Three S&P/ASX 200 Index (ASX: XJO) stocks did more than their fair share of the heavy lifting in May.

The month just past saw the ASX 200 close up 0.5% at 7,701.7 points.

But these three companies left those gains far behind.

Which companies am I talking about?

Read on.

Three ASX 200 stocks ripping higher in May

The third best performer on the Aussie benchmark index in May was Alumina Ltd (ASX: AWC), a holding company focused on alumina and bauxite production.

Shares in the ASX 200 stock closed out April trading for $1.63 and finished May at $1.91 apiece, up 16.6%.

The Alumina share price has been surging in 2024 amid fast-rising aluminium prices. Up 14% in 2024, the aluminium price gained more than 6% in May to close the month at US$2,703 per tonne.

Of course, the big news in May was the market update on the proposed takeover of Alumina Alcoa Corp (NYSE: AA), announced on 21 May.

The United States-based mining giant is looking to acquire Alumina, offering 0.02854 Alcoa shares for each Alumina share. With the Alcoa share price up 26% in May, investors were taking advantage by piling into Alumina shares.

Moving on to the second ASX 200 stock racing higher in May, which was PEXA Group Ltd (ASX: PXA).

Shares in the digital property exchange and data insights business closed April at $12.26 and finished May trading for $14.63 apiece, up 19.3%.

Much of that came on 2 May, when the ASX 200 stock closed up 11.0% after reporting it was progressing a strategic partnership with United Kingdom based lender, NatWest. Under the deal, NatWest will employ PEXA’s digital property exchange technology to deliver 48-hour remortgage transactions to its customers. The platform will also enable NatWest to speed up the handling of sale and purchase transactions.

Commenting on the deal, Joe Pepper, UK CEO of PEXA said, “As one of the UK’s major lenders, NatWest shares a common goal of driving digital innovation and transforming the customer experience to address the chronically long time it takes to transact property in the UK market.”

Investors also responded positively to PEXA’s third-quarter update on 7 May, with shares closing up 1.2% on the day.

Which brings us to the top performing ASX 200 stock in May, Telix Pharmaceuticals Ltd (ASX: TLX).

The Telix Pharmaceuticals share price ended April at $15.05 and closed out May at $18.15, up an impressive 20.6%.

There was a lot going on with the biopharmaceutical company over the month, starting on 3 May. That’s when the company announced it had completed the acquisition of QSAM Biosciences, a US-based company developing therapeutic radiopharmaceuticals for primary and metastatic bone cancer.

Shares dropped 4.2% when the company reported its first-quarter results on 17 May.

But investors were quick to pile back into the ASX 200 stock the following trading day when the company reported filing for an initial public offering (IPO) on the Nasdaq.

And Telix shares finished the month with a bang, closing up 15.3% on 31 May after management announced positive results from the company’s ProstACT SELECT clinical cancer trial.

Telix’s TLX591 drug is being developed to treat adult patients with PSMA-positive metastatic castrate-resistant prostate cancer.

The post Sell in May and go away? Not for these top 3 ASX 200 stocks! appeared first on The Motley Fool Australia.

More reading

• Up 80% in 2024, here’s why the Telix Pharmaceuticals share price is marching higher again on Monday
• These were the best performing ASX 200 shares in May 2024
• Guess which 3 ASX 200 shares are leading the charge higher this week
• Why AVITA Medical, Catapult, Meridian Energy, and Telix shares are storming higher today
• Why is the Telix Pharmaceuticals share price soaring 11% today?

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 positions in and has recommended PEXA Group and Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. 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 followed Wall Street’s lead and is charging higher. At the time of writing, the benchmark index is up 0.8% to 7,760.8 points.

Four ASX shares that are failing to follow the market higher today are listed below. Here’s why they are falling:

Lovisa Holdings Ltd (ASX: LOV)

The Lovisa share price is down 9% to $30.86. Investors have been hitting the sell button today after the fashion jewellery retailer announced the exit of its highly regarded CEO, Victor Herrero. He will leave in approximately 12 months after four years at the helm. Given how instrumental Herrero has been in guiding Lovisa’s international expansion, the market appears concerned about what might happen when he steps down from the role and hands the reins over to someone new. A replacement has been announced.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is down 4% to $28.82. This decline also relates to Victor Herrero’s exit from Lovisa. That’s because his replacement will be John Cheston, who is the CEO of the Premier Investments-owned Smiggle business. Much like Herrero, Cheston has overseen a very successful international expansion of the retailer. And with Premier Investments recently announcing the potential divestment of Smiggle into a separate listing, the loss of its CEO at this time will be a blow. Cheston will join Lovisa on 4 June 2025.

Silver Lake Resources Ltd (ASX: SLR)

The Silver Lake Resources share price is down 3.5% to $1.48. Investors have been selling Silver Lake and other gold miners on Monday following a pullback in the gold price on Friday. This has led to the S&P/ASX All Ords Gold index underperforming and dropping 0.6% today. Shareholders won’t be too disheartened, though. Silver Lake shares remain up 29% over the last six months despite falling 9% over the last couple of weeks.

WA1 Resources Ltd (ASX: WA1)

The WA1 Resources share price is down 7% to $19.73. This follows the release of further assays from broad-spaced reverse circulation and diamond drilling at the West Arunta niobium project in Western Australia. Management notes that the drilling has provided additional definition of the high-grade blanket of niobium mineralisation at the Luni deposit ahead of the initial Mineral Resource estimate. Judging by the share price reaction on Monday, it seems that some investors were expecting stronger results from the mineral exploration company’s drilling.

The post Why Lovisa, Premier Investments, Silver Lake, and WA1 Resources shares are tumbling today appeared first on The Motley Fool Australia.

More reading

• Why are Lovisa shares sinking 10% on a green day?
• What are 3 of the safest ASX consumer discretionary shares in Australia right now?
• Up 66% in a year, the Lovisa share price just hit an all-time high
• Brokers name 5 fantastic ASX growth shares to buy in June
• 3 high-quality ASX shares tipped to generate strong returns

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

The market may be pushing higher today, but the same cannot be said for Lovisa Holdings Ltd (ASX: LOV) shares.

At the time of writing, the fashion jewellery retailer’s shares are down a sizeable 10% to $30.58.

Why are Lovisa shares sinking?

Investors have been heading to the exits today after the company announced that its CEO, Victor Herrero, will be stepping down from the role next year.

According to the release, Herrero has agreed to an amended employment contract through to 31 May 2025.

After which, the highly regarded CEO will be replaced by John Cheston, who will join the company on 4 June 2025.

Why the reaction?

While CEO exits often receive poor reactions from investors, Lovisa shares are falling particularly heavily today. This is because the appointment of Victor Herrero was a real coup for the company and a key reason why many invested (myself included) in the company.

The outgoing CEO has been instrumental in Lovisa’s global expansion. And while a lot of the hard work has certainly been done since his arrival in 2021, there’s still a lot more to come. The market may be concerned that his exit now puts at risk the successful execution of this expansion.

Herrero joined Lovisa having spent 13 years with the Inditex Group, which is one of the world’s largest fashion retailers (Zara, Pull & Bear and Massimo Dutti). During his time at Inditex, he held numerous roles including Head of Asia Pacific and Managing Director Greater China and led the company’s expansion through this region rolling out 800 stores across multiple countries including China and India.

After which, Herrero spent four years as CEO of Guess, and was then the chairman and CEO of international shoe manufacturer and retailer Clarks.

The good news is that Lovisa’s chair, Brett Blundy, remains positive on the future and was pleased with the appointment of John Cheston. He said:

The Board and I are pleased to announce that Victor has entered an amended 12-month contract. The Board and I are also pleased to announce that John Cheston will join us as CEO and Managing Director on the 4th of June 2025. John is a highly successful Global retailer and will join Lovisa at a very exciting time as we continue our global growth.

Cheston is currently the CEO of Smiggle, which is owned by Premier Investments Limited (ASX: PMV). Its shares are down on the news of his departure from the role.

Given that Smiggle has also been successfully expanding internationally in recent years, Cheston appears to be a worthy CEO of Lovisa and should be able to pick up where Herrero leaves off.

The post Why are Lovisa shares sinking 10% on a green day? appeared first on The Motley Fool Australia.

More reading

• What are 3 of the safest ASX consumer discretionary shares in Australia right now?
• Up 66% in a year, the Lovisa share price just hit an all-time high
• Brokers name 5 fantastic ASX growth shares to buy in June
• 3 high-quality ASX shares tipped to generate strong returns
• These 2 ASX shares could win big time in the long term

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

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has had a terrible 2024 to date, dropping by more than 30%, as shown on the chart below. Some investors may be wondering if this is an excellent buying opportunity. I’m going to use Warren Buffett’s advice to help decide.

Warren Buffett is one of the world’s greatest investors, he turned Berkshire Hathaway into one of the US’ largest and strongest businesses. He was, and still is, brilliant at finding stocks that the market was undervaluing for their long-term potential, such as Coca Cola and American Express.

One of Buffett’s most quoted investment pearls of wisdom could be applicable in this situation:

Be fearful when others are greedy and greedy when others are fearful.

I do think Buffett would be open to considering Domino’s shares because Berkshire Hathaway is the owner of Dairy Queen, a fast food chain in the US. But, is the Domino’s share price valuation attractive? I think there are a few factors that Buffett would consider.

Long-term expansion plan

Domino’s noted in a recent investor presentation that in two of its biggest ‘opportunity markets’ of Germany and France, it currently covers just 30% of the country.

The company’s growth outlook could be heavily influenced by how many more (profitable) stores it’s able to open.

Domino’s is looking to approximately double its total store count by 2033, which is 1.9 times its current market size. Achieving this scaling-up would be a significant positive for the Domino’s share price, in my opinion.

In Australia and New Zealand, it’s aiming for a total of 1,200 stores by 2027 or 2028. That growth would represent an increase of 1.3 times compared to its current size.

In Europe, the company aims to have 2,900 stores by 2033, which would equate to doubling in size.

In Asia, Domino’s wants to reach 3,000 stores by 2033; this would see Domino’s double in size in the region.

Domino’s noted its current operating regions have a population of 418 million, which is 25% larger than the US.

The company noted store expansion is “important to the growth of franchise partners and Domino’s Pizza Enterprises, but relies on improved unit economics”. It points out that longer delivery distances reduce profitability for those orders. An additional store on the edge of the delivery zone would significantly reduce the delivery distance for those orders, increasing product quality and delivery times for the customer. It would also improve the existing store’s unit economics.

Profit improvement

Domino’s has revealed it’s working on improving sales and unit economics to lift franchise partner profitability and store paybacks. Success here could be very useful for supporting the Domino’s share price.

It’s “applying proven approaches and expertise to rebuild unit economics.” Management and franchise partners are implementing “best practice with tactics that resonate locally”.

With a focus on growing volumes in every store, it’s working on new products, growth in aggregators (like Uber), targeting certain order price points (such as 5 Euros), increasing digital spending to reach new customers, improving product quality and aiming for faster customer resolution.

The ASX share is also trying to lower food costs, reduce delivery costs through “increased efficiency”, and reinvest savings initiatives into franchise partners.

For FY24, Domino’s is targeting network savings of around $50 million through a restructuring, with one-third of that being shared with franchise partners.

Same-store sales growth

The performance of existing stores is important for Domino’s and its partners too.

Domino’s is targeting annual same-store sales (SSS) growth of between 3% to 6% over the next three to five years. It achieved this target in the first halves of FY19, FY20 and FY21, but it hasn’t achieved it since. The FY24 first-half result experienced SSS growth of 1.25%.

If the company can achieve annual SSS growth of 3% from here, I think that would be a solid result considering its store count is expected to increase over the next decade.

Would Warren Buffett buy Domino’s shares?

At Domino’s much lower current share price, I think Warren Buffett would have a look at the company. The share price has actually been down approximately 75% since September 2021, making it a lot cheaper presently.

According to the estimates on Commsec, the company is now valued at 28x FY24’s forecast earnings and 19x FY26’s estimated earnings. With significant growth planned for the next decade, combined with ongoing population growth in key markets, I think Domino’s shares could be an underrated buy.

The post Would Warren Buffett buy Domino’s shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 4 ASX 200 shares receiving broker upgrades
• Domino’s share price is set to soar 22%, say top brokers
• Top brokers name 3 ASX shares to buy today
• These ASX 300 shares could rise 35% to 65%

American Express is an advertising partner of The Ascent, a Motley Fool company. 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 Berkshire Hathaway, Domino’s Pizza Enterprises, and Uber Technologies. The Motley Fool Australia has recommended Berkshire Hathaway and Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’re on the lookout for promising  All Ordinaries Index (ASX: XAO) shares, it’s always wise to consider companies with high-quality fundamentals.

To many, that means growing sales and profits. Some look at dividend growth and yield instead. For others, it is a combination of both ingredients that makes the recipe ‘just right’.

In my opinion, investors seeking high-quality business franchises with respectable dividends might want to consider Helia Group Ltd (ASX: HLI) and Wesfarmers Ltd (ASX: WES). Both ASX All Ords shares could present compelling opportunities for capital growth and passive income going forward.

Helia Group Ltd (ASX: HLI)

Helia Group is an insurance provider specialising in lenders mortgage insurance (LMI), which protects lenders against potential defaults. By providing LMI, the ASX All Ords share enables homebuyers to purchase properties with as little as a 5% deposit.

Helia’s business model and management brought in strong financial results and respectable dividends last year.

In FY 2023, Helia reported net profit after tax (NPAT) of $275.1 million, a 37% increase. Management revised guidance for this year and now projects FY 2024 insurance revenue of $360 million to $440 million (from $427 million previously).

Despite this double-digit profit growth, the ASX All Ords share trades at a price-earnings ratio (P/E) of 4.86 times at the time of writing.

That is a 73% discount to the iShares Core S&P/ASX 200 ETF (ASX: IOZ), which currently trades at a P/E of 17.96. This exchange-traded fund (ETF) tracks the other major Australian index, the S&P/ASX 200 Index (ASX: XJO). There is no ETF that tracks the All Ords Index.

Helia’s dividends have also been rising. In FY 2023, the company paid 59 cents per share, including a special unfranked dividend of 30 cents per share. The previous year, it paid a 36.5 cents per share dividend.

Based on its current price of $4.21 at the time of writing, Helia offers a trailing dividend yield of 6.89%. Compared to many high-interest savings accounts that currently pay 4%–6% interest per annum, this puts Helia at a relative advantage for income-seeking investors.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is a diversified conglomerate with a strong portfolio of retail, healthcare, and chemical brands.

The ASX All Ord share’s diverse operations include renowned franchises like Bunnings and Kmart. As I’ve noted previously, this diversification helps mitigate risks and creates multiple sources of value.

Broker Goldman Sachs expects 6% and 11% growth in revenue and earnings before tax and interest (EBIT) growth, respectively, for Bunnings in FY 2025/2026. This, it says, could generate annual free cash flow of $2.5 billion–$3 billion for the company.

This is healthy, in my opinion, as it can fund Wesfarmers’ other high-growth categories, like health and lithium.

Meanwhile, as my colleague Tristan reported, UBS noted four “improvements” Bunnings could deliver. These were improvements in the supply chain, real estate efficiency, customer experience, and commercial offering. Goldman and UBS value Wesfarmers at $68.80 and $66 apiece, respectively.

The company’s recent fully franked dividend of $1.94 per share offers a trailing yield of 2.99% after growth of 3.4% year over year.

ASX All Ords shares takeaway

Helia Group and Wesfarmers could be two sensible ASX All Ords shares to consider for your portfolio.

My view is that Helia is trading cheap, while Wesfarmers provides diversified operations and promising growth prospects.

Remember that past performance is no guarantee of future results and that you should consider your own personal financial circumstances before making any decisions.

The post 2 great ASX All Ords shares that I’d like to buy appeared first on The Motley Fool Australia.

More reading

• Do Wesfarmers shares pay a decent ASX dividend?
• ASX retail shares mixed amid modest April sales growth
• ASX investors may choose supermarkets over Wesfarmers shares after ACCC inquiry: broker
• Why did Goldman Sachs just downgrade Wesfarmers shares?
• Why AIC Mines, Fletcher Building, Nufarm, and Wesfarmers shares are dropping

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

The BHP Group Ltd (ASX: BHP) share price just closed out a surprisingly strong month.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant finished off April trading for $43.03. When the closing bell rang on Friday 31 May, shares were changing hands for $44.51 apiece.

That saw the BHP share price up 3.4% in May, racing ahead of the 0.5% monthly gain posted by the ASX 200.

Here’s what happened in the month just gone.

What moved the BHP share price in May?

Setting aside the elephant in the room for the moment, the BHP share price received some support in May from a fairly resilient iron ore market, with the steel-making metal trading in the US$116 to US$118 per tonne range for most of the month.

And copper, BHP’s second biggest revenue earner after iron ore, continued to outshine in May. After hitting all-time highs on 20 May, the copper price ended the month up 3% at US$10,040 per tonne.

The demand outlook for both industrial metals received a boost mid-month as the Chinese government announced fresh moves to stimulate the nation’s sluggish economy and struggling, steel-hungry property markets. Those included the sale of 1 trillion yuan of bonds intended to increase infrastructure spending.

Which brings us back to the elephant in the room, BHP’s three failed bids to acquire global miner Anglo American (LSE: AAL).

Investors shrug off takeover rejection

The BHP share price alternately moved higher or lower amid fresh news over the month on the ASX 200 miner’s takeover efforts of Anglo American.

BHP’s acquisition of some of Anglo’s prized assets, most notably its copper mines, would likely have lifted its fortunes over the medium to longer-term. But over the shorter-term many investors were concerned over the hefty price tag, along with BHP’s plans to divest a number of Anglo’s South African platinum and iron assets.

As it turns out, those concerns were unwarranted, and BHP’s efforts eventually came to naught.

As you’re likely aware, BHP made its first bid for Anglo American on 26 April. That was swiftly rejected by Anglo’s board.

In May, BHP twice sweetened its offer, which reached approximately $74 billion on the third bid.

But those too were rejected by Anglo’s board, which remained concerned over the complicated structure of the deal and maintained the offer undervalued Anglo American’s long-term growth prospects.

On 30 May, following Anglo’s rejection of that third bid, BHP CEO Mike Henry closed the door on any further negotiations. At least for now.

“BHP will not be making a firm offer for Anglo American,” he said.

As for June, the BHP share price is starting the new month off with a bang, up 1.3% at $45.08 a share.

The post The BHP share price crushed the benchmark in May. Here’s how appeared first on The Motley Fool Australia.

More reading

• Here’s the average wealth of Aussies who manage their own superannuation
• Copper checkers: What’s next for BHP shares after Anglo talks?
• Brokers name 3 ASX shares to buy now
• Buying ASX shares, rentvesting and co-ownership: How young Australians are achieving home ownership
• Why BHP, GR Engineering, Novonix, and Pointerra shares are dropping today

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

The Telix Pharmaceuticals Ltd (ASX: TLX) share price has bounced back into the green today.

Shares in the S&P/ASX 200 Index (ASX: XJO) biopharmaceutical company closed up 15.3% on Friday trading for $18.15 apiece. At the time of writing, in morning trade on Monday, shares are changing hands for $18.21 apiece, up 0.3%.

For some context, the ASX 200 is up 0.9% at this same time.

Friday’s big share price leap came after Telix Pharmaceuticals announced positive results from its ProstACT SELECT clinical cancer trial.

Today the company reported on progress on approval for its kidney cancer imaging agent with the United States Food and Drug Administration (FDA).

Here’s what investors are considering on Monday.

Telix Pharmaceuticals share price wobbles

Investors are bidding up the Telix Pharmaceuticals share price after the company said it has completed the submission of a Biologics License Application (BLA) to the FDA.

The BLA involves Telix’s investigational radiodiagnostic PET agent, TLX250-CDx for the characterisation of renal masses as clear cell renal cell carcinoma (ccRCC). The clear cell variant of renal cancer is the most common and aggressive sub-type of kidney cancer.

The BLA submission was based on Telix’s successful global Phase III ZIRCON study in ccRCC.

According to the ASX 200 biotech company, its ZIRCON study met all co-primary and secondary endpoints, demonstrating a sensitivity of 86%, specificity of 87% and a positive predictive value of 93% for ccRCC. That includes patients with small, difficult to detect lesions.

Commenting on the submission helping lift the Telix Pharmaceuticals share price today, chief development officer James Stonecypher said:

Completing the BLA submission for TLX250-CDx represents a significant milestone for Telix as we bring our breakthrough investigational kidney cancer imaging agent closer to market as a non-invasive diagnostic for patients.

We believe TLX250-CDx is a natural follow-on product to Illuccix as it is targeted at the same clinical stakeholders, the urologist and urologic oncologist, and leverages the proven commercial and distribution infrastructure developed through the launch of Illuccix.

The company has also requested a priority review from the FDA as part of its BLA submission process under the eligibility criteria of the Breakthrough Therapy designation.

Management noted that if the FDA grants priority review status, it would potentially support an expedited review time and could further build on the biotech company’s successful urology imaging franchise.

If approved, TLX250-CDx will be the first commercially available targeted radiopharmaceutical imaging agent specifically for kidney cancer in the US.

With today’s intraday gains factored in, the Telix Pharmaceuticals share price is now up 80% in 2024.

The post Up 80% in 2024, here’s why the Telix Pharmaceuticals share price is marching higher again on Monday appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares in May 2024
• Why AVITA Medical, Catapult, Meridian Energy, and Telix shares are storming higher today
• Why is the Telix Pharmaceuticals share price soaring 11% today?
• Which ASX biotech shares are pioneering the future of medicine?
• Here are the top 10 ASX 200 shares today

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

The iShares S&P 500 ETF (ASX: IVV) has been a high-performing exchange-traded fund (ETF) for the past 15 years. The unit price has climbed approximately 580% in the last decade and a half, as shown in the chart below.

The IVV ETF is invested in a group of 500 of the largest and most profitable businesses listed in the United States.

Over the years, some companies have fallen out of the S&P 500 Index (SP: .INX), and other major operators have joined. For example, Meta Platforms (formerly known as Facebook) wasn’t even a listed business 15 years ago.

After such a strong run by the US share market, is this a good time to invest in the ETF? I’m going to consider three aspects.

High-quality ETF

There’s a reason the IVV ETF has performed so well — the companies in its portfolio are very high quality.

Think global powerhouses like Microsoft, Apple, Alphabet, Amazon, Nvidia, and Meta Platforms, whose products and services are used around the world. They all have extremely strong economic moats and still invest in their core products to grow further. Many are also now investing in artificial intelligence (AI), which could be the next big growth step for them.

The US tech giants I named make up more than a quarter of the IVV ETF portfolio.

When companies earn a high return on equity (ROE) and also reinvest a substantial amount of their profits back into the business, I think they have a great chance of success in generating good shareholder returns.

The ETF’s portfolio also includes several other non-tech, high-quality names, such as Berkshire Hathaway¸ Broadcom, JPMorgan Chase, UnitedHealth, Visa, Proctor & Gamble, Mastercard, Costco, and Home Depot.

Strong diversification

No one can accurately predict which industries and stocks will perform well or poorly in the future, so diversification is one of the best ways to ensure investors don’t face the risk of overconcentration. This means the overall portfolio is able to withstand a hit in one sector.

While IT does have a high weighting inside the IVV ETF portfolio (30.7% at 30 May 2024), I think that’s a positive because of the profit margins and growth that technology businesses are capable of delivering.

Other industries with an allocation of more than 5% include financials (12.8%), healthcare (11.9%), consumer discretionary (9.9%), communication (9.3%), industrials (8.5%) and consumer staples (6%).

Valuation

It’s clear that the IVV ETF is a quality proposition, but no investment is worth buying at any price. Overpaying can be a risk in itself, so we want to make sure we’re buying at a reasonably good value.

According to Blackrock, iShares S&P 500 ETF has a price/earnings (P/E) ratio of 25. While that’s quite high for an index fund, I don’t think it’s too crazy because of the quality and growth potential of its larger holdings. It can often make sense to buy a wonderful investment at a fair price.

It’s not cheap, but at the current level, I think it’s still worth a long-term buy because of the underlying companies’ growth prospects in the years ahead. Profit growth usually drives share prices over time.

The post Is the iShares S&P 500 ETF (IVV) a good buy right now? appeared first on The Motley Fool Australia.

More reading

• 5 ASX ETFs that could be great long-term buys
• Own the ASX’s Vanguard US Total Markets ETF (VTS)? Here’s what you’re invested in
• Does the iShares S&P 500 ETF (IVV) pay a decent ASX dividend?
• 3 excellent ASX ETFs for beginner investors to buy
• 16% per annum: Is the iShares S&P 500 ETF (IVV) too good to turn down?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor 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 Alphabet, Amazon, Apple, Berkshire Hathaway, Costco Wholesale, Home Depot, JPMorgan Chase, Mastercard, Meta Platforms, Microsoft, Nvidia, Visa, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and UnitedHealth Group and has recommended the following options: long January 2025 $370 calls on Mastercard, long January 2026 $395 calls on Microsoft, short January 2025 $380 calls on Mastercard, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Mastercard, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

REA Group Limited (ASX: REA) has been an incredible ASX investment over the long term. In the last five years, the online real estate advertising company has delivered total shareholder returns (TSR) of an average of 17% per annum, as shown in the chart below.

The company has built an impressive collection of real estate-related businesses including realestate.com.au, realcommercial.com.au, PropTrack, Mortgage Choice, Property.com.au, Campaign Agent, Realtair, Managed Platforms, Simpology and Arealytics.

Let’s explore three crucial factors that I think make it a great business and then examine the valuation.

Market-leading position

REA Group has developed its property website realestate.com.au into the market leader in Australia. According to the ASX company, an average of 11.2 million people visit realestate.com.au each month, with 52% forgoing competitors to utilise the company’s portal exclusively.

Realestate.com.au receives 130 million average monthly visits, which is 4.1 times more visits than the nearest competitor.

Having the strongest market position allows the company to implement impressive price rises with little detrimental effect.

For example, REA Group expects its residential ‘buy yield’ to grow between 18% and 19% in FY24. In FY25, the buy yield is expected to be “primarily driven by an average 10% increase” in its highest penetrated product, Premiere+.

Excellent financial growth

The solid revenue growth REA Group has delivered over the years, from both price rises and vendors paying for more advanced listing tools, has translated into robust profit growth.

REA Group can deliver rising profit margins on stronger revenue/volume as a digital business. It has already developed the technology and infrastructure, so additional revenue is beneficial for the bottom line and powering the ASX investment.

For example, the business recently reported its performance for the nine months to 31 March 2024. Revenue was up 20% to $1.06 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) was up 23% to $594 million, and free cash flow jumped 39% to $322 million. The company expects listings growth of between 5% to 7% for FY24.

Bigger profits can help support a higher REA Group share price because that’s what investors typically focus on.

India potential

REA Group has an important presence in India with its controlling interest in REA India, which owns Housing.com and PropTiger.com.

According to the World Bank, India has a population of more than 1.4 billion. That’s a huge potential market. REA India’s Housing.com is India’s number one property portal, with 1.2 times more web traffic than the closest competitor.

In the FY24 first-half result, REA saw Indian revenue growth of 21% (to $44 million) thanks to price rises, multiple tiers now in the market, and continued customer growth.

As more people in India turn to the internet for property searching and selling, REA India has the potential for an incredible future.

REA Group share price valuation

REA Group is a highly successful business, and its valuation matches that. According to Commsec, the REA Group share price is valued at 54x FY24’s estimated earnings.

It’s not at a bargain price, but it’s forecast to grow earnings per share (EPS) by 46% between FY24 and FY26, putting it at 37x FY26’s estimated earnings.

I’d be happy to invest in a small amount of shares today and buy more on any material weakness for the ASX investment in the future.

The post Up 17% per annum: Is this index-beating ASX investment too good to turn down? appeared first on The Motley Fool Australia.

More reading

• Don’t get clever, just buy stability: 2 defensive ASX shares to buy now
• Here are the top 10 ASX 200 shares today
• How ASX growth shares can become top dividend stocks
• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy now

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