Category: Stock Market

It has been another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Coles Group Ltd (ASX: COL)

According to a note out of Citi, analysts have retained their buy rating and $19.00 price target on this supermarket giant’s shares. Citi has been visiting stores to get a better idea of how the big two supermarket operators are performing with their respective strategies. It believes that Coles’ pricing strategy is resonating more with consumers and will result in stronger sales growth during the fourth quarter of FY 2024. This is based on its belief that Coles’ strategy is being executed better and has a stronger value perception. And while Citi rates both supermarket giants as buys, its preference at this point is Coles. The Coles share price ended the week at $16.42.

Pro Medicus Limited (ASX: PME)

A note out of Goldman Sachs reveals that its analysts have reiterated their buy rating on this health imaging technology company’s shares with an improved price target of $136.00. This follows news that Pro Medicus has won five new contracts with a minimum contract value of $45 million. Goldman highlights that this brings the company’s minimum total contract value (TCV) for new sales this financial year to $245 million. And there’s still potential for more contract wins given its sizeable sales pipeline. Goldman believes this supports its view that the company’s Visage 7 software is an industry-leading solution and that the company is the incumbent technology leader in radiology and well-placed to take market share. The Pro Medicus share price was fetching $120.12 at Friday’s close.

Qantas Airways Limited (ASX: QAN)

Another note out of Goldman Sachs reveals that its analysts have retained their buy rating and $8.05 price target on this airline operator’s shares. Goldman believes that the market is severely undervaluing Qantas’ shares. It suspects that this could be due to investors pricing in a trade off between investment (fleet and customer) and capital returns (dividends and buybacks). However, the broker believes that Qantas can return significant capital to shareholders and invest in its fleet while still maintaining a strong balance sheet. As a result, its analysts see the Flying Kangaroo’s cheap valuation as a buying opportunity. It is also worth noting that Goldman is expecting the Qantas dividend to return in 2025. The Qantas share price ended the week at $6.15.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• ASX 200 shares are still cheap! Here’s one to consider buying now
• Top ASX shares to buy in June 2024
• Guess which 3 ASX 200 shares are leading the charge higher this week
• Brokers name 3 ASX shares to buy now

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

Picking out ‘safe’ ASX shares in the consumer discretionary sector is a tough ask. For one thing, there is really no such thing as a ‘safe’ ASX share, no matter what sector of the market you are looking in.

If you want absolute certainty that you won’t lose money on an investment, the share market is the wrong place to look.

No one can predict how the market will price any asset. You might think a share is worth a certain amount for whatever reason. But if the market doesn’t agree with you, there’s not much you can do about it.

But even if we do assume you can get pretty close to a safe ASX share, the consumer discretionary sector is a fraught place to search anyway – it’s all in the name. Consumer discretionary stocks tend to sell goods or services that consumers may or may not purchase depending on their economic circumstances.

When a downturn or recession hits, these consumers tend to cut back on discretionary items such as new clothes, cars or electrical appliances.

That makes the companies that sell them inherently cyclical.

But this doesn’t mean there aren’t some deals to be found in this space right now. So today, let’s discuss three consumer discretionary shares that I think you can call ‘safe’ relative to their peers for a long-term investment today.

3 ‘safe’ ASX consumer discretionary stocks today

Super Retail Group Ltd (ASX: SUL)

Super Retail Group is the ASX retail share behind popular chains like Super Cheap Auto, Macpac, Rebel and BCF.

I like this retailer because it is resistant to the typical economic cycle that affects other consumer discretionary shares. Australians tend to keep shopping at stores like Super Cheap and BCF regardless of the economic weather.

To illustrate this defensiveness, Super Retail posted a robust half-year earnings report in February. This report showed the company increasing half-year revenues by 3.2% despite the ongoing cost-of-living crisis.

Super Retail shares also offer a 5.75% fully franked dividend yield today.

JB Hi-Fi Ltd (ASX: JBH)

JB is another ASX consumer discretionary stock that I think makes for a great investment in any economic climate.

This company has shown a remarkable ability to move with the times. Two decades ago, it mainly stocked hi-fi, DVDs, music, and video games. But today, JB is more known as a destination for electronics, home appliances, and office equipment. That’s for both its eponymous chain of JB Hi-Fi stores and its Good Guys side hustle.

JB Hi-Fi has been struggling with a downturn in consumer demand over the past year.

However, I think the 10% drop in the JB share price that we’ve seen over the past couple of months has left this consumer discretionary stock looking pretty cheap today on a price-to-earnings (P/E) ratio of under 14. That comes with a fully franked dividend yield of 4.7%. It could be a great entry point for long-term investors.

Premier Investments Limited (ASX: PMV)

A final stock that you might name amongst the ‘safe shares’ of the consumer discretionary sector is Premier Investments. Like Super Retail Group, this company owns a large portfolio of successful Australian stores, including Peter Alexander, Smiggle, JayJays, Dotti, and Just Jeans.

As with Super Retail’s businesses, these stores seem to be more resistant to adverse economic circumstances than most. Over the first half of FY2024, Premier Investments posted a 1.65% rise in statutory net profits after tax, as well as a hike to its interim dividend.

Premier’s $209.8 million in earnings before interest and tax during the half was a 66.4% increase over the company’s earnings during the first half of FY2020.

I also think that Premier’s plans to spin off its profitable Smiggle and Peter Alexander divisions will be beneficial to long-term investors.

Right now, Premier shares are trading on a fully franked dividend yield of just over 4%.

The post What are 3 of the safest ASX consumer discretionary shares in Australia right now? appeared first on The Motley Fool Australia.

More reading

• 4 top ASX dividend shares to buy next week
• ASX retail shares mixed amid modest April sales growth
• 4 ASX 200 shares being scooped up by insiders
• Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings
• Analysts say these 4 ASX dividend shares are buys

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 Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Jb Hi-Fi and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Consumer staple shares led the ASX 200 market sectors last week with a 1.02% gain over the five trading days.

Meantime, the S&P/ASX 200 Index (ASX: XJO) lost 0.91% to finish the week at 7,701.7 points.

Six of the 11 market sectors finished the week in the green.

Let’s recap.

Consumer staple shares led the ASX sectors last week

The biggest ASX consumer staple stock Woolworths Group Ltd (ASX: WOW) moved 0.57% higher last week. Woolworths shares closed at $31.60 on Friday.

Among the other large sector players, Coles Group Ltd (ASX: COL) shares lifted 1.48% to $16.42 apiece.

ASX 200 wine share Treasury Wine Estates Ltd (ASX: TWE) lost 1.95% to finish the week at $11.33 apiece.

Endeavour Group Ltd (ASX: EDV) shares lost 0.6% over the week to finish at $4.96 on Friday.

Among the big movers in the staples sector this week was Australian Agricultural Company Ltd (ASX: AAC). The stock rose 7.8% despite no price-sensitive news to finish at $1.52 per share on Friday.

ASX 200 agricultural share Select Harvests Ltd (ASX: SHV) lifted 4.47% to $3.27. Most of those gains came on Friday after the company released its 1H FY24 results.

The almond farmer and processor reported a net profit after tax (NPAT) loss of $2.1 million. But this was an improvement on the prior corresponding period of 1H FY23 when a $96.2 million loss was recorded.

Select Harvests managing director David Surveyor said:

The operating environment for the almond industry remains challenging. In the US, almond prices have been below the cost of production since the 2020/21 season.

Through this period, Select has made strong progress on its transformational program and is ready to benefit from the cyclical upturn.

The Bega Cheese Ltd (ASX: BGA) share price increased 2.76% over the five days to $4.46 on Friday.

There was no news from Bega this week. However, my colleague Bernd says the price surge could relate to speculation that milk prices may fall over the months ahead, thereby reducing Bega’s input costs.

Ridley Corporation Ltd (ASX: RIC) rose 1.94% to $2.10. There was no news from the company this week.

Top broker Goldman Sachs says its key buy calls among ASX retail shares are now skewed towards consumer staples over discretionary stocks.

Goldman has buy ratings on three of the top four consumer staple shares by market capitalisation.

They are Woolworths shares with a 12-month price target of $39.40, Treasury Wine shares with a 12-month price target of $13, and Endeavour shares with a 12-month price target of $6.30.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Consumer Staples (ASX: XSJ)	1.02%
Consumer Discretionary (ASX: XDJ)	0.83%
Communication (ASX: XTJ)	0.59%
Information Technology (ASX: XIJ)	0.26%
Healthcare (ASX: XHJ)	0.15%
A-REIT (ASX: XPJ)	0.09%
Financials (ASX: XFJ)	(0.26%)
Industrials (ASX: XNJ)	(0.35%)
Energy (ASX: XEJ)	(0.6%)
Materials (ASX: XMJ)	(1.35%)
Utilities (ASX: XUJ)	(2.73%)

The post Here’s how the ASX 200 market sectors stacked up last week appeared first on The Motley Fool Australia.

More reading

• 4 top ASX dividend shares to buy next week
• These were the best performing ASX 200 shares in May 2024
• Guess which 3 ASX 200 shares are leading the charge higher this week
• 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 Bronwyn Allen 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 positions in and has recommended Coles Group. The Motley Fool Australia has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The two ASX dividend shares I’m going to tell you about pay high levels of passive income. Due to their rewarding dividend yields, they could produce $1,000 of passive income, or more, over the next year.

When businesses have a relatively low price/earnings (P/E) ratio, where they trade at a low multiple of their earnings, they are more likely to have a good dividend yield.

ASX retail shares usually trade on a lower earnings multiple than some sectors like ASX tech shares or ASX industrial shares. Below are two ASX dividend shares that have a commendable history of dividend payments.

Shaver Shop Group Ltd (ASX: SSG)

As the name suggests, Shaver Shop is a retailer that specialises in male and female personal grooming products, including electric shavers, clippers, trimmers, and wet shave items. It has 123 Shaver Shop stores across Australia and New Zealand. The company also offers oral care, hair care, massage, air treatment, and beauty products.

Impressively, the ASX dividend share has grown its annual payout every financial year since it started paying a dividend in 2017, though that streak is not guaranteed to continue. Using the last two declared dividends, it has a trailing grossed-up dividend yield of 13%.

In the trading update for 1 January 2024 to 22 February 2024, it revealed total sales were up 0.9%, which is beneficial for the profit generation and supporting the dividend.

In a drive to boost in-store and online operational efficiency, as well as improve the customer experience, it has invested in a new software platform, which was planned for the second half of FY24.

There are multiple ways the business can raise profit in the future, including growing its store network, increasing online sales, expanding its range of products and capturing market share. A rising Australian population is another helpful tailwind for the company.

Nick Scali Limited (ASX: NCK)

Nick Scali is a leading furniture retailer through its Nick Scali and Plush brands.

I think this ASX dividend share is a well-run business, with management focused on moves that will generate good profit growth for investors.

The passive income stock grew its annual payout every year between FY13 to FY23, which is an excellent record considering furniture retailing isn’t what I’d call an ultra-defensive sector.

Nick Scali’s last two dividends amount to 70 cents, which is a grossed-up dividend yield of 7.2%.

The company plans to add another 70 or so stores to its Australia and New Zealand network over the long term. It had 108 stores on 31 December 2023, so there are still a lot of additional stores to go.

The ASX retail share announced it was expanding into the UK by acquiring Fabb Furniture, which has a 21-store network. The company intends to establish the Nick Scali brand in the UK. Management believes there is a “significant opportunity” to drive long-term profitable growth.

Foolish takeaway

Those two companies together have an average grossed-up dividend yield of 10.1%, so an investment of just under $10,000 across the two ASX dividend shares could make an income of $1,000 over the next 12 months.

The post 2 ASX dividend shares that could create $1,000 in passive income in 2024 appeared first on The Motley Fool Australia.

More reading

• Top 5 reasons for retirement in Australia
• Here’s the average wealth of Aussies who manage their own superannuation
• 4 top ASX dividend shares to buy next week
• Top ASX green energy stocks in June 2024
• These ASX shares can rise 25% to 100%+

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nick Scali and Shaver Shop Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Access to financial support is the top reason prompting Australians to commence their retirement, according to a new report from the Australian Bureau of Statistics (ABS).

This includes reaching the preservation age for access to superannuation and reaching the ‘retirement age’, which refers to the age at which we become eligible to receive the age pension.

Most retirees in Australia today are from the Baby Boomer generation. The Boomers were born between 1945 and 1964, making the youngest in this cohort 60 years of age.

Preservation ages vary depending on when you were born. For those born after 30 June 1964, it’s 60 years of age. That means every boomer will have access to their superannuation after this year.

Meanwhile, the pension age in Australia is 67. So, the youngest baby boomers still have seven years to wait to be eligible for this financial support.

Currently, the age pension is the main income source for most Australians in retirement, with superannuation the second main source.

Bjorn Jarvis, ABS head of labour statistics said:

In 2022-23, a Government pension or allowance was still the main source of personal income at retirement for 43 per cent of retirees. This was followed by Superannuation, an annuity or private pension at 27 per cent.

What does financial support actually mean?

Superannuation

Obviously, everyone has varying amounts of money in their superannuation account at preservation age.

However, according to Australian Taxation Office (ATO) data, the average superannuation balance for an Australian aged between 65 and 69 years is $428,738.

If we break the numbers down by gender, the average balance for men is $453,075, and the average for women is $403,038.

Age pension

Following the most recent inflation indexing update on 20 March, the full age pension is now a taxable $43,752.80 per annum for couples and $29,023.80 for singles.

These amounts include the maximum pension supplement and energy supplement.

What are the other top 4 reasons for retirement?

The ABS data looks at the reasons Australia’s 4.1 million retirees entered retirement.

As we said earlier, the top reason was access to financial support (31% of respondents).

The second most common reason for retirement was sickness, injury or disability (13%).

The third most common was being retrenched, dismissed, or unable to find work (5%).

Next on the list is retiring to care for an ill, disabled or elderly person (3%).

And finally, the fifth most common reason was that their employment ended because their job was temporary, seasonal or holiday work.

The important thing to note here is that many people retire for reasons that are not of their choosing. This is leading to many retiring earlier in life than planned.

8-year gap between actual and intended age of retirement

The ABS data shows a significant disparity between when people actually retire and when they intend to retire.

The average age at which most people intend to retire is 65.4 years. But among those already retired, the age at which they retired was substantially lower at 56.9 years.

A new survey from insurer TAL shows six in 10 Australians retired earlier than expected. This is a reminder to all of us who are still working that we need to start our financial planning sooner rather than later.

Ashton Jones, TAL General Manager of Growth, Retirement & Wealth Partnerships said:

When retirement arrives sooner than expected, it can derail a person’s ability to prepare as much as they’d like to.

Some common themes that emerged for retirees were that many wish they’d put more into superannuation when they had the chance, or that they’d started salary sacrificing earlier.

The post Top 5 reasons for retirement in Australia appeared first on The Motley Fool Australia.

More reading

• Here’s the average wealth of Aussies who manage their own superannuation
• 4 top ASX dividend shares to buy next week
• Top ASX green energy stocks in June 2024
• These ASX shares can rise 25% to 100%+
• Buy one, sell the other: Goldman’s take on these 2 ASX bank shares

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.

About 1.15 million Aussies are managing their own superannuation via a self-managed superannuation fund (SMSF), according to new figures from the Australian Taxation Office.

Nine in 10 SMSFs have just one or two members. Overall, there are 616,400 SMSFs in Australia today.

In the first quarter of 2024, 7,371 new SMSFs were established and 272 were wound up. This left a net increase of 7,099 SMSFs over the quarter, the third-fastest rate of increase over the past five years.

Aussies looking after their own superannuation through an SMSF collectively manage $933 billion in assets. If we strip out the amount they’ve borrowed, we get a net $896 billion under management.

Aussies can borrow through their SMSFs to buy assets such as residential real estate.

Average wealth of self-managed superannuation owners

According to the latest full-year financial data published by the ATO (FY22), the average wealth per member is $780,254, and the median is $467,187.

These figures combine contributions over the years and the increase in the value of their assets.

If we look at income data among SMSF members, 22.5% have an annual income between zero and $20,000, 15.3% earn between $20,000 and $40,000, and 13.4% earn between $100,000 and $150,000.

The first two income bands likely reflect retired Australians who are no longer earning high taxable incomes, such as those mainly drawing money tax-free from their superannuation to cover living costs.

Demographic data shows the largest cohort of SMSF members are 75 to 84 years old (15.1% of members) followed by those aged 60 to 64 years (12.7%) and 65 to 69 years (12.1%).

The preservation age for superannuation is between 55 and 60 years, depending on when you were born. The age pension is taxable and the age of eligibility is 67 years.

The third income band likely reflects current workers on high incomes.

Which assets do SMSF investors like most?

The bulk of that $933 billion personally managed by Aussies with SMSFs is invested in ASX shares.

In total, $271 billion is in ASX shares and $16 billion is in international shares.

Cash and term deposits, at $145 billion, are another big category.

There is also $122.5 billion in unlisted trusts and $55.5 billion in other managed investments.

In the property space, SMSF members have $92 billion in Australian commercial property and $50 billion in local residential property.

Debt securities such as bonds comprise $9.5 billion of assets under management by Aussies with SMSFs.

Cryptocurrency was introduced as an investment option for SMSFs in 2019, with $1 billion now invested.

5 most popular ASX shares among SMSFs

According to Super Guide, the most popular ASX stocks among SMSFs are as follows:

• BHP Group Ltd (ASX: BHP) shares (48% of SMSFs holding ASX shares are invested in BHP)
• Woodside Energy Group Ltd (ASX: WDS) shares (45.6%)
• Westpac Banking Corp (ASX: WBC) shares (40.9%)
• Commonwealth Bank of Australia (ASX: CBA) shares (39.1%)
• National Australia Bank Ltd (ASX: NAB) shares (38.9%)

The post Here’s the average wealth of Aussies who manage their own superannuation appeared first on The Motley Fool Australia.

More reading

• 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
• 2 high-yield ASX shares I’d buy now for dividends
• Copper checkers: What’s next for BHP shares after Anglo talks?
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Bronwyn Allen has positions in BHP Group, Commonwealth Bank Of Australia, and Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of options for income investors to choose from on the Australian share market.

But which ASX dividend shares could be buys when the market reopens?

Let’s take a look at four that analysts rate as buys. Here’s what you need to know about them:

Challenger Ltd (ASX: CGF)

Goldman Sachs thinks that this annuities company could be an ASX dividend share to buy.

It likes Challenger because “it has exposure to the growing superannuation market across Life and Funds Management.” In addition, it highlights that “higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins.”

The broker currently has a buy rating and $7.50 price target on its shares.

As for dividends, it is forecasting fully franked dividends of 26 cents per share in FY 2024, 27 cents per share in FY 2025, and then 28 cents per share in FY 2026. Based on the current Challenger share price of $6.48, this will mean dividend yields of 4%, 4.15%, and 4.3%, respectively.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend share that has been given the thumbs up is Dexus Convenience Retail REIT. It owns a portfolio of service station and convenience retail assets across Australia.

The team at Morgans is positive on the company and has an add rating and $3.23 price target on its shares.

In respect to income, the broker is forecasting dividends per share of 21 cents in both FY 2024 and FY 2025. Based on its current share price of $2.67, this implies yields of 7.85%.

Endeavour Group Ltd (ASX: EDV)

Goldman Sachs also thinks that Dan Murphy’s and BWS owner Endeavour Group could be a great ASX dividend share to buy.

It likes the company due to its market leadership position and the defensive nature of the alcohol retail market.

The broker expects this to support fully franked dividends of approximately 22 cents per share in both FY 2024 and FY 2025. Based on the current Endeavour share price of $4.96, this will mean dividend yields of 4.4% for both years.

The broker has a buy rating and $6.20 price target on its shares.

Super Retail Group Ltd (ASX: SUL)

A final ASX dividend share that could be a buy according to Goldman Sachs’ analysts is Super Retail. It is the owner of popular retail brands BCF, Macpac, Rebel, and Super Cheap Auto.

Goldman Sachs has a buy rating and $17.80 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends per share of 67 cents in FY 2024 and then 73 cents in FY 2025. Based on the latest Super Retail share price of $13.09, this will mean yields of 5.1% and 5.6%, respectively.

The post 4 top ASX dividend shares to buy next week appeared first on The Motley Fool Australia.

More reading

• 4 ASX 200 shares being scooped up by insiders
• Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings
• 2 ASX dividend stocks to buy in June
• Analysts say these 4 ASX dividend shares are buys
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. 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.

Green energy isn’t just good for the environment – it could also be big business.

As part of this year’s Federal Budget, Australian Treasurer Jim Chalmers announced that the government is planning to invest a whopping $22.7 billion in decarbonisation through its ‘Future Made in Australia’ package.

Given Australia’s abundant sunlight and windswept coastlines, the government believes we could quickly grow into a ‘renewable energy superpower’. Now, it wants to light a fuse under our fledgling green energy sector.

But Australia isn’t alone – governments all over the world are investing in renewables. According to the World Economic Forum, America has invested an eye-popping US$559 billion in clean energy since 2020, and Germany’s not too far behind at US$339 billion.

This could make green energy a real growth sector to invest in over the next decade.

Although – a little surprisingly – when it comes to genuine green energy ASX stocks, there aren’t too many Australian companies available to choose from.

Sure, Origin Energy Ltd (ASX: ORG) can talk up its solar and wind energy credentials, but it still owns Eraring, Australia’s largest coal-fired power plant. And AGL Energy Limited (ASX: AGL) may offer some renewables, but it’s also Australia’s biggest carbon emitter.

This might leave investors seeking green energy exposure feeling a little downtrodden. But don’t despair – the Kiwis have got us covered. There are not one, not two, but three New Zealand-based 100% green energy companies currently trading on the ASX.

Mercury NZ Ltd (ASX: MCY)

First up is Mercury NZ. It is a diversified utilities company that supplies electricity, as well as broadband and mobile services to its customers. All its electricity comes from renewable sources, including hydro, geothermal, and wind.

In its 1H24 results, covering the six months ended 31 December 2023, total revenues jumped by 23% versus 1H23 to NZ$1.6 billion. However, higher operating expenses, mainly driven by depreciation on its new wind farms at Turitea and Kaiwera Downs and higher borrowing costs, drove net profit after tax (NPAT) 27% lower (to NZ$174 million).

Despite the drop in net income, management remains bullish about the company’s growth prospects and is investing heavily in new energy assets. In September 2023, the company committed NZ$220 million to expand its geothermal station at Ngā Tamariki and is also planning to significantly increase capacity at its Kaiwera Downs wind farm.

Meridian Energy Ltd (ASX: MEZ)

Meridian Energy is New Zealand’s largest energy producer, and it generates all of its energy from renewable sources.

The company owns and operates six power stations in the Waitaki Hydro Scheme, with a further two owned and operated by Genesis Energy Ltd (ASX: GNE) – yet another New Zealand energy company ASX investors can buy shares in (although it also owns the Huntley Power Station, NZ’s largest coal-fired power plant). Together, the eight power stations in the Hydro Scheme supply 16% of New Zealand’s electricity.

Meridian also owns and operates the underground Manapouri Power Station, the largest hydropower station in New Zealand. In addition to its hydro assets, Meridian also has a significant number of wind farms – plus, it offers solar energy plans where it buys back excess energy from households and businesses with solar panels installed.

Infratil Ltd (ASX: IFT)

Completing our New Zealand-based trifecta is Infratil. It’s an interesting addition to this list as it’s actually an investment company that owns a number of green energy assets, along with investments in healthcare, digital infrastructure (like data centres and telecommunications networks), and even Wellington International Airport.

Infratil takes a long-term approach to its investment choices, which makes it a good stock to look at for growth investors. It taps into many emerging growth investing themes, from artificial intelligence to an ageing population to (of course) green energy and decarbonisation.

Infratil has a globally diversified portfolio of renewable energy investments, including a 51% stake in hydroelectricity generator Manawa Energy Ltd (NZE: MNW), a 95% stake in Singapore-based wind and solar energy company Gurīn Energy, and a 40% stake in Swiss-based company Galileo, which has operations all across Europe.

The post Top ASX green energy stocks in June 2024 appeared first on The Motley Fool Australia.

More reading

• Why AVITA Medical, Catapult, Meridian Energy, and Telix shares are storming higher today
• Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today
• How I plan to invest my tax cuts
• Here are the 2 ASX shares I might buy next

Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

Are you looking for big returns for your investment portfolio?

If you are, then take a look at the three ASX shares listed below that have been tipped to rise materially by analysts.

Here’s what you need to know about them:

AVITA Medical Inc (ASX: AVH)

Morgans sees huge upside for this ASX share over the next 12 months. In fact, the broker believes the regenerative medicine company could more than double in value from current levels.

It was very pleased with news that the US FDA has approved its Recell Go product. It is an autologous cell harvesting device, harnessing the regenerative properties of a patient’s own skin to treat burn wounds and full-thickness skin defects. It commented:

AVH has received FDA approval for its automated product, RECELL Go, for use in burns and full thickness skin defects. This approval marks a significant milestone for the company, with management expecting this device to increase adoption of the technology amongst clinicians. We have made no changes to our forecasts and recommendation.

Morgans has an add rating and $6.40 price target on its shares. This implies potential upside of 115% for investors.

Champion Iron Ltd (ASX: CIA)

Analysts at Goldman Sachs think that this miner would be a great option for investors that are looking for exposure to iron ore. The broker feels its shares are undervalued at the current level and could offer major upside potential and good dividend yields. It said:

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.

Goldman has a buy rating and $8.80 price target on its shares. This implies potential upside of 25% for investors. In addition, it is forecasting dividend yields of 4% in FY 2025 and 6% in FY 2026.

Eagers Automotive Ltd (ASX: APE)

Another ASX share that could offer big returns is Eagers Automative. It operates one of Australia’s largest auto dealership networks.

Bell Potter thinks that the company’s shares have been oversold following a disappointing trading update last month. It said:

We believe this is a relatively isolated event that doesn’t materially change the outlook so our investment thesis remains intact. We believe the stock looks value on a 2025 PE ratio of c.10x and a forecast yield of c.6% in 2024 and c.7% in 2025.

Its analysts have a buy rating and $13.35 price target on its shares. This implies potential upside of 32% for investors. In addition, dividend yields of 6%+ are forecast through to FY 2026.

The post These ASX shares can rise 25% to 100%+ 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 Avita Medical and Goldman Sachs Group. The Motley Fool Australia has recommended Avita Medical and Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX bank shares have had a remarkable run since November, and now it’s time to be cautious on the sector, warns top broker Goldman Sachs.

In a note to clients, the broker said bank fundamentals were generally weak and stocks were trading at “close to record expensive” levels.

Goldman said:

… while the deterioration in earnings appears to now be finished, we see very limited upside risk, and therefore, with valuations skewed asymmetrically to the downside, we now think a more negative view on the banks is appropriate …

The broker added:

Australian bank valuations are at extremes, with absolute 12-month forward PERs at the 99th percentile, our DCF valuations are, on average, 175% below current share prices, and the spread between bank fully-franked yields and the 10-year bond yield is currently at its lowest level in nearly 15 years.

Amid stretched valuations, Goldman has a buy rating on only one bank among the big four institutions.

Which bank is a buy?

Goldman has a buy rating on ANZ Group Holdings Ltd (ASX: ANZ) with a 12-month share price target of $28.15.

ANZ shares closed on Friday at $28.25, up 1.15% for the day and up 8.7% in the year to date.

Goldman analysts Andrew Lyons and John Li said:

We are Buy-rated on ANZ given i) we are seeing evidence of ANZ’s ability to derive productivity benefits (A$201 mn in 1H24) and management noted there remains a large pipeline available which can be used to offset cost inflation.

Furthermore, ii) the improving profitability of ANZ’s Institutional business remains a key driver of our positive investment thesis.

We continue to see upside for Group returns due to accretive mix shifts in the Institutional business towards higher ROE Payments and Cash Management business.

Finally, the stock still trades at a discount to the sector (ex-dividend adjusted).

Why is this ASX 200 bank share a sell?

Goldman has a sell rating on ASX bank share Westpac Banking Corp (ASX: WBC) with a 12-month price target of $24.10.

Westpac shares closed yesterday at $25.98, up just 0.19% for the day and 12.56% higher year to date.

Lyons and Li said they had downgraded Westpac shares due to the following factors:

… 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. 

The post Buy one, sell the other: Goldman’s take on these 2 ASX bank shares appeared first on The Motley Fool Australia.

More reading

• Here’s when Westpac says the RBA will now cut interest rates
• ANZ shares rise as the bank boosts its capital coffers
• Buying ASX 200 bank stocks? Here’s why they could keep outperforming
• Do the dividends from Westpac shares still come fully franked?
• Do Macquarie shares pay a decent ASX dividend?

Motley Fool contributor Bronwyn Allen has positions in Anz Group. 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.