Stock Pick

  • 1 ASX small-cap stock that could benefit from the rental crisis

    Woman with a moving box on her head.

    Australia’s rental market is in a frenzy, with skyrocketing prices and tight supply leaving many scrambling for solutions. As housing affordability issues continue to plague the housing market, the rental crisis has become a significant concern for tenants.

    But for savvy investors, this crisis may present a golden opportunity.

    Aspen Group Limited (ASX: APZ) is one ASX small-cap stock that might benefit from the ongoing housing crisis. Let’s explore.

    Focus on affordable housing sector

    Aspen Group specialises in affordable housing and accommodation solutions. The company owns more than 5,000 approved dwellings and land sites across Australia.

    It offers affordable living options such as rental properties, retirement villages, and holiday parks, making housing accessible to a wide range of people. The company explains its business model:

    Our core customer base is the approximate 40% of Australian households that can afford to pay no more than about $400 per week to rent or $400,000 to purchase their housing needs.

    The shortage of accommodation at our end of the market has become even more acute over recent years with the proportion of rentals offered nationally at less than $400 per week collapsing from 42% in 2020 to only 16% in 2023.

    Aspen Group generates revenue from two main sources: rental income and property development and sales. Its underlying net operating income (NOI) from these sources grew significantly, increasing from $5 million in FY19 to $21 million in the last 12 months to December 2023.

    These NOI figures are different to the statutory net profits after tax (NPAT), which reached $50.8 million in the last 12 months. The higher NPAT is primarily due to revaluation gains on properties, estimated at around $47 million, reflecting the market value increase of these properties, which can vary each year.

    According to Aspen’s 1H FY24 report, the rental market remains strong. Aspen’s total portfolio rent rose 13% year-over-year to $314 per week per dwelling. Notably, residential rent jumped 18% to $342 per week per dwelling, surpassing the market average growth of 16%.

    Another important axis of growth is strategic acquisitions. The company continuously looks for acquisition opportunities to expand its portfolio and enhance its revenue potential. By acquiring properties that fit its affordable housing model, Aspen can scale its business and increase market reach.

    Most recently, Aspen Group tried to acquire Eureka Group Holdings Ltd (ASX: EGH). Although its takeover offer wasn’t successful, Aspen still owns a strategic stake of 36% in Eureka Group. The value of this stake represents approximately 8% of Aspen’s total assets.

    FY25 profit guidance upgrade

    Aspen remains upbeat about the future.

    Recently, the company increased its underlying earnings forecast for FY24 to 13.5 cents per security (cps), the upper limit of its previous guidance. Additionally, it issued profit guidance for FY25, projecting underlying earnings to be between 14.5 cps and 15 cps, representing a 9% growth from FY24 at the midpoint.

    The residential market is in short supply, especially for affordable housing, which management expects to continue. The company noted:

    Aspen’s residential and lifestyle portfolios are essentially full and 3-month forward bookings for our parks portfolio are 18% ahead of the same time last year.

    Rents are growing strongly yet remain affordable and competitive at an average of about $365 per week for residential dwellings and $190 per week for lifestyle land sites. We enjoy a high-quality tenant base and negligible arrears.

    How cheap are Aspen Group shares compared to peers?

    Aspen Group shares are trading at 12 times FY25’s estimated earnings. Comparing Aspen Group to other similar companies in the real estate sector based on earnings estimates provided by S&P Capital IQ:

    • Ingenia Communities Group (ASX: INA) share price is valued at 19x FY25 estimated earnings
    • Lifestyle Communities Ltd (ASX: LIC) share price is valued at 16x FY25 estimated earnings
    • Eureka Group share price is valued at 16x FY25 estimated earnings

    Aspen Group shares offer a distribution yield of 4.7% based on trailing 12 months’ payments. The company anticipates paying out 9.5 cps as distribution in FY25, representing a 5.3% yield at the current security price.

    Foolish takeaway

    I think Aspen Group shares offer an interesting opportunity to benefit from rental shortages in Australia.

    At $1.79, the Aspen Group share price has moved sideways, trading 0.5% lower than it was 12 months ago but up 6.5% in the year to date.

    The post 1 ASX small-cap stock that could benefit from the rental crisis appeared first on The Motley Fool Australia.

    Wondering where you should invest $1,000 right now?

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes could be the ‘five best ASX stocks’ for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now…

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    More reading

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

  • OceanGate co-founder thinks about the Titan implosion daily but still wants to make deep-sea exploration accessible

    Side-by-side portrait of OceanGate co-founders Guillermo Söhnlein and Stockton Rush
    Guillermo Söhnlein, left, co-founded OceanGate with the late Stockton Rush, right, in 2009.

    Guillermo Söhnlein, Bill Sikes/AP

    • OceanGate's Titan imploded nearly a year ago, killing all 5 passengers including the company's CEO.
    • The company's co-founder, Guillermo Söhnlein, told BI he thinks about the incident daily.
    • The fatal implosion motivates him to continue with his exploration ventures, Söhnlein said.

    OceanGate's co-founder said he thinks about the fatal Titan submersible voyage every day, and the incident pushes him to continue pursuing his vision of accessible deep-sea exploration.

    Nearly one year ago, on June 18, 2023, the Titan made its final plunge in the Atlantic, where five passengers — including OceanGate's CEO Stockton Rush — ventured to the site of the Titanic wreckage.

    US Coast Guard officials said the vessel experienced a "catastrophic implosion," instantly killing all passengers.

    The incident captured national attention and was widely viewed as the manifestation of Rush's hubris and relentless push to explore the deep sea — even if that meant bending a few rules.

    "Few of us ever have a fatal flaw, and Rush did," Arnie Weissmann, the editor-in-chief of Travel Weekly, told Business Insider last year. "He thought he was right or he wouldn't have gotten in [the submersible] and piloted it, but that was a fatal flaw."

    But for Guillermo Söhnlein, who co-founded OceanGate with Rush in 2009, death is an unfortunate element of innovation that explorers can only hope to avoid.

    "We always know that setbacks are almost just part of the exploration experience. It's almost in the definition of exploration," he told BI in a recent interview. "You're gonna have setbacks, and you hope that the setbacks don't include fatalities, but you know that's a possibility."

    And when death does become a "setback," Söhnlein said, that's when you should push harder.

    "I think in a paradoxical kind of way, that drive to keep going is amplified," he said. "And I think in large part, it's because you want to make sure that your colleagues, who lost their lives, didn't lose their lives in vain. You want their death to mean something, and you want their legacies to live on."

    This sentiment is part of why Söhnlein hasn't stopped thinking about OceanGate and Rush in the year since the Titan catastrophe.

    "If anything I probably think about him and the company and everything 10 times more than I did before the incident," he said.

    Advances in human transportation systems

    During the interview, Söhnlein did not mention regrets in those thoughts but rather a desire to achieve OceanGate's early vision to "open the oceans up to humanity."

    He told BI that he sees an issue with how the only people who seem to be able to plunge into the ocean's depths are billionaires with resources to build a submersible or researchers and government agencies that have access to deep-sea vessels.

    "When Stockton and I sat down and looked at the state of the world in 2009, we thought, 'That is a tragedy,'" he said. "The most important ecosystem in the entire planet is one that we can only access if we are a national government or a billionaire. And that's ridiculous."

    The Titan implosion continues to be investigated today. A recent Wired report revealed more insights into Rush's push to build a low-cost submersible and how he ignored warnings from his colleagues.

    People within and outside OceanGate urged Rush to conduct more tests on the Titan before taking on passengers. Last year, BI reported that OceanGate had completed over 14 expeditions and 200 dives using two submersibles.

    Söhnlein said he read the Wired report but didn't want to comment because he felt he would be speculating on its contents.

    He also told BI that he doesn't consider how many tests are suitable for a deep-sea submersible "because it is different for every sub, depending on the level of innovation."

    When asked if he would have said anything differently to Rush before the implosion, Söhnlein again told BI that he would be speculating.

    "I don't know. I'd be speculating since I wasn't at the company and I only spoke to Stockton occasionally," he said. "I didn't have access to all the information. I wasn't there day to day. I didn't see the sub being built."

    A communications firm representing OceanGate wrote in a brief email to BI that "OceanGate has suspended all exploration and commercial operations."

    Last year, Söhnlein told BI of his grand vision to send 1,000 people to a floating colony on Venus. He also founded Blue Marble Exploration, which he described as an "exploration-focused media company," after he left OceanGate.

    In his recent interview with BI, he said that one takeaway from the Titan implosion, which he would apply to his ongoing exploration ventures, goes beyond submersibles and is relevant to the current advancements in the "human transportation system," from self-driving cars to suborbital flight.

    "At some point in the technology development cycle, you have to put humans in the loop," Söhnlein said. "But if you're going to start putting humans in that transportation system, you've got to have the right level of comfort with the viability of the technology to do it as safely as possible. And I think that's just kind of a lesson learned for everybody."

    Read the original article on Business Insider

  • Their trip to Bali was going to be a month long. But they fell in love with the island and built a house near the sea, giving up city life for good.

    The garden creeps into the living area.
    The garden creeps into the living area.

    Amanda Goh/Business Insider

    • Tanguy and Lucie Yu gave up city life in Paris to move to Bali in 2019.
    • Their house, located amid rice paddies, took 4 months to build and has a garden indoors.
    • They say they are less attached to material things and want to focus on what truly matters to them in life.

    Tanguy and Lucie Yu first visited Bali together in 2018 for a monthlong vacation.

    That year, Lombok, a neighboring island, experienced a 6.9-magnitude earthquake that could be felt even in Bali, which was 40 minutes away by plane.

    "We couldn't travel much to the other islands because the boats weren't working, so we rented motorbikes, and we did road trips to see all the different parts of the main island," Lucie, 35, told Business Insider.

    A man holding a baby posing for a photo with a woman.
    Tanguy and Lucie Yu, with their baby.

    Amanda Goh/Business Insider

    The couple, who was living in Paris at the time, was blown away by the simplicity of life on the island and the generosity of the people they met.

    "Farmers whose houses were damaged by the earthquake still invited us over for coffee. They had a smile on their faces and were just happy to be alive," Lucie said. "It was a sign that this place had some magic."

    A year later, in September 2019, the couple packed up their lives and moved across the globe to Bali.

    Finding land

    The exterior of their home in Bali.
    The exterior of the couple's home in Bali.

    Amanda Goh/Business Insider

    Initially, they planned to use Bali as a base to travel around Asia. But six months later, the pandemic hit and derailed their plans.

    Around then, Tanguy cofounded Astungkara Way, a regenerative travel company. That spurred the couple's decision to put down more permanent roots in Bali, so they started looking for land to build on.

    During their first year in Bali, the couple lived in Kerobokan, an area sandwiched between the bustling, tourist-filled neighborhoods of Canggu and Seminyak.

    A pathway leading to the front door of the house. There's a garden inside the house.
    A pathway leading to the front door of the house. There's a garden inside the house.

    Amanda Goh/Business Insider

    "It was very busy, very loud, and a lot of traffic," Lucie said.

    They knew they wanted to be somewhere quieter, and a friend introduced them to the property 10 miles north in Kediri, where they now live.

    The only criterion they had was that the land couldn't be a rice paddy since part of the travel company's mission is to protect rice paddies.

    "We thought that it was too far from things like hospitals and shops. But when he took us here, and we stepped on this land, we felt this was the place we wanted to be," Lucie said.

    The living area and sofa.
    One of the couple's dogs lounging in the living room.

    Amanda Goh/Business Insider

    They had viewed three other plots of land before they found this.

    "The land was basically the village dump and the soil was full of trash. It took us two weeks to clean everything up," Lucie said.

    She added that back in 2020, there was only one local village in the area, although things have changed since.

    The garden creeps into the living area.
    The garden creeps into the living area.

    Amanda Goh/Business Insider

    "We were like the last point before the rice paddies started and we were promised that it would stay that way," Lucie said. But two months later, a new 160-home development broke ground on the land just beyond their property.

    Building a low-impact house

    In local measurements, their land spans 15 are — about 16,145 square feet.

    The couple says they paid 4.5 million Indonesian rupiah per are each year for a 25-year lease, which amounts to about 1.687 billion Indonesian rupiah in total, or about $103,500 in today's currency.

    The living area and sofa.
    One of the couple's dogs lounging in the living room.

    Amanda Goh/Business Insider

    Building the home took about four months, and they estimate they spent about $70,000 on the build.

    The couple's house is surrounded by their lush outdoor garden. A dirt pathway with an overhead trellis covered in creepers leads from the gate at the edge of their property to the couple's front door.

    The entire front section of the house is shielded by a giant insect net — meant for greenhouses — to prevent mosquitoes from entering.

    The kitchen island doubles as a dining table.
    The kitchen island doubles as a dining table.

    Amanda Goh/Business Insider

    "You get sun, you get wind, you get rain in the house as well, which is really nice, but you don't get bugs," Tanguy, 40, told BI.

    There's even a garden inside the house, which helps keep their home cool even without a cooling system.

    The couple's home was designed and built by the late architect Tony Gwilliam, a close family friend. The inspiration behind its design was another similar building prototype that Gwilliam had constructed in the Bloo Lagoon Eco Village, a resort located along the east coast of Bali.

    The kitchen.
    The kitchen.

    Amanda Goh/Business Insider

    "We went for a road trip during our first week in Bali, and we stopped by the Bloo Lagoon Eco Village because we wanted to see their permaculture garden. In the middle of the garden was the first prototype of our house, and we just fell in love with its concept," Lucie said.

    It was a six-meter cube made from steel, and the couple liked the idea of incorporating that material into their build.

    "If you're using steel, you can have very small foundational elements," Tanguy said.

    The bathroom.
    The bathroom.

    Amanda Goh/Business Insider

    For instance, the couple's house is supported by six steel pillars and made from local brick. Because it's light, the house can also be taken down and fit in a container to be moved if required.

    "It doesn't take much space, and it doesn't require many materials," Tanguy added.

    As he explained, Gwilliam and the couple were inspired by architect R. Buckminster Fuller's ideas about the weight of a house, which is related to its environmental impact.

    The bedroom.
    The bedroom.

    Amanda Goh/Business Insider

    "How much material was extracted from the ground, transported, and transformed? When you have a big concrete villa, the impact of those is colossal," Tanguy said.

    Even the home's interiors are fairly minimal, with each piece of furniture designed by the couple and made by local craftsmen.

    "Maybe we're getting older, we're less attached — and this is also what the idea of coming here was about, to be less attached to material things and more attached to how we feel, how we live, how we are as a couple, as parents, and just focusing more on life," he said.

    Now, even with an infant son in tow, they have a slower pace of life.

    Every day, they spend time as a family and walk their three dogs along the beach, which is less than 10 minutes away on foot. The couple also has two cats, and they rear chickens and grow their own produce in the garden.

    A little play area for the baby.
    A little play area for the baby.

    Amanda Goh/Business Insider

    "The only thing that we didn't think about when we were creating the house was that we were going to have a baby, so it's not very baby-proof," Lucie added.

    That said, the layout can be easily adjusted because of the house's design and materials.

    "If we want to add two more rooms, we can still do it within the space," she said. "We can improve it as we grow according to our needs."

    Be part of the solution, not the problem

    Tanguy acknowledges that mass tourism has greatly impacted Bali and its natural ecosystems. He points to the island's ongoing water crisis and the destruction of Bali's natural landscapes for materials as examples.

    The garden.
    The garden.

    Amanda Goh/Business Insider

    "I think people should move here if they want to contribute, but if they are here to just extract value from the people, from unregulated resource management, then they should reconsider," Tanguy said. "It's a pretty fragile part of the world."

    He added that there are plenty of eco-tourism alternatives that are now available on the island.

    "There are a lot of hotels that are trying to do better, who are growing their own food, doing wastewater treatment or sourcing their food locally," Tanguy said. "If you come to Bali, go there and support. The same thing for restaurants."

    "Make sure to be part of the solution," he added.

    Have you recently built or renovated your dream home? If you've got a story to share, get in touch with me at agoh@businessinsider.com.

    Read the original article on Business Insider

  • I’d use the Warren Buffett method and buy these 2 ASX shares

    A happy boy with his dad dabs like a hero while his father checks his phone.

    I think Warren Buffett is one of the world’s leading investors. He has identified the right times to invest via his Berkshire Hathaway business during bear markets. His advice is very useful for finding compelling ASX shares.

    Good investing is usually about choosing good assets at attractive prices. We’re generally presented with the best prices when there’s a lot of uncertainty.

    Warren Buffett once shared one of the most simple yet valuable pieces of advice:

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

    In other words, invest eagerly when most investors are cautious and be careful when the market looks bubbly and too excited.

    With that in mind, I believe the two ASX shares below tick the boxes.

    Johns Lyng Group Ltd (ASX: JLG)

    The Johns Lyng share price has dropped close to 20% since 26 February 2024, as shown in the chart below.

    The company specialises in building and restoring various properties and contents after damage caused by insured events such as weather, fire, and impact.

    Clients include major insurance companies, commercial enterprises, local and state governments, body corporates/owners’ corporations and regular households.

    Johns Lyng is effectively growing its market share in Australia and the United States. It was recently appointed to the Allstate emergency response and mitigation panel. Allstate is one of the largest insurance companies in the US.

    The company’s catastrophe earnings can be pretty volatile – catastrophes are not consistent. However, the underlying core business is growing at a pleasing pace. In the FY24 first-half result, Johns Lyng reported that its normalised business-as-usual net profit after tax (NPAT) increased 15.8% to $25 million.

    The estimate on Commsec suggests the business could generate earnings per share (EPS) of 20.5 cents in FY24 and reach 25 cents in FY26. This translates into a forward price/earnings (P/E) ratio for FY26 of 24, which I think is appealing for a business with a long growth runway that’s growing underlying earnings by double digits.

    That’s why I believe Warren Buffett would be attracted to this growing industrial ASX share.

    Collins Foods Ltd (ASX: CKF)

    The chart below shows that the Collins Foods share price has dropped around 25% since January 2024, presenting an opportunity to buy into this fast-growing business.

    Collins Foods operates an extensive network of KFCs in Australia and a growing KFC network in Europe. It also operates a small number of Taco Bells in Australia.

    When it comes to businesses that operate through physical locations, like retailers or food places, we want to see that those existing locations are performing well. This can be measured through the same-store sales (SSS) metric.

    In the FY24 first half result, Collins Foods revealed KFC Australia SSS growth of 6.6% and KFC Europe SSS growth of 8.8%. It’s also steadily adding more KFC outlets in Australia and Europe, improving its scale benefits.

    That HY24 result saw the company’s revenue rise 14.3% to $696.5 million and underlying NPAT increase 28.7%.

    Europe has a much bigger population than Australia, so I believe there’s scope for a significant increase in the number of stores in the region over the next decade.

    According to Commsec, Collins Foods’ EPS is expected to rise by approximately 50% between FY24 and FY26, which would put the business at just 12x FY26’s estimated earnings. I believe Warren Buffett would be attracted to this sort of growth potential.

    The post I’d use the Warren Buffett method and buy these 2 ASX shares appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Collins Foods Limited right now?

    Before you buy Collins Foods Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Collins Foods Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    Motley Fool contributor Tristan Harrison has positions in Collins Foods and Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group. The Motley Fool Australia has recommended Collins Foods and Johns Lyng Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Here’s the earnings forecast out to 2027 for Pilbara Minerals shares

    Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.

    The Pilbara Minerals Ltd (ASX: PLS) share price has seen significant volatility in the last couple of years. Just look at the chart below — in the last month alone, it has sunk around 20%.

    Can profit generated in future years translate into a recovery for the lithium miner?

    ASX mining shares are heavily exposed to commodity price movement regarding profit-making and investor confidence.

    Mining costs typically don’t change much from month to month or even year to year. Therefore, changes on the revenue side can significantly increase or reduce profitability.

    The lithium price has sunk over the past 18 months. In the quarterly update for the three months to 31 March 2024, the ASX lithium share revealed the realised price for its commodity had sunk 28% since the quarter ending 31 December 2023.

    With the lithium price sinking and staying low, what has this done to the profit estimates for the next few years? Let’s examine what one broker thinks.

    FY24 projection

    The 2024 financial year is nearly over, with only a couple of weeks left in June. However, until the reporting season arrives in August, we won’t see the company’s reported financials for several more weeks.

    Broker UBS thinks Pilbara Minerals will generate $353 million of net profit after tax (NPAT) in FY24, which could represent a $2 billion reduction year over year.

    UBS has forecast the company’s net cash balance could drop to $936 million as it invests in its P680 and P1000 projects.

    UBS thinks the lithium price has stabilised at levels largely consistent with Pilbara Minerals’ BMX auction result of US$1,106 per tonne.

    At the current Pilbara Minerals share price, it’s valued at 27x FY24’s estimated earnings.

    How about FY25?

    According to UBS, the weak conditions are expected to continue into the 2025 financial year.

    The broker expects the ASX lithium share to generate $366 million of net profit in FY25, $13 million more than in FY24.

    UBS expects Pilbara Minerals to allocate another A$680 million in capital expenditures in FY25 to grow P1000.

    The broker forecasts the ASX share’s cash balance will be A$1.25 billion at the end of FY25, with a net cash balance of A$708 million.

    Expectations for FY26

    The 2026 financial year could see the ASX lithium share’s revenue increase by around A$300 million, which could also help the earnings before interest and tax (EBIT) increase by approximately A$300 million to $826 million.

    Pilbara Minerals is projected to generate a net profit of $543 million in FY26, which would represent a 48% year-over-year increase or $177 million in dollar terms.

    The increased profit and winding down of P1000 capital spending could see the net cash balance jump to $1.2 billion.

    UBS has also pencilled in a dividend payment of 5 cents per share with earnings per share (EPS) generation of 18 cents.

    Finally, here’s the FY27 forecast

    According to this series of forecasts, the 2027 financial year could be the best year.

    Its revenue is forecast to increase again to almost $2 billion, which could unlock $1 billion of EBIT.

    UBS has predicted that Pilbara Minerals could make a net profit after tax of $690 million in FY27, which would represent an increase of 27% year over year. If that happens, the broker predicts the company could declare an annual dividend per share of 9 cents.  

    The post Here’s the earnings forecast out to 2027 for Pilbara Minerals shares appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Pilbara Minerals Limited right now?

    Before you buy Pilbara Minerals Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pilbara Minerals Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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

  • This speculative ASX stock could almost double in value

    Every investor has a different risk appetite. Some investors play it safe and buy low risk, defensive ASX stocks. Others are willing to risk a little for stronger potential returns. And a handful will seek the huge potential returns on offer from the speculative side of the market.

    If you’re in the latter category, then it could be worth checking out the speculative ASX stock in this article.

    That’s because the team at Bell Potter believes that it has the potential to almost double in value from current levels.

    Which speculative ASX stock?

    The company in question is Immutep Ltd (ASX: IMM). It is a $520 million, clinical-stage biotechnology company developing novel Lymphocyte Activation Gene-3 (LAG-3) immunotherapy for cancer and autoimmune disease.

    Immutep’s eftilagimod alfa (efti) product is its proprietary soluble LAG-3 protein and MHC Class II agonist that stimulates both innate and adaptive immunity for the treatment of cancer.

    Management notes that as a first-in-class antigen presenting cell (APC) activator, efti binds to MHC (major histocompatibility complex) Class II molecules on APC leading to activation and proliferation of CD8+ cytotoxic T cells, CD4+ helper T cells, dendritic cells, NK cells, and monocytes.

    It also upregulates the expression of key biological molecules like IFN-Æ´ and CXCL10 that further boost the immune system’s ability to fight cancer.

    What is the broker saying?

    Bell Potter highlights that the speculative ASX stock is on the cusp of becoming a phase three company with a significant market opportunity. It notes:

    At the end of CY24, IMM will transition into a Phase 3 company targeting one of the most lucrative oncology indications, first-line (1L) non-small cell lung cancer (NSCLC).

    IMM will target all patients regardless of PD-L1 expression and test the regimen of Efti + pembrolizumab + chemo in ~750 patients. This is a positive choice in our view as it broadens the TAM to ~70k US patients diagnosed annually (or ~US$11b) and aims to improve upon the best standard of care currently available to patients, thereby speeding up Phase 3 recruitment and real-world adoption. Recruitment will start end-CY24/early-CY25.

    The broker was also pleased to see that Immutep has successfully raised $100 million from investors recently. It believes this “improved balance sheet provides ~2.5 years of runway to end-CY26 (post Phase 3 futility analysis) and clears any perceived funding overhang in the near-term ahead of key readouts in HNSCC and beyond.”

    Big potential returns

    Bell Potter has responded to the above by reaffirming its speculative buy rating and 80 cents price target on the ASX stock.

    Based on its current share price of 41%, this implies potential upside of 95% for investors over the next 12 months. It concludes:

    With longer-term value being driven by the 1L NSCLC Phase 3, short-term attention now shifts to the imminent release of Phase 2b data by 30th June in head & neck cancer, where Efti + Keytruda is being evaluated head-to-head against Keytruda.

    We maintain our BUY (speculative) recommendation and $0.80/share valuation. We remain positive ahead of the significant Ph2b readout due in the next ~2 weeks.

    The post This speculative ASX stock could almost double in value appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Immutep Limited right now?

    Before you buy Immutep Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Immutep Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    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.

  • Why the iShares Global 100 ETF (IOO) is a great long-term buy

    Two people work with a digital map of the world, planning their logistics on a global scale.

    I think one of the leading ASX-listed exchange-traded funds (ETFs) is the iShares Global 100 ETF (ASX: IOO).

    Regular readers may already know that I’m a big fan of international ETFs, which can provide diversification with strong holdings at an attractive management cost.

    The Australian share market is heavily concentrated on two sectors, with around half of the S&P/ASX 200 Index (ASX: XJO) weighted to ASX bank and mining shares. I think the IOO ETF could be a particularly good move for Aussies who don’t have much international share exposure.

    The iShares Global 100 ETF invests in 100 of the largest global stocks from both developed and emerging markets.

    Diversification and holdings

    It’s invested in all of the large US tech giants that are now part of our lives in various ways, including Microsoft, Nvidia, Apple, Amazon.com and Alphabet.  

    It also owns names such as Proctor & Gamble, Mastercard, Tencent, Samsung, Walmart, LVMH, McDonald’s, Caterpillar, HSBC and many more.

    These holdings are some of the world’s most effective operators in their fields. Because of their excellent economic moats, it’s very hard for smaller challengers to hurt these industry giants.

    What I particularly like about the IOO ETF is its significant exposure to technology, with a 43% weighting. While banks and miners are typically exposed to the same operational risks as their peers, US tech shares are much more diverse and have global earnings bases. Thanks to the intangible nature of many of their services, tech companies can achieve strong profit margins and grow revenue quickly.

    In terms of the other sectors, five industries have an allocation of more than 5% inside the IOO ETF: healthcare (10.5%), consumer discretionary (9.9%), financials (8.7%), communication (8.4%), and consumer staples (7.5%).

    While more than three-quarters of the portfolio is listed in the US, the underlying earnings are more evenly spread worldwide. For example, consider all the different countries in which Apple smartphones are sold.  

    Excellent returns

    We shouldn’t rely upon past performance as an indicator of future returns, but I believe the underlying quality of the IOO ETF’s holdings can help long-term returns continue to be compelling.

    According to fund provider Blackrock, the IOO ETF has delivered an average return per annum of 14.95% over the decade to 31 May 2024. If someone had invested $1,000 a decade ago, they would have around $4,000 now.

    Many of these companies generate strong profits and a pleasing return on equity (ROE), so further profit re-investment can help them grow even more in the future.

    Investors often like to value a business based on how much profit they’re making, so rising earnings should translate into higher valuations over time.

    Reasonable fee

    It’s not the cheapest ASX ETF out there. The IOO ETF has an annual management fee of 0.40%.

    I acknowledge other ETFs are cheaper, such as the Vanguard MSCI Index International Shares ETF (ASX: VGS) and the Vanguard US Total Market Shares Index (ASX: VTS).

    However, the IOO ETF allocates more to the strongest businesses than the VGS ETF and has more global diversification than the VTS ETF.

    I think this ASX ETF can provide a lot of elements that some Aussie investors may be missing in their portfolios.

    The post Why the iShares Global 100 ETF (IOO) is a great long-term buy appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Ishares International Equity Etfs – Ishares Global 100 Etf right now?

    Before you buy Ishares International Equity Etfs – Ishares Global 100 Etf shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Ishares International Equity Etfs – Ishares Global 100 Etf wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

    HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, 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, Mastercard, Microsoft, Nvidia, Tencent, and Walmart. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings 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, Mastercard, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • This ASX dividend share is predicted to pay a 12% yield in 2026!

    Middle age caucasian man smiling confident drinking coffee at home.

    Shaver Shop Group Ltd (ASX: SSG) shares might be an excellent source of passive income in the coming years. The ASX dividend share could pay an enormous dividend yield in FY26 if a forecast proves correct.

    One of the benefits of investing in ASX retail shares is that they typically trade on a lower price/earnings (P/E) ratio, which can help enable a greater dividend yield.

    Shaver Shop is among the largest retailers of male and female hair removal products. It has more than 120 stores in Australia and New Zealand and an online presence on its own websites, as well as eBay, Amazon, TradeMe, and MyDeal.

    The company also offers oral care, hair care, massage, air treatment, and beauty products.

    Low valuation

    I mentioned retailers can have low P/E ratios, and Shaver Shop is no exception.

    According to the estimate on Commsec, Shaver Shop is projected to generate earnings per share (EPS) of 13.2 cents in FY26.

    At the current Shaver Shop share price of $1.14, that translates into the company trading at 10x FY26’s estimated earnings, which I think represents a low valuation considering the ASX dividend share could generate EPS growth between now and FY26.

    Growing businesses are normally valued at a higher earnings multiple by investors to take into account the potential profit the business may make in the future.

    Large dividend yield expected

    No business is guaranteed to pay a dividend – it’s not bank interest.

    Interestingly, Shaver Shop has grown its annual dividend every year since it first started paying one in 2017. This growth streak is not guaranteed to continue. Indeed, the estimates on Commsec imply a dividend cut may be on the cards in FY24, though the FY24 interim payout was maintained at 4.7 cents per share.  

    The forecast on Commsec suggests Shaver Shop could pay an annual dividend per share of 10 cents in FY26. This would translate into a grossed-up dividend yield of 12.6%.

    If that payout happens, it would be a huge yield for shareholders, but it could certainly be possible considering the last 12 months amounted to a grossed-up dividend yield of 12.8% amid difficult retailing conditions.

    Shaver Shop can grow its profit in the future by adding more stores, benefiting from Australia’s growing population and adding more brands to its portfolio, such as Skull Shaver.

    The post This ASX dividend share is predicted to pay a 12% yield in 2026! appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Shaver Shop Group right now?

    Before you buy Shaver Shop Group shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Shaver Shop Group wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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

  • These ASX 200 mining stocks could rise 30% to 60%

    If you’re looking to diversify your investment portfolio with some mining sector exposure, then it could be worth considering the two ASX 200 mining stocks named below.

    That’s because they have not only been rated as top buys, but they also have been tipped to rise strongly from current levels. This could potential mean market-beating returns for investors buying them today.

    Here’s what you need to know about these mining stocks:

    Regis Resources Ltd (ASX: RRL)

    Analysts at Bell Potter think this ASX 200 gold mining stock could be severely undervalued by the market right now.

    It feels that investors are not taking into account its high-quality all-Australian portfolio and the attractiveness of these assets to a bigger player. In addition, the broker highlights that the Duketon Gold Project owner has a very positive production growth outlook. It said:

    As one of the largest ASX listed gold producers, we are attracted to its all-Australian asset portfolio and organic growth options which are unique at this scale. Furthermore, we see key opportunities in the fundamental, medium-term outlook and, in our view, these may also make RRL an appealing corporate target in the current conducive M&A environment.

    Bell Potter has a buy rating and $2.80 price target on its shares. This implies potential upside of 61% for investors over the next 12 months.

    Woodside Energy Group Ltd (ASX: WDS)

    Another ASX 200 mining stock that gets the thumbs up by analysts is Woodside. It is one of the world’s largest energy producers with operations across the globe.

    Morgans thinks that its shares are undervalued after recent weakness. In light of this, it sees now as a great opportunity for investors to snap them up. It said:

    WDS’s share price has been under pressure in recent months from a combination of oil price volatility and approval issues at Scarborough, its key offshore growth project. With both of those factors now having moderated, with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions. Increasing our conviction in our call is the progress WDS is making through the current capex phase, while maintaining a healthy balance sheet and healthy dividend profile.

    The broker has an add rating and $36.00 price target on Woodside’s shares. Based on its current share price of $27.26, this suggests that a return of 32% is on the cards for investors before dividends. This increases to approximately 36% including them.

    The post These ASX 200 mining stocks could rise 30% to 60% appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Regis Resources Limited right now?

    Before you buy Regis Resources Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Regis Resources Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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

  • 3 of the best ASX 200 blue chip shares to buy now

    The benchmark ASX 200 index is home to 200 of the largest listed companies on the Australian share market.

    Among these companies are some true blue chip stars that could form the foundations for a winning portfolio.

    But which ASX 200 shares could be top buys for investors today today? Let’s now take a look at three blue chip options for investors to consider buying:

    Coles Group Ltd (ASX: COL)

    The team at Bell Potter thinks that Coles could be an ASX 200 share to buy.

    It is of course one of Australia’s largest supermarket operators. In addition, the company has a large liquor store network and joint ownership of the Flybuys loyalty program.

    The broker likes the company due partly to its recent investment in automation and its online business. It believes that this “should help Coles maintain its market position.”

    Bell Potter currently has a buy rating and $19.00 price target on the company’s shares.

    CSL Limited (ASX: CSL)

    Another ASX 200 share that analysts rate as a buy is CSL.

    It is one of the world’s leading biotherapeutics companies with a collection of industry-leading therapies. This includes therapies such as Privigen, Hizentra, Idelvion, and Afstyla.

    But CSL is never one to settle. Each year it reinvests in the region of 12% of its sales back into research and development (R&D) activities. Combined with its existing products and the rollout of its new plasma collection technology, the future looks bright for this ASX 200 blue chip star.

    In light of this, it may not come as no surprise to learn that a large number of brokers are recommending CSL shares as a buy. One of those is Macquarie, which has an overweight rating and $330.00 price target on them.

    ResMed Inc. (ASX: RMD)

    A third ASX 200 share that could be a great addition to a portfolio is ResMed.

    It is a medical device company with a focus on the sleep disorder market. This is a huge market, with an estimated one in five people suffering from a sleep disorder globally.

    However, the majority of these people are not aware of their conditions. But with the awareness of sleep disorders and the health risks they pose increasing each year, ResMed looks well-placed to continue its solid growth long into the future.

    Citi is bullish on ResMed and has a buy rating and $36.00 price target on its shares.

    The post 3 of the best ASX 200 blue chip shares to buy now appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Coles Group Limited right now?

    Before you buy Coles Group Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Coles Group Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 5 May 2024

    More reading

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