If you’re a fan of ASX growth shares, then you will be pleased to know that analysts are predicting strong returns from the five listed below.

Here’s what you need to know about these top shares:

Lovisa Holdings Ltd (ASX: LOV)

The first ASX growth share to look at is Lovisa. It is a fashion jewellery retailer that is growing at a rapid rate thanks to its global expansion.

Bell Potter is very positive on this expansion. In fact, it believes Lovisa can grow its network by 10% per annum between FY 2023 and FY 2034. This is expected to underpin strong earnings growth over the next decade.

The broker has a buy rating and $36.00 price target on Lovisa’s shares. This implies potential upside of 13% for investors.

NextDC Ltd (ASX: NXT)

Another ASX growth share that has been given the thumbs up by analysts is NextDC.

It is one of Asia’s most innovative data centre-as-a-service providers. It is building the infrastructure platform for the digital economy, delivering the critical power, security and connectivity for global cloud computing providers.

Morgan Stanley is very positive on the company’s outlook thanks to its belief that the data centre market will grow materially over the remainder of the decade.

The broker currently has an overweight rating and $20.00 price target on its shares. This suggests upside of 13.5% is possible over the next 12 months.

TechnologyOne Ltd (ASX: TNE)

Over at Goldman Sachs, its analysts think that enterprise software provider TechnologyOne could be ASX growth share to buy right now.

It likes the company due to its attractive valuation and positive growth outlook. The latter is being underpinned by its market leadership, defensive end markets, and mission-critical systems.

Goldman has a buy rating and $18.10 price target on Technology One’s shares. This implies 14% upside from current levels.

Webjet Limited (ASX: WEB)

A fourth ASX growth share for investors to consider buying is online travel booking company Webjet.

Analysts at Morgans are bullish on the company. This is due partly to its key WebBeds B2B business and the “significant market share still up for grabs.” The broker believes this leaves the company well-positioned for the future.

Morgans has an add rating and price target of $10.33 on Webjet’s shares. This suggests potential upside of 24% for investors.

Xero Ltd (ASX: XRO)

A final ASX growth share for investors to look at is Xero.

It is a cloud accounting platform provider with an estimated global market opportunity of 100 million small to medium sized businesses.

It is thanks partly to this huge market opportunity that Goldman Sachs is very bullish on Xero’s outlook and is tipping it as a buy. The broker has a buy rating and $156.00 price target on its shares. This implies potential upside of 29% from current levels.

The post 5 stellar ASX growth shares to buy for strong returns appeared first on The Motley Fool Australia.

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• Brokers name 2 rapidly growing ASX 200 tech stocks to buy

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

There has been a lot of speculation recently that interest rates may need to go higher before they go lower in an effort to tame inflation.

This would of course be very bad news for borrowers, which are already being squeezed by higher interest rates.

The good news, though, is that Westpac Banking Corp (ASX: WBC) continues to believe that the next move by the Reserve Bank of Australia (RBA) will be to take rates lower.

And the even better news that the first rate cut could be coming later this year and that there could be plenty more on the way.

What is Westpac saying about interest rates?

According to the Westpac Weekly economic report, the bank’s chief economist, Luci Ellis, hasn’t seen anything to say that inflation will be heading in the wrong direction again. She said:

Households in Australia are collectively doing it tough. Their cash flows are being squeezed by the high cost of living, high level of interest rates and a rising tax take. Consumption per capita has fallen more than 2½% since the RBA started raising rates. Australia stands out from its peers on this front.

At the same time, inflation is too high and the labour market is tight, though not quite as tight as late last year. The labour force data for April confirmed this gradual easing, helping to cut through the noise of the first three months of the year. And the Wage Price Index release, also this week, shows that wages growth is starting to roll over from its recent peak, as was widely expected. To be fair, these are lagging indicators. But there is nothing in these data – or more leading indicators – pointing to even higher inflation pressures down the track.

When will rates go lower?

As things stand, Westpac is forecasting the RBA to make its first interest rate cut in December. This will see a 25 basis points cut to 4.1% (from 4.35% today).

After which, Westpac’s economics team believes the central bank will then move swiftly with its cuts.

By March 2025, another 25 basis points cut to 3.85% is forecast and then by June rates are expected to fall to 3.6%.

But that’s not where it ends. Westpac is tipping the RBA to then take interest rates to 3.35% by September 2025 and then finally 3.1% by December 2025.

In summary:

• Today: 4.35%
• December 2024: 4.1%
• March 2025: 3.85%
• June 2025: 3.6%
• September 2025: 3.35%
• December 2025: 3.1%

Overall, it seems that some relief could be on the way for borrowers in the not so distant future according to Westpac.

The post Here’s when Westpac says the RBA will cut interest rates appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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.

The S&P/ASX 200 Index (ASX: XJO) stock Inghams Group Ltd (ASX: ING) looks like a good buy because of its dividend income and the value it offers.

Inghams claims to be the largest integrated poultry producer in Australia and New Zealand. Its products are sold through various businesses, including fast food, food service distributors and wholesalers, and supermarkets.

The company also has strong market positions across the Australian turkey, Australian stockfeed and New Zealand dairy feed industries.

Why the ASX 200 stock looks cheap

Inghams is recovering from the impacts of inflation, which significantly affected costs during that period a couple of years ago.

The company is now getting back to good profitability – the FY24 first-half result saw group core poultry volume grow 2.2% to 240.8kt, revenue rose 8.7% to $1.64 billion, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 19.9% to $252.1 million, and the underlying net profit after tax (NPAT) jumped 134.2% to $62.3 million.

Inghams is expecting some benefit from lower key feed costs in FY25, which could help profit rise again.

The ASX 200 stock is also investing in automation which it expects, over time, will “provide cost savings, higher yield and throughput outcomes, and improved product quality.” It’s also expected the automation investments will support increased production of value-add products and new customer opportunities.

On top of that, Inghams’ new distribution in Hazelmere, WA, has started operations. It also opened new distribution centres in August 2022 and April 2023 in Victoria and South Australia, respectively. These new facilities can help the company’s efficiencies.

The forecast on Commsec suggests Inghams could make earnings per share (EPS) of 33.4 cents in FY25 and 36.8 cents in FY26, putting it on a forward earnings multiple of under 12x for FY25 and under 11x for FY26.  

While we don’t know precisely what the earnings are going to be, things look positive for Inghams shares and the trajectory of profit.

Big dividend yield

With the ASX 200 stock’s low price/earnings (P/E) ratio, it’s projected to have a solid dividend yield, just like before COVID-19.

Commsec’s forecast suggests Inghams might go with a dividend payout ratio of around 66%. This could lead to a grossed-up dividend yield of 8.3% in FY25 and 8.9% in FY26.

The prospect of rising profit, a growing dividend, and a big yield look like a compelling combination that could power tasty returns over the next two or three years.  

The post With its 8% yield, I think this undervalued ASX 200 stock is an opportunity not to miss appeared first on The Motley Fool Australia.

More reading

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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.

Tuesday’s federal budget included around $5.4 billion worth of initiatives to help Australians cope with the surging cost of living.

While this is welcome news for many, others are concerned the Government’s increased spending will create additional inflationary pressure.

If this proves the case, we could find ourselves waiting even longer for any much-anticipated interest rate cuts from the RBA, notwithstanding the latest jobs data indicating unemployment is rising faster than expected.

As such, even with the additional help provided in this week’s budget, we may have to get used to paying higher prices on everyday essentials for longer.

For most of us, having access to a passive income stream generated by ASX dividend shares would be very handy right now and help further ease those cost-of-living pressures.

So we asked our Foolish writers which ASX dividend shares they think offer the very best buying for income investors in May.

Here is what the team came up with:

6 best ASX dividend shares for May 2024 (smallest to largest)

• Harvey Norman Holdings Limited (ASX: HVN), $5.38 billion
• Sonic Healthcare Ltd (ASX: SHL) $12.79 billion
• Coles Group Ltd (ASX: COL), $21.83 billion
• Woolworths Group Ltd (ASX: WOW), $38.66 billion
• Telstra Group Ltd (ASX: TLS), $42.40 billion
• Fortescue Ltd (ASX: FMG), $82.95 billion

(Market capitalisations as of market close 17 May 2024).

Why our Foolish writers love these ASX passive income stocks

Harvey Norman Holdings Limited

What it does: Most Australians have probably made a mad dash to a Harvey Norman store at some point for a new appliance, computer, furniture item, or other consumer product – a charging adapter, in my recent case. Boasting more than 300 stores across eight countries, Harvey Norman is a retailing staple.

By Mitchell Lawler: According to billionaire investor Bill Ackman, “The best businesses in the world are capital-light franchises which own the right to collect royalties on a compounding base of assets”. 

Admittedly, Harvey Norman isn’t exactly a ‘capital-light’ business, though it is highly profitable thanks to its franchise model. I’ve said it before – Harvey Norman is akin to McDonald’s Corp: Buying the land, leasing it out, and charging a franchise fee. 

Personally, I think Harvey Norman shares are undervalued. Especially after the government decided to throw $300 into the pocket of basically every Australian household via the latest federal budget. A business like Harvey Norman might see a boost from those who didn’t need the financial relief.

This ASX dividend payer currently trades on a trailing dividend yield of 5.09%.

Motley Fool contributor Mitchell Lawler does not own shares of Harvey Norman Holdings Limited.

Sonic Healthcare Ltd

What it does: Sonic Healthcare is a global pathology business with operations in Australia, the United States, Germany, Switzerland, the United Kingdom, Belgium, and New Zealand.

By Tristan Harrison: Down 25% since this time last year, the Sonic Healthcare share price is much cheaper now than a year ago. I think this makes it great value right now for ASX income investors.

The ASX 200 healthcare stock now trades on a trailing dividend yield of around 3.6%, excluding franking credits.

Sonic Healthcare has grown its dividend every year since 2013 and almost every year for the past three decades. The company’s board of directors has a stated “progressive dividend policy”, making it an appealing pick for resilient passive income.

I believe the ASX healthcare company can grow earnings thanks to a number of different tailwinds.

A growing and ageing population can translate into more demand for Sonic’s services. It’s also investing in businesses that bring new technology to the pathology table, such as AI and microbiome testing.

Sonic Healthcare continues to make acquisitions, which boosts its scale and allows it to achieve increased synergies. It recently announced the acquisition of Dr Risch Group, which generated around AU$156 million of revenue in Switzerland in 2023.

Motley Fool contributor Tristan Harrison owns shares of Sonic Healthcare Ltd.

Coles Group Ltd

What it does: Coles is one of the big two supermarket operators in Australia with more than 840 stores across the country. The company also operates more than 950 liquor stores through brands, including First Choice and Liquorland.

By James Mickleboro: I think Coles would be a great ASX dividend share to buy in May, particularly given its shares are now trading closer to their 52-week low than their 52-week high. 

I believe this recent share price weakness means Coles shares are great value now, especially for a company with a market leadership position, a positive growth outlook, defensive earnings, and an attractive dividend yield.

Speaking of the latter, the team at Morgans is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on the current Coles share price of $16.20, this equates to yields of 4.1% and 4.25%, respectively.

Morgans also sees plenty of upside for Coles shares with its add rating and $18.95 price target. The broker highlights that “the ongoing scrutiny on the supermarkets has affected short-term sentiment in the sector, which we believe creates a good buying opportunity in COL.”

Motley Fool contributor James Mickleboro does not own shares of Coles Group Ltd.

Woolworths Group Ltd

What it does: Woolworths operates Australia’s largest supermarket network and also has a presence in New Zealand.

By Bronwyn Allen: When negative market sentiment temporarily drives down the share price of a blue chip stock, the dividend yield may be temporarily enhanced.

Woolworths shares were down 15.6% year-to-date to $31.65 at Friday’s close. Top broker Goldman Sachs is tipping dividends of $1.08 in FY24 and $1.14 in FY25. That means dividend yields of 3.4% and 3.6%, respectively.

When you add the 100% franking, those yields move up to around 5% and 5.3%. That’s about what you’d get if you left your cash in a savings account. There’s no prospect of capital growth in cash investing, but there is with Woolworths shares.

Goldman has a 12-month price target of $39.40 on the ASX 200 consumer staples stock, implying a potential 24.5% upside. The broker assesses the current Woolworths share price as “a value entry level for a high-quality and defensive stock”.

Motley Fool contributor Bronwyn Allen does not own shares of Woolworths Group Ltd.

Telstra Group Ltd

What it does: Telstra is a stock that needs little introduction. It is the largest telecommunications provider in Australia and the market leader in mobile telephony and fixed-line broadband services.

By Sebastian Bowen: When looking at the major ASX 200 blue chip shares right now, I think Telstra qualifies as the most oversold of the bunch. Investors have sent this telco down by around 16% since June last year. This pessimism seems to stem from Telstra’s decision not to sell off its valuable infrastructure assets. 

However, I think this was the right decision for the telco and, as such, reckon this share price slump is a considerable buying opportunity. Retaining some of its most valuable assets in-house is not a bad thing for Telstra’s long-term future. It should bode well for Telstra’s dividends and bolster their reliability.

Speaking of dividends, Tesltra’s share price falls have resulted in this company’s dividend yield rising to over 4.7% at recent pricing. Given that dividend yield typically comes with full franking credits attached too, I think Telstra shares are well and truly oversold this May. 

Motley Fool contributor Sebastian Bowen owns shares of Telstra Group Ltd.

Fortescue Ltd

What it does: Fortescue was established in 2003 and is based in Western Australia. The company counts among the world’s biggest iron ore miners and has been leading the competition to become an integrated green technology, energy, and metals company.

By Bernd Struben: Not only has Fortescue delivered outsized passive income over the past year, the company’s share price has also soared by 33%.

For its half-year results, the miner reported a 21% year-on-year increase in revenue to US$9.5 billion. And net profit after tax (NPAT) increased by 41% to US$3.3 billion.

As for that income, the ASX 200 miner has paid out $2.08 per share in fully franked dividends over the past 12 months. At the recent Fortescue share price of $26.94, that equates to a fully franked trailing yield of 7.7%.

And I think the outlook remains strong. Despite iron ore shipments slipping in the past quarter, management reaffirmed the company’s full-year shipments and cost guidance.

Fortescue also stands to benefit from the $6.7 billion in tax incentives for green hydrogen production contained in the new federal budget. With its investments in green hydrogen, green ammonia, and green iron, Fortescue leads its peers in this field.

Motley Fool contributor Bernd Struben does not own shares of Fortescue Ltd.

The post Top ASX dividend shares to buy in May 2024 appeared first on The Motley Fool Australia.

More reading

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• ASX 200 mining shares charging higher amid China’s $210 billion cash injection
• Buy, hold or sell these 3 ASX 200 healthcare shares: Experts
• 2 of the best ASX 200 blue chip shares to buy in May

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, Harvey Norman, and Telstra Group. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.