Category: Stock Market

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

In a new note to clients this week, Goldman analysts Lisa Deng and James Leigh said they currently “see better value in staples where valuation and earnings expectations are less demanding”.

Deng and Leigh said consumers were “clearly increasingly value-focused” amid anticipated delays in interest rate cuts or even another hike this year.

What’s happening in retail these days?

The latest retail figures from the Australian Bureau of Statistics (ABS) revealed the “weakest growth on record” outside the pandemic and the introduction of the GST.

Retail turnover has increased by just 0.8% over the 12 months to 31 March, despite massive population growth due to high immigration.

Turnover fell by a seasonally adjusted 0.4% in the month of March.

This followed gains of 1% in January and 0.2% in February.

ABS head of retail statistics Ben Dorber said:

Consumers pulled back on retail spending in March as cost of living pressures remained high.

Outside of the pandemic period and introduction of the GST, this is the weakest growth on record when comparing turnover to the same time in the previous year. 

Turnover was down in every sector in March, except food. The largest declines occurred in clothing, footwear and personal accessory retailing (down 4.3%) and department stores (down 1.6%).

Goldman’s take on consumer spending

Deng and Leigh said Goldman Sachs had changed its rate cut projection from August to November and “this is expected to impact discretionary spending” from here.

They noted recent ABS data showing declining discretionary spending, including a 1.9% annual drop in household goods sales, a 3.5% dip in electronic goods and a 3.7% fall in furniture sales.

They said:

Recent 3Q24 results, our deep-dive channel checks and the latest ABS retail data suggest that Australian consumers are increasingly price conscious and selective on spending.

Conversely for Staples … we continue to believe that market concern on ongoing regulatory inquiries (most important ACCC Inquiry interim report by August 31) is overdone.

Our latest conversations with key FMCG companies also note that volumes remain positive and while pricing is unlikely to see significant hikes from here, continued portfolio innovation to drive mix remains a growth lever.

The analysts mentioned ABS data showing a 3.8% lift in supermarket sales in the March quarter.

6 ASX retail shares to buy

In light of all this and following third-quarter updates from ASX companies, the analysts have updated their recommendations for ASX retail shares.

In order of preference, here are the ASX retail shares that Goldman says are a buy today.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price is $13.33, down 1.15% currently and 16.1% lower in the year to date.

Goldman has a 12-month share price target of $17.80 on the owner of Rebel and Supercheap Auto.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price is $31.80, down 0.16% now and 15.2% lower in the year to date.

Goldman has a 12-month share price target of $39.40 on the ASX retail supermarket share.

Endeavour Group Ltd (ASX: EDV)

The Endeavour share price is $5.14, down 1.34% currently and down 1.9% in the year to date.

Goldman has a 12-month share price target of $6.30 on the owner of BWS and Dan Murphys.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price is $11.57, up 0.35% now and 8.2% higher in the year to date.

Goldman has a 12-month share price target of $13 on the ASX retail wine share.

Webjet Ltd (ASX: WEB)

The Webjet share price is $8.47, down 0.76% now but up 14.4% in the year to date.

Goldman has a 12-month share price target of $9.20 on the ASX retail travel share.

Breville Group Ltd (ASX: BRG)

The Breville share price is $25.48, down 2.75% currently and down 5.5% in the year to date.

Goldman has a 12-month share price target of $28 on the ASX retail share.

The post Goldman says these 6 ASX retail shares are a buying opportunity appeared first on The Motley Fool Australia.

More reading

• Looking to retire? Buy these ASX dividend shares for passive income
• 2 cheap ASX All Ords shares to buy for growth and dividends
• Which ASX shares could be set to benefit from the federal budget?
• Why this could be the best ASX 200 consumer staples stock to buy in May
• These ASX 200 blue chip shares could rise 10% to 30%

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 Super Retail 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.

S&P/ASX 200 Index (ASX: XJO) mining shares are racing ahead of the benchmark today.

In early afternoon trade on Friday, the ASX 200 is down 0.66%.

Here’s how the big three ASX 200 mining shares are tracking at this same time:

• Fortescue Metals Group Ltd (ASX: FMG) shares are up 1.8% at $27.10
• BHP Group Ltd (ASX: BHP) shares are up 0.99% at $44.98
• Rio Tinto Ltd (ASX: RIO) shares are up 0.93% at $131.60

Here’s what’s happening.

ASX 200 mining shares lift on China stimulus plans

ASX 200 mining shares BHP, Rio Tinto and Fortescue are all catching some heady tailwinds today amid a 2.6% increase in the iron ore price. The critical steel-making metal is trading for just under US$117 per tonne.

Now, that’s well down from the US$144 that same tonne was fetching on 3 January. But iron ore has now surged more than 16% since 4 April, when it was trading for just under US$100 per tonne.

This once again defies numerous bearish analyst forecasts, which predicted iron ore would be trading at or below US$100 per tonne by now.

The strength of the industrial metal also lifted BHP and Rio Tinto in US markets, where the ASX 200 mining shares are also listed. BHP shares closed up 1.3% on the New York Stock Exchange (NYSE) overnight, while Rio Tinto shares gained 2.3%.

Investor enthusiasm for the big miners looks to be fuelled by China.

New economic data shows that while parts of China’s economy, like its manufacturing sector, are rebounding, other sectors continue to struggle. Particularly the nation’s sluggish property market.

In hopes of getting the economy back onto its growth track, the Chinese government said it would commence selling 1 trillion yuan (AU$210 billion) in its ultra-long special sovereign bonds today.

Much of this cash is expected to flow into the steel-hungry infrastructure sector. Analysts are also forecasting the potential of more monetary easing from the People’s Bank of China to make it, well, easier for banks to buy the bonds.

Commenting on the Chinese stimulus that looks to be lifting the ASX 200 mining shares today, ANZ Group Holdings Ltd (ASX: ANZ) stated (quoted by The Australian Financial Review):

Iron ore rose amid renewed optimism over Beijing’s efforts to tackle property crisis. This follows reports that China will start selling 1 trillion yuan of special bonds this week centred on boosting infrastructure spending.

The post ASX 200 mining shares charging higher amid China’s $210 billion cash injection appeared first on The Motley Fool Australia.

More reading

• What this unprecedented short squeeze signals for ASX copper stocks
• Buy Rio Tinto and these ASX 200 dividend shares
• What’s the outlook for ASX iron ore shares after the federal budget?
• How Fortescue shares could gain from the Federal budget
• How much passive income would I make from 300 BHP shares?

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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has run of steam and is giving back some of yesterday’s stellar gains. At the time of writing, the benchmark index is down 0.65% to 7,831.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

AIC Mines Ltd (ASX: A1M)

The AIC Mines share price is up 4.5% to 56 cents. This follows news that the mining lease for the Jericho Copper Mine has been approved for grant by the Minister for Resources and Critical Minerals Queensland. This allows for surface works at Jericho to commence within a maximum 10ha area and mine development activity to take place with a maximum of 20 people employed on site. Development of the Jericho mine and the expansion of the Eloise processing plant will lift production to over 20,000tpa copper and 7,500ozpa gold.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The Bendigo and Adelaide Bank share price is up over 7% to $10.67. This follows the release of a trading update from the regional bank. Management advised that its unaudited cash earnings (after tax) year-to-date is approximately $464 million. This is down 2.3% on the prior corresponding period. CEO, Marnie Baker, said: “The margin considerations we outlined in February have helped support a year-to-date margin of 1.87% post revenue share. We look forward to showcasing our growth engines at our Investor Day on 23 May 2024.”

Patriot Battery Metals Inc. (ASX: PMT)

The Patriot Battery Metals share price is up a further 11% to 97.5 cents. Investors have been buying this lithium developer’s shares since the release of a new batch of core assay results on Thursday. Those results were for drill holes completed this year at the CV5 spodumene pegmatite at its Corvette Lithium Project in Canada. The company’s vice president of exploration, Darren L. Smith, said: “Another round of CV5 core assays from our infill program and it continues to deliver to expectations. Coupled with the new high grade discovery at CV13, the 2024 winter program’s results continue to demonstrate the quality and scale on show at Corvette.”

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price is up almost 14% to $5.41. This morning, this lithium developer announced the formal launch of the second and final phase of its Project-level debt and equity funding package. Phase one of the Finance Process is now complete, with the company receiving significant interest from strategic and financial investors, commercial banks, the European Investment Bank (EIB), and major government-backed export credit agencies.

The post Why AIC Mines, Bendigo and Adelaide Bank, Patriot Battery Metals, and Vulcan Energy are racing higher today appeared first on The Motley Fool Australia.

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• Guess which ASX lithium share just leapt 13% on major financing news!
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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX copper stocks have been among the best performers in the market in 2024.

And while most copper miners are sliding today, alongside the broader market, the future continues to look bright as the red metal surged another 2.0% overnight to US$10,424 per tonne.

That’s right near all-time highs. And it sees the red metal up 28% from this time last year, when that same tonne was trading for US$8,122.

As for that strong performance, shares in S&P/ASX 200 Index (ASX: XJO) copper stock Sandfire Resources Ltd (ASX: SFR) are up 57% over the past six months.

And the Aeris Resources Ltd (ASX: AIS) share price has surged 100% over the half year, compared to a 12% gain posted by the All Ordinaries Index (ASX: XAO).

Then there’s dual-listed, Canadian-based Capstone Copper Corp (ASX: CSC).

Capstone Copper only began trading on the ASX on 8 April. Since then shares have leapt 20%, compared to a 1% gain posted by the All Ords over this same period.

What’s boosting copper prices?

ASX copper stocks have obviously been benefiting from fast-rising copper prices.

The red metal has been supported by strong global demand growth, even though supplies have been disrupted at several major mines worldwide.

Expected interest rate cuts from major central banks, including the US Federal Reserve, could further fuel medium-term demand.

Longer-term tailwinds for ASX copper stocks are likely to come from the globe’s ongoing transition to electrification. The highly conductive red metal is a critical component in EVs, the new generation of AI-enabled data centres, and much more.

And despite the copper price already having surged 28% over 12 months, Goldman Sachs believes the metal is due to gain another 15%. The broker forecasts an end-of-year price of US$12,000 per tonne.

So, what’s all this about a big short squeeze?

I’m glad you asked!

ASX copper stocks and the big short squeeze

If you follow futures markets, you may have noticed the unprecedented short squeeze that has sent copper prices surging on the Comex over the past few days.

If you’re unfamiliar with Comex, it stands for the Commodity Exchange Inc.

The United States-based Comex is the primary futures and options market for trading base and precious metals. Ordinarily, the spread on copper futures on Commex and the price for copper on the London Metal Exchange (LME) vary by only a few dollars.

But as Bloomberg reports, the premium for New York copper futures has rocketed to US$1,200 per tonne, which has never been seen before.

This bodes well for the demand outlook for ASX copper stocks.

The short squeeze reportedly comes in part as traders pile in amid forecasts that copper supply growth will likely lag demand growth for years to come.

According to Matthew Heap, a portfolio manager at Orion Resource Partners:

The broader story is that there are new investment funds that are boosting their exposure to copper for a multitude of reasons, and while that’s a global trend, a huge amount of that investment has been heading to Comex.

While ASX copper stocks may not be tapped to fill the immediate supply needs, the dynamics at play here tell me they’re well-positioned for the year and potentially years ahead.

Commenting on the unprecedented Comex spread, Jia Zheng, head of trading at Shanghai Dongwu Jiuying Investment Management, said (quoted by Bloomberg), “The short squeeze is set to continue as traders might not be able to ship enough metal from either Chinese bonded warehouses or from Europe ahead of the delivery date.”

This certainly goes a long way toward explaining why BHP Group Ltd (ASX: BHP) is so keen to acquire copper-focused Anglo American (LSE: AAL). If successful, this would see BHP become the largest ASX copper stock and, indeed, the biggest copper producer in the world.

The post What this unprecedented short squeeze signals for ASX copper stocks appeared first on The Motley Fool Australia.

More reading

• ASX 200 mining shares charging higher amid China’s $210 billion cash injection
• What’s the outlook for ASX iron ore shares after the federal budget?
• How much passive income would I make from 300 BHP shares?
• Why BHP, Boss Energy, Domino’s, and Renascor shares are racing higher
• What the federal budget means for interest rates and ASX shares

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.

ASX 200 healthcare shares are in the red with the rest of the market on Friday.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is down 1.53% while the S&P/ASX 200 Index (ASX: XJO) is down 0.53%. This follows a subdued session on Wall Street overnight after yesterday’s exuberance.

Here, we canvas expert opinions on three of the largest and most popular ASX 200 healthcare stocks on the market today.

Expert verdicts on 3 top ASX 200 healthcare shares

CSL Ltd  (ASX: CSL)

CSL is the biggest ASX 200 healthcare share by far, with a market capitalisation of $138.67 billion.

The CSL share price is $281.38, down 1.94% at the time of writing and down 7.5% over the past 12 months.

Jed Richards of Shaw and Partners has a buy rating on CSL shares.

He told The Bull this week:

This well managed blood products company offers compelling long-term tailwinds.

CSL is steadily growing its dividend stream. The company usually under-promises and over-delivers when it comes to profit. The stock has underperformed on the back of a slower recovery in margins.

Also behind a weaker share price was a phase 3 study which found its CSL112 drug was unable meet its primary efficacy endpoint of reducing the risk of major adverse cardiovascular events in patients at 90 days following a first heart attack.

The recent share price presents an attractive entry level for investors.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is the fifth largest ASX 200 healthcare stock with a market cap of $12.99 billion.

The Sonic Healthcare share price is $26.99, down 0.19% now and down 24.4% over the past 12 months.

Toby Grimm of Baker Young has a hold rating on Sonic Healthcare shares.

Grimm says:

Australia’s largest pathology testing firm remains out of favour as it loses prior windfall COVID-19 revenues amid an elevated operating cost environment.

However, we see fiscal year 2024 as the low point for earnings. Moving forward, we expect growth across its global core business as a prime reason to consider holding the stock.

Resmed CDI (ASX: RMD)

Resmed is the third biggest ASX 200 healthcare share with a market cap of $21.12 billion.

The Resmed share price is $32.99, down 0.33% now and down 3.74% over the past 12 months.

Grimm has a sell rating on Resmed shares.

He explains:

The sleep apnoea device maker delivered impressive third quarter results in fiscal year 2024. RMD’s share price has surged relative to the market and its peers.

While long term growth is likely, the impact from new weight loss drugs remains uncertain, so we suggest investors consider reducing exposure and cashing in some gains.

The post Buy, hold or sell these 3 ASX 200 healthcare shares: Experts appeared first on The Motley Fool Australia.

More reading

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

The All Ordinaries Index (ASX: XAO) is down 0.34% in Friday morning trade, but that’s not holding back this surging ASX lithium share.

Shares in the company – which is focused on delivering the world’s first integrated renewable energy and zero carbon lithium project – closed yesterday trading for $4.76. In earlier trade, shares were changing hands for $5.38 apiece, up 13.0%.

At the time of writing, shares have retraced a touch, trading for $5.28, putting the ASX lithium share up 10.9% for the day.

Any guesses?

If you said Vulcan Energy Resources Ltd (ASX: VUL), give yourself a virtual gold star.

Here’s what’s got investors excited today.

ASX lithium share lifts on financing progress

The Vulcan Energy share price is surging today following an update on the company’s financing process.

Phase one of the two-phase financing process is now complete. Vulcan said it had received significant interest from strategic and financial investors, commercial banks, the European Investment Bank (EIB) and “major government-backed export credit agencies”.

The ASX lithium share said it had formally launched the second and final phase of its project-level debt and equity funding package for its integrated renewable energy and Zero Carbon Lithium Project, located in Germany.

With the support of global bank BNP Paribas, Vulcan has been running a two-phase debt and equity financing process to secure a 65% to 35% mix of debt and equity.

The formal debt launch package was issued today. Vulcan said it was entering formal discussions with four international banks – ABN-AMRO, ING, NATIXIS and UNICREDIT – and four export credit agencies that had expressed in-principle and non-binding interest.

The ASX lithium share said it was receiving continued support from the EIB. And it’s applied for additional public funding through several grant schemes.

The project-level financing program remained on schedule for completion by the end of 2024.

Vulcan reported that it is also launching the second phase of its project-level equity financing process.

What did management say?

Commenting on the financing progress that’s sending the ASX lithium share soaring today, Vulcan CEO Cris Moreno said this marked “a key milestone on our path to becoming Europe’s first fully integrated carbon-neutral lithium producer”.

Moreno added:

The high-quality nature of respondents in the first phase of our finance process is a strong signal of confidence in both our team’s ability to deliver a world class project, and the credentials of Vulcan’s integrated renewable energy and Zero Carbon Lithium Project, to enable a green energy and mobility transition for Europe.

This is an exciting period for the company, and we look forward to entering the formal discussion stage of our finance process with such exceptional and well aligned financing partners.

Vulcan Energy share price snapshot

While most ASX lithium shares have struggled this year, Vulcan Energy’s share price has now soared a whopping 88% in 2024.

The post Guess which ASX lithium share just leapt 13% on major financing news! appeared first on The Motley Fool Australia.

More reading

• ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens
• Is now the time to buy this high-yielding ASX dividend stock?
• Looking to retire? Buy these ASX dividend shares for passive income
• Here are the 2 ASX shares I might buy next
• Buy Rio Tinto and these ASX 200 dividend shares

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 S&P/ASX 200 Index (ASX: XJO) bank stock Bendigo and Adelaide Bank Ltd (ASX: BEN) are leaping higher today.

Bendigo Bank shares closed yesterday trading for $9.92. In morning trade on Friday, shares are swapping hands for $10.38 apiece, up 4.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Here’s why Bendigo Bank stock is smashing the benchmark today.

ASX 200 bank stock lifts off on increased margins

The Bendigo Bank share price is soaring after the company released a trading update for the 10 months through 30 April.

The ASX 200 bank stock reported unaudited cash earnings of roughly $464 million for the 10 months. That’s down 2.3% on the prior corresponding period.

Likely spurring investor interest, the bank’s net interest margin (NIM) – which measures the difference between its lending rates and borrowing rates – increased since it reported its half year results.

NIM post revenue share arrangements came in at 1.87%, up from 1.83% reported in 1H FY 2024. The bank added that its April exit NIM was higher than the year to date average.

Also likely spurring investor interest is the low credit expense levels Bendigo Bank reported across all of its portfolios.

What did management say?

Commenting on the 10-month results sending the ASX 200 stock surging today, CEO Marnie Baker said:

At our half year results in February we reiterated our commitment to managing the business for long term value. We have continued our focus on disciplined growth and prudent management of our costs.

The margin considerations we outlined in February have helped support a year-to-date margin of 1.87% post revenue share. We look forward to showcasing our growth engines at our Investor Day on 23 May 2024.

How has the ASX 200 bank stock been tracking?

With this morning’s intraday gains factored in, the Bendigo Bank share price is up an impressive 21% since this time last year. Most of those gains have been delivered over the past six months.

Atop the strong share price gains, the ASX 200 bank stock also pays some juicy dividends.

Over the past year, Bendigo Bank paid a final dividend of 32 cents per share on 29 September and an interim dividend of 30 cents per share on 26 March. At the current share price that equates to a fully franked trailing yield of 6.0%.

And if we add those dividends back into the share price, the accumulated value of the ASX 200 bank stock is up more than 28% in 12 months.

The post ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens appeared first on The Motley Fool Australia.

More reading

• Is now the time to buy this high-yielding ASX dividend stock?
• Looking to retire? Buy these ASX dividend shares for passive income
• Here are the 2 ASX shares I might buy next
• Buy Rio Tinto and these ASX 200 dividend shares
• 2 of the best ASX 200 blue chip shares to buy in May

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

The ASX dividend stock Step One Clothing Ltd (ASX: STP) has drifted lower over the last several weeks, as the chart below shows. I’m going to examine whether it’s the right time to invest in this business.

Step One describes itself as a leading direct-to-consumer online retailer of innerwear. It says its underwear is “high quality, organically grown and certified, sustainable, and ethically manufactured”.

The Step One share price’s decline of more than 20% started around the time that Step One founder and CEO Greg Taylor sold 313,500 shares to bring James Spithill (a winner of two Americas Cups) onto the share register.

Is this a good time to invest in the ASX dividend stock?

I love investing in growing ASX dividend shares that are priced cheaper, just like we’re seeing with Step One.

The FY24 first-half result showed a number of good financial metrics. Revenue grew by 25.5% to $45.1 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 35.6% to $10.1 million.

The gross profit margin grew from 80.7% to 81.2%, and the average order value (AOV) increased by 4.7% to $94.47.

Step One’s balance sheet is in a good state, with a closing cash balance of $43.9 million and no debt.

One of the most compelling things about the business’s future is that it’s growing rapidly in the UK and the US, which have much bigger populations than Australia (where it generates most of its revenue). HY24 UK revenue increased 38% to $14.6 million, and US revenue jumped 256% to $4.1 million.

If Step One can keep growing in the UK and US, then the business looks like it has a very exciting future.

The company is working on a number of things in FY24, including growing the women’s line, expanding its partnerships with retailers and other organisations, taking the women’s lines to the US, investing in its capabilities and products, and continuing to improve the customer experience.

ASX dividend stock valuation and yield

The Step One share price is still up more than 300% over the past year, so it’s not exactly trading at a 52-week low.

However, the company is at a reasonable valuation in my opinion, considering how much global potential it has. It’s valued at 21x FY25’s estimated earnings with a forecast FY25 grossed-up dividend yield of 6.7%.

This seems like the type of business that can deliver significant economies of scale benefits. I’m expecting profit margins to grow over the longer term. I also think Step One can easily expand to other countries, such as Canada, giving it a longer growth runway.

I think the ASX dividend stock is a good long-term buy at this level.

The post Is now the time to buy this high-yielding ASX dividend stock? appeared first on The Motley Fool Australia.

More reading

• How ASX growth shares can become top dividend stocks

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

If you’re building a retirement portfolio, then owning some ASX dividend shares that provide a decent source of passive income is always a good idea.

But which ones could be quality options this month? Let’s take a look at three for income investors to consider now:

APA Group (ASX: APA)

When looking for ASX passive income options, it’s always good to find stable businesses with the ability to grow their earnings and dividends.

Well, energy infrastructure company certainly ticks these boxes. Its strong business model has allowed the company to increase its dividend each year for almost 20 years.

The good news is that Macquarie feels confident this trend will continue. It is forecasting dividend increases to 56 cents per share in FY 2024 and 57.5 cents per share in FY 2025. Based on the current APA Group share price of $8.82, this equates to 6.3% and 6.5% dividend yields, respectively.

Macquarie has an outperform rating and $9.40 price target on its shares.

Aurizon Holdings Ltd (ASX: AZJ)

Another ASX passive income stock for investors to consider buying is Aurizon.

It plays a key role in Australia’s supply chain. It transports more than 250 million tonnes of Australian commodities, connecting miners, primary producers and industry with international and domestic markets.

Ord Minnett thinks it would be a great option for income investors. Particularly given that a sizeable dividend increase could be on the cards next year.

It is forecasting partially franked dividends of 17.8 cents per share in FY 2024 and then 24.3 cents per share in FY 2025. Based on the latest Aurizon share price of $3.74, this will mean yields of 4.75% and 6.5%, respectively.

Ord Minnett currently has an accumulate rating and $4.70 price target on the company’s shares.

Endeavour Group Ltd (ASX: EDV)

As the leading company in alcohol retail, Dan Murphy’s owner Endeavour Group could be a great option for passive income from the ASX.

Goldman Sachs certainly believes this is the case. It likes its market leadership position and the defensive nature of the alcohol retail market.

As for income, it is forecasting fully franked dividends of approximately 22 cents per share in both FY 2024 and FY 2025. Based on the current Endeavour share price of $5.21, this will mean dividend yields of 4.2% for both years.

The broker also sees plenty of room for its shares to charge higher from where they trade today, It currently has a buy rating and $6.20 price target on them.

The post Looking to retire? Buy these ASX dividend shares for passive income appeared first on The Motley Fool Australia.

More reading

• 2 high-yield ASX dividend shares to buy as they bounce
• Buy Telstra and these ASX dividend stocks for income
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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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group and Macquarie Group. The Motley Fool Australia has recommended Aurizon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s been a while since I initiated a new position in my ASX share portfolio. Sure, I’ve topped up a couple of my favourite existing positions in the past few months. But I haven’t found any new investments I’ve liked in a while now. At least not enough to prompt enough conviction to part with my own money.

However, that might change very soon. Two investments on the ASX have caught my eye in recent weeks, and there’s a good chance that my next ASX buy will be one of them.

The 2 ASX shares that I might buy next

Infratil Ltd (ASX: IFT)

Infratil is a rather unusual ASX share. It is a New Zealand-based conglomerate similar to Washington H. Soul Pattinson and Co Ltd (ASX: SOL) in that it owns a vast portfolio of underlying assets that it manages on behalf of its shareholders. In Infratil’s case, these are mostly private investments in the renewable energy, infrastructure and healthcare spaces.

Infratil has been around for a very long time (120 years). Over this period, it has consistently brought it home for shareholders, targeting a total return rate of 11-15% per annum.

It has also delivered on this, with the company reporting that investors have enjoyed a total return (assuming dividends are reinvested) of 21.4% per annum over the 10 years to 29 February 2024.

This track record, combined with Infratil’s defensive yet diverse portfolio of investments, indicates a high level of quality to me. As such, I can see myself adding this company to my ASX share portfolio in the near future.

Regal Investment Fund (ASX: RF1)

The Regal Investment Fund is a listed investment trust (LIT) on the ASX. It’s a fairly complicated setup comprising stakes in a number of other investments provided by its owner, Regal Partners Ltd (ASX: RPL).

These investments mostly consist of ‘alternative assets’, including water entitlements, a long-short strategy, private credit and resources royalties.

This LIT is designed to deliver meaningful, risk-adjusted returns with limited correlations to the broader share market. It has notched up some impressive performance wins since listing in 2019, achieving an average of 27.2% per annum over the four years to 30 April and 19.3% per annum since inception.

I like this investment from a diversification view and appreciate its rather stunning past returns. Whilst this LIT doesn’t come cheap (charging 1.5% per annum in fees as well as a performance levy on returns above the cash rate), it’s still on my watchlist right now.

If the Regal Investment Fund can keep up its impressive performance track record, it might find itself in my ASX share portfolio.

The post Here are the 2 ASX shares I might buy next appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended 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.