There could be some big returns on offer at the smaller side of the market.

That’s the view of analysts at Goldman Sachs, which have just reiterated buy ratings on three mid-cap ASX shares following the broker’s annual Emerging Leaders Conference.

Let’s now take a look at the three shares that could offer returns of 20% to 50% over the next 12 months:

IPH Ltd (ASX: IPH)

Goldman Sachs has a buy rating and $8.70 price target on this intellectual property services company’s shares. This implies potential upside of 47% for investors from current levels. And with the broker forecasting 5.6%+ dividend yields through to at least FY 2026, the total potential return stretches beyond 50%.

Goldman believes the company is positioned for solid growth in the coming years. It commented:

In our view, IPH is well-placed to deliver consistent and defensive earnings with modest overall organic growth. We expect Asia to be the fastest growing region for IPH (c.10% volume growth p.a. over the medium term), as the company leverages its strong market share in Singapore to grow in other Asian markets.

Macquarie Technology Group Ltd (ASX: MAQ)

Another mid-cap ASX share that Goldman is bullish on is data centre, cloud, cybersecurity, and telco company Macquarie Technology. It has a buy rating and $93.00 price target on its shares, which suggests potential upside of almost 20% for investors.

The broker is feeling very positive about the company’s data centre operations. It said:

MAQ is poised to demonstrate the acceleration of its data centre growth pipeline through 2024, both from IC3W (now DA approved and underway, with potential to be upsized from 38MW to 45MW) and a new site in the Sydney metro area. The core Cloud Services / Telco businesses are performing well in the interim, and valuation remains compelling relative to listed peers.

Readytech Holdings Ltd (ASX: RDY)

Finally, Goldman thinks that this enterprise software provider could be a top mid-cap ASX share to buy. It has a buy rating and $4.25 price target on its shares. This implies potential upside of 21% for investors from current levels.

The broker believes its valuation is compelling based on its growth outlook and compared to peers. The broker explains:

Valuation is compelling at <20x NTM P/E and ~25x EV/FCF against a ~20% FY23-26E EPS growth outlook, particularly when considering subscription revenue now represents >85% of the total. We also remain well below the company’s FY27 targets on revenue (A$155mn vs >A$170mn target) and EBITDA margin (~34% vs high 30s target).

The post These mid-cap ASX shares could rise 20% to 50% appeared first on The Motley Fool Australia.

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More reading

• 3 beaten down ASX growth shares that could be dirt cheap
• Experts name 4 top ASX artificial intelligence shares
• Goldman Sachs says these ASX tech stocks can rise 18% to 30%

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

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Curious to know which ASX shares some of Australia’s top investors are backing? Read on to find out.

We can learn a lot about potentially exciting stocks by looking at larger holdings in the portfolios of 30 high-performing funds.

Of course, being chosen by the experts doesn’t mean they’re guaranteed to perform well. Having said that disclaimer, let’s look at which stocks have been hand-picked.

Aristocrat Leisure Limited (ASX: ALL)

This ASX stock is a global leader in poker machines and casino management systems. It also claims to be a leading global gaming content and technology company and a top-tier mobile games publisher.

According to reporting by the Australian Financial Review, Aristocrat was the only company outside of the most significant 20 businesses to be among the most widely-held stock pickers. This includes DNR Capital’s High Conviction Strategy.

In terms of the outlook, it expects to deliver underlying net profit after tax (NPATA) growth in FY24 on a constant currency basis. The ASX share expects “strong segment profit growth” from its gaming division and a “market-leading margin result.”

According to Commsec, the Aristocrat Leisure share price is valued at 19x FY24’s estimated earnings and 17x FY25’s estimated earnings.

Goodman Group (ASX: GMG)

Goodman is a huge property business and another ASX share widely held by fund managers. It is best known for owning and developing large industrial warehouses. Investors appear excited by Goodman’s plans to benefit from increasing demand for AI as it increases its exposure to data centres.

As Totus Capital portfolio manager Ben McGarry recently said, according to the AFR:

Goodman is a world leader with Grade A industrial property in tier one cities in Australia, the US and Europe. The company has a large and growing data centre pipeline and, while not cheap versus other listed REITs, Goodman is very cheap relative to other listed data centre landlords.

Tribeca Alpha Plus fund manager Jun Bei Liu agreed that data centres were a positive for the ASX share’s long-term growth potential. She said:

Goodman had decades of execution and a good track record, they were going to be able to re-innovate and grow their business.

ResMed CDI (ASX: RMD)

This ASX healthcare share offers digital health technologies and cloud-connected medical devices for people with sleep apnea, chronic obstructive pulmonary disease (COPD), and other chronic diseases.

ResMed is the fifth most-held stock out of the high-performing funds, even though it’s number 16 in size on the index list.

A recent investor survey by JPMorgan found that ResMed was the stock in the ASX 20 that fund managers “most loved”, according to the AFR.

The ASX share continues to report growth despite concerns about the possible impact of weight loss drugs on ResMed. In the second quarter of 2024, revenue rose 12% to US$1.2 billion, and the underlying gross margin increased 10 basis points to 56.9%. The underlying operating profit increased by 20%.

The company’s operating cash flow was US$272.8 million, and fund managers seem optimistic about it.

The post 3 unexpected ASX shares owned by top-performing fund managers appeared first on The Motley Fool Australia.

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More reading

• Why two brokers have named this ASX 200 stock as a best buy
• Bell Potter names more of the best ASX 200 shares to buy
• 5 ASX 200 shares for trying to build wealth after 50
• 3 roaring ASX shares to hold for the next 20 years
• Got $5,000? 5 ASX shares to buy for lasting wealth

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

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If you’re looking for a passive income boost, then it could be worth checking out the ASX dividend stocks listed below.

All four have recently been named as buys and tipped to provide investors with attractive dividend yields in the near term.

Here’s what you need to know about these income options:

ANZ Group Holdings Ltd (ASX: ANZ)

Ord Minnett thinks that ANZ Bank could be an ASX dividend stock to buy if you don’t already have meaningful exposure to the banking sector. The broker has a buy rating and $31.00 price target on ANZ Bank’s shares.

As for dividends, Ord Minnett is forecasting dividends per share of $1.62 in FY 2024 and $1.65 per share in FY 2025. Based on the current ANZ share price of $28.96, this will mean dividend yields of 5.6% and 5.7%, respectively.

Coles Group Ltd (ASX: COL)

Over at Morgans, its analysts think that income investors should buy this supermarket giant’s shares. The broker currently has an add rating and $18.70 price target on its shares.

In respect to income, it is expecting Coles to pay fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $16.34, this implies yields of approximately 4% and 4.2%, respectively.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend stock that could be a buy is Dexus Convenience Retail REIT. It owns a portfolio of service station and convenience retail assets located across Australia and concentrated on the eastern seaboard.

Morgans is positive on the company and recently put an add rating and $3.23 price target on its shares.

As for dividends, the broker is expecting its shares to provide income investors with some very big yields in the coming years. It has pencilled in dividends per share of 21 cents in both FY 2024 and FY 2025. Based on its current share price of $2.71, this implies yields of 7.7%.

Transurban Group (ASX: TCL)

Finally, the team at Citi believes that Transurban could be a top ASX dividend stock to buy right now. The broker has a buy rating and $15.60 price target on the leading toll road developer and operator’s shares.

As for income, its analysts are expecting dividends per share of 63 cents in FY 2024 and 65 cents in FY 2025. Based on the current Transurban share price of $13.38, this will mean yields of 4.7% and 4.85%, respectively.

The post Buy these ASX dividend stocks for passive income appeared first on The Motley Fool Australia.

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More reading

• Do the dividends from ANZ shares still come fully franked?
• Are Coles or Fortescue shares a better buy for dividend income?
• 3 ASX dividend shares everyone should own for the long haul
• 4 ASX 200 blue chip shares to buy now
• How to earn $3,000 in passive income with less than $3,000 in savings

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Transurban Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to commodity prices, Goldman Sachs is bullish on metallurgical coal and bearish on thermal, which goes some way to explaining its latest ratings on these two ASX coal shares.

Let’s investigate.

ASX coal shares: Buy one, sell the other

Why Coronado Global Resources Inc (ASX: CRN) shares are a buy

Goldman has a buy rating on this ASX coal share with a 12-month share price target of $1.80.

The Coronado Resources share price closed steady on Thursday at $1.18. Thus, the price target implies a potential 52.54% upside for investors who buy the specialist metallurgical coal miner today.

The broker explains its buy rating as follows:

We are Buy rated on: (1) Strong forecast FCF & Div yield in 2H 24 & 2025, (2) Supportive met coal market in 2024 on strong Indian & China demand, and ongoing supply risks (Aus & Canada).

However, due to 3m pricing lags wet weather and the ongoing waste stripping catch-up at Curragh, strong FCF is likely only from 2Q24.

However, the broker outlines some downside risks for the ASX coal share:

Weakening steel demand, lower met coal prices, trade issues/tariffs Unforeseen technical and operational issues, cost increases, higher taxes/royalties, stronger AUD.

Goldman is expecting Coronado to report 4.2 Mt of metallurgical coal sales in the March 2024 quarter, up 13% year over year (yoy). It expects a realised metallurgical coal price of US$187 per tonne, down 4% yoy.

The latest official forecast from the Federal Government is for metallurgical coal market spot prices to average US$289 per tonne in FY24, up from US$277 per tonne in FY23.

Why New Hope Corporation Ltd (ASX: NHC) shares are a sell

The top broker has a gloomier outlook on specialist thermal coal miner, New Hope Corporation.

Goldman has a sell rating on New Hope with a 12-month share price target of $3.50.

The New Hope share price closed up flat at $4.82 yesterday. Thus, the price target implies a potential 27.38% downside for investors who buy the ASX coal share today.

Goldman explains:

… remain Sell rated on relative valuation trading at ~1.4x NAV discounting a long-run thermal coal price of ~US$100/t (real) vs. our US$83/t estimate, and our view of the thermal coal market to soften further in 2024.

Recently reported 1H FY24 results in-line with GSe and Visible Alpha Consensus Data.

However, the broker can see some upside risks on this ASX coal share:

Weaker AUD, higher coal prices & better price realisations, supply disruptions, lower opex/better production, higher than expected shareholder returns, New Acland Stage 3 ramp-up.

The broker expects New Hope to report 2.51 MT of thermal coal sales in the March quarter, up 17% yoy.

The Federal Government expects thermal coal market spot prices to average US$135 per tonne in FY24, down from US$302 per tonne in FY23.

The post Buy one, sell the other: Goldman’s verdict on these 2 ASX coal shares appeared first on The Motley Fool Australia.

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More reading

• This 7% yield ASX 200 stock trades ex-dividend next week. Should you buy?
• Here are the top 10 ASX 200 shares today
• How to earn $3,000 in passive income with less than $3,000 in savings
• Leading brokers name 3 ASX shares to buy today
• 3 top ASX 200 dividend shares to buy now for $2,000 a month in passive income

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has 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.

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Are you looking for ASX 200 dividend shares to buy? If you are, it could be worth checking out the high quality options listed below.

They have all recently been named as buys by analysts at Goldman Sachs. Here’s what you need to know about them:

Endeavour Group Ltd (ASX: EDV)

The first ASX 200 dividend share that analysts at Goldman Sachs are bullish on is Endeavour Group. It is the drinks giant behind the BWS and Dan Murphy’s brands.

Goldman feels its valuation is attractive. Especially given its “clear market leading position.” The broker has a buy rating and $6.20 price target on the company’s shares.

As for income, the broker is forecasting fully franked dividends of approximately 22 cents per share in FY 2024 and FY 2025. Based on the current Endeavour share price of $5.28, this will mean dividend yields of 4.2% for both years.

Telstra Corporation Ltd (ASX: TLS)

Goldman Sachs also think that telco giant Telstra could be an ASX 200 dividend share to buy right now.

It believes “the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive.” In addition, it sees a “medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets.”

Goldman has a buy rating and $4.65 price target on Telstra’s shares.

In respect to dividends, the broker is forecasting fully franked dividends of 18 cents per share in FY 2024 and 19 cents per share in FY 2025. Based on the current Telstra share price of $3.80, this equates to yields of 4.7% and 5%, respectively.

Woolworths Limited (ASX: WOW)

Finally, Goldman thinks that Woolworths could be an ASX 200 dividend share to buy. It is the retail giant behind the Woolworths supermarkets and Big W brands, among others.

Goldman remains very positive on the company. This is due to its belief that “the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage.”

The broker currently has a conviction buy rating and a $40.40 price target on Woolworths shares.

In respect to dividends, Goldman is forecasting fully franked dividends per share of $1.09 in FY 2024 and $1.17 in FY 2025. Based on the current Woolworths share price of $32.59, this will mean yields of 3.3% and 3.6%, respectively.

The post Goldman Sachs names 3 super-strong ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

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More reading

• Why it’s a good day to own Woolworths shares
• 5 things to watch on the ASX 200 on Thursday
• How I’d invest my first $20k to target $5,000 a year from ASX dividend shares
• 2 excellent ASX 200 retirement shares to buy now
• Better ASX stock: Woodside vs Telstra

Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) had a tough session and dropped into the red. The benchmark index fell 0.45% to 7,813.6 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to end the week in the red despite a decent night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 25 points or 0.3% lower this morning. In the United States, the Dow Jones was down slightly, the S&P 500 was up 0.75%, and the NASDAQ jumped 1.7%.

Oil prices soften

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a subdued finish to the week after oil prices softened overnight. According to Bloomberg, the WTI crude oil price is down 0.75% to US$85.56 a barrel and the Brent crude oil price is down 0.3% to US$90.19 a barrel. Traders were selling oil after inflation concerns offset Middle East tensions.

Telix shares named as a buy

The Telix Pharmaceuticals Ltd (ASX: TLX) share price could have major upside potential according to analysts at Bell Potter. In response to recent acquisition news, the broker has retained its buy rating and $14.50 price target on the radiopharmaceuticals company’s shares. This implies a return of 15% from current levels. It believes that further acquisitions could be coming and sees positives from its pursuit of a NASDAQ listing. It notes that the Telix board “believes such a listing will unlock the value of the therapeutic pipeline.”

Gold price jumps

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a great session after the gold price jumped overnight. According to CNBC, the spot gold price is up 1.9% to US$2,393.2 an ounce. Traders appear to have been locking in gains after the precious metal reached a record high. Persistent geopolitical concerns appears to have been behind this.

Dividend payday

Another group of ASX 200 shares will be rewarding their shareholders with their latest dividend payments on Friday. Among the companies making dividend payments are insurance giant QBE Insurance Group Ltd (ASX: QBE), diversified investment company Seven Group Holdings Ltd (ASX: SVW), retail conglomerate Super Retail Group Ltd (ASX: SUL), and telco TPG Telecom Ltd (ASX: TPG). The latter is paying out 9 cents per share to its shareholders.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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• Why I’d buy this ASX 200 stock (even if we’re heading for a market crash)
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• Shares vs. property: What $100 invested in 1926 is worth now
• Why Computershare, Core Lithium, Northern Star, and Vulcan Energy shares are storming higher
• Northern Star share price tumbles on difficult quarter

Motley Fool contributor James Mickleboro has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended Super Retail Group. 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.

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The Macquarie Group Ltd (ASX: MQG) share price has failed to deliver anything special in the past year. However, that could be set to change if what one analyst believes is true.

Shares in the investment bank are up 5.73% compared to a year ago. Likewise, the S&P/ASX 200 Index (ASX: XJO) is 6.4% better off over the same timeframe.

This means Macquarie Group has not been a market-beating stock for the past 12 months. What matters now is what the company can achieve for investors from today. According to Morgan Stanley’s Andrei Stadnik, it could be much more than most think.

What is the market missing?

Macquarie shares have flatlined since December 2021. As depicted below, it’s a clear departure from the previous ‘up and to the right’ trajectory over the preceding decade.

However, based on Stadnik’s forecast, a rally in Macquarie’s share price could be on the cards. The executive director of equity research considers Macquarie Group the best option within Aussie financial shares — but why?

Well, it comes down to operating leverage.

A company holds high operating leverage when its revenue can increase with a much smaller cost increase. In other words, high operating leverage is present when profits outpace revenue growth. This occurs when a business has high fixed costs and low variable costs.

Stadnik believes Macquarie is in such a position, stating:

We think consensus is missing the operating leverage from rising revenues.

In turn, the Morgan Stanley analyst reckons net profits after tax (NPAT) in FY25 at Macquarie will increase by 27% — a drastically different forecast than the 17% consensus among analysts.

Interest rates could also play an important role. Stadnik added, “Stable interest rates remove a headwind to asset prices and deal activity, while falling rates present a tailwind, in our view.”

The theory is that anything other than rising interest rates could see Macquarie cash in on asset sales.

Downside risk to the Macquarie share price

There’s a catch when it comes to operating leverage… it can go in the other direction.

As covered by Bernd Struben, US core inflation data came in above estimates overnight at 3.8%. Now the prospects of a June rate cut by the Federal Reserve are being written off.

The risk is inflation proves harder to tame, demanding higher interest rates. It may seem unlikely, but it could mean the inverse of Stadnik’s expectations — lower asset prices, making that operating leverage work against Macquarie.

Nonetheless, the analyst has pencilled in a $225 target on the Macquarie share price, 15.6% above the current $189.89 price tag. If all goes well, such that NPAT rises 10% in FY25, Stadnik would dial up the target another 11.64% to a price tag of $261.

The post Why the Macquarie share price could soar 16% on an overlooked factor appeared first on The Motley Fool Australia.

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• Here are the top five ASX 200 stocks in Macquarie’s model income portfolio
• 3 ASX shares I think will lead the next bull market charge
• 13 ASX 200 shares at 52-week highs

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

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S&P/ASX 200 Index (ASX: XJO) stock Metcash Ltd (ASX: MTS) is an ASX defensive share I’d look to invest in right now. I think it’s a great long-term buy, whether there’s a bear market this year or not.

Metcash has been one of my preferred stocks to write about recently because of the compelling potential of its underlying divisions, appealing valuation, and large dividend yield. For me, it ticks all the boxes.

The company has three main divisions, including a food segment that supplies IGAs around the country.

Second is the liquor segment, which supplies a range of independent liquor retailers, including Cellarbrations, The Bottle-O, IGA Liquor, Porters Liquor, Thirsty Camel, Big Bargain Bottleshop and Duncans. It also supplies bars, pubs, restaurants and hotels.

Finally, the third pillar is the hardware division which includes Mitre 10, Total Tools, Home Timber & Hardware.

So why do I think the ASX 200 stock is a good buy, no matter what happens next? Here are two key reasons, and I’ll also share some thoughts on the financial metrics.

Defensive earnings

With interest rates and inflation remaining high, I’m not sure when conditions will change enough for central banks to feel confident about cutting rates. US inflation in March was stronger than some investors expected.

I think the Metcash food and liquor divisions have really defensive earnings – we all need to keep eating. And people have indulged in alcoholic drinks for centuries, so I don’t think that’s going to change any time soon.

Remember, investors generally value a business based on its potential profit in the foreseeable future. I think the ASX 200 stock’s food and liquor earnings aren’t at risk of heavy declines, so a market crash or correction wouldn’t faze me. I’d hope the Metcash profit and share price may fall less than the ASX 200 as a whole.

Supportive longer-term tailwinds

When we consider the drivers of Metcash’s earnings, population growth is one of the most important. More people in the country means more people needing food, more potential liquor drinkers and more people needing a home (and potentially wanting various bits of hardware for renovations or other work).

Before the numerous RBA interest rate hikes, Metcash’s hardware division was seeing solid profit growth. Buying Total Tools was a smart move, and with that business performing well, it could have a very promising future.

When interest rates finally start coming down, I think the ASX 200 stock’s hardware division could see significant improvement.

Pleasing metrics

As I’ve said, I think Metcash’s earnings are resilient and can grow. But the market doesn’t appear to value it as highly as I think it’s worth.

Looking at the projections for the ASX 200 stock on Commsec for FY25, the Metcash share price appears underrated – it’s valued at 13x FY25’s estimated earnings with a possible grossed-up dividend yield of 7.5%.

I think it’s a buy today, particularly in the current uncertainty surrounding inflation and interest rates.

The post Why I’d buy this ASX 200 stock (even if we’re heading for a market crash) appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Shares vs. property: What $100 invested in 1926 is worth now
• 5 things to watch on the ASX 200 on Thursday
• Why I’d drip-feed $500 a month into ASX 200 shares, starting now
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in Metcash. 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 recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Whitehaven Coal Ltd (ASX: WHC) stock finished trading for $7.71 per share on Thursday, up 1.72%.

As you can see below, this ASX coal share has taken a tumble from its all-time high seen in late 2022.

Back then, Whitehaven shares were trading close to $11 per share.

The catalyst?

Sky-high coal prices with the black gold reaping about US$430 per tonne.

Commodity prices have since come back down to earth, with the price today at US$137 per tonne.

That’s still strong in historical terms, as the following chart shows.

Source: Trading Economics

Part of the reason for reasonably strong coal prices is demand from China and India.

According to Trading Economics analysis:

China and India’s reluctance to lower their coal dependency has maintained coal prices well above their averages from before 2021, despite earlier calls that the gradual phase-out of carbon emissions would lower coal demand.

What’s the latest news on this ASX coal share?

The latest price-sensitive news out of Whitehaven was last week’s announcement that the company has completed its acquisition of two coal mines.

Whitehaven bought the Daunia and Blackwater metallurgical coal mines from BHP Group Ltd (ASX: BHP) and Mitsubishi Alliance (BMA) for an aggregate cash consideration of US$3.2 billion.

Managing director and CEO Paul Flynn described the acquisition as a “significant milestone for Whitehaven that transforms us into a leading metallurgical coal producer”.

But looking ahead, commodity prices are likely to fall.

According to the official new 5-year forecasts for commodity prices, the average metallurgical coal price for FY24 will be higher than FY23.

But the thermal coal price average in FY24 will be more than half of FY23.

By FY29, both commodity prices will be lower.

Meantime, Whitehaven stock has been trading between $6 and $8 per share for about 14 months.

Is it time to buy the dip?

Is Whitehaven stock a buy?

Michael Gable of Fairmont Equities says Whitehaven stock “looks cheap” today.

Gable explains:

The share price looks cheap when taking into account the recently acquired metallurgical coal assets from BHP.

We expect global growth to assist a recovery in coal prices.

UBS is also positive and has upgraded Whitehaven stock following the completion of the BHP deal.

The broker now has a buy rating on Whitehaven with an improved 12-month share price target of $8.70.

This is largely based on the positive outlook for metallurgical coal, the broker says.

Goldman Sachs is neutral on Whitehaven stock with a 12-month share price target of $5.80.

However, this rating and price target were based on models excluding the Daunia and Blackwater mines.

Goldman describes the upside risk for Whitehaven stock as, “Sustained high thermal coal prices and capital returns, possible asset sell downs and JVs, value accretive M&A“.

The downside risk is, “Operating issues, delays to project execution (Vickery, Narrabri extension & Winchester South), lower thermal coal prices”.

The post Should ASX investors buy the dip in Whitehaven stock? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why EOS, Novonix, St Barbara, and Whitehaven Coal shares are storming higher
• Here are the top 10 ASX 200 shares today
• ‘Share price looks cheap’: Fortescue & 1 other beaten-up ASX 200 share to buy now
• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has 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.

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Gold bugs, investors in ASX gold mining shares or gold exchange-traded funds (ETFs), and anyone with an interest in precious metals in general, will no doubt be familiar with the sharp rise in the price of the yellow metal that we’ve seen over 2024 so far.

As my Fool colleague discussed this week, gold rose from US$1,823 an ounce in early October to a new all-time high of US$2,365 an ounce just this Thursday. Humans have been putting a price on gold for almost all of recorded history, so a new record high is no small deal.

Interest in ASX gold shares has predicably followed this surge in value, as has interest in gold ETFs.

There are a few ETFs on the ASX that allow investors to gain direct exposure to the gold price without having to physically own the metal. Most do so by backing the ETF with physical gold bullion stored in a bank vault. When more funds enter the ETF, they are used to bulk up that ETF’s bullion reserve.

Given the surging price of gold itself, it’s no surprise to see ASX gold ETFs following suit. To illustrate, the VanEck Gold Bullion ETF (ASX: NUGG) has gained an impressive 18.7% over 2024 to date. That beats out most other investments, including the S&P/ASX 200 Index (ASX: XJO) and the S&P 500 Index.

Other ASX gold ETFs, such as the Perth Mint Gold ETF (ASX: PMGOLD), the Global X Physical Gold ETF (ASX: GOLD), and the BetaShares Gold Bullion ETF (ASX: QAU), have performed similarly. Every ETF on this list, with the exception of QAU, has recently clocked a new record high.

Is it too late to buy ASX gold ETFs at all-time highs?

But with gains like that already under the belt, is it too late to invest in ASX gold ETFs today?

I tend to think that it is. Gold, like most commodities, typically rises and falls on a cyclical basis rather than climbing slowly and steadily.

Gold’s trajectory over the 21st century thus far has been upward. However, this hasn’t come without peaks and troughs in between. A subsequent slump has followed every past all-time high for gold.

Long-term gold investors probably remember the then-all-time record of just under US$1,900 that gold hit in 2011. It took almost another decade before that high was again surpassed in 2020. In the meantime, the price of gold almost halved from that high at one point when it hit US$1,060 an ounce in 2015.

As such, I think the best time to buy gold, and by extension gold ETFs, is when it is in one of these slumps. Not when it is minting fresh new all-time highs. Of course, this time could be different, and gold might hit US$3,000 an ounce by the end of the year, for all I know.

But I like to take investing cues from history, and in this case, I think the lesson is clear.

The post Is it a bad idea to buy ASX gold ETFs at all-time highs? appeared first on The Motley Fool Australia.

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More reading

• Is it too late to get on board the ASX gold train?
• 3 ASX gold ETFs smashing all-time record highs today

Motley Fool contributor Sebastian Bowen 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.

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