The Calix Ltd (ASX: CXL) share price is having a day to forget on Monday.

In morning trade, the ASX All Ords share was down as much as 30% to a 52-week low of $1.65.

The environmental technology company’s shares have recovered slightly since then but remain down by 26% at the time of writing.

Why is this ASX All Ords share crashing?

Investors have been rushing to the exits this morning after the company announced that the Leilac-2 project will move to another Heidelberg Materials’ site following a decision by Heidelberg Materials to end clinker production at its Hanover cement plant.

The release notes that Heidelberg Materials has attributed the decision to shut down clinker production in Hanover to a “substantial decline in cement sales following weak construction demand in Germany due to the current economic environment.”

Calix and its subsidiary, Leilac, are currently working with Heidelberg Materials to identify a suitable new site for the project as soon as possible.

This is a bitter blow for the ASX All Ords share. It notes that Leilac-2 is well advanced and was on track for construction in 2024.

Leilac-2 has a modular design that aims to demonstrate an efficient, economic and scalable solution for the cement and lime industries to capture their unavoidable process emissions and provide flexible and future-proof fuel optionality.

The ASX All Ords share’s managing director and CEO, Phil Hodgson, said:

Current macro-economic environment realities have resulted in what is undoubtedly a difficult decision for Heidelberg Materials, and our thoughts and best wishes are with those whose jobs will be impacted by this decision.

We will work closely with Heidelberg Materials and our Leilac Consortium partners on the relocation options. Once chosen, we would expect around six months additional engineering work associated with site integration specifics. The Leilac-2 module is basically ready-to-build, with long lead items already being procured, and we look forward to continuing to work with Heidelberg Materials and our Leilac consortium partners to bring the Leilac-2 project to a successful conclusion.

The post Why is this ASX All Ords share plunging 30% on Monday? appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 uranium stock was just downgraded
• Building wealth in your 30s? I’d buy these ASX shares
• BHP share price tumbles amid reported $14.8 billion Brazil dam disaster hit
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• Bell Potter says these ASX dividend shares are top buys

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

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Boss Energy Ltd (ASX: BOE) shares are having a tough start to the week.

In morning trade, the ASX 200 uranium stock is down over 5% to $5.28.

Why is this ASX 200 uranium stock sinking?

The catalyst for the weakness in the Boss Energy share price on Monday has been the release of a broker note out of Bell Potter.

According to the note, the broker believes the risk/reward on offer from its shares at present is no longer sufficient to recommend it as a buy.

As a result, this morning, the broker has downgraded the ASX 200 uranium stock to a speculative hold rating with an improved price target of $6.41 (from $5.69).

The good news for investors is that today’s decline means that this price target still implies potential upside of approximately 21% for its shares.

Commenting on the downgrade, the broker said:

We upgrade our valuation to $6.41/sh (previously $5.69/sh) on changes to our price outlook, and downgrade BOE to Speculative Hold (from speculative Buy) as the stock has out-performed peers. Uranium fundamentals continue to support our thesis being 1) advancement in Nuclear energy across the globe (60 reactors currently under construction) filtering through to a growing demand for U3O8 and 2) a lack of near-term supply as producers exited the market post Fukushima. The recent acquisition of a 30% interest in the Alta Mesa joint venture, diversifies BOE’s operations and revenue streams, making BOE one of only two geographically diversified uranium producers in CY24.

Bell Potter is now expecting the mid-term uranium price to reach a peak of US$130 per pound. Though, that could yet change depending on “the potential downgrades in production from Kazatomprom and the ripple effects on-market purchases will have to the spot price.”

Boss Energy shares are up 100% over the last 12 months.

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

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

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In your 30s and looking to build wealth with ASX shares? It’s a great age to start investing because there are still many years ahead of working and time for compounding.

If someone is 35 and is thinking about retiring at 65, that’s 30 years of possible compounding. How much growth could happen in that time?

The share market has made an average return per annum of 10% over the ultra-long-term. If $10,000 grew at 10% per year for 30 years, it would become $174,000. Of course, the share market could do worse (or better) than that in the future.

People in their 30s may be earning a bit more than in their 20s, allowing them to set aside some cash to invest. Of course, people of other ages can also save and invest.

I think the two ASX shares in this article could be top picks for long-term growth.

Global X Fang+ ETF (ASX: FANG)

This exchange-traded fund (ETF) helps us invest in some of the largest, strongest and most compelling businesses in the world.

It’s quite similar to the Betashares Nasdaq 100 ETF (ASX: NDQ) – both ETFs are focused on the large US tech companies.

But, the FANG ETF is only invested in 10 businesses. These are the names (and latest weightings) within the portfolio: Nvidia (11.73%), Meta Platforms (10.73%), Broadcom (10.58%), Netflix (10.44%), Alphabet (10.31%), Microsoft (9.88%), Amazon.com (9.69%), Snowflake (9.53%), Apple (9.03%) and Tesla (7.98%). These are businesses with very strong economic moats.

One benefit to this ETF over the NDQ ETF is that it has a lower management fee. The FANG ETF has an annual management of 0.35% while the NDQ ETF fee is 0.48%.  

I’d guess a lot of people invest in the NDQ ETF for the big US tech names, so why not get a greater exposure to them?

The FANG ETF has done very well over the last three years, with an average return per annum of 17%, compared to 14.1% per annum for the NDQ ETF over the same time period. Of course, past performance is not a guarantee of future performance.

But these businesses are doing a number of things that could change the world and grow earnings in areas like AI, cloud computing, gaming, online video and so on. I think owning these names makes a lot of sense for people building wealth in their 30s.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an ASX share that helps leading fund managers start their own fund management business.

It can help the funder with various services like seed funding of funds under management (FUM), working capital, distribution and client services, compliance, finance, legal, technology and other infrastructure. Taking this off the managers’ desk means the fundie can focus on the investing side of things.

The business has built a portfolio of solid fund managers, including Hyperion, Plato, Solaris, Antipodes, Spheria, Firetrail, Metrics, Five V and Coolabah.

2022 was a rough year, with strong inflation and rising interest rates leading to falling asset prices and an element of caution among investors about adding ore money into Pinnacle’s funds.

With asset prices now performing better and interest rate cuts on the horizon, the ASX share is now better placed to attract more FUM, in my opinion. In the second half of FY23, the fund managers saw net inflows of $3.1 billion.

Pinnacle has built an impressive portfolio of fund managers, and I like its initiative of looking to grow overseas. It recently helped start (and invested in) a Canadian small-cap fund manager.

According to Commsec, the Pinnacle share price is valued at 20x FY25’s estimated earnings.

The post Building wealth in your 30s? I’d buy these ASX shares appeared first on The Motley Fool Australia.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Pinnacle Investment Management Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, Microsoft, Netflix, Nvidia, Pinnacle Investment Management Group, Snowflake, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Pinnacle Investment Management Group. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Netflix, and Nvidia. 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 BHP Group Ltd (ASX: BHP) share price is under selling pressure today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock closed on Friday trading for $47.54. In morning trade on Monday shares are swapping hands for $46.83 apiece, down 1.5%.

For some context the ASX 200 is up 0.02% at this same time.

The BHP share price is in the red despite another small uptick in the iron ore price over the weekend. The industrial metal is selling for US$135.60 per tonne.

Comparing apples to apples, rival ASX 200 miner Rio Tinto Ltd (ASX: RIO) shares down 0.1%, while the Fortescue Metals Group Ltd (ASX: FMG) share price is up 1.1%.

This comes amid media reports that BHP shareholders could be looking at billions of dollars in legal damages related to the 2015 Samarco Fundao iron ore tailings dam collapse in Brazil.

The collapse killed 19 people and caused massive environmental damage.

Here’s the latest.

BHP share price pressured amid court ruling

The BHP share price is down today as ASX investors consider the potential implications of the ruling on the Fundao Dam, which was owned and operated by Samarco Mineracao, a joint venture between BHP Brasil and Vale.

As Reuters reported, Brazilian federal court judge Vinicius Cobucci has ruled that BHP, Vale and their Samarco joint venture must pay 47.6 billion reais (US$9.7 billion, or AU$14.8 billion) in damages for the collapse.

According to the ruling, the legal damages will be used for local improvement projects in the impacted areas.

However, investors may be prematurely pressuring the BHP share price after the ASX 200 miner released a statement saying it “has not been served with a decision by the court”.

Management said they “will review the decision to assess its implications, the potential for an appeal and any potential impact to the group’s provision related to the Samarco dam failure”.  

The miner noted:

Since early CY2021, the parties have been engaging in negotiations to seek a settlement of obligations under the Framework Agreement and BRL$155bn Federal Public Prosecution Office claim and the negotiations are expected to resume in February 2024.

The company said that, as reported in its 2023 annual report, the group’s provision related to the Samarco dam failure is US$3.7 billion (as at 30 June 2023).

“BHP Brasil is fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil through the Fundacao Renova,” the miner stated.

Fundacao Renova is a not-for-profit, private foundation. It was established after the damn collapse to implement 42 remediation and compensatory programs in Brazil. 

The BHP share price is down 5% over the past 12 months.

The post BHP share price tumbles amid reported $14.8 billion Brazil dam disaster hit appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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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Mineral Resources Ltd (ASX: MIN) shares could be a bargain buy right now.

That’s the view of analysts at Bell Potter, which have responded positively to the mining and mining services company’s quarterly update.

What is the broker saying about Mineral Resources shares?

According to the note, the broker was pleased enough with its performance during the quarter.

It notes that production was stronger than expected but prices were lower. It said:

Production was generally above our forecasts. Lithium prices declined further during the quarter and were lower than our forecasts. […] MIN noted that the lithium division is profitable at current lithium prices. Iron ore prices were up 20% qoq. On the 35Mtpa Onslow Iron Project construction, MIN reiterated that the project is well within budget, and on target to deliver first ore-on-ship in June-24.

In light of this, the broker remains very positive on Mineral Resources shares and has reiterated its buy rating on them.

And while its analysts have cut their price target to $75.00 (from $90.00) due to weak lithium prices, this still implies potential upside of 26% for investors over the next 12 months.

The broker concludes:

Our price Target Price is reduced due to our downgraded lithium price outlook. For 2024, we estimate SC6 prices averaging US$1,100/t (prev. US$2,500/t) and hydroxide prices averaging US$18,125/t (prev. US$32,500/t). EPS changes in this report include: FY24 -26%, FY25 -29%, FY26 -7%. From June 2024 the Onslow Iron Project is guided to commence its production ramp-up. The project will grow attributable iron ore production by 21Mtpa (more than 100%), and Mining Services volumes by 140Mtpa (~50%, before haul road sell down), leading to significant forecast growth earnings.

The post Why this leading broker is tipping Mineral Resources shares to jump 25% appeared first on The Motley Fool Australia.

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

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The team at Bell Potter has been scouring the market for ASX dividend shares to buy in recent weeks.

Two shares that were identified as a buys are listed below. Here’s what the broker is saying about them:

Dexus Convenience Retail REIT (ASX: DXC)

The first ASX dividend share that Bell Potter rates as a buy is Dexus Convenience Retail REIT.

The broker believes the convenience retail and service station property company’s shares are cheap at current levels. It explains:

DXC is a convenience retail / service station REIT with a network of over 100 assets across the country predominantly leased to institutional and strong covenant tenants including Chevron, Viva, EG, Mobil and 7-Eleven. DXC trades at a circa 34% discount to stated NTA which we think is overly punitive for a sub-sector where there is clear price discovery (double digit number of asset sales for DXC at a blended 2-3% discount to book, and 65 market transactions in FY23), and investors for commercial real estate have a clear preference for smaller cheque size assets.

In respect to income, the broker is forecasting dividends per share of 20.9 cents in FY 2024 and 20.5 cents in FY 2025. Based on its current share price of $2.62, this equates to yields of 8% and 7.8%, respectively.

Bell Potter has a buy rating and $2.85 price target on its shares.

Elders Ltd (ASX: ELD)

Another ASX dividend share that has been given the thumbs up by Bell Potter is agribusiness company Elders.

The broker was pleased to see that operating conditions have been more favourable for Elders since the release of its FY 2023 results. It commented:

Our Buy rating is unchanged. Since reporting FY23 results in Nov’23 soil moisture profiles in key summer cropping regions have improved (with NOAA long range forecasts shifting to ENSO neutral by April-June) and livestock prices have firmed, with volumes generally continuing to demonstrate high single-to-double digit YOY gains in both cattle and sheep/lamb markets.

Bell Potter expects this to support the payment of dividends of 34 cents per share in FY 2024 and 41 cents per share in FY 2025. Based on the current Elders share price of $8.82, this will mean yields of 3.85% and 4.65%, respectively.

Its analysts have a buy rating and $9.50 price target on the company’s shares.

The post Bell Potter says these ASX dividend shares are top buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders. 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 blue-chip shares have a reputation for being goliaths of their industry. But does being bigger mean better in recessions and bear markets?

What ASX blue-chip shares are there?

There is no definitive definition of how big an ASX blue chip should be. But, we’re certainly talking about many tens of billions of dollars in terms of market capitalisation.

ASX mining and financial shares are the two biggest market sectors on the ASX. Retail shares also make up a sizeable portion.

Some of the biggest miners include BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO).

Financial blue chips include the big four banks — Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) — and Macquarie Group Ltd (ASX: MQG).

Big names in the retail, health care and energy sectors include CSL Ltd (ASX: CSL), Wesfarmers Ltd (ASX: WES), Woodside Energy Group Ltd (ASX: WDS), Goodman Group (ASX: GMG), Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW) and Transurban Group (ASX: TCL).

According to the ASX, the miner BHP has a market capitalisation of $237 billion, and Transurban has a market capitalisation of just over $40 billion.

Some risks

These blue-chip stocks may be huge, but they are not immune to large swings in their share prices.

We’ve got to expect share price volatility because current events are always popping up, which can be worrying. If people sell during widespread market volatility, it results in a permanent loss from temporary volatility.

When the related commodity price falls, names like BHP, Fortescue, Rio Tinto and Woodside can suffer heavily.

Just because they’re large doesn’t mean they’re not susceptible to challenges. For example, CSL is facing an increasing amount of competition from other biotechnology businesses. Banking competition sent the share prices of the banks downwards in February last year. Worries about household finances can hurt banks and retailers.

Why ASX blue-chip shares can provide stability

There is typically more liquidity with ASX blue-chip shares. This means more shares being sold and bought, making it easier for investors to buy and sell shares at close to the last market price.

Blue chips are the biggest companies in their industries, so they are likely to have the strongest balance sheet and the most well-known brands. Combined with the liquidity benefits, that usually means ASX blue-chip shares fall less in bear markets compared to smaller businesses on the ASX (particularly smaller competition).

The strongest balance sheets of ASX blue-chip shares can also mean larger companies are able to acquire distressed, smaller competition. During the GFC, the big banks acquired smaller banks, helping entrench their position.

Many of these businesses have been around for many decades. I think there’s a good chance they will continue for many more years. In my mind, a large decline in share prices across the board is often the best time to think about investing.

The post Are ASX blue-chip shares actually safe investments? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, Macquarie Group, Transurban Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended CSL and 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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The Woolworths Group Ltd (ASX: WOW) share price is edging lower on Monday.

In morning trade, the retail giant’s shares are down 0.5% to $36.00

What’s going on with the Woolworth share price?

Investors have been selling the supermarket operator’s shares today in response to the release of a trading update.

According to the release, there are two significant items that will be recognised in its FY 2024 half-year results next month.

The significant items relate to the non-cash impairment of the carrying value of the New Zealand Food reporting segment and a change in accounting treatment for the company’s investment in Endeavour Group Ltd (ASX: EDV).

In respect to the former, Woolworths has made “significant progress” on its Woolworths New Zealand transformation agenda. This includes 34 Countdown stores rebranded to Woolworths and the relaunch of key price mechanics and in-store value communication.

However, this has not been enough to turn around the fortunes of the business. Management notes that “the trading performance in New Zealand Food has continued to be challenging.”

As a result, it expects the New Zealand food business to report half-year earnings before interest and tax (EBIT) of NZ$71 million (including transformation costs). This will be down 42% over the prior corresponding period.

In light of this and its weaker medium-term outlook, a non-cash impairment of NZ$1.6 billion (~A$1.5 billion) will be recorded as a significant item with its half-year results.

Woolworths Group CEO, Brad Banducci, said:

Our confidence in the potential of Woolworths New Zealand and our transformation plan remains unchanged. While the short-term performance has been impacted by a variety of factors and the speed of improvement remains uncertain, we are seeing early positive signs from our Kiwi customers as our transformation gathers momentum.

Woolworths’ second impairment relates to the accounting treatment of its holding in Dan Murphy’s owner Endeavour. It will derecognise its equity accounted investment and recognise it as a financial asset, which means a loss of $209 million.

Trading update

Potentially offering some relief for the Woolworths share price today was news that its Australian Food and Pet care businesses have performed positively during the first half.

As a result, Woolworths Group’s unaudited EBIT before significant items is expected to be $1,682 million to $1,699 million. This will be up 2.8% to 3.8% over the $1,637 million record a year ago.

The post Woolworths share price falls on $1.5b impairment news appeared first on The Motley Fool Australia.

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

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IGO Ltd (ASX: IGO) shares are falling on Monday morning.

At the time of writing, the battery materials company’s shares are down 2.5% to $7.29.

Why are IGO shares falling?

Investors have been selling IGO shares this morning after the company released an update on its lithium operations.

The company notes that its 49% owned Tianqi Lithium Energy Australia (TLEA) business and Albemarle Corp (NYSE: ALB), the joint venture partners of the Windfield Joint Venture, have been considering spodumene concentrate offtake volumes and pricing arrangements from the Greenbushes Operation. This project is operated by Talison Lithium under the Windfield Joint Venture.

According to today’s update, the Windfield board has agreed to amend the pricing mechanism which will be applied to SC6.0 spodumene concentrate offtake volumes effective 1 January 2024.

Under the new mechanism, pricing will be reset monthly. It will be based on the average of the previous month, referencing the average of four price reporting agencies, less a 5% volume discount, FOB Australia.

In addition, IGO revealed that its joint venture partners have indicated their spodumene concentrate volumes for the second half of FY 2024 will be below forecast. As a result, it expects production at Greenbushes to be marginally reduced during this period to match inventory build with product logistics.

IGO expects that sales for the second half will be approximately 20% lower than production as inventories build at site.

Production guidance and cost update

In light of the above, IGO’s SC6.0 spodumene concentrate production guidance from Greenbushes for FY 2024 has been downgraded to between 1.3Mtpa to 1.4Mtpa (previously 1.4Mtpa – 1.5Mtpa).

And while its cost guidance remains the same at present, it expects to be at the very top end of its range.

IGO’s CEO, Ivan Vella, commented:

Despite the short-term weakness in the lithium market, the JV Partners at Greenbushes are strongly aligned on continuing to drive value from this world class operation. IGO is pleased with the new arrangements which balance near term market weakness whilst maintaining the leading position of this world class asset, including the commitment to CGP3 development. I am looking forward to continuing to build our relationship with two industry leaders and realise the full potential of our asset and its impact on this nascent industry.

IGO shares are down 55% over the last 12 months.

The post IGO shares drops on lithium update appeared first on The Motley Fool Australia.

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

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I love the idea of investing in ASX shares for my child. I believe stocks will be able to deliver much stronger returns than cash and interest can do. There are many years until my child becomes an adult, which means many years of potential compounding.

ASX blue chips wouldn’t be a bad idea, and I do really like the look of BetaShares Global Sustainability Leaders ETF (ASX: ETHI).

But, I like the two names below for their underlying characteristics and the long-term potential growth.

Betashares Global Quality Leaders ETF (ASX: QLTY)

This exchange-traded fund (ETF) has a portfolio of global businesses from around the world. Its holdings include 150 companies, with around two-thirds of the portfolio currently allocated to US shares. Other countries with sizeable weightings include Japan (11.7%), the Netherlands (4%), France (3.4%), Denmark (2.6%), Switzerland (2.1%) and the United Kingdom (2%).

The ETF selects stocks that rank well on a combined four factors. They include return on equity (ROE), debt to capital, cash flow generation and earnings stability.

At the moment, the biggest positions in the portfolio are Nvidia, ASML, Meta Platforms, Applied Materials and Intuit. But, while the ETF may change holdings over the years, the portfolio’s characteristics will stay the same year after year. It’s very profitable for shareholders with stable earnings, low debt and good cash flow.

Over the past five years, the QLTY ETF has delivered an average return per annum of 15.4%. Past performance is no guarantee of future returns, but even compounding at 10% per annum would be useful for growing an investment for my child.

Frontier Digital Ventures Ltd (ASX: FDV)

This ASX small-cap share is much riskier than the QLTY ETF. Indeed, it’s likely to be more volatile than most S&P/ASX 200 Index (ASX: XJO) shares. However, in my mind, share price volatility and operational business risks are not the same thing. I’m happy to hold through volatility if the business has a compelling long-term future.

Not many Aussies may have heard of this business, but it has a very exciting thesis, in my opinion.

The company aims to become the world leader in online marketplace businesses in emerging markets, with a particular focus on property and automotive sectors, as well as general marketplace websites.

It looks for local partners and teams that have “integrity, unwavering self-belief in their online marketplace business and extraordinary passion to make it succeed”.

For example, it’s invested in Fincaraiz, the leading real estate marketplace in Colombia. It owns a stake in Infocasas, the leading property portfolio in Uruguay and Paraguay, and is a key player in Bolivia. The ASX share is also invested in Yapo, the leading general classifieds portal in Chile.

It’s invested in several other businesses, including Zameen and Pakwheels, the leading property portal and auto portal in Pakistan. Other investments give it the leading auto portal in the Philippines and Myanmar.

After digital infrastructure has been built, these companies can benefit from the growing number of users. Digital businesses can achieve a lot of operating leverage. The gross profit margin of these businesses is normally high, so revenue growth can deliver strong improvements for the earnings before interest, tax, depreciation and amortisation (EBITDA).

Frontier Digital Ventures is now starting to make positive EBITDA and positive cash flow. This significantly de-risks the business in my eyes. In five or ten years, I think this company could make much more operational profit if those emerging market businesses keep scaling.

The post 2 ASX shares I’d buy for my child for long-term growth appeared first on The Motley Fool Australia.

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More reading

• Here are 10 ASX shares I’d buy in 2024
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML, Applied Materials, Frontier Digital Ventures, Intuit, Meta Platforms, and Nvidia. The Motley Fool Australia has recommended ASML, Frontier Digital Ventures, Meta Platforms, and Nvidia. 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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