ASX biotech shares have been showing significant signs of momentum lately. Exciting clinical trial results and strong investor interest are propelling the sector forward. Plenty of upcoming catalysts and company-specific developments could mean the rest of 2024 is also busy for ASX biotech stocks. 

The biotechnology industry combines biology with technology to develop products for various applications. Biotech stocks are shares in companies developing biotech products, which could have medical, agricultural, or industrial applications. 

Many biotech firms focus on genetics and molecular biology to innovate. Extensive research and development (R&D) is undertaken to create new therapies and technologies. This means substantial R&D spending generally precedes revenue generation. Success in biotech can lead to significant rewards, however, with share values potentially soaring following technological breakthroughs or drug approvals. 

Risks and rewards 

The biotech sector is known for its volatility, driven by the high stakes of clinical trials. The performance of biotech shares tends to be driven by company-specific developments, such as trial data, rather than broader economic factors. This means the sector is generally non-cyclical and can provide potential diversification benefits. 

The ASX is home to a number of groundbreaking biotech companies pioneering innovative therapies. For example, Telix Pharmaceuticals Ltd (ASX: TLX) develops radiopharmaceutical diagnostic agents and therapeutic products that are reshaping oncological care. Fellow ASX 300 biotech Clinuvel Pharmaceuticals Limited (ASX: CUV) develops treatments for serious skin disorders. Both Clinuvel and Telix have successfully commercialised products and are expanding their market presence. This should bode well for future revenue streams. 

The ASX also hosts an array of emerging biotech firms that are beginning to make their mark. Botanix Pharmaceuticals Ltd (ASX: BOT) develops dermatological products and drug treatments. The company is preparing for the upcoming commercial launch of a topical treatment for underarm sweating. Federal Drug Administration (FDA) approval for the treatment is expected by late June 2024. 

Meanwhile, Neuren Pharmaceuticals Ltd (ASX: NEU) is focused on developing treatments for severe neurodevelopmental disorders like Rett syndrome and Fragile X syndrome. It recently achieved FDA approval for a drug that treats Rett syndrome in adults and children over two years old. This is the first and only approved treatment for this condition. Another Neuren Pharmaceuticals drug candidate is also in trials for the treatment of several other disorders. 

As these companies progress through regulatory pipelines and reach commercial stages, the impact on their valuations could be transformative.  

What does the future hold for ASX biotech shares? 

Biotech firms on the ASX are benefitting from global trends that favour advancements in medical technology and increased healthcare demand. The performance of individual biotech companies, however, is ultimately dependent on successful outcomes from R&D activities.
 
Investing in this sector comes with high volatility and risk, but does offer substantial growth potential. Current trends suggest a positive trajectory for ASX biotech shares, making them an interesting sector for investors looking for exposure to innovative healthcare solutions.

The post Which ASX biotech shares are pioneering the future of medicine? appeared first on The Motley Fool Australia.

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• Guess which ASX 200 healthcare share just rocketed 11% on ‘groundbreaking trial’

Motley Fool contributor Katherine O’Brien 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 ASX tech stock Siteminder Ltd (ASX: SDR) is a leading opportunity according to one of the top brokers in Australia.

The company aims to provide software that “unlocks the full revenue potential of hotels”. It’s responsible for more than 115 million reservations worth over $70 billion in revenue for its hotel customers annually. Its all-in-one hotel management software for small accommodation providers is called Little Hotelier.

There are a number of positives about the company, according to the broker UBS.

Bullish reasons UBS likes this ASX tech stock

The broker said there are multiple positives for the company’s outlook following the FY24 third-quarter update.

First, UBS noted that Siteminder’s underlying free cash flow of negative $0.2 million was close to breakeven. This was consistent with the management’s target of generating positive free cash flow in the second half of FY24.

The second positive was developments with its new product – ‘Channel Plus’ signed an agreement with Trip.com Group. This means hoteliers can “effortlessly distribute their inventory to the rebounding Chinese outbound tourism market, while Trip.com will gain access to more hotels.” UBS noted that 14 channels have been signed, compared to just six in the FY24 first half. There is “strong initial customer interest” in Siteminder’s new releases, according to UBS.

The third positive about Siteminder is its product enhancements. The ASX tech share has introduced Siteminder Pay into “new markets”. The company also noted the rollout of Siteminder Pay terminals is on track for the first half of FY25. Little Hotelier Autopay, which was released at the start of the FY24 third quarter, has seen “strong adoption and increased Siteminder’s capture of gross booking value at participating properties.”

The final positive UBS pointed to about the ASX tech stock was that hotel subscriber additions have continued the momentum from the first half of FY24, which is “skewed towards larger properties”, with the highest room count per hotel added since the COVID-19 reopening. In the broker’s view, this provides higher revenue per subscriber, a larger base for future transactions and higher new product uptake, combined with lower subscriber churn.

The ASX tech stock is still targeting medium-term revenue growth of 30%. UBS thinks the core offering looks “appealing” and sees potential upside to its estimates if traction for the new product launch is stronger than expected.

Siteminder share price target

UBS has a price target of $6.65 on Siteminder shares, which is currently around 25% higher than it is today. A price target is where the broker thinks the Siteminder share price will be in 12 months.

That positive outlook is despite the Siteminder share price rising around 70% over the past 12 months, as seen on the chart below.

The post The little-known ASX tech stock that could rise 25% in a year appeared first on The Motley Fool Australia.

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

If you’re looking for big returns, then it could be worth checking out the small side of the market.

That’s because in exchange for higher risk, investors have the potential for higher rewards.

For example, the small cap ASX share in this article has been tipped to provide investors with a return that is more than double the historic market return.

Let’s see what analysts at Bell Potter are saying about this small cap.

Which small cap ASX share is a buy?

According to a note out of Bell Potter, following a change of analyst, the broker has reaffirmed its buy rating and 29 cents price target on Capitol Health Ltd (ASX: CAJ) shares.

Based on its current share price of 24.5 cents, this implies potential upside of 18% for investors over the next 12 months.

In addition, the broker is expecting the medical imaging company to pay fully franked dividends of 1 cent per share in FY 2024, FY 2025, and FY 2026. This will mean dividend yields of 4.1% each year, boosting the total potential return to over 22%.

To put that into context, a $10,000 would be worth approximately $12,200 in 12 months if Bell Potter’s recommendation proves accurate.

It is also more than double the historical return of the share market, which sits at around 10% per annum.

Why is it bullish?

The note reveals that Bell Potter has boosted its revenue estimates for the coming years. This is to reflect the normalising of volumes and pricing growth rates. And while the broker expects inflationary pressures to weigh on margins in the near term, it appears to believe that this is more than priced into the small cap ASX share’s valuation at present. It commented:

On the transfer of coverage, we have reviewed our earnings estimates. Across FY24e – FY26e, we have increased our revenue estimates by c.1.6% / c.4.7% / c.7.9% driven by normalising volume and pricing growth rates across DI Services and Benefits. However, we expect inflationary pressures to dampen the recovery in operating margins and a lower plateau than previous estimates with margins levelling out at c.22% by FY28e.

This leads to a cut in earnings expectations of c.-8% / c-4.8% / c.- 13.4%. We have upgraded our blended DCF / EV / EBITDA valuation by c.3.6% to $0.29 / sh, reflecting adjustments in our valuation parameters. Catalysts for the share price include continued positive momentum in the Medicare data and M&A activity.

The post Buy this cheap small cap ASX share for a very big return appeared first on The Motley Fool Australia.

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• ASX investors may choose supermarkets over Wesfarmers shares after ACCC inquiry: broker

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

Wesfarmers Ltd (ASX: WES) shares have had an impressive run of share price growth over the past year.

Yesterday, the market’s biggest consumer discretionary share closed at $64.61, up 1.24% for the day, and up 31.7% over the past 12 months.

After such a strong run, top broker Goldman Sachs reckons Wesfarmers shares may lose some investor support to ASX supermarket shares, given their attractive valuations these days.

Wesfarmers shares downgraded by top broker

On Friday, Goldman Sachs downgraded Wesfarmers shares from a buy rating, which it assigned to the stock on 25 January, to a neutral rating.

The 12-month price target remains unchanged at $68.80.

Analysts Lisa Deng and James Leigh explained that their earnings expectations for the conglomerate have not changed, but their buy thesis has now “played out”.

They also commented that Wesfarmers shares may lose some support from investors in favour of fallen ASX supermarket shares amid the Australian Competition and Consumer Commission (ACCC) inquiry.

The ACCC inquiry is examining supermarkets’ pricing practices and the relationship between wholesale, including farmgate, and retail prices. Essentially, it seeks to determine whether supermarkets are price-gouging customers. An interim report is due by 31 August, and a final report is due by 28 February 2025.

What’s happening with ASX supermarket shares?

The two major supermarket shares on the ASX are Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

There’s also ASX mid-cap stock Metcash Ltd (ASX: MTS), which owns the IGA and Foodland grocery store networks, the Cellarbrations, Porters Liquor and Bottle-O liquor brands, and the Mitre 10 chain.

While Deng and Leigh do not name specific supermarket stocks, they point out that they are trading at historically attractive prices.

The analysts said:

As the supermarket ACCC inquiry concludes, we expect the regulatory overhang on supermarkets to dissipate, potentially drawing capital away from WES given the supermarkets’ more attractive valuation.

What’s the P/E comparison to Wesfarmers shares?

According to CBA data, Wesfarmers shares are trading on a price-to-earnings (P/E) ratio of 28.7x.

This compares to Woolworths shares at 22.1x, Coles shares at 20.17x, and Metcash shares at 13.85x.

Over the past 12 months, Woolworths shares have fallen 17.67% to close at $31.46 yesterday. Goldman Sachs has a buy rating on Woolworths shares with a 12-month price target of $39.40.

Coles shares have fallen 10.32% to $16.34. The broker has a neutral rating and a price target of $16.30 on the stock.

Metcash shares have gained 4.66% in value over the past year and closed at $3.82 apiece yesterday. Goldman has a neutral rating on Metcash shares with a price target of $3.70.

As mentioned earlier, Wesfarmers shares have gained 31.7% over the past 12 months.

Other inquiries into the supermarkets

Apart from the ACCC inquiry, others have also taken place concurrently.

A Senate Select Committee on Supermarket Prices handed down its report earlier this month.

Its recommendations included creating divestiture powers in the supermarket sector and giving the ACCC the authority to investigate and prosecute unfair trading practices.

Meantime, a formal review of the Food and Grocery Code of Conduct is also underway.

The code’s purpose is “to address harmful practices in the grocery sector stemming from an imbalance of bargaining power between supermarkets and their suppliers”.

A final report is due on 30 June.

The post ASX investors may choose supermarkets over Wesfarmers shares after ACCC inquiry: broker appeared first on The Motley Fool Australia.

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

Only a small group of ASX shares have the accolade of increasing their dividend every year for the past decade. This is because it can be challenging to grow the payout annually, as profit can dramatically change from year to year due to trading conditions or shifts in commodity prices.

Businesses operating in resilient industries are the ones that grow profit quite consistently. That’s important because it’s profit generation that funds dividend payments. The below ASX shares are among the leading stocks for regular dividend growth, though dividend hikes are not guaranteed.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson has the best record on the ASX when it comes to consecutive dividend increases. Its annual ordinary dividend has grown every year since 2000. The business has paid a dividend every year since 2000.

It has achieved this by owning a portfolio of assets that generate defensive or uncorrelated cash flows, such as telecommunications, resources, swimming schools, property and electrification.

TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Ltd (ASX: NHC), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and BHP Group Ltd (ASX: BHP) are some of Soul Patts’ biggest ASX holdings.

The ASX share currently offers a grossed-up dividend yield of just over 4%.

APA Group (ASX: APA)

APA owns a large portfolio of gas pipelines around the country, transporting half of the country’s gas usage. It also owns gas storage, gas processing, gas-powered energy generation, electricity transmission assets, and renewable energy generation (solar and wind) assets.

The business has grown its payout yearly since 2004, so it has had two consecutive decades of growth.

APA’s cash flow pays for the distribution, which has steadily increased as the business completes more energy projects. A large majority (over 90%) of its revenue is linked to inflation and has seen elevated growth in the last couple of years.

The Australian federal government has confirmed that gas will continue to contribute to Australia’s energy mix for decades to come.

APA has guided it expects to pay a distribution per security of 56 cents in FY24, which is a forward distribution yield of 6.5%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the world’s leading pathology businesses, with a presence in several countries including Australia, the US, Germany and the UK.

It has increased its dividend every year since 2013 and it has grown its dividend almost every year in the last three decades, with only a few years during that period when the dividend was maintained.

The ASX share has a stated “progressive dividend policy”, where the board aims to increase the payout for shareholders. The last two dividends amount to a dividend yield of 4.3%, excluding franking credits.

Inflation may be hurting Sonic’s short-term profitability, but the company is hopeful for the future, with its investments in artificial intelligence (AI) a key focus.

The post 3 ASX shares with a long history of increasing dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Brickworks, Sonic Healthcare, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Apa Group, Brickworks, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of ASX stocks to choose from on the Australian share market.

But not all are buys at current levels. In fact, some could even be sells. But which ones are buys and which ones are sells?

Let’s take a look at one ASX stock that could be a buy and one that could be a sell according to analysts at Goldman Sachs.

The ASX stock to buy

The first stock we’re going to look at is cloud accounting platform provider Xero Ltd (ASX: XRO).

It impressed the market last week when it released its FY 2024 results and delivered revenue and profit growth ahead of expectations.

The good news is that analysts at Goldman Sachs believe there’s still a significant growth runway ahead for Xero. It highlights that the company currently has a touch under 4.2 million subscribers from an addressable market of over 100 million. The broker commented:

We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company’s pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.

Goldman has a conviction buy rating and $164.00 price target on its shares. This implies potential upside of 22% for investors from current levels.

The ASX stock to sell

An ASX stock to sell according to analysts at Goldman Sachs is Commonwealth Bank of Australia (ASX: CBA).

The broker believes that Australia’s largest bank’s shares are severely overvalued at current levels and could be destined to fall materially. It commented:

We are Sell-rated on CBA given: While CBA’s volume momentum in housing lending has improved and BDDs charges remain benign, we don’t think this justifies the extent of CBA’s valuation premium to peers. Coupled with i) a business mix that leaves it more exposed to the current competitive environment, and ii) while CBA has historically done a good job in balancing investment and productivity, we do not think it can escape elevated FY24E cost pressures given heightened inflation.

Goldman currently has a sell rating and $82.61 price target on the ASX stock. Based on its current share price of $120.10, this implies potential downside of 31% for investors over the next 12 months.

The post One ASX stock to buy and one to sell appeared first on The Motley Fool Australia.

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

The Neuren Pharmaceuticals Ltd (ASX: NEU) share price was in fine form on Monday.

The ASX 200 pharma stock ended the day almost 16% higher at $23.97.

This means that Neuren Pharmaceuticals’ shares are now up 78% since this time last year.

It also means that they are now trading within sight of their record high of $25.95.

But if you thought the gains were over, think again. That’s because the team at Bell Potter believes that this ASX 200 stock can rocket to a new record high.

What is the broker saying about this ASX 200 stock?

Bell Potter was pleased with the top-line results from Neuren Pharmaceuticals’ phase 2 clinical trial of NNZ-2591 in children with Pitt Hopkins syndrome (PTHS). Those results revealed that NNZ-2591  delivered a “statistically significant improvement” across all four efficacy measures.

The ASX 200 stock’s CEO, Jon Pilcher, commented: “We are very excited about the results of this first clinical trial in Pitt Hopkins patients. This underserved community has such urgent unmet need and we can now continue towards our goal of developing a first approved treatment.”

Commenting on the results, Bell Potter said:

Another favourable mean CGI-I score of 2.6, albeit from a small sample size of 11 subjects. Anything under 3.5 would’ve been positive (lower=better), hence clearly a good result in our view. We are again impressed to see nearly half (=5/11) of subjects achieving a CGI-I score of 1 or 2, meaning the clinical investigator deemed their symptoms were “very much” or “much” improved from baseline. These larger responses after 13 weeks’ treatment are less likely to be due to a placebo effect in our view. As a comparison, in the trofinetide Phase 3 trial, only 5% on placebo and 13% on trofinetide achieved a CGI-I score of 1 or 2, versus 45% in today’s data.

Big returns ahead

In response to the trial results, the broker has retained its buy rating with an improved price target of $28.00.

Based on the current Neuren Pharmaceuticals share price of $23.97, this implies potential upside of 17% for investors over the next 12 months. It would also mean a new record high for its shares.

The broker concludes:

Following today’s further clinical validation of NNZ-2591 we increase our PT by 6% to $28.00 and maintain our BUY recommendation. Roughly half of our PT is comprised of value ascribed to NNZ-2591, which has now shown encouraging clinical data in two indications, each of which represent a similar if not larger market opportunity than Rett syndrome. For both completed Phase 2 indications, no approved treatments are available and NNZ-2591 is comfortably in poll position to be the first drug to market. A third Phase 2 readout with NNZ-2591 in Angelman syndrome is expected in Q3 CY24.

The post This ASX 200 stock can rocket to a record high: Broker appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 have a high tolerance for risk, then it could be worth thinking about adding the speculative ASX stock in this article to a balanced portfolio.

The stock in question is IperionX Ltd (ASX: IPX).

What is IperionX?

IperionX is aiming to become a leading American titanium metal and critical materials company.

It is using patented metal technologies to produce high performance titanium alloys from titanium minerals or scrap titanium. This is achieved with lower energy, low costs and low carbon emissions.

The company notes that its Titan critical minerals project is the largest JORC-compliant mineral resource of titanium, rare earth, and zircon minerals sands in the United States.

This leaves it well positioned to benefit from demand for titanium metal and critical minerals for advanced U.S. industries. This includes space, aerospace, defence, consumer electronics, hydrogen, electric vehicles, and additive manufacturing.

Why is this a speculative ASX stock to buy?

According to a note out of Bell Potter, its analysts think this ASX stock could be seriously undervalued at current levels.

The note reveals that the broker has reaffirmed its speculative buy rating with an improved price target of $3.85. Based on its current share price of $2.19, this implies potential upside of 76% for investors over the next 12 months.

To put that into context, a $10,000 investment would be worth approximately $17,600 by this time next year if Bell Potter is on the money with its recommendation.

Though, it is worth acknowledging that its speculative rating means that there’s potential for sizeable losses as well. That’s why this ASX stock is likely to be only suitable for investors that have a much higher than average risk tolerance.

What is the broker saying?

Bell Potter believes that the company has the potential to disrupt the titanium supply chain with its technology. It explains:

IPX has the potential to disrupt the incumbent titanium supply chain through materially lowering production costs and manufacturing waste. Large-scale production will commence this year, further de-risking the company’s technologies and enabling IPX to progress commercial relationships with several high-profile aerospace, automotive, luxury goods and government end users.

Our valuation is mostly supported by Phase 2 earnings using relatively conservative assumptions with respect to process margins. There is potential for IPX to rapidly scale Phase 2 and cement itself as a key supplier in the US and global titanium value chains. Our IPX valuation is now $3.85/sh (previously $3.70/sh), having removed the assumption of a near-term equity raise and its corresponding dilution.

All in all, the broker believes IperionX could have a very bright future ahead of it. This could make it one to watch very closely.

The post This disruptive speculative ASX stock could rise 75% in 12 months appeared first on The Motley Fool Australia.

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

I’ve already bought the two cheap ASX dividend shares in this article. They’re wonderful picks for passive income in retirement.

The higher interest rate environment is harming some sectors more than others. Within the pain, I think there are a few opportunities on the ASX.

And I’d much rather buy undervalued businesses than, say, the Commonwealth Bank of Australia (ASX: CBA), which, based on its earnings multiple and price-to-book ratio, is one of the most expensive banks in the world.

So, if I were investing in companies because of the dividend yield and value on offer, the below two would be among the names at the top of my buy list.

Metcash Ltd (ASX: MTS)

Metcash is a diversified business with three core segments.

It supplies independent supermarkets around Australia, namely IGAs. The company also supplies independent liquor retailers, including IGA Liquor, Bottle-O, Cellarbrations, and Porters Liquor. The food and liquor divisions can, in my opinion, provide stable earnings because of the largely consistent demand by households.

I’m excited about the company’s hardware division, which includes Total Tools, Mitre 10, and Home Timber & Hardware.

Hardware earnings are currently facing headwinds amid the high cost-of-living environment households and builders are in. I think Metcash can return to good earnings growth when economic conditions improve.

I like the company’s recent move to buy one of the country’s largest frame and truss businesses and a food service business that supplies other businesses, such as restaurants, cafes, hotels, hospitals, and others.

The ASX dividend share has committed to a dividend payout ratio of 70% of underlying net profit after tax (NPAT), which means it can pay a relatively high dividend yield. According to the estimates on Commsec, Metcash could pay a grossed-up dividend yield of 7.7% in FY24.

It looks cheap to me because it’s trading at just 13x FY24’s estimated earnings, whereas blue-chip peers like Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL) are trading at higher earnings multiples.

Rural Funds Group (ASX: RFF)

Rural Funds is a cheap ASX dividend share, in my opinion, because the farmland real estate investment trust (REIT) is trading at a significant discount to its underlying net asset value (NAV).

According to Rural Funds (and independent property valuers), the business had an adjusted NAV of $3.07 at 31 December 2023. That means the current Rural Funds share price is at a discount of around 34% to the latest disclosed NAV.

The business is seeing its rental income steadily grow thanks to rental indexation built into most of its contracts. Some of those rental increases are linked to inflation, while other contracts have a fixed annual increase.

Rural Funds has grown or maintained its distribution every year for the past decade. In the longer term, it wants to grow its annual distribution by 4% per annum.

The business has good farmland diversification across cattle, almonds, macadamias, vineyards and cropping. Diversification is useful as a form of protection against risk, so not all the eggs are in one basket. Being open to investing in multiple farming sectors gives the business more opportunities.

Its trailing distribution yield is 5.8%, which I believe is a solid starting yield for this cheap ASX dividend share.

The post 2 cheap ASX dividend shares I’d buy in retirement appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Metcash and Rural Funds Group. 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 Coles Group, Rural Funds Group, and Wesfarmers. The Motley Fool Australia has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The uranium sector has been a great place to invest over the last 12 months.

During this time, a number of ASX 200 uranium stocks have delivered stunning returns for their lucky shareholders.

However, one uranium stock that may have peaked now is Paladin Energy Ltd (ASX: PDN).

That’s the view of analysts at Bell Potter, which have just downgraded the uranium miner’s shares.

Why has this ASX 200 uranium stock been downgraded?

According to a note, the broker has downgraded its shares to a hold rating (from buy) with a trimmed price target of $15.70 (from $16.50). This is largely in line with the current Paladin Energy share price of $15.74.

Bell Potter recently visited the company’s Langer Heinrich Mine (LHM) in Namibia and was impressed with what it saw. In fact, it sees scope for Paladin Energy to surprise to the upside with its earnings. It said:

In summation, we were surprised at the quality of the site/ regional infrastructure and competency of the local workforce. The restart & ramp up appears to be running smoothly, which could provide upside risks to our earnings.

However, there are risks for investors to consider. One of these comes from its operating costs. It adds:

On the flip-side, we are cautious on operating costs which seem to be the biggest downside risk at this point. Based on the assumptions in the restart plan (2021) PDN anticipated a US$15.74/t milled ore mining cost. In our mind, there is no doubt that this figure has increased, however the Namibian Rand has depreciated 10% against the US$ since that period. Overall, we have factored in a 5% increase to US$ mining costs going forward.

In addition, Bell Potter highlights that there is an election coming up in Namibia, which could throw a spanner into the works. It explains:

In the upcoming election (Nov), key risks remain with the potential for an introduction of a Government free-carry interest and/or an increase in mining taxes being discussed. At this stage, the likelihood is unknown however the impact should these measures be introduced could be substantial.

Shares downgraded

In light of the above and with the ASX 200 uranium stock rallying hard over the last 12 months, the broker has decided to downgrade its shares to a hold rating. It summarised its decision:

Our target price for PDN decreases slightly to $15.70/sh (previously $16.50/sh) and we downgrade to a Hold. We walked away from the site tour with a positive outlook on LHM, however note that the stock has appreciated 140% over the past twelve months and at current levels looks fully valued, on our estimates. Further appreciation from here will be driven by 1) improving uranium pricing (PDN has ~80% market exposure through to 2030, our near-term price assumes a near-term price of US$115/lb vs spot of $92/lb), 2) expansion and exploration to the west of the current mining lease at LHM, and 3) potential M&A activity as LHM reaches a steady state of production.

The post Guess which ASX 200 uranium stock was just downgraded appeared first on The Motley Fool Australia.

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