The Treasury Wine Estates Ltd (ASX: TWE) share price is pushing higher on Tuesday.

In morning trade, the wine giant’s shares are up 1% to $12.59.

Why is the Treasury Wine share price rising?

Investors have been buying the company’s shares today after the Chinese Ministry of Commerce (MOFCOM) announced that tariffs on Australian wine imports into China will be reduced to nil, effective 29 March 2024.

This looks set to be a major boost to the Penfolds owner’s sales in the coming years and the company is responding quickly to the news.

Effective immediately, the company will commence partnering with its customers in China to implement the detailed plan outlined with its half-year results in February. This includes re-establishing distribution for Penfolds entry-level Australian COO portfolio, including Penfold’s Max’s, Koonunga Hill and One by Penfolds.

In addition, it will be re-allocating a portion of Penfolds Bin and Icon tiers from other global markets in order to progressively re-build distribution to China, while maintaining the strong momentum in those other markets where Penfolds has successfully grown in recent years.

Finally, it will be re-establishing distribution for the Treasury Premium Brands Australian sourced priority portfolio in China, including Rawson’s Retreat, as well as expanding sales and marketing resources and brand investment in China.

Treasury Wine’s CEO, Tim Ford, commented:

Today’s announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China. Since the tariffs were introduced three and a half years ago, our commitment to China has been resolute, and we now look forward to partnering with our local customers to re-establish our Australian COO portfolio in the market while continuing to be a meaningful contributor to the development and growth of the Chinese wine industry.

This is a medium-term growth opportunity that we will pursue in a deliberate and sustainable manner, focused on growing our portfolio in China while continuing the strong momentum that we have delivered in several global markets over recent years.

What earnings impact will this have?

Treasury Wine doesn’t expect a huge impact to earnings in the immediate term as it will take time and money to re-establish its presence in the lucrative market.

Management advised that the incremental EBITS contribution will be minimal through the remainder of FY 2024, with increased shipments of Penfolds entry-level Luxury tier wines to be offset by the step up in overhead costs onshore.

Until expanded Bin and Icon availability from the 2024 Australian vintage is available for release, which is expected to be from FY 2027 onwards, incremental growth due to the removal of tariffs on Australian wine sold in China will be modest. This will be driven by the increased shipments of entry level tiers into China, any incremental price increases implemented as part of Penfolds multi-year pricing roadmap, but partially offset by incremental overheads and brand investment in China.

Importantly, based on early feedback from customers in China, Treasury Wine “believes the medium-term potential for Penfolds is strong, and that the removal of tariffs will be a significant positive for the business.”

Commenting on the news, analysts at Goldman Sachs said:

Whilst the tariff removal was widely anticipated amongst investors, its finalization still provides a positive catalyst for the stock, in our opinion. Our recent channel checks with multiple industry sources suggest there is strong reception by China distributors on the return of Australian Penfolds to the market and some have been “hoarding cash” in order to pay for the Bins and Icons allocations.

The Treasury Wine share price is down 2% over the last 12 months.

The post Treasury Wine share price climbs after China removes wine tariffs appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. 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 recommended Treasury Wine Estates. 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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Austal Ltd (ASX: ASB) shares are lifting off on Tuesday morning.

At the time of writing, the ASX 300 stock is up 9% to $2.40.

Why is this ASX 300 stock jumping?

Investors have been buying the shipbuilder’s shares this morning in response to news that the company has received and rejected a takeover offer from South Korean chaebol, Hanwha.

According to the release, the ASX 300 stock received an unsolicited, conditional, and non-binding indicative proposal from Hanwha to acquire it by way of a scheme of arrangement. Under the terms of the indicative proposal, Austal shareholders would receive $2.825 cash per Austal share.

This represents a 28.4% premium to where the Austal share price ended last week.

Management notes that Hanwha’s indicative proposal is subject to numerous conditions. These include due diligence, various regulatory approvals, final approval of the Hanwha Board, the unanimous recommendation of the Austal Board, and Austal shareholder approval.

While most acquisitions are subject to regulatory approvals, as a shipbuilder to the Australian and US governments, any deal for Austal faces significant scrutiny from regulators. For example, for a deal to get over the line, it would require approval from Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the United States (CFIUS), and the US Defense Counterintelligence and Security Agency.

In addition, the ASX 300 highlights that it recently executed a memorandum of understanding (MoU) with the Department of Defence to negotiate a Strategic Shipbuilding Agreement (SSA). If all goes to plan, Austal will be appointed as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.

However, the Commonwealth Department of Defence noted that “a sovereign and enduring naval shipbuilding and sustainment industry at Henderson is central to the Government’s commitment to ensuring continuous naval shipbuilding in Australia and delivering the capabilities needed to keep Australians safe.” A takeover by a South Korean chaebol could potentially scupper this agreement.

Offer rejected

In light of the above, the ASX 300 stock has rejected the offer. Though, it will continue to engage with Hanwha. It explains:

The Austal Board, together with its advisers, has considered the Indicative Proposal in detail and engaged with Hanwha in relation to whether the transaction described in the Indicative Proposal would obtain the relevant regulatory approvals in Australia and the USA to enable it to proceed. At present Austal is not satisfied that these mandatory approvals would be secured, however the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.

Management also advised that Austal shareholders do not need to take any action in response to the proposal.

The post Guess which ASX 300 stock is jumping 9% after receiving a takeover offer appeared first on The Motley Fool Australia.

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More reading

• How to tap into the record-breaking ASX 200 performance with just one stock
• Treasury Wine share price climbs after China removes wine tariffs
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• The pros and cons of buying ANZ shares right now

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 Austal. 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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ASX dividend shares with large dividend yields could be really appealing for investors who want to receive a good amount of return through the cash flow. I’m going to talk about two stocks with large potential yields.

A large yield isn’t the only thing I want to see from an ASX dividend share. Ideally, an appealing business will be able to grow earnings over the long term. I’d be wary of a business with a large yield if the profit is about to sink, that’s why it’s good to look further ahead than the current financial year.

So, below are two stocks that are projected to grow their dividend.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop operates in Australia and New Zealand as a specialty retailer of male and female personal grooming products and wants to be the leader in “all things related to hair removal”.

It currently has more than 120 stores where it aims to sell a wide range of quality brands at competitive prices. Its large presence in Australia means it can negotiate exclusive products with suppliers. The business also sells various products across oral care, hair care, massage, air treatment and beauty categories.

Things are looking positive for the company, with the growth of the populations in Australia and New Zealand, as well as the long-term growth of the store count. In the period of 1 January 2024 to 22 February 2024, total sales were up 0.9% year over year, despite the difficult economic conditions.

Impressively, the business has grown its annual dividend every year since it started paying in 2017. According to Commsec, the ASX dividend share is projected to pay a grossed-up dividend yield of 12.6% in FY26.

Inghams Group Ltd (ASX: ING)

Ingham’s was founded over 100 years ago and has since become the largest integrated poultry producer in Australia and New Zealand.

It supplies a number of major customers like supermarkets, quick service operators, foodservice distributors and wholesalers. Ingham’s also has strong market positions in Australian turkey, Australian stockfeed and the New Zealand dairy feed industries.

The FY24 first-half result saw a big recovery of profit. Core poultry volume rose 2.2% to 240.8kt, revenue rose 8.7% to $1.64 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) roe 19.9% to $252.1 million, underlying net profit after tax (NPAT) grew 134.2% to $62.3 million and the dividend was increased by 166.7% to 12 cents per share.

The ASX dividend share’s profit is expected to keep rising in the coming years – though not at a triple-digit pace – which can help push the dividend payments higher.

According to Commsec, the company is expected to pay an annual dividend per share of 24.1 cents in FY26, which could translate into a grossed-up dividend yield of 9.6%.

The post 2 ASX dividend shares that could pay huge yields in 2026 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Shaver Shop 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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Over the last few weeks, the Wesfarmers Ltd (ASX: WES) share price has climbed to all-time highs. And in the last six months, it has risen by around 30%, beating the S&P/ASX 200 Index (ASX: XJO)’s returns by around 18%.

So, are Wesfarmers shares now overvalued, or still possibly an ASX bargain buy?

As depicted on the chart above, the Wesfarmers share price has had a top run over the past year. It’s also probably one of the ASX 200 shares I’ve written most about over this period. That’s because I liked the company’s outlook, its valuation, the underlying businesses, and its financial metrics.

But what do I think now that Wesfarmers is trading at all-time highs? Well, in all honesty, I don’t think I can call Wesfarmers shares a bargain at current prices. But let’s take a look at some factors that could make investors cautious, and other reasons the stock could still be worth buying right now.

Remain cautious?

Naturally, the rising Wesfarmers share price has also pushed its forward price-to-earnings (P/E) ratio higher. According to Commsec, Wesfarmers shares are now trading at more than 30x FY24’s estimated earnings.

The rapid rise in the share price is good for current shareholders, but it may make it trickier for newer investors to make solid returns in the short term. For example, if Wesfarmers shares are trading at $70 in 12 months, then this would only represent a rise of 2.3% from today’s price of $68.40. But if the Wesfarmers share price were only $65 right now, it’d be a gain of 7.7%.

So is Wesfarmers’ current valuation justified? Interest rates are still high compared to pre-Covid levels – and central bankers don’t appear to be in any rush to deliver cuts. Wesfarmers profit hasn’t exactly been soaring either – FY24 first-half net profit after tax (NPAT) only grew by 3%.

Here’s what legendary investor Warren Buffett once said about the impact of interest rates on a company’s valuation:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

In other words, investors should take into account high interest rates because they, in theory, reduce the underlying value of assets.

A higher Wesfarmers share price also has an unfortunate effect on the dividend yield for prospective investors – the higher the share price, the lower the dividend yield. According to Commsec estimates, Wesfarmers could pay a grossed-up dividend yield of 4% in FY24. While this is not to be sneezed at, dividend investors may be tempted to go searching for higher yields elsewhere on the ASX 200.

Why I’d still buy Wesfarmers shares

Wesfarmers’ profit didn’t grow much in the HY24 result and may only slightly improve in FY24. Strong profit growth would help move the stock towards being an ASX bargain buy in my view.

However, we shouldn’t just base our valuation thoughts on a 12-month period. Firstly, I think it’s impressive that the company is managing to grow its profit at all in the current climate, with many households tightening their belts amid the surging cost of living.

Secondly, it’s true that Wesfarmers’ earnings per share (EPS) may only reach $2.23 in FY24, but it is projected to grow 21% to $2.70 by FY26. That would put the Wesfarmers share price at 25x FY26’s estimated earnings.

So, in my mind, growing profit can justify a higher share price. If company profit keeps rising, then the Wesfarmers share price can theoretically keep climbing.  

Furthermore, Kmart and Bunnings are great businesses. They earn strong returns on capital (ROC) and Wesfarmers overall typically achieves a very good return on equity (ROE).

Australia’s growing population is also helping increase the total number of potential customers for Wesfarmers.

Foolish takeaway

While the Wesfarmers share price has run hard, and could fall in the shorter term (making it better value), I still think, given the quality of the company, it represents solid long-term buying at current levels.

The post Are Wesfarmers shares an ASX bargain buy or overvalued right now? 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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ANZ Group Holdings Ltd (ASX: ANZ) shares have been on an impressive run lately, rising 13% in 2024 to date. This compares to a 3.5% rise for the S&P/ASX 200 Index (ASX: XJO).

Since the start of December 2023, the ANZ share price has gone up by around 20%.

I recently wrote about some of the possible drivers that have sent ASX bank shares higher. So, I’m going to look at some of the potential positives and negatives.

Reasons to buy

One of the most exciting reasons to look at banks right now is because there could be an improvement in the outlook if there are interest rate cuts within the next 12 months.

A lower interest rate could reduce the risk of heightened arrears in the loan book. A reduction in the cost of debt could also increase demand for credit, which would be helpful for loan book growth.

Another positive is the planned acquisition of the banking division of Suncorp Group Ltd (ASX: SUN). There are advantages to becoming bigger, such as economies of scale across the business and an increased market position in Queensland.

The company is paying a large dividend, which is helping boost the cash returns from the ASX bank share.

According to Commsec, owners of ANZ shares are projected to receive an annual dividend per share of $1.62 in FY24, which would translate to a grossed-up dividend yield of 7.9%.

Why to avoid ANZ shares for now

The valuation of ANZ has soared when there haven’t actually been any changes, so the market may have gotten ahead of itself.

Inflation remains stronger than central banks seemingly want, so interest rates may stay higher for longer. Even so, a cut of 0.25% or even 0.50% would mean the RBA cash rate is still a lot higher than it was before COVID-19. Arrears may keep rising over the rest of 2024.

The bank’s acquisition of Suncorp may help some things, but it could take a lot of effort, time and cost to integrate. Westpac Banking Corp (ASX: WBC) is only just getting around to integrating its technology of Bank of St George onto one platform.

There is a lot of competition in the lending and deposit space, which could mean challenged net interest margins (NIM) for the foreseeable future. This reduces the potential profit generation in the future. Internet banking has nullified the need to have a large branch network to be successful, creating more competition.

ANZ’s profit is currently projected to decrease in FY24 and again in FY25. That’s not exactly exciting for the ANZ share price. It’s priced at 13 times FY25’s estimated earnings.

I’d be cautious about buying ANZ shares at this level – I think there are more attractive ASX shares out there.

The post The pros and cons of buying ANZ shares right now 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 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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If you’re not a fan of stock picking but want to make some investments, then exchange-traded funds (ETFs) could be the answer.

That’s because they provide investors with access to large numbers of shares through a single click of the button.

And the good news for investors is that there are plenty of options for them out there for them to choose from.

But which ASX ETFs could be smart options in April? Let’s take a look at three high-quality options:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

The first ASX ETF to look at is the VanEck Vectors Morningstar Wide Moat ETF.

This popular fund gives investors the opportunity to invest in the type of companies that Warren Buffett buys for Berkshire Hathaway (NYSE: BRK.B). These are high-quality companies with sustainable competitive advantages and fair valuations.

Buffett has a long history of beating the market, so it should come as no surprise to learn that this ETF has done the same over the last decade.

Since this time in 2014, the index the fund tracks has achieved an average total return of 17.1% per annum. This would have turned a $10,000 investment into almost $50,000 today.

Vanguard Australian Shares Index ETF (ASX: VAS)

Another ASX ETF for investors to consider buying in April is the Vanguard Australian Shares Index ETF.

It is a low-cost, diversified, index-based exchange-traded fund that aims to track the ASX 300 index.

The ASX 300 index is home to Australia’s leading 300 listed companies. This includes shares such as BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), Northern Star Resources Ltd (ASX: NST), and Wesfarmers Ltd (ASX: WES).

Another positive with this ETF is that it provides investors with a nice source of income. For example, at the last count, the ETF was trading with an attractive dividend yield of 3.9%.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ASX ETF for smart investors to look at is the Vanguard MSCI Index International Shares ETF.

This popular ETF gives investors exposure to approximately 1,500 of the world’s largest listed companies from major developed countries. Vanguard highlights that investing internationally offers greater access to sectors such as technology and health care that aren’t as well represented in the Australian share market.

Among the ETF’s largest holdings are household names such as Apple, Johnson & Johnson, Nestle, Procter & Gamble, and Visa.

Over the last five years, the ETF has delivered an average return of 13.75% per annum.

The post 3 excellent ASX ETFs for smart investors in April 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 positions in and has recommended Apple, Berkshire Hathaway, Macquarie Group, Visa, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and Nestlé. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, VanEck Morningstar Wide Moat ETF, 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.

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Pleasingly for income investors, there are a large number of ASX 200 dividend shares to choose from on the Australian share market.

But which ones could be buys in April?

Listed below there are three that analysts have rated as buys. Here’s what sort of dividend yields could be on offer with these shares:

Coles Group Ltd (ASX: COL)

The first ASX 200 dividend share for income investors to consider buying this month is Coles.

It is of course one of the big two supermarket operators with over 800 stores across the country. In addition, it has a sprawling liquor network comprising almost 1,000 stores across several brands such as Liquorland and Vintage Cellars.

The team at Morgans is feeling very positive about the company. Particularly after its first-half results surprised to the upside. Not only did its first-half sales outperform expectations, but its trading update revealed that Coles is outperforming its bitter rival early in the second half.

In light of this, the broker is now forecasting 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 $16.94, this will mean yields of 3.9% and 4.1%, respectively.

Morgans currently has an add rating and $18.70 price target on its shares.

Rio Tinto Ltd (ASX: RIO)

Another ASX 200 dividend share that could be a top option for income investors this month is Rio Tinto.

It is one of the largest miners in the world and the owner of a high-quality portfolio of operations across multiple commodities. This includes the Gudai-Darri iron ore mine, which is its newest and most technologically advanced mine, and the ISAL aluminium smelter in Iceland, which produces the lowest carbon footprint aluminium in the world.

The team at Goldman Sachs is feeling very positive on the miner’s production outlook. It expects this to support the payment of fully franked dividends per share of US$4.39 (A$6.77) in FY 2024 and then US$4.61 (A$7.11) in FY 2025. Based on the latest Rio Tinto share price of $121.76, this will mean yields of approximately 5.5% and 5.8%, respectively.

Goldman has a buy rating and $138.30 price target on its shares.

Stockland Corporation Ltd (ASX: SGP)

A final ASX 200 dividend share that could be a buy is Stockland. It is known as Australia’s largest community creator, delivering a range of masterplanned communities and medium density housing in growth areas across the country.

The team at Citi is positive on the company and believes it is positioned to pay some very generous dividends in the near term.

It is expecting dividends per share of 26.2 cents in FY 2024 and 26.6 cents in FY 2025. Based on the current Stockland share price of $4.85, this will mean yields of 5.4% and 5.5% yields, respectively.

Citi has a buy rating and $5.00 price target on its shares.

The post Buy Coles and these ASX 200 dividend shares now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
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• 2 ASX blue-chip shares I’d buy with $3,000 right now
• $19 billion in ASX dividends is being paid out this week. Are you getting your share?
• Brokers say these ASX 200 dividend stocks are buys

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 Goldman Sachs 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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) ended the week on a very positive note. The benchmark index jumped 1% to 7,896.9 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 to open flat

The Australian share market looks set to for a subdued day following a mixed couple of sessions on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day flat. On Thursday, Wall Street charged higher but overnight it has given back some of these gains with a disappointing start to the week. The Dow Jones is currently down 0.7%, the S&P 500 is down 0.3%, and the Nasdaq has edged slightly lower.

Oil prices fall

ASX 200 energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good start to the week after oil prices rose again on Monday night. According to Bloomberg, the WTI crude oil price is up 0.85% to US$83.87 a barrel and the Brent crude oil price is up 0.6% to US$87.55 a barrel. Middle East tensions gave oil prices a boost. It is also worth noting that oil prices were higher on Thursday night before the Easter break.

China lifts wine tariffs

The Treasury Wine Estates Ltd (ASX: TWE) share price will be on watch on Tuesday after China announced that it will remove tariffs from Australian wine. The company’s CEO, Tim Ford, commented: “Today’s announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China.”

Gold price rises again

ASX 200 gold shares such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a great start to the week after the gold price charged higher. According to CNBC, the spot gold price is up 1% to US$2,261.9 an ounce. The precious metal hit a record high after US economic data supported interest rate cuts.

BHP and Rio Tinto on watch

BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) shares will be on watch on Tuesday after iron ore prices tumbled deep into the red on Monday. The benchmark iron ore price dropped over 4% to a 10-month low of US$96.70 a tonne amid concerns over demand from China due to its ongoing property downturn.

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

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More reading

• Top ASX shares to buy in April 2024
• Here’s how the ASX 200 market sectors stacked up last week
• 5 top ASX dividend shares to buy right now
• These were the best-performing ASX 200 shares in March
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates and 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 recommended Treasury Wine Estates. 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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After two years of underperformance, ASX small-cap shares are ready to roar again.

Datt Capital chief investment officer Emanuel Datt reckons Australian small caps are even more attractive than their US counterparts.

“The inefficiencies and relative under-coverage of the Australian market create fertile ground for identifying overlooked gems and undervalued assets,” he said.

“The Australian market is considerably cheaper than the US market on a relative basis. Valuation differentials between the two markets are quite apparent, with Australian equities trading at more attractive multiples compared to their US counterparts.”

Not only are the local stocks cheaper, they have an excellent outlook, he added.

“Australian small caps present opportunities for growth, particularly in emerging industries like technology, healthcare, and renewable energy.”

With this in mind, here are three top ASX shares I would be tempted to buy this month from small-cap land:

Top ASX shares to invest in mining without investing in mining

My first two picks have similar customers.

RPMGlobal Holdings Ltd (ASX: RUL) provides technology and related services, while Mader Group Ltd (ASX: MAD) is a maintenance contractor for mining companies.

They are both growth shares but a handy way to gain investment exposure to the cyclical resources industry.

With both western and Chinese economies set to pick up in the coming years after battling inflation and deflation in recent times, commodity prices could be on the way up.

And when minerals are in hot demand, mining businesses will be calling on contractors like RPMGlobal and Mader Group to ramp up their activities.

Both small caps have strong support in the professional investor community.

The team at Forager, in a memo to clients, forecast that RPMGlobal would keep growing its revenue and profits “for a long while yet”.

“The company now has a $500 million market capitalisation and trading volumes in its shares have increased markedly over the past month, making it potentially appealing to a wider range of institutional investors.”

Broking platform CMC Invest shows Moelis and Veritas Securities also rating RPMGlobal as a strong buy at the moment.

Mader Group shares are recommended as a buy by five out of six analysts.

Small-cap software maker taking on the world

Playside Studios Ltd (ASX: PLY) shares are already going gangbusters.

It has rocketed 52% so far this year, and is close to tripling over the past 12 months.

Incredibly, more than one expert reckons there is more growth to come for the Melbourne video games maker.

The Cyan Fund has been a longtime supporter of Playside Studios.

“All parts of the business are performing well and the company is enjoying strong investor support as it looks to execute its multi-layered growth plan over the next 24 months,” the team said in its memo to clients.

The company posted excellent numbers in the February reporting season, more than doubling its revenue and boasting strong cash flow.

All three analysts covering the $377 million company rate the stock as a strong buy, according to CMC Invest.

The post My 3 top small-cap ASX shares to buy in April appeared first on The Motley Fool Australia.

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More reading

• 4 ASX growth shares I think will benefit from interest rate cuts in 2024
• Got $500? 2 top Australian shares to buy and hold
• 3 ASX shares I think are set to soar in 2024
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• 4 Australian shares set to soar in 2024

Motley Fool contributor Tony Yoo 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 Mader Group and RPMGlobal. The Motley Fool Australia has positions in and has recommended Mader Group. The Motley Fool Australia has recommended RPMGlobal. 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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Even though it has been a staple for many mum-and-dad portfolios over the decades, historically Telstra Group Ltd (ASX: TLS) stock has been frustrating to own.

However, investors started getting excited last year as the telco shares rose more than 15% in about six months, all while paying a healthy dividend yield above 4%.

But now Telstra shares are 13% down again.

So is this time to pounce on this iconic Australian brand?

Ready to rock

Firstly, the business is looking healthy.

Telstra still enjoys a dominant position in the Australian telecommunications landscape, while its nearest rival Optus has struggled with scandal after scandal in recent years.

It has now completed its T22 strategy for profit growth in the post-NBN era.

And perhaps this is why professional investors are tipping that the share price is due for a revival.

Broking platform CMC Invest shows that 15 out of 18 analysts currently rate Telstra shares as a buy. Twelve of those think it’s a strong buy.

One of those enamoured with the stock is Bell Potter, upgrading its rating to buy just last month.

“Bell Potter made the move on valuation grounds following a period of underperformance from Telstra’s shares,” said The Motley Fool’s James Mickleboro.

“It highlights that this has left them looking for reasonable value trading on an FY 2025 price-to-earnings (P/E) ratio of under 20x. Bell Potter notes that this is lower than the average multiples of other comparable companies.”

Healthy dividends expected from Telstra stock

The team at Goldman Sachs Group Inc (NYSE: GS) is also a fan, due to Telstra’s “low-risk earnings and dividend growth”.

“It is expecting this to lead to Telstra paying fully franked dividends of 18 cents per share in FY 2024, 19 cents per share in FY 2025, and then 20 cents per share in FY 2026,” reported Mickleboro last month.

“Based on the current Telstra share price of $3.78, this equates to yields of 4.75%, 5%, and 5.3%, respectively.”

Telstra shares closed before the Easter weekend 1.85% higher at $3.85.

So the answer is that investors may be well advised to buy Telstra stock during the current dip. The professionals are certainly getting onto it.

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

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More reading

• 5 top ASX dividend shares to buy right now
• 2 of my top ASX 200 shares to consider buying before April
• Investing for passive income? Keep any eye out for that boosted Telstra dividend today!
• Is Telstra stock a buy, sell, or hold?
• 5 things to watch on the ASX 200 on Thursday

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

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