Rising interest rates were a headwind for ASX real estate investment trusts (REITs) last year, and today they look like good value, says Morgan Stanley Australia’s co-head of investment banking, Tim Church.

Before we get into why, let’s take a look at the recent performance of ASX REITs.

ASX REITs smashed in 2023, but recover strongly in Santa Rally

The S&P/ASX 200 A-REIT Index (ASX: XPJ) hit its 2023 trough of 1,216.6 points on 30 October.

At that time, the property shares index was down 8.76% in the year to date compared to a 3.78% fall in the benchmark S&P/ASX 200 Index (ASX: XJO).

Everything changed in November, with the traditional Santa Rally starting early as yields on long-dated bonds fell and optimism that the US Federal Reserve would cut interest rates in the new year grew.

The chart below shows this change. As you can see, ASX REITs had a massive rally in November and December, with the A-REIT Index rising 23.5% over this two-month period.

ASX REITS looking ‘decidedly good value’

Tim Church told the Australian Financial Review (AFR) that ASX REITs are looking like bargains.

Church said:

Bombed-out REITs that have suffered from a combination of poor sentiment and rising bond yields and cash rate increases look decidedly good value, ie oversold, particularly when you consider that we are closer to – if not there already – peak interest rates.

In an AFR roundtable discussion, Church and other real estate investment bankers noted that more property funds were likely to downgrade their commercial property valuations this year.

Valuations are likely to fall most on office tower assets amid hybrid working arrangements reducing demand for office space post-pandemic.

More of these valuation downgrades may take place during the February reporting period.

Which REITs are good buys?

Here’s how the top three ASX REITs by market capitalisation stack up based on consensus ratings published on CommSec today.

Goodman Group (ASX: GMG)

The biggest REIT, Goodman Group, is trading at $24.29 per share on Tuesday. The consensus rating on CommSec is a moderate buy. The rating fell from a strong buy on 27 November.

Scentre Group (ASX: SCG)

The Scentre Group is changing hands at $2.93 per share today. The consensus rating on CommSec is a moderate buy. The rating increased from a hold on 5 June.

Stockland Corporation Ltd (ASX: SGP)

Stockland shares are trading at $4.43 per share today. The consensus rating is a moderate buy, up from a hold rating on 2 June.

Median home values rose by 8.1% in 2023 while ASX REITs booked a 12.67% gain for the year overall.

The post ‘Bombed-out’ ASX REITs are bargain shares, says expert appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Bullish about data centre growth? I’d try these 3 ASX 200 shares
• Forget term deposits and buy these ASX dividend stocks
• The No. 1 ASX 200 shares of each market sector in 2023
• Navigating rising interest rates: Top Australian stocks to watch
• Citi says these ASX 200 dividend shares are buys

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

from The Motley Fool Australia https://ift.tt/I7jFMSh

S&P/ASX 200 Index (ASX: XJO) shares aren’t just sensitive to interest rate moves from the Reserve Bank of Australia (RBA). Like it or not, they’ve also proven to be susceptible to rates set by the United States Federal Reserve.

As we covered at the start of the year, ASX 200 shares came within a whisker of setting new all-time highs on 2 January. But that new record slipped further away in the first weeks of trading in 2024, in part because investors pared their bets of a March rate cut from the US Fed.

That March Fed rate cut is still possible. But a potential deal in the works for US$70 billion (AU$106 billion) in tax breaks for US households and businesses could throw cold water on those hopes.

Here’s what’s happening.

ASX 200 shares eyeing Fed rate cuts

While not all ASX 200 shares would face headwinds from a delay in interest rate cuts from the Fed, the benchmark index will most likely fare better once the world’s most watched central bank begins easing.

And that easing could be delayed if the $106 billion in proposed tax breaks work to fuel inflation.

If passed the deal – which remains under Congressional negotiations – would increase the child tax credit and renew corporate tax breaks through 2025. And households could see the benefits of that extra cash as early as March.

Now that extra cash will certainly be welcomed by those on the receiving end, and work to spur the US economy. But if it stalls the Fed’s battle to bring inflation back to its 2% target range, investors in ASX 200 shares may have a longer wait than many expected for the Fed to begin easing.

Mickey Levy, a visiting scholar at the Hoover Institution, noted that the US economy is still awash with some of the fiscal stimulus unleashed during the global pandemic.

“There’s already substantial fiscal stimulus driving up economic activity,” Levy said (quoted by Bloomberg).

Commenting on the potential $106 billion in tax cuts, Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget said, “This is going to be a decent amount of fiscal cost with very little of it going to encourage new investment in a time when there are still inflation pressures.”

As for today, ASX 200 shares are down an average of 1.2%.

The post Buying ASX 200 shares in 2024? Here’s why this $106 billion proposed US tax break matters appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• The pros and cons of buying Wesfarmers shares right now
• Bullish about data centre growth? I’d try these 3 ASX 200 shares
• 5 things to watch on the ASX 200 on Monday

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.

from The Motley Fool Australia https://ift.tt/hyJK2Oj

Unless you’ve been investing under a rock, you’ll probably be aware of the huge gains that owners of ASX uranium shares like Boss Energy Ltd (ASX: BOE) have been enjoying in recent weeks and months.

Boss Energy shares have been on an absolute tear lately. This ASX uranium stock was going for just $2 a share in March last year. But today, Boss shares are sitting at $5.46 each, after hitting a new all-time high of $5.64 earlier this morning.

That puts the company up a whopping 35% in 2024 to date, and up an even better 128% over the past 12 months:

So we’ve established that Boss Energy shareholders have been a lucky lot in recent times. But what about an investor looking to buy Boss shares today? Is it too late to get in at $5.50 a share?

Are Boss Energy shares a buy at $5.50?

Well, expert opinion on this uranium stock remains a little mixed.

Earlier this month, my Fool colleague James covered the opinion of ASX broker Macquarie. Macquarie did give Boss an outperform rating. However, it also slapped a $5 share price target on the company, which is obviously well below Boss’ current share price.

However, at the time, Boss Energy shares were well under $5. Macquarie noted that Boss has recently signed its maiden sales contract, and reckons the company is well placed to take advantage of the recent surge in uranium prices.

However, another ASX expert isn’t quite as optimistic. The Bull recently covered the views of John Athanasiou of Red Leaf Securities. Athanasiou rated Boss as a sell, despite the surge in uranium prices.

He argued that Boss Energy “shares have risen too quickly and appear priced to perfection, leaving little or no room for error”.  Athanasiou advised investors to consider “pocketing a profit”.

As such, it seems that at least these two ASX experts are wary of Boss Energy shares at $5.50 each. Something for those jubilant Boss investors to keep in mind with today’s new record high for the company.

The post Would I be crazy to buy Boss Energy shares at $5.50? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• The shocking admission catapulting ASX uranium shares to record highs today
• ASX uranium shares crack new highs AGAIN as spot price flies past US$100 per pound
• Why Boss Energy, Core Lithium, Pinnacle, and Syrah shares are rising today
• Boss Energy shares up 23% in 2024. Is it too late to buy?

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 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.

from The Motley Fool Australia https://ift.tt/pvA18Wq

Last month, we discussed whether it was too late to buy the BetaShares Nasdaq 100 ETF (ASX: NDQ) at close to what was then a new record high.

Since then, we’ve seen this ASX exchange-traded fund (ETF) push even higher, decisively answering that redundant question with a ‘no’.

Today, we’ve seen ASX NDQ units do it again. This ETF closed at $38.16 a unit yesterday afternoon. But this morning, those same units climbed up to $38.31 each. That’s a new record high that is more than 2% above where the Betashares Nasdaq 100 ETF was last month when we first asked whether it was too late to buy.

Today’s gains put NDQ units up 2.44% year to date, as well as up an extraordinary 49.65% over the past 12 months.

So why is this popular ETF sitting at another new high today?

Why has the BetaShares NDQ ETF just hit a new ASX record high?

Well, to answer that, let’s look at what this ETF actually invests in. Like many ETFs, NDQ is an index fund. In this case, the index that it tracks is the NASDAQ-100 Index (INDEXNASDAQ: NDX). This index covers the largest 100 non-financial shares on the American Nasdaq stock exchange.

The Nasdaq is famous for housing almost every major US tech stock on the market. That’s everything from Apple, Microsoft and Amazon to Netflix, PayPal and Airbnb.

During last night’s US trading, a few of these companies managed to push higher. Microsoft inched closer to another new record high, gaining 1%. Meta Platforms was up 1.3%. Although other Nasdaq tech stocks like Apple, Amazon and NVIDIA fell slightly, it seems that those gains from Microsoft and Meta were enough to warrant another rise for NDQ units today.

A fall in the value of the Australian dollar against the US dollar overnight would be helping to push NDQ higher as well.

Investing in index funds

It can be hard to muster enough energy to buy more units of an index fund that is sitting at or near a new record high. However, as we’ve already discussed, investors who got cold feet before today would probably be regretting their previous reluctance.

If you’re following a dollar-cost averaging strategy to invest in NDQ units, it’s important to stick to a consistent investing schedule.

Trying to time the market by waiting for a cheap opportunity to buy an investment is usually a poor strategy to follow. None of us know what an index might do next. The BetaShares Nasdaq 100 ETF could have a terrible year in 2024 for all we know. But it’s equally possible that it has another blowout year.

If you keep in mind that indexes like the Nasdaq 100 tend to go up more often they they go down, the right path is hopefully easier to see.

The post The BetaShares Nasdaq 100 ETF (NDQ) just hit a new all-time high. Here’s why appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 no-brainer ASX ETFs for investors to buy and hold
• 5 top ASX ETFs for investors to buy in 2024
• 3 ASX ETFs to buy in 2024 and hold forever
• 3 ASX ETFs to buy after the Christmas break
• Is it too late to buy the BetaShares Nasdaq 100 ETF (NDQ) trading near record highs?

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Airbnb, Amazon, Apple, Netflix, PayPal and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Airbnb, Amazon, Apple, BetaShares Nasdaq 100 ETF, Microsoft, Netflix, Nvidia, and PayPal. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Airbnb, Amazon, Apple, Netflix, Nvidia, and PayPal. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/N2tFr6b

Owning ANZ Group Holdings Ltd (ASX: ANZ) shares can be rewarding in terms of passive income. I’m sure it’s a dream for plenty of Aussies to be able to enjoy thousands of dollars of dividends flowing into their bank account every year for no effort. In this article, I’m going to look at how many ANZ shares we’d need to own for $7,000 of passive income.

ANZ is one of the biggest ASX bank shares around, as well as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

Why are ANZ shares able to generate such strong dividends?

As one of the biggest companies in Australia, its huge size gives it the ability to achieve good economies of scale.

It makes billions in profit every year, and the ASX bank share trades on a fairly low earnings multiple. In other words, ANZ has a low price/earnings (P/E) ratio. If a company pays a dividend, the lower the P/E ratio the higher the dividend yield. That’s why ASX coal shares can have such large yields.

The other part of the dividend yield equation is the dividend payout ratio. The more of its profit it pays out, the bigger the dividend yield – that’s applicable to ANZ shares or any other business that pays a dividend or distribution.

In FY23, the business paid an additional 13 cents per share to make up for the fact that the percentage of franking for the FY23 second-half dividend was reduced. Excluding that extra 13 cents, ANZ’s normalised dividend had a dividend payout ratio of 66% in FY23. In FY22 and FY21 the dividend payout ratio was 65%.

How big could the passive income be in FY24?

Amid the difficulties of strong banking competition and the danger of borrowers’ rising bad debts due to high interest rates, ANZ’s net profit after tax (NPAT) and dividend are expected to reduce in FY24.

According to Commsec, the ANZ share price is valued at 12 times FY24’s estimated earnings and could pay an annual dividend per share of $1.62. I’m not sure what the franking level is going to be in 2024, so I’ll just assume it is going to be partially franked again.

ANZ could pay a partially franked dividend yield of 6.3%, or 7.6% grossed-up at the same franking rate as the last dividend.  

Making $7,000 of passive income

Excluding franking credits, investors would need to own 4,321 ANZ shares to get $7,000 of cash dividends in FY24 from ANZ. It’s predicted to pay the same dividend in FY25.

At the current ANZ share price, we’re talking about an investment of around $111,000 to buy that many ANZ shares.

Diversification is an essential part of an investment strategy, so I wouldn’t rely on one ASX share for all of my dividend income. I’d buy a number of others to create a portfolio of dividendpayers.

Businesses that are growing earnings and dividends could be solid picks for long-term passive income.

The post How much would I need to invest in ANZ shares for $7,000 a year in passive income? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These ASX dividend stocks could be buys this month
• Here’s why I think the dividend forecast could send ANZ shares climbing
• Here’s how these top 3 performing ASX 200 bank shares stacked up in 2023
• Could this give ANZ shares an edge over the other ASX 200 banks?
• Passive income seekers: Make $1,540 in 2024 buying just 3 ASX 200 shares

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.

from The Motley Fool Australia https://ift.tt/x6U2mVD

If you’re on the lookout for big returns in 2024, then look no further.

That’s because the ASX 200 growth shares listed below have been named as buys and tipped to rise very strongly.

Here’s what analysts are saying about these highly rated shares:

IDP Education Ltd (ASX: IEL)

The team at Bell Potter is feeling very bullish about IDP Education and see it as a top ASX 200 growth share to buy right now.

The broker likes the language testing and student placement company due to its dominant market position and successful track record with acquisitions.

Combined with structural growth tailwinds, the broker believes its shares deserve to trade on a premium valuation. The broker explains:

Whilst increased competition in English language testing is likely to impact IELTS volumes, we expect this to be partially offset by strength in the student placement segment supported by strong 1QFY24 student visa data in the Northern Hemisphere and structural growth tailwinds. In addition, the business has a solid dividend yield, relatively low working capital intensity, and has historically maintained strong cash conversion. IEL trades at a premium to its peers on a FY24e EV/EBIT of ~24x, however, we believe this is justified given its dominant market position, potential for M&A and successful track record.

Bell Potter has a buy rating and $27.00 price target on its shares. This implies almost 30% upside for investors.

Life360 Inc (ASX: 360)

Over at Goldman Sachs, its analysts see big returns ahead for this ASX 200 growth share.

The broker likes the location technology company due to its huge market opportunity and potential structural profitability tailwinds. It explains:

We estimate Life360 is exposed to a US$12bn global TAM with a large opportunity to expand its product suite, grow average revenue per paying circle (ARPPC), increase payer conversion, and lift penetration rates outside of the US. […] We see Life360 as reaching a volume/pricing inflection point, with potential structural profitability tailwinds on the horizon from a reduction in effective app store fees. Life360’s Subscription business currently trades at a discount to global subscription app peers when adjusting for its superior growth outlook.

Goldman has a buy rating and $10.50 price target on its shares. This suggests potential upside of 55% from current levels.

The post These ASX 200 growth shares can rise ~30% to 55% appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These are the 10 most shorted ASX shares
• ‘Lowest valuation since listing’: ASX 200 stock for ‘excellent business’ now an irresistible bargain
• These 3 ASX 200 shares could rise 20% to 40%
• Top ASX shares for beginner investors to buy in 2024
• Why these ASX 200 growth shares could be strong buys

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Idp Education, and Life360. The Motley Fool Australia has recommended Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/Xzu6afp

The S&P/ASX 200 Index (ASX: XJO) is having a tough session on Tuesday. At the time of writing, the benchmark index is down 0.9% to 7,427.9 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is up 2.5% to 41 cents. This is despite there being no news out of the Africa-focused lithium developer. However, it is worth noting that Macquarie remains positive on the company. This led to the broker reaffirming its outperform rating and 56 cents price target on its shares on Monday.

Charter Hall Group (ASX: CHC)

The Charter Hall share price is up 2.5% to $11.90. This appears to have been driven by a broker note out of Morgan Stanley this morning. According to the note, the broker has upgraded the property company’s shares to an overweight rating with an improved price target of $13.25. It believes the company is a great option for investors while bond yields fall.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up 8.5% to 40.2 cents. Investors have been buying this counter drone technology company’s shares following the release of its quarterly update. Droneshield reported a record $48 million of customer cash receipts and grants for the December quarter. This is five times larger than the next largest quarter on record. It also revealed a maiden profit for the 12 months.

Zip Co Ltd (ASX: ZIP)

The Zip share price is up 8.5% to 53.2 cents. This is despite there being no news out of the buy now pay later provider. Though, it is worth highlighting that its shares have fallen heavily since this time last month, so bargain hunters could be swooping in. Zip’s shares remain down 14% on a monthly basis.

The post Why Atlantic Lithium, Charter Hall, Droneshield, and Zip shares are pushing higher appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which small cap ASX stock is jumping 12% after record-breaking year
• Buy Rio Tinto and these ASX dividend shares
• Why Arcadium Lithium, IAG, PYC Therapeutics, and Zip shares are falling today
• 10 ASX shares I would buy in 2024
• Why Atlantic Lithium, KMD Brands, Neuren, and PEXA shares are falling today

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

from The Motley Fool Australia https://ift.tt/sJBTjXf

IGO Ltd (ASX: IGO) shares are having another poor session on Tuesday.

In morning trade, the ASX lithium stock is down a further 1% to $7.50.

This stretches its 12-month decline to a disappointing 49%.

Should you buy this ASX lithium stock now?

While it would take a brave investor to jump into the lithium industry right now, Goldman Sachs believes it would be a good move with IGO shares.

Following a review of the industry this week, the broker has reaffirmed its buy rating with a reduced price target of $9.70 (from $10.60).

Based on the current IGO share price, this implies potential upside of almost 30% for this ASX lithium stock over the next 12 months.

In addition, the broker is forecasting a 36 cents per share dividend in FY 2024. If this proves accurate, it will mean an attractive yield of 4.8%.

Though, it is worth noting that Goldman then expects dividends to be constrained to just 4 cents per share in FY 2025 and FY 2026.

What did the broker say?

Goldman laid out three key reasons why it thinks that IGO is an ASX lithium stock to buy right now. It said:

We are Buy rated on: (1) Valuation, trading on ~0.9x NAV and pricing ~US$860/t spodumene (peers ~1x NAV and ~US$1,050/t), where near-term FCF yields FY24E remain attractive vs. peers, (2) Greenbushes is one of the lowest cost lithium assets, (3) TLEA dividends may de-risk nickel spend.

The broker also highlights its belief that concerns over the Greenbushes sales deferrals are unwarranted. It adds:

We continue to see market reaction to Greenbushes sales deferrals as overdone, where without a pricing mechanism reset, we see the rapid decline in spodumene prices driving Greenbushes pricing down to ~US$1,500/t for the Mar-24 quarter (bringing conversion closer to breakeven), and if spot persists potentially below ~US$1,000/t for the Jun-24 quarter, making the risk of ongoing sales curtailments beyond March unlikely in our view, and well ahead of our downside scenario.

The post This ASX 200 lithium stock is a buy with ~30% upside and a ~5% dividend yield appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Leading brokers name 3 ASX shares to buy today
• Have lithium prices finally bottomed?
• Why are ASX lithium shares having an underwhelming end to the week?
• 6 ASX 200 stocks trading on attractive P/E ratios right now
• Top brokers name 3 ASX shares to buy next week

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 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.

from The Motley Fool Australia https://ift.tt/2w5ZeUj

DroneShield Ltd (ASX: DRO) shares are catching the eye on Tuesday.

In morning trade, the small cap ASX stock is jumping over 12% to 41.5 cents.

Why is this small cap ASX stock jumping?

Investors have been scrambling to buy the counter drone company’s shares this morning after it released its latest quarterly update.

According to the release, Droneshield achieved a record $48 million of customer cash receipts and grants for the December quarter. This is five times larger than the next largest quarter on record.

This underpinned a record 12 months for the small cap ASX stock, with cash receipts and grants coming in at $73.5 million. This is five times greater than what was achieved in 2022.

Management notes that 80% of revenues were from repeat customers. In addition, it highlights that the US and Australia markets represent its largest revenue contributors. Approximately 68% of revenue came from the US and 23% came from Australia.

Pleasingly, this strong top line growth has allowed Droneshield to deliver a maiden profit before tax of $4 million. This compares to a $2.9 million loss before tax in 2022.

But if you thought its growth was over, think again. The company advised that it has a $30 million contracted order backlog, over $400 million in its sales pipeline, and 85 qualified opportunities. It also has no overweight exposure to any one customer.

At the end of the period, the small cap ASX stock had a cash balance of $57.9 million.

DroneShield CEO, Oleg Vornik, commented:

We are ready to deliver a strong 2024, after a record 2023. We are seeing continuing peak demand from our customer base globally, our competitive positioning and customer reputation are exceptional, and we are ready operationally to meet this demand.

The post Guess which small cap ASX stock is jumping 12% after record-breaking year appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 10 ASX shares I would buy in 2024

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

from The Motley Fool Australia https://ift.tt/8ijz1Go

When it comes to investing, you don’t have to start with big lump sums to build your wealth.

Particularly now there are investment platforms out there that allow you to invest small amounts or even your spare change into the share market.

In fact, if you were to give up a coffee a day and put $5 into ASX shares, you could generate big returns and even a second income over the long term.

$5 a day into ASX shares

Over the long term, the Australian share market has generated an average return of approximately 10% per annum.

It has been possible to beat this return by investing in ASX shares with strong business models, positive long-term growth outlooks, and competitive advantages. Just look at Warren Buffett’s track record at Berkshire Hathaway (NYSE: BRK.B) to see this.

But for the purpose of this article, we’re going to assume that you match the market return rather than beat it.

With that in mind, let’s see what you happen if you were to invest $5 a day into ASX shares.

Firstly, $5 a day equates to an investment of approximately $152 per month on average throughout the year.

If you put this amount into ASX shares for 10 years and earned an average 10% per annum return, you would have grown your portfolio to just over $30,000.

And thanks to compounding, if you were to keep going, you would grow your investment portfolio to $110,000 after a total of 20 years and over $315,000 at the 30-year mark.

Making a second income

Once you’ve built up your investment portfolio, you can start thinking about a second income.

For example, if you were able to average a 6% dividend yield across your portfolio, your annual income would be as follows based on the above amounts:

• $30,000 – $1,800 of income
• $110,000 – $6,600 of income
• $315,000 – $18,900 of income

All in all, I believe this demonstrates that by coming up with a long-term investment plan, even with small contributions, it can lead to significant wealth in the future.

The post My $5 a day ASX second income plan for 2024 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How to apply a Warren Buffett investing style in 2024
• With no savings at 50, I’d follow Warren Buffett’s approach to build wealth
• How I’d aim to turn $10k into $1 million with ASX shares

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 Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8lhpdaJ