Clouds have gathered around the shares of Insurance Australia Group Ltd (ASX: IAG) today. As if sticky inflation figures weren’t troublesome enough, the insurance giant is also coming to grips with a new class-action lawsuit backed by millions of people.

As the day winds down, shares in the $15 billion insurer are skating 2.5% lower to $6.25. The uninspiring performance makes IAG the worst performer in the financial sector, outpacing losses across the big four banks.

Allegations of exploited loyalty

Following an investigation, the law firm Slater and Gordon served IAG with a class action claim in the Supreme Court of Victoria yesterday.

The firm will represent millions of policyholders who held insurance policies from RACV, SGIO, and SGIC — the last two of which are now encompassed under the NRMA brand — between 2018 and 2024. All three insurance companies are subsidiaries of IAG.

At the core of the claim is the allegation that IAG used an algorithm to determine policy pricing based on loyalty. Rather than being rewarded for their proclivity to stay, customers may have been charged a higher premium — departing from the ‘loyalty discounts’ sold to customers, the claim alleges.

Explaining further, Slater and Gordon’s Ben Hardwick said:

The higher the computer program identified a customer’s perceived price elasticity, the lower the annual premium increases the customer would receive, so loyal customers who were assessed as having low price elasticity and were unlikely to leave, faced steeper increases to their premiums.

In an interview with ABC News, Hardwick noted many affected customers could be entitled to more than $1,000 in compensation.

IAG addressed the claim in a release made last night. In the announcement, the insurance provider acknowledged Slater and Gordon’s claim before dismissing it.

As IAG announced on 25 August 2023, IAL [Insurance Australia Limited] and IMA [Insurance Manufacturers of Australia Pty Limited] are defending the ASIC proceedings. IAL and IMA maintain they have delivered on loyalty promises made to customers and do not agree that they have misled customers about the extent of the discounts they would receive.

IAG shares retreat from record zone

The possible implications of the lawsuit have dampened the mood around the IAG share price.

Before today, the value of the insurers’ shares was riding high at a closing price of $6.41. Another 2% rise and the company’s share price would have reached its highest point since before the COVID crash in 2020.

Nevertheless, IAG shares are still faring well when we step back. Up 19.8% compared to a year ago, IAG shareholders are doing better than many others over this timeframe. Although, the performance is only slightly better than the 17.5% return across the financials sector.

The post IAG shares caught in a storm as millions join ‘loyalty’ lawsuit appeared first on The Motley Fool Australia.

More reading

• IAG share price teases 4-year high amid cyber expedition
• What this top broker is saying about IAG shares
• Here are the top 10 ASX 200 shares today
• Here is the earnings forecast out to 2026 for IAG shares

Motley Fool contributor Mitchell Lawler 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.

Let’s assume you have an empty or small ASX share portfolio, but you want to grow it into a $300k portfolio as quickly as possible. Cheap ASX shares might just be the best way to do it.

Building an ASX share portfolio from scratch (or close to it) is no easy feat, let alone getting to a portfolio worth $300,000. But I think it is doable with a lot of patience and disciplined investing.

But choosing the right investments at the lowest possible price is essential. After all, whilst we all like it when our shares rise in value, the more expensive a company is, the lower the potential returns you might receive.

So here’s what I would do if I were starting out on an investing journey today.

Start with index funds

First up, I would invest some of the cash I had saved up into a simple index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ). I believe that a fund like this one is a great place to invest at any point in the market cycle.

Since IOZ represents a slice of the entire Australian share market, you are always going to get some ASX shares that are cheap, and others that are expensive. By using a dollar-cost averaging strategy, you can further ensure that you are never paying a price that’s overly expensive for these ASX shares, at least for too long.

If the iShares ASX 200 ETF continues to hit an annual average return of 7.91% per annum, as it has over the five years to 30 April, a monthly investment of $500 will see you hit $300k within 21 years. Of course, we should never assume an investment returns what it has in the past into the future. But you still get a good shot at a decent long-term return with this index fund in my view.

Looking for cheap ASX shares

But what about some individual ASX shares? Well, despite the volatile run the Australian share market has had over the past couple of months, the reality is that the ASX 200 Index is still pretty close to its most recent all-time high. While this makes finding cheap ASX shares a little more difficult, you can start by looking for blue-chip stocks that are well off their last 52-week highs.

Telstra Group Ltd (ASX: TLS) might be a good example. Telstra is today languishing at $3.46 a share at the time of writing. That’s down more than 22% from its last 52-week high.

At this share price, Telstra is trading on a dividend yield of 5.05%. That means you’d only need around 2% worth of capital growth per annum to make this company a market beater going forward (assuming Telstra’s dividends are at least maintained).

Woolworths Group Ltd (ASX: WOW) is another ASX 200 share that I think is looking pretty cheap right now. This grocer is also down more than 22% from its last 52-week high. This can be put down to a number of factors, including a recent lacklustre earnings report and the messy departure of its CEO.

But these falls have left Woolworths shares at the cheapest levels we’ve seen in years. The company is currently sporting a relatively high dividend yield of 3.4% for one. But Woolworths is also trading close to its rival Coles Group Ltd (ASX: COL) on a price-to-earnings (P/E) basis – a rare occurrence.

Buying $1 for 80 cents

A final way I personally like to buy cheap ASX shares is by going through listed investment companies (LICs).

LICs are companies that run a portfolio of underlying assets (usually other shares) on behalf of their shareholders. Because of this unique structure, the value of a LIC can actually be cheaper than the sum of its underlying portfolio.

A good example right now is one of my favourite LICs – MFF Capital Investments Ltd (ASX: MFF). MFF Capital owns a portfolio that houses some of the world’s best companies, including Amazon, Mastercard, Visa and Alphabet.

Earlier this week, MFF told us that, as of 24 May, its portfolio was worth $4.27 per share before taking taxes into account and $3.57 a share post-tax. Yet today, you can pick up MFF shares for just $3.52 each at the time of writing.

Foolish takeaway

There’s no foolproof way of getting from nothing to a portfolio worth $300k. However, I think the best way to approach this task is by using a combination of index fund investing and finding cheap ASX shares.

The latter is easier said than done, but with practice and a willingness to not accept the market’s pricing as gospel, it can be done.

The post How I’d try to turn an empty portfolio into $300k by buying cheap ASX shares, starting now appeared first on The Motley Fool Australia.

More reading

• How UBS expects Telstra shares to gain 27% and deliver dividend growth
• 3 ASX 200 blue-chip shares to buy now
• Buy these ASX shares and get 5% and 6.5% dividend yields
• 3 reasons this broker thinks Woolworths shares are a cheap buy
• Safeguarding against inflation: A defensive share strategy

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. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, Mastercard, Mff Capital Investments, Telstra Group, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Alphabet, Amazon, and Mastercard. 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 is swapping hands at $36.48 apiece in late afternoon trading on Wednesday.

The past year of trade has been challenging for Domino’s.

Its share price is down 23% in the past 12 months. It recently nudged 52-week lows of $36.24. And it is trading 38% lower this year to date.

Despite the challenges, a number of analysts believe shares in the pizza company have the potential to rise by 22%.

Let’s dive into why this ASX stock is catching analysts’ eyes and why investors should take note.

Why could Domino’s share price increase?

Analysts at investment bank Citi upgraded their view on the pizza giant in a recent note, according to The Australian.

The broker upgraded Domino’s to a buy rating with a target price of $44.50. If Citi’s analysis proves accurate, that’s a share price surge of 22%.

Analyst Sam Teeger said Citi was “cautiously optimistic” about Domino’s prospects for FY 2025 following the company’s investor tour in France.

According to Teeger, the company has struggled recently but “better days could be ahead” for the beloved pizza chain. This optimism spurred the upgraded rating.

Spotlight on share price

Citi isn’t the only broker that is bullish on the Domino’s share price. Ord Minnett also believes Domino’s has major upside potential.

The broker has an accumulate rating and a price target of $44.40 on Domino’s shares, implying a similar increase from the current price.

This optimistic outlook is based on expected growth in sales and earnings as the company adapts to changing consumer preferences and market conditions.

But despite the broker optimism, Domino’s share price has slipped 4% into the red this past month. What gives?

Why Domino’s shares are moving sideways

Domino’s share price briefly rose following the Federal Budget announcement earlier in May. According to my colleague James, the government’s plans to increase disposable income could boost consumer spending, benefiting Domino’s sales in Australia.

However, there are risks to consider in this investment debate. Morgan Stanley analysis suggests that the rising popularity of appetite-suppressing drugs like Ozempic could potentially impact the consumption of high-calorie foods (hint: pizza).

The broker estimates that “ice cream, cakes, cookies, candy, chocolate, frozen pizzas, chips, and regular sodas could see 4% to 5% reductions in consumption by 2035”.

“Quick service restaurants with a focus on unhealthy food items, including fried chicken and pizza, present with greater risks from a consumption standpoint,” it added in its report.

This could pose a challenge for Domino’s, as the fast food industry might face reduced demand for items like pizza, according to the broker.

Foolish takeaway

If Citi and Ord Minnet are right, Domino’s might present as a promising investment opportunity.

With both brokers predicting a 22% rise in the share price, it could be wise to watch this name. As always, however, stay mindful of the potential risks and do your research.

The post Domino’s share price is set to soar 22%, say top brokers appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• These ASX 300 shares could rise 35% to 65%
• 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 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 Domino’s Pizza Enterprises. The Motley Fool Australia has recommended 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.

Telstra Group Ltd (ASX: TLS) shares haven’t exactly shot the lights out so far in 2024.

To say the least.

Last Wednesday, 22 May, shares in the S&P/ASX 200 Index (ASX: XJO) telco closed at $3.42 apiece. That marked a three-year closing low for Telstra shares.

The stock came under renewed selling pressure after management announced their intentions to axe as many as 2,800 employees in a cost-cutting initiative.

And, in a move that’s divided analyst expectations, Telstra said it would no longer increase its monthly mobile charges in line with inflation.

After recouping some losses over the following trading days, today Australia’s biggest telco is again under pressure. Shares are down 1.4% at $3.46 apiece at the time of writing.

For some context, the ASX 200 is also down 1.3% at this same time following the ABS’s hotter-than-anticipated April inflation print released this morning.

But with Telstra shares now down more than 20% in 12 months, the ASX 200 telco could be in for a sizeable rebound. And that comes with partial thanks to rival Optus.

Did Optus just boost the outlook for Telstra shares?

Yesterday, Optus announced that it would increase the price of some of its monthly mobile plans by 5% to 6%, outpacing inflation.

Management pointed to higher operating costs for the price rise, which will see the cost of Optus’ least expensive mobile plan rise from $49 per month to $52 per month. Customers will also receive a higher data allowance from the service.

The last time Telstra shares enjoyed a revenue boost from higher monthly mobile fees was in July. With the ASX 200 telco having axed its CPI-linked price hikes, UBS now expects Telstra will next increase prices in 2025.

And the company now has greater flexibility to amend prices as it sees fit.

Commenting on the Singtel owned Optus price increases yesterday, UBS analyst Lucy Huang said (quoted by The Australian), “We view today’s price hikes by Optus positively, as mobile rationality continues across the industry.”

Huang added:

We note Singtel management last Friday had announced ambitions to improve return on invested capital at Optus which are currently below 2%, and we see mobile pricing as one of the key drivers.

As for Telstra shares, UBS believes the company will also boost prices to help lift returns.

“We note both key competitors have now put through above CPI price increases. Vodafone up 9% back in late March, and now Optus up 5% to 6%,” Huang said.

And that could prove beneficial not just for the share price but also for Telstra’s 2025 dividend outlook.

According to Huan:

We remain watchful on Telstra’s next price change, with our base case assuming 3% postpaid average revenue per user growth in FY 2025, driving growth in the dividend from 18 cents in FY 2024 to 19 cents in FY 2025.

UBS has a buy rating on Telstra shares with a $4.40 price target.

That represents a potential upside of more than 27% from current levels.

The post How UBS expects Telstra shares to gain 27% and deliver dividend growth appeared first on The Motley Fool Australia.

More reading

• How I’d try to turn an empty portfolio into $300k by buying cheap ASX shares, starting now
• 3 ASX 200 blue-chip shares to buy now
• Buy these ASX shares and get 5% and 6.5% dividend yields
• 3 top ASX 300 dividend shares to buy now for $3,000 a month in passive income
• Here’s the new Telstra dividend forecast through to 2026

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

Many of Australia’s top brokers have been busy adjusting their financial models and recommendations again. This has led to the release of a number of broker notes this week.

Three ASX shares that brokers have named as buys this week are listed below. Here’s why their analysts are feeling bullish on them right now:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Macquarie, its analysts have retained their outperform rating and $50.50 price target on this gaming technology company’s shares. The broker highlights that Aristocrat is looking into the potential sale of its Plarium and Big Fish digital gaming businesses. Macquarie believes this would be a smart move and could command a sale price of up to US$1.18 billion based on peer valuations and the popularity of its RAID: Shadow Legends game. Macquarie sees the potential sale as a positive and expects it to support a re-rating of its shares. Particularly given that it will allow management to focus more on its core business and growing social casino and real money gaming businesses. The Aristocrat Leisure share price is trading at $43.45 this afternoon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A note out of Citi reveals that its analysts have upgraded this pizza chain operator’s shares to a buy rating with a $44.50 price target. The broker has become more positive on the struggling company after it laid out its plans to address its underperformance in the European market. Citi notes that the company’s excessive discounting has cheapened the brand and Domino’s failed to localise its offer. However, it thinks that Domino’s agreement to allow third-party delivery via aggregator services should lead to higher volumes. It also sees potential for the brand to outperform across a European summer that includes Euro 2024 and the Paris Olympics. The Domino’s share price is fetching $36.56 on Wednesday.

Pro Medicus Limited (ASX: PME)

Analysts at Goldman Sachs have reiterated their buy rating on this health imaging technology company’s shares with an improved price target of $136.00. Goldman highlights that Pro Medicus has won five new contracts with a minimum value of $45 million. It notes that this brings the company’s minimum total contract value (TCV) for new sales this financial year to $245 million. Goldman believes this supports its view that the company’s Visage 7 software is an industry leading solution and that Pro Medicus is the incumbent technology leader in radiology and well-placed to take market share. The Pro Medicus share price is trading at $115.28 today.

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

More reading

• Buy ‘one of the highest quality’ growth shares on the ASX 200
• Why you should buy this ‘industry leading’ ASX 200 tech stock
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• 4 ASX growth shares to buy to supercharge your portfolio in June

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises and Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises, Goldman Sachs Group, Macquarie Group, and Pro Medicus. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Pro Medicus. 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) is under significant pressure following a hotter than expected inflation reading. At the time of writing, the benchmark index is down 1.35% to 7,662.6 points.

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

Alligator Energy Ltd (ASX: AGE)

The Alligator Energy share price is up 6% to 6.25 cents. This follows the release of an update on the uranium developer’s Samphire Uranium Project in South Australia. According to release, the 2024 Blackbush resource extension and broader exploration drilling programs have recommenced at the Samphire Uranium Project. Alligator Energy’s CEO, Greg Hall, commented: “Alligator is planning near-continuous Blackbush deposit resource extension drilling through this year, with a target to increase the resource and hence the potential annual production rate in a future feasibility study. […] Drilling and logging results will feed into a further update to the Blackbush resource estimate at year end.”

Data#3 Ltd (ASX: DTL)

The Data#3 share price is up almost 4% to $7.71. Investors have been buying this leading Australian information technology services and solutions provider’s shares thanks to a bullish broker note out of Morgan Stanley this morning. According to the note, in response to significant pullback from recent highs, the broker has upgraded Data#3’s shares to an overweight rating with an $8.40 price target. The broker believes that its valuation looks more attractive following recent weakness. Particularly given the resilience of its end users.

Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price is up 4% to $26.53. This has been driven by the release of the medical device company’s FY 2024 results this morning. Fisher & Paykel Healthcare reported revenue of NZ$1.74 billion for the 12 months ended 31 March 2024. This represents a 10% increase over the previous financial year. Looking ahead, in FY 2025 management is guiding to revenue of between NZ$1.9 billion and NZ$2 billion, with a net profit after tax in the range of NZ$310 million and NZ$360 million.

IPD Group Ltd (ASX: IPG)

The IPD Group share price is up over 4% to $4.56. This follows the release of a guidance update from the electrical infrastructure products distributor this morning. IPD revealed that it expects to report EBITDA of $39 million to $39.5 million in FY 2024. This is up 41% to 42.5% from $27.7 million in FY 2023.

The post Why Alligator Energy, Data#3, Fisher & Paykel, and IPD shares are storming higher appeared first on The Motley Fool Australia.

More reading

• Up 20% in 2024, why this ASX 200 healthcare stock just hit a new 52-week high
• 2 of the best ASX growth shares to buy right now
• Guess which ASX uranium stock is charging higher today
• How to invest in uranium on the ASX
• Top ASX shares to buy in May 2024

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

Looking for an overlooked S&P/ASX 200 Index (ASX: XJO) AI share to capture the mammoth growth potential on offer from the fast-developing technology?

You’re not alone!

While not an ASX share, no company better demonstrates the potential returns on offer from the rapid rise and largely untapped opportunities presented by artificial intelligence than Nvidia Corporation (NASDAQ: NVDA).

With global companies lining up for the United States-based generative AI stock’s chips, the Nvidia share price is up 184% in 12 months. That’s seen Nvidia’s market cap reach US$2.8 trillion (AU$4.2 trillion) — more than Australia’s annual GDP!

With that growth in mind, we turn to an ASX 200 AI share that could reap major benefits from the global rollout of artificial intelligence.

Namely, Life360 Inc (ASX: 360).

An unexpected ASX 200 AI share

Like Nvidia, Life360 is also based out of the US.

The ASX 200 AI share develops software predominantly used for location sharing. The company’s smartphone app is favoured by families looking to track their children’s locations or to help keep elderly people and folks with special needs safe.

And like Nvidia, the Life360 share price has been on fire of late, up 124% over 12 months. That gives the company a current market cap of $3.1 billion, with some significant growth potential still ahead.

A new Morgan Stanley report, spearheaded by equity analyst James Bales, names Life360 as one of several ASX 200 shares that could catch sustained tailwinds from the AI revolution.

According to the report (courtesy of The Australian Financial Review):

We see the most scope for meaningful upside surprise in the industries with lower expectations where innovation, data advantages and labour automation can provide earnings upside not yet envisioned by consensus…

Demand drivers behind the AI theme are robust, setting the stage for a multiyear structural growth cycle.

Morgan Stanley is bullish on Life360 in part due to all of the data it collects from its users. Data that AI-enabled systems could monetise down the road.

According to Morgan Stanley:

We see Life360 as having access to huge volumes of user data, from personal details to daily habits, driving patterns and behaviours. Life360 understands who you are with, and where your belongings are and how you spend time on the weekend.

Longer-term, we see significant potential in terms of both monetisation and user experience of consumers being served compelling offers.

The ASX 200 AI share really began to lift off on 1 March this year after reporting its full 2023 calendar year results.

Though still operating at a net loss of US$28 million, losses were trimmed back from the more than US$91 million reported in 2022. That was driven by a 33% year-on-year revenue boost to US$305 million.

The post ‘Significant potential’: One unexpected ASX 200 AI share to buy now appeared first on The Motley Fool Australia.

More reading

• 1 ASX growth stock that turned $10,000 into $21,000 in less than 2 years
• Prediction: Nvidia stock will continue to rise…and here’s why
• Joining the revolution: How I’d invest in ASX AI shares right now
• Nvidia shares are now worth more than 17 times the market cap of BHP. What’s next?
• 2 ASX growth shares with legit potential to outperform the market

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 Life360 and Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.