FY23.

Looking at year-over-year ADT growth for the individual markets, Sydney was up 0.7%, Melbourne increased 1.6%, Brisbane ADT fell 1.1%, and North American ADT grew 4.9%.

The timing of Easter in 2024 compared to 2023 reduced ADT by approximately 1.5% across the group in the FY24 third quarter. Excluding the Easter timing impact, the group would have seen 2.4% total ADT growth, with 2.1% growth for Sydney, 2.9% for Melbourne, 0.9% for Brisbane and 6.5% for North America.

The defensive ASX 200 stock reported the quarter’s traffic uplift was largely driven by a higher workday ADT and airport-related travel, offset by construction and weather impacts.

In Sydney, WestConnex traffic increased 9.7%, including a full quarter contribution from the Rozelle Interchange. Higher traffic on the WestConnex was supported by an estimated 10,000 trips per day redistributed from across the Sydney portfolio following the opening of the Rozelle Interchange.

Is the Transurban share price a buy?

The ASX 200 share says macroeconomic projections continue to indicate larger, denser, and wealthier futures for the cities in which Transurban operates. This is expected to drive the “need for increased travel, the continued development of new roads and increased congestion”.

Transurban isn’t growing rapidly, and a higher cost of debt over the long term may be a headwind, but I think this lower Transurban share price can appeal to income-focused investors.

The defensive ASX 200 share is expected to pay a full-year distribution of 62 cents per security, translating into a forward distribution yield of around 5%.

I’d call it a conservative buy. I don’t think it’s going to materially outperform the market until interest rates start coming down. However, it continues to see traffic growth, and it’s working on projects that can expand its total capacity, which could help it climb slowly but steadily.

The post Should you buy this defensive ASX 200 stock on a pullback? appeared first on The Motley Fool Australia.

More reading

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

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 Transurban 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.

Brickworks Limited (ASX: BKW) shares could be great value at current levels.

That’s the view of analysts at Bell Potter, which believe investors should be picking up the building products company’s shares while they can.

What is the broker saying about Brickworks shares?

According to a note this morning, the broker thinks that the company’s important stake in Washington H Soul Pattinson & Company Ltd (ASX: SOL) is the reason to invest. It highlights:

The biggest driver of value in our BKW valuation is the company’s 26.1% shareholding in SOL, which we estimate represents ~50% of the current EV of the business. However, while SOL may be the primary driver of value, the headstock of BKW can at times trade independent of SOL (~70% correlation) and associates such as NHC (~29% correlation) given its equal or greater relationship to domestic building exposures such as JHX (84%) and CSR (70%).

Bell Potter believes the stake is being undervalued by the market at present. It adds:

We believe that an attractive look-through opportunity has recently presented in BKW, with our mark to market valuation of SOL indicating that the stock is currently trading at a 3.6% discount to pre-tax NTA. This compares to an average pre-tax premium to NTA of 3.9% (post the MLT merger) and represents the widest valuation gap since Jul’22.

Upgraded

In light of the above, Bell Potter has upgraded Brickworks’ shares to a buy rating (from hold) with an improved price target of $29.50.

Based on its current share price of $25.76, this implies potential upside of almost 15% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends of 67 cents per share in FY 2024 and then 69 cents per share in FY 2025. This equates to 2.6% and 2.7% dividend yields, respectively, for investors.

This means a total potential return of over 17% for investors between now and this time next year, which would turn a $10,000 investment into approximately $11,700 if it proves to be accurate.

Bell Potter then concludes:

There are no material changes to forecasts, however we think the implied SOL discount and rent growth outlook on offer is attractive and upgrade our rating to Buy. Potential catalysts could include news flow regarding development of other surplus properties (e.g. USA). We see Building Products and near-term working capital reduction targets as the key risk, with our FY24e forecasts -6% below consensus.

The post Why this broker just upgraded Brickworks shares to a buy rating appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 2 ASX dividend shares that are coiled springs for a lifetime of passive income
• 3 ASX 200 blue-chip shares to buy now
• Here’s how I’d target a $2,000 second income by investing $35 a week
• 3 ASX shares with a long history of increasing dividends

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 Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you wanting to invest in the beaten down lithium industry? If you are and have a high tolerance for risk, then it could be worth taking a look at Latin Resources Ltd (ASX: LRS).

That’s because analysts at Bell Potter believe the ASX lithium stock could deliver very big returns for investors over the next 12 months.

What is the broker saying about the ASX lithium stock?

Bell Potter notes that Latin Resources has updated the mineral resource estimate for its Salinas Lithium Project in Brazil. It was pleased to see that it has increased since its last update. It said:

LRS has announced an updated Mineral Resource Estimate for its 100% owned Salinas Lithium Project located in Minas Gerais, Brazil. The Salinas global MRE is now 77.7Mt grading 1.24% Li2O (compared with the December 2023 estimate of 70.3Mt at 1.27% Li2O). Importantly, the Measured & Indicated component of the Colina deposit (within the global MRE) is now 67.3Mt grading 1.27% Li2O (previously 41.0Mt at 1.36% Li2O). Infill drilling at Colina is now complete and this large M&I component will form the basis of an initial Reserve estimate and Definitive Feasibility Study due for release in the September 2024 quarter.

The broker highlights that the ASX lithium stock is now in the process of preparing a final investment decision by the end of the year. And if all goes to plan, development at Salinas could commence next year and production the year after. It adds:

LRS is actively progressing permitting, offtake and financing to support a Final Investment Decision at Salinas by the end of 2024. Commencement of development in 2025 could enable first production in 2026. Financing and lithium offtake proposals have been received and are being assessed. The DFS is expected to be based on a similar scale project to the September 2023 Preliminary Economic Assessment. The PEA outlined ramp-up to 3.6Mtpa mining and processing rates to ultimately support +500ktpa Spodumene Concentrate production. Based on the PEA throughput assumptions, the current M&I MRE could support a +15 year project life.

Big returns

Bell Potter has responded to the update by retaining its speculative buy rating and 40 cents price target on the ASX lithium stock.

Based on its current share price of 26 cents, this implies potential upside of 53% for investors over the next 12 months. If this proves accurate, a high risk investment of $10,000 would turn into over $15,000.

The broker then summarised its bullish view on the stock. It said:

Colina has the potential to deliver new lithium supply into what we expect to be structurally short markets. Uncommitted offtake and an open share register provide further strategic appeal.

The post Guess which ASX lithium stock could rise over 50% appeared first on The Motley Fool Australia.

More reading

• Should you buy this defensive ASX 200 stock on a pullback?
• Why this broker just upgraded Brickworks shares to a buy rating
• Forget Fortescue and buy this ASX mining stock now
• Is the Westpac share price at a stretched valuation right now?
• These are the 10 most shorted ASX shares

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.

When it comes to investing in iron ore, Fortescue Ltd (ASX: FMG) shares are a popular option for investors.

But with almost all brokers saying that the mining giant’s shares are overvalued right now, it may not be the best ASX mining stock to buy to gain exposure to the steel making ingredient.

Instead, one of the best options in the space could be the often-overlooked Champion Iron Ltd (ASX: CIA).

That’s because analysts at Goldman Sachs have just named it as an ASX mining stock to buy and are tipping big returns over the next 12 months.

What is the broker saying about this ASX mining stock?

Goldman notes that Champion Iron recently released a solid full year result. It commented:

CIA reported record EBITDA of C$553mn for FY24, up 11% YoY, broadly in-line with GSe of C$541mn but +9% vs. VA consensus. The balance sheet remains well-placed to fund growth and ongoing capital returns with net debt of ~C$140mn, and CIA declared their sixth consecutive C10cps semi-annual dividend. Improvements in rail volumes and drawdown in iron ore inventory at site is still expected from Sep Q 2024.

In light of this in-line performance from the Canada-based miner, the broker has retained its buy rating and $9.30 price target on its shares.

Based on its current share price of $7.02, this implies potential upside of 32% for investors over the next 12 months.

In addition, the broker is forecasting dividends per share of 27.2 Canadian cents in FY 2025 and then 38.8 Canadian cents in FY 2026. At current exchange rates, this equates to dividend yields of 4% and 6%, respectively, for investors.

Why is the broker bullish?

Two key reasons that Goldman is bullish on this ASX mining stock are its valuation and production growth. It explains:

Supportive Valuation: the stock is trading at 0.8x NAV (A$8.8/sh) and ~4.4x EBITDA (NTM). Our NAV is based on a long run Fe price of ~US$105/t (real) for 65% Fe and ~US$75/t premium for DRPF above 62% Fe Index. For every ~US$10/t increase in our long run price, our CIA NAV would increase by ~A$1.5/sh.

Bloom Lake has operated above nameplate 15Mtpa, strong OCF in FY25, with de-bottlenecking options to 18Mtpa: CIA has now ramped-up Bloom Lake Phase II to 15Mtpa nameplate, and we expect this to support +50% EBITDA growth and doubling of Operating Cash Flow (OCF) in FY25, which could fund de-bottlenecking of Bloom Lake to 18Mtpa (not included in GSe base case).

All in all, this could make Champion Iron worth considering ahead of fellow ASX mining stock Fortescue. Incidentally, Goldman has a sell rating and $16.90 price target on the latter’s shares.

The post Forget Fortescue and buy this ASX mining stock now appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• These ASX shares can rise 25% to 100%+
• Buy, hold, or sell: What is Bell Potter saying about Fortescue shares?
• Why these 3 top ASX 300 stocks dragged the benchmark lower this week
• Why Core Lithium, Fortescue, Peter Warren, and Talga shares are falling 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 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 Westpac Banking Corp (ASX: WBC) share price has been a strong performer over the last six months.

During this time, Australia’s oldest bank’s shares have risen over 21%.

In addition, Westpac rewarded its shareholders with a fully franked 72 cents per share final dividend in December and later this month will pay a 90 cents per share interim dividend.

But are the good times over for the time being and is the Westpac share price starting to look fully valued? Let’s find out.

Is the Westpac share price fully valued?

Unfortunately, the general consensus is that Westpac’s valuation is now becoming stretched.

For example, even Morgans, which has a hold rating on its shares, has a price target of $24.15. That is 7% below where the bank trades today.

Elsewhere, analysts at Citi recently put a sell rating and $24.75 price target on its shares, and Morgan Stanley put an underperform rating and $24.50 price target on them.

Rally over

Last month, Goldman Sachs called time on the Westpac share price rally largely on valuation grounds.

It believes that the bank valuations are now skewed heavily to the downside. It said:

With earnings risks more balanced, valuations skewed heavily to the downside, and our analysis suggesting previous sector deratings not being catalysed by absolute or relative earnings downgrades, we take a more negative view on the banks, reflected by downgrading: 1) WBC to Sell from Neutral, given i) execution, cost and timing risks relating to its technology simplification, ii) of the major banks, WBC’s balance sheet is the most overweight domestic housing, which we expect will be more growth constrained than commercial lending over the medium term, iii) NIM has been supported by a shorter duration replicating portfolio but this will give them less longevity, and d) WBC’s 14.2x 12-mo fwd PER is more than one standard deviation expensive vs. its 12.7x historic average.

Goldman has a sell rating and $24.10 price target on the bank’s shares. Based on the current Westpac share price of $25.98, this implies potential downside of 7.2% over the next 12 months.

Though, with Goldman forecasting dividends of $1.50 per share to be paid out over the next 12 months, which equates to a 5.8% dividend yield, the total potential loss on investment is a more modest 1.4%.

The broker concludes:

Valuations full: WBC’s 12-mo fwd PER of 14.2x is more than one standard deviation expensive vs. its 15-yr historic avg of 12.7x (Exhibit 11). While its relative PER vs. its peers has fallen to a 20% discount, vs. its 15-yr avg of a 5% discount, this largely correlates with the relative deterioration in its ROTE vs. peers.

The post Is the Westpac share price at a stretched valuation right now? appeared first on The Motley Fool Australia.

More reading

• Here’s the average wealth of Aussies who manage their own superannuation
• Buy one, sell the other: Goldman’s take on these 2 ASX bank shares
• Here’s when Westpac says the RBA will now cut interest rates
• Buying ASX 200 bank stocks? Here’s why they could keep outperforming
• Do the dividends from Westpac shares still come fully franked?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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.

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) remains far and away the most shorted ASX share with 21.8% of its shares held short. This is down slightly week on week. It appears that short sellers are not expecting lithium prices to recover any time soon.
• IDP Education Ltd (ASX: IEL) has 17.1% of its shares held short, which is up week on week once again. There are concerns that this language testing and student placement company could struggle with changes to student visa rules in a number of key markets. In addition, the loss of its language testing monopoly in Canada has been a blow.
• Syrah Resources Ltd (ASX: SYR) has short interest of 12.8%, which is down slightly week on week again. This graphite miner’s shares have lost half of their value over the last 12 months amid weak battery materials prices, production suspensions, and further cash burn.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest fall week on week to 10.7%. Short sellers appear to believe the market is too optimistic on revenue margins and travel spending.
• Australian Clinical Labs Ltd (ASX: ACL) has short interest of 9.9%. This may have been driven by the health imaging company guiding to another sharp decline in its earnings in FY 2024.
• Liontown Resources Ltd (ASX: LTR) also has 9.9% of its share held short, which is flat week on week. Some analysts believe that lithium prices will stay at low levels for years.
• Westgold Resources Ltd (ASX: WGX) has short interest of 9.4%, which is now up for a fourth week in a row. This may be due to concerns over the gold miner’s proposed merger with Canada-based Karoa Resources.
• Sayona Mining Ltd (ASX: SYA) has short interest of 9.4%, which is up week on week again. Short sellers have targeted this lithium miner because of weak lithium prices. In fact, prices are so low that it costs Sayona Mining more to produce its lithium than it receives for it.
• Chalice Mining Ltd (ASX: CHN) has short interest of 8.4%, which is up week on week again. Short sellers don’t appear to be put off by the favourable Federal Budget.
• Healius Ltd (ASX: HLS) is a new entry in the top ten with short interest of 8%. Short sellers appear to have noted tough trading conditions, the exit of its CEO, and a precarious balance sheet.

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

More reading

• Growth spurt: 2 ASX growth shares set to skyrocket
• Brokers name 5 fantastic ASX growth shares to buy in June
• Why are Sayona Mining shares up 43% in a month?
• Own Liontown Resources shares? Here’s when it will start producing lithium
• Holidays on hold: How will this affect ASX travel shares?

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.

National Australia Bank Ltd (ASX: NAB) shares have certainly delivered the goods for investors in 2024. Since the start of the year, the banking giant’s shares have risen over 10%.

While this is good news for its shareholders, it isn’t for non-shareholders.

That’s because almost all brokers now believe that its shares are trading above fair value. As a result, if you are on the lookout for ASX dividend shares to buy, you might want to stay clear of NAB until it trades at a more attractive level.

But which dividend shares would be good alternatives? Let’s take a look at three that brokers rate as buys. They are as follows:

Accent Group Ltd (ASX: AX1)

The first alternative for income investors to consider buying is Accent Group. It is a market-leading leisure footwear retailer with a huge network of stores across countless brands. This includes HypeDC, Platypus, and The Athlete’s Foot.

Bell Potter is a fan of the company and has a buy rating and $2.50 price target on its shares. It is particularly positive on the ASX dividend share due to its “growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy.”

The broker expects this to allow the company to pay fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. Based on the latest Accent share price of $1.88, this represents dividend yields of 6.9% and 7.8%, respectively.

Coles Group Ltd (ASX: COL)

Another ASX dividend share that could be a top option for income investors is Coles. It is of course one of the big two supermarket operators in the Australian market. It also has a significant liquor store network and a joint ownership in the Flybuys loyalty program.

Morgans sees value in its shares and has an add rating and $18.95 price target on them.

As for dividends, it is forecasting Coles to pay fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $16.42, this implies yields of approximately 4% and 4.2%, respectively.

Stockland Corporation Ltd (ASX: SGP)

A third alternative for income investors to look at is Stockland.

Citi thinks the leading residential developer could be an ASX dividend share to buy right now. It sees positives in a recently announced land lease partnership with Invesco and expects it to eventually generate better returns on capital.

The broker has a buy rating and $5.20 price target on its shares.

In respect to dividends, Citi is expecting dividends per share of 26.2 cents in FY 2024 and 26.6 cents in FY 2025. Based on the current Stockland share price of $4.50, this will mean yields of 5.8% and 5.9%, respectively.

The post Forget NAB and buy these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Here’s how the ASX 200 market sectors stacked up last week
• Here’s the average wealth of Aussies who manage their own superannuation
• 3 Australian shares to help secure your future
• Buying ASX 200 bank stocks? Here’s why they could keep outperforming

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Coles Group. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Friday, the S&P/ASX 200 Index (ASX: XJO) had a strong finish to the week and charged higher. The benchmark index rose 0.9% to 7,701.7 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set for another good session on Monday following a strong finish on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 38 points or 0.5% higher. On Friday in the United States, the Dow Jones was up 1.5%, the S&P 500 rose 0.8%, and the Nasdaq was flat.

Oil prices fall

ASX 200 energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a poor start to the week after oil prices fell on Friday. According to Bloomberg, the WTI crude oil price was down 1.2% to US$76.99 a barrel and the Brent crude oil price was down 0.95% to US$81.11 a barrel. Traders were selling oil ahead of OPEC’s meeting at the weekend.

Brickworks upgraded

The Brickworks Limited (ASX: BKW) share price could be undervalued according to analysts at Bell Potter. This morning, the broker has upgraded the building products company’s shares to a buy rating with a $29.50 price target. It commented: “There are no material changes to forecasts, however we think the implied SOL discount and rent growth outlook on offer is attractive and upgrade our rating to Buy.”

Gold price drop

It looks like ASX 200 gold shares such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price dropped on Friday. According to CNBC, the spot gold price was down 0.8% to US$2,347.7 an ounce. However, this couldn’t stop the precious metal from recording its fourth consecutive monthly gain.

Champion Iron named as a buy

Goldman Sachs thinks investors should be buying Champion Iron Ltd (ASX: CIA) shares. In response to its FY 2024 result, the broker has retained its buy rating and $9.30 price target. This implies potential upside of more than 30% for investors. In addition, Goldman expects dividend yields of 4.3% in FY 2025 and 6.1% in FY 2026. It said: “CIA reported record EBITDA of C$553mn for FY24, up 11% YoY, broadly in-line with GSe of C$541mn but +9% vs. VA consensus.”

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

More reading

• $20,000 invested in these ASX 200 shares 10 years ago is now worth… (a lot!)
• Here’s how the ASX 200 market sectors stacked up last week
• Here’s the average wealth of Aussies who manage their own superannuation
• These ASX shares can rise 25% to 100%+
• These were the best performing ASX 200 shares in May 2024

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

Several ASX real estate investment trusts (REITs) manage large portfolios of offices and are likely to benefit from the return to the workplace occurring across Australia’s CBDs today.

Among them is the No. 7 ASX REIT by market capitalisation Dexus (ASX: DXS).

Dexus manages $24.3 billion worth of office blocks out of $48 billion in total real estate assets (as of FY23). It owns 62 office blocks.

Dexus shares are currently $6.78, up 0.44% at market close on Friday and down 17.42% over the past 12 months.

Another is the No. 8 ASX REIT by market cap Charter Hall Group (ASX: CHC).

Of Charter Hall’s $71.9 billion property funds under management (FUM) as of FY23, $29.3 billion of it was office space. The ASX REIT owns 96 office towers and blocks.

Charter Hall shares finished Friday at $12.12, up 1%, and are up 8.21% over the past 12 months.

The largest pure-play office REIT is Centuria Office REIT (ASX: COF). It manages $2.2 billion in office space and owns 23 office blocks (as of FY23).

The Centuria Office REIT share price is $1.21, down 2.03% as of Friday’s market close and 16.32% over the past year.

CBD office occupancy rises to 76% of pre-pandemic levels

The post-pandemic return to the office is continuing, although many workers are operating under hybrid arrangements where they work from home a few days per week.

In a recent report, CBRE, a global leader in commercial real estate services and investment, said Australia’s average office occupancy rate rose to 76% of pre-pandemic levels in the first quarter of 2024.

This is up from 70% in the December 2023 quarter and 67% in the March 2023 quarter.

While occupancy rates rose in all capital cities during the quarter, Perth and Adelaide maintained the highest occupancy rates of 93% and 88%, respectively.

CBRE said a shorter average commute from home to work in these smaller capital cities may be contributing to higher occupancies.

Across the rest of the country, occupancy rates were 86% in Brisbane, 77% in Sydney, 66% in Canberra, and 62% in Melbourne.

Aussies are bowing to their employers’ requests to return to the office much more than workers in the United States, where CBRE says occupancy rates have stalled at the 50% mark for more than a year.

Why do companies want employees back in the office?

Many companies are asking their employees to return to the office at least part of the time to leverage the benefits of teamwork, innovation, and collaboration.

They are concerned that working from home in the long term may reduce overall productivity.

One related issue is ensuring new employees have enough interaction with senior staff so they can learn faster and more easily integrate into the company’s culture.

When the ASX REIT Centuria Office released its FY23 results, Grant Nichols, Centuria’s Head of Office, commented:

With productivity falling in both Australia and overseas, we have seen an increase in mandated return to office policies that aim to address productivity, increased loneliness and diminished corporate culture.

While hybrid working arrangements and increased workplace flexibility are likely to become more prevalent, it is becoming increasingly apparent that the office will remain an important and focal point in many workplace operations.

In fact, Centuria’s 2023 annual Australian office tenant customer survey reinforced this view, with approximately 75% of respondents stating they expect to retain or increase their office space requirements in the medium term.

But workers aren’t being as cooperative as many companies would like.

So, some companies have begun to offer incentives, including linking salary and promotions to how much time an employee spends in the office.

Companies move into premium offices to lure workers back

Another trend is companies moving their corporate headquarters into more attractive office buildings. They appear happy to pay a higher rent in exchange for attracting workers back on-site.

CBRE reports that two-thirds of organisations that have relocated since COVID have upgraded to premium office blocks featuring retail, restaurants, and other amenities on the lower floors.

Charter Hall Office CEO Carmel Hourigan said Charter Hall was carefully curating its portfolio “to meet demand for premium offices that are rich with amenity”.

Upon the release of the company’s FY23 results, she said:

This is reflected in our strategic investments and development pipeline, including our recently submitted application for Chifley South in Sydney which will realise the development potential of the site.

Dexus Executive General Manager, Office, Andy Collins said more than half of new office leases in FY23 represented companies upgrading to better office suites:

The average terms of new leases and renewals was circa 6.2 years, and 57% of new leases were represented by customers upgrading to higher quality space.

The post Will ASX REITS be boosted by Australian workers returning to the office? appeared first on The Motley Fool Australia.

More reading

• 2 high-yield ASX stocks I’d buy for dividends
• Here are the top 10 ASX 200 shares today
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Motley Fool contributor Bronwyn Allen 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.

If you are looking for an easy way to invest your hard-earned money, then it could be worth looking at the exchange traded funds (ETFs) in this article.

Here’s why they could be high quality options for investors in June:

Betashares Energy Transition Metals ETF (ASX: XMET)

The first ASX ETF for investors to look at in June is the Betashares Energy Transition Metals ETF.

It provides investors with easy exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements. These are all metals that will be pivotal to the decarbonisation of the planet.

Betashares has named it on its list of 12 ASX ETFs ideas for 2024. It appears to believe the companies included in the fund are well-positioned to benefit from increasing demand for these metals.

It notes that “both electric cars and clean energy use notably more metals than their conventional counterparts, and many of these minerals have highly concentrated and insecure supply chains.”

Betashares Global Quality Leaders ETF (ASX: QLTY)

Another ASX ETF for investors to consider buying in June is the Betashares Global Quality Leaders ETF.

This ETF has a focus on investing in the highest quality companies that the world has to offer. This is of course never a bad thing.

At present, there are approximately 150 companies included in the fund. These companies rank highly on four key metrics: return on equity, debt-to-capital, cash flow generation, and earnings stability. Betashares’ chief economist, David Bassanese, recommended this ETF last year.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

A third ASX ETF that could be a great option for investors in June is the VanEck Vectors Morningstar Wide Moat ETF.

This fund has a focus on companies with sustainable competitive advantages (or wide moats) and fair valuations. These are the qualities that Warren Buffett looks for when he makes investments for his Berkshire Hathaway (NYSE: BRK.B) business.

Buffett certainly is a good role model when it comes to investing. His investment focus has helped Berkshire Hathaway double the market return since all the way back in 1965.

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

The post 3 of the best ASX ETFs to buy in June appeared first on The Motley Fool Australia.

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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 Berkshire Hathaway, Nike, 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. The Motley Fool Australia has recommended Berkshire Hathaway, Nike, 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.