The Kogan.com Ltd (ASX: KGN) share price is racing higher following the company’s latest business update.

Shares in the online retailer are up 10% to $3.98 in Wednesday morning trade. The positive move comes amid the company’s plans to conduct a share buyback as its balance sheet returns to a healthy state.

Putting spare cash to work

The market is looking upon Kogan fondly this morning as the ship veers closer to its originally charted course. After fiercely focusing on right-sizing inventory levels and returning to underlying profitability, shareholders who have stuck it out are being rewarded.

Announced in its third-quarter update, management has made the decision to return capital via a share buyback. The decision comes as inventory levels further decrease to $78.3 million at the end of March, while net cash settled at $49.1 million.

Furthermore, the update revealed that all debt within Kogan had been repaid, with only a small advance on the books of its Mighty Ape operations.

The strong financial positioning has enabled the board to initiate an on-market share buyback program. As part of the program, up to a maximum of 10% of Kogan-issued ordinary shares can be purchased by the company.

As shown above, the planned reduction in share count follows a notable expansion during the pandemic. If the full 10% allocation were used, the company’s total shares outstanding would be roughly in line with pre-pandemic levels.

According to the release, the commencement of the buyback is set to be on 12 May and will come to an end on 10 May 2024.

What else is moving the Kogan share price?

In addition to the buyback news, the third-quarter update painted a reassuring picture for shareholders based on recent business performance.

Notably, inventories are now far below their abnormally high levels from a year ago. In stark contrast to the $193.9 million in the prior corresponding period, Kogan finished the quarter with $78.3 million worth of inventory on hand.

Another positive indicator noted in the release is continued growth in Kogan First subscribers, increasing 24.3% to 407,000.

On the flip side, gross sales declined 28% year on year to $188.7 million. The inflationary environment and rising interest rates were cited as reasons for the subdued market conditions.

Despite this, adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in at $4.4 million. Though, Kogan’s statutory EBITDA remained in the negative, coming in at a $4 million loss.

The Kogan share price is still approximately 20% lower than where it was perched a year ago.

The post Kogan share price jumps 10% amid plans for share buyback cash splash appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Kogan.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has positions in and has recommended Kogan.com. 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 think ASX-listed exchange-traded funds (ETFs) are a great vehicle for creating wealth. So, ASX ETFs could be a great way for me to invest for my child and then gift it to them in 15 years.

The wonderful thing about investing in ASX ETFs is the ability to just buy one and then not need to track, or worry about, what each individual company is doing.

But, I wouldn’t want to just invest in any ETF for my child. I’d want to choose ones that can do well and hopefully have a positive impact on the world.

These are two I’d buy.

Betashares Climate Change Innovation ETF (ASX: ERTH)

The concept of this ETF is that it invests in a portfolio of up to 100 “leading global companies that derive at least 50% of their revenues from products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions”.

It is invested in a number of areas including clean energy providers, green transportation, waste management, sustainable product development, sustainable food, water efficiency, and improved energy efficiency and storage.

BetaShares says that “demand for products and services to tackle the world’s growing climate and environment-related problems is anticipated to rise strongly over the long term”.

This investment has been certified by the Responsible Investment Association Australasia.

Some of the largest positions in the portfolio as of April 2023 include Tesla, BYD, Ecolab, Samsung, Trane Technologies, and Vestas Wind Systems.

Over the past five years, the index that this ASX ETF tracks has returned an average of 15.6% per annum. Past performance isn’t a guarantee of future results, but it shows the progress the underlying businesses are making.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

I think this could be one of the most effective, feel-good ETFs to invest in for global diversification.

It invests in a portfolio of large global shares that have been identified as ‘climate leaders’ while excluding businesses involved in a variety of activities including fossil fuels, manufacturing weapons, gambling, habitat destruction, predatory lending, tobacco, and so on.

The ASX ETF owns a portfolio of around 200 names including Visa, Nvidia, Apple, Home Depot, Mastercard, Toyota, ASML, and Adobe.

I like that there’s more diversification across products and services offered within this ETF, and there are more holdings as well.

The portfolio has performed admirably over the longer term. In the past five years, it has delivered an average return per annum of 16.3%. Though past performance is not a reliable indicator of future returns.

Foolish takeaway

I like the global diversification offered by these two ASX ETFs, as well as the exposure to businesses trying to do the right thing. I think the two ETFs can perform well while also being positive for the world.

The post 2 ASX ETFs I’d buy for my child and gift again in 15 years appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares offering exciting yields over 7%
• I think the market is wrong about this beaten-up ASX 200 share
• Mineral Resources share price tumbles 9% despite record quarterly lithium shipments
• Investing in ASX 200 mining stocks? Here’s Citi’s latest iron ore price forecast
• Want to buy ASX 200 mining shares? Goldman Sachs says these are top buys

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, Adobe, Apple, Home Depot, Mastercard, Nvidia, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe, long January 2025 $370 calls on Mastercard, short January 2024 $430 calls on Adobe, and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has recommended ASML, Adobe, Apple, Mastercard, 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 share market is a great place to find ASX dividend shares that can pay large dividend yields.

Dividends are not guaranteed. However, over a number of years, we can tell that some companies have a stronger commitment to paying dividends to shareholders than others.

I think ASX retail shares can be an effective way to get dividends because they typically have a fairly low price/earnings (P/E) ratio and can have a fairly high dividend payout ratio. This can result in a very good dividend yield.

With that in mind, I’m going to write about two ASX dividend shares that are expected to pay very large dividends over the next two dividends.

Adairs Ltd (ASX: ADH)

Adairs is a retailer of homewares and furniture through three different brands – Adairs, Mocka and Focus on Furniture.

Out of FY23 and FY24, the profit estimate for FY23 is lower, so I will use that projection from Commsec. Adairs shares are valued at just 8 times FY23’s estimated earnings and could pay an annual dividend per share of 16.8 cents. This would translate into a grossed-up dividend yield of 11%.

But, if the forecasts on Commsec turn out to be correct, the Adairs earnings and dividend could both grow by around 10% in FY24, which would mean the FY24 grossed-up dividend yield from the ASX dividend share would be 12.5%.

Assuming the Australian economy doesn’t go into a painful recession next financial year because of interest rates, Adairs could benefit from having more stores, upgrading a few locations to larger stores (which are more profitable), having more loyalty members and being more efficient with its recently-opened national distribution centre.

Nick Scali Limited (ASX: NCK)

Nick Scali is another furniture retailer with its Nick Scali and Plush-Think Sofas brands after recently acquiring it.

The business sold an elevated amount of furniture during the COVID-19 period, but it could keep paying good dividends over the next couple of years.

Commsec numbers suggest that Nick Scali could generate earnings per share (EPS) of 85.1 cents, which would put the ASX dividend share at under 12 times FY24’s estimated earnings.

The grossed-up dividend yield in FY24 would be 7.9%, while the FY23 grossed-up dividend yield is projected to be 10.5%.

Nick Scali may be able to grow its earnings in FY25 and beyond to a few different factors including a store rollout in New Zealand, growth of the Plush network in Australia, a range expansion and growth of online sales. Online sales can be very profitable for Nick Scali.

The post 2 ASX dividend shares offering exciting yields over 7% 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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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 my opinion, the market is being harsh on the S&P/ASX 200 Index (ASX: XJO) share Metcash Ltd (ASX: MTS).

Metcash may not exactly be a household name, even though many of the businesses that it’s involved with are very recognisable.

There are three pillars to the business: food, drink and hardware.

Metcash’s food division supplies IGA and Foodland stores around the country. The liquor segment supplies a number of brands including Cellarbrations, The Bottle-O, IGA Liquor, Thirsty Camel, Big Bargain Bottleshop, Duncans and Porters Liquor.

The hardware division owns a few different brands including Home Timber & Hardware, Mitre 10, Hardings and Total Tools. It also supports independent operators under the small format convenience banners Thrifty-Link Hardware and True Value Hardware.

Is the market being harsh on the ASX 200 share?

I think we can compare the Metcash business somewhat to names like Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW).

Over the past year, Wesfarmers shares are up 7%, Woolworths shares are up 0.33% and Coles shares are down 2%.

Yet, the Metcash share price is down 15%.

Looking at the Metcash share price, it could be considered the cheapest one. According to Commsec numbers, it’s valued at under 13 times FY23’s estimated earnings.

Let’s compare that to the valuations of its peers. Wesfarmers is priced at over 24 times FY23’s estimated earnings, Woolworths is priced at 28 times FY23’s estimated earnings and Coles is priced at under 23 times FY23’s estimated earnings.

On these numbers alone, the ASX 200 share looks significantly undervalued.

But I think there are a few key reasons why investors should back the business as an investment option.

Why Metcash shares look undervalued

The low price/earnings (P/E) ratio that I just noted also means that it has a relatively high dividend yield, helped by its dividend payout ratio of 70% of underlying net profit after tax (NPAT).

In FY23, the ASX 200 share could pay a grossed-up dividend yield of 7.9%. That’s a stronger dividend yield than what its peers may pay.

On top of that, the business reported ongoing growth in the first four weeks of FY23, which I think is impressive. Food sales had grown by 4%, hardware sales had grown by 8% and liquor sales had grown by 8.9%.

Sales growth is a very useful boost for growing earnings, plus increased scale gives it a good chance of benefiting from scale benefits.

The business is investing in a number of areas including “loyalty, digital, e-commerce, data, network optimisation and development” according to Metcash CEO Doug Jones.

Metcash has also commented that there is an increased preference by customers for local neighbourhood shopping. Jones said that shoppers are recognising “the increased competitiveness, differentiated offer and relevance” of its network of independent stores.

I think Metcash shares are significantly underrated by the market and trade at a much cheaper valuation than the supermarket giants.

The post I think the market is wrong about this beaten-up ASX 200 share appeared first on The Motley Fool Australia.

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• Top defensive ASX shares to buy in April 2023
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• ‘Attractive numbers’: Expert names ASX dividend share to buy right now

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

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The Mineral Resources Ltd (ASX: MIN) share price is in the red after the iron ore and lithium producer released a seemingly positive quarterly activities report.

Stock in the S&P/ASX 200 Index (ASX: XJO) mining giant is down 9.17% at $72.99 a share in early trade on Wednesday.

Mineral Resources share price falls amid record lithium shipments

Here are the key takeaways from Mineral Resources’ report on the three months to 31 March:

• Iron ore shipments came to 4.5 wet metric tonnes last quarter – up 10% quarter-on-quarter (QoQ)
• Average realised iron ore price lifted 12% to US$109 per dry metric tonne
• Spodumene concentrate shipments reached a quarterly record of 111,000 dry metric tonnes – up 15% QoQ
• Converted 7,666 tonnes of lithium battery chemicals – flat on the prior quarter – with 5,925 tonnes sold — down 14% QoQ
• Average realised lithium battery chemicals revenue (exclusive of China VAT) was US$56,996 a tonne – down 14%  
• Production volumes at the company’s mining services leg slumped to 52 million tonnes

The company’s mining services business saw production volumes fall on the back of the completion of two external mining contracts. Equipment and people were then moved to joint venture projects, where delays in approvals dinted volumes.

But it wasn’t all bad. The company secured a new external crushing contract and two new mining contracts, and the extension of an existing hauling contract last quarter.

What else happened last quarter?

Mineral Resources also worked to restructure its MARBL joint venture and investment in lithium conversion assets in China with lithium giant Albemarle last quarter. The Australian part of the restructure is expected to complete this quarter.

The ASX 200 company also continued the expansion of the Mt Marion lithium project. The expansion is currently within budget, with completion expected to begin next month.

Finally, Mineral Resources’ off-market all-scrip takeover bid for Norwest Energy NL (ASX: NWE) gained traction last quarter. The mining giant had a 76% hold on the acquisition target as of 30 March. That’s since increased to 88%.

What’s next?

Notable guidance downgrades are likely weighing on the Mineral Resources share price today.

The company dropped its full-year outlook for its mining services production volume by as much as 12.5% to between 245 million tonnes and 255 million tonnes on the back of last quarter’s struggles.

Over at its iron ore business, full-year production is tipped to be in line with prior estimates. However, iron ore free on board (FOB) costs are now forecast to be at the upper end of previous guidance – $65 to $75 a tonne for Utah Point and $85 to $95 a tonne for Yilgarn.  

Looking to lithium, volumes at Mt Marion are expected to come in at the lower end of spodumene concentrate guidance – 160,000 to 180,000 dry metric tonnes – and lithium battery chemicals sold guidance – 19 kilotons to 21.3 kilotons. The project’s FOB cost guidance has been lifted to between $1,200 and $1,250 per tonne – up from $850 to $900 per tonne.

Mineral Resources share price snapshot

Today’s fall included, the Mineral Resources share price has fallen 0.6% so far this year. Though, it’s trading 36% higher than it was this time last year.

For comparison, the ASX 200 has risen 5% year to date and is flat year-on-year.

The post Mineral Resources share price tumbles 9% despite record quarterly lithium shipments appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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S&P/ASX 200 Index (ASX: XJO) mining stocks have enjoyed a big run higher since iron ore hit recent lows of around US$78 per tonne in early November.

The industrial metal reached 2023 highs of US$132 per tonne on 15 March as traders remained confident of an uptick in demand amid China’s ongoing pandemic reopening.

Despite a big retrace over the past month, with iron ore falling to US$120 per tonne last Wednesday and sliding to just US$102 per tonne as of this morning, big-name mining shares remain well up since early November.

Here’s how the big three iron ore giants have performed since 1 November as at Monday’s close:

• Rio Tinto Ltd (ASX: RIO) shares have gained 28%
• BHP Group Ltd (ASX: BHP) shares have gained 18%
• Fortescue Metals Group Ltd (ASX: FMG) shares have gained 41%

With that said, all three of these ASX 200 mining stocks are well into the red over the past week’s trading.

That’s because they all derive more than half of their annual revenue from iron ore.

And traders are getting more pessimistic about the outlook for demand out of China.

As for what to expect next in 2023, here’s what the analysts at Citi are forecasting.

What can ASX 200 mining stocks expect from the iron ore price in 2023?

According to Citi analyst Wenyu Yao, investors in ASX 200 mining stocks should be prepared to see the iron ore price potentially fall to US$90 per tonne in 2023 before finding support.

That’s due to lower steel production out of China’s steel mills amid narrow profit margins.

According to Yao (courtesy of The Australian):

We have been cautious on China’s steel demand and iron ore amid an uneven economic recovery and heightened policy risk, though things have unravelled sooner than our base case. We see potential risk for further downside below $100 a tonne if steel demand fails to show meaningful improvement.

Of course, the Chinese government might step in with some incentives to re-energise the markets.

Lacking that, however, Yao said, “Without meaningful stimulus, any major turnaround in steel demand from major end use sectors would likely be delayed.”

Yao added:

The shoe seemed to be finally dropped for iron ore as operating rate at blast furnaces has rolled over as well as hot metal productions.

Open interest remains elevated in iron ore, suggesting further room to go from current level.

And the lower production out of China’s steel mills is likely to take some time to have an impact. Yao expects the reduced production to offer “cost support” for iron ore at US$90 per tonne.

That further 11% slide from today’s iron ore prices could throw up some more headwinds for the ASX 200 mining stocks in 2023.

“The weak steel demand and steelmaking margins have started to negatively feed through into the iron ore market as hot metal production growth started to roll over and port inventory started to build,” Yao concluded.

“Liquidation of speculative positions may have expedited the downside move.”

How have BHP, Fortescue and Rio Tinto shares been tracking longer term?

All three of the ASX 200 mining stocks are well up over the past six months, with iron ore trading above its late October levels.

Over the past full year, BHP shares are down 3%, Rio shares have gained 4% and the Fortescue share price is up 5%.

The post Investing in ASX 200 mining stocks? Here’s Citi’s latest iron ore price forecast appeared first on The Motley Fool Australia.

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• Want to buy ASX 200 mining shares? Goldman Sachs says these are top buys
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• Lowest ASX bank yield: Are CBA shares still worth it?
• Leading brokers name 3 ASX shares to buy today
• Why BHP, InvoCare, Lake Resources, and South32 shares are dropping today

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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The Australian share market is home to some of the largest mining companies in the world.

But which ASX 200 mining shares would be great options right now? Listed below are two that analysts at Goldman Sachs are tipping as buys. Here’s what they are saying about them:

Allkem Ltd (ASX: AKE)

The first ASX 200 mining share for investors to look at is Allkem. It is one of the world’s largest lithium miners with projects across Argentina, Australia, and North America.

From these projects, the company is aiming to grow its production in a way that allows it to command a 10% share of global lithium supply over the long term.

It is for this reason that Goldman believes its shares are a buy even though it is bearish on lithium prices. The broker commented:

Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis. This drives our forecast for the company’s equity LCE production growth of >4x over five years to FY28E, supporting earnings rebounding to near current record levels despite the declining lithium price environment.

Goldman has a buy rating and $12.90 price target on Allkem’s shares.

Rio Tinto Ltd (ASX: RIO)

Another ASX 200 mining share that could be a buy is Rio Tinto. This mining behemoth has a diverse portfolio of operations and projects spanning a number of commodities including aluminium, copper, iron ore, and lithium.

Goldman Sachs is a big fan of the miner due to its valuation, strong free cash flow generation, and production growth outlook, to name just three reasons. It summarised:

We are Buy rated (on CL) on RIO due to: (1) compelling relative valuation vs. peers, (2) Strong FCF and dividend yield with our bullish view on iron ore, aluminium and copper prices, (3) Strong production growth in 2023 & 2024, (4) Pilbara turnaround (~50% of group NAV), (5) Compelling high margin low emission aluminium exposure.

The broker has a buy rating and $136.20 price target on its shares.

The post Want to buy ASX 200 mining shares? Goldman Sachs says these are top buys appeared first on The Motley Fool Australia.

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More reading

• Why are ASX lithium shares powering higher today as the resource sector bleeds?
• Is the Rio Tinto share price a buy at under $120?
• Top brokers name 3 ASX shares to buy next week
• Why Bank of Queensland, Lithium Power, Piedmont Lithium, and Rio Tinto are falling
• Brokers name 3 ASX shares to buy now

Motley Fool contributor James Mickleboro has positions in Allkem. 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 S&P/ASX 200 Index (ASX: XJO) shares I’m going to cover in this article have been named by a fund manager called Contact Asset Management as businesses that could perform soundly during any uncertainty in 2023.

Contact’s ex-50 fund targets “quality Australian companies” that aren’t one of the 50 biggest businesses in Australia. It looks to invest in founder-led businesses and “tomorrow’s leaders”. At the end of March 2023, it owned 28 stocks, so the fund’s managers have a fair amount of conviction with an average position size of more than 3%.

Here are the two ASX 200 shares that Contact picked out:

Kelsian Group Ltd (ASX: KLS)

Over the last year, the Kelsian share price has dropped over 20%. Kelsian describes itself as Australia’s largest land and marine transport service provider and tourism operator, with established operations in London and Singapore.

The fund manager noted the recent acquisition of All Aboard America! Holdings, which it described as a US-based bus business providing “contract and charter coach passenger services.” The cost of this was almost A$500 million for the ASX 200 share.

Contact said that the transaction “opens the door for significant growth in the US”. It noted that All Aboard America! Holdings is the fourth largest motorcoach operator in the US with 1,069 vehicles.

The fund manager pointed out that the Kelsian Australian bus segment has around 3,000 buses. However, while the US market is large (over $30 billion according to Contact), it’s a fragmented market.

Contact noted that the business has a “high degree of recurring revenue and solid earnings before interest, tax, depreciation and amortisation (EBITDA) margins of 25%.” The fund manager also pointed out that the majority of the management team, including the founders, continue to remain with the business.

Charter Hall Group (ASX: CHC)

Over the past year, the Charter Hall share price has dropped 26%. Charter Hall is a property fund manager which manages a property portfolio spread across around 1,700 “high-quality properties, spanning everything from industrial properties, retail centres and premium office buildings”.

The ASX 200 share also owns 50% of the listed shares fund manager Paradice Investment Management.

Group funds under management (FUM) is now $88 billion when adding the property FUM and shares FUM together.

Contact noted the recent negative sentiment about the commercial real estate sector after the recent bank issues in the US. The fund manager also pointed out the “air of negativity on the outlook for office building valuations.”

The fund manager said:

We believe that Charter Hall will be better placed than peers, given its portfolio is higher-quality and its balance sheet is robust. Its revenue stream is more resilient than peers from the fees generated on funds management.

The post 2 ASX 200 shares this fund manager is backing for good returns 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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Santos Ltd (ASX: STO) shares are down 7% over the past six months. Sometimes a lower share price can open up a ‘buy the dip’ opportunity for investors. So, Is this a good chance to buy the ASX energy share?

The thing with oil and gas ASX shares is that they’re heavily dependent on the commodity price to make more profit in the short term. A higher energy price means new revenue largely adds to profit, while a fall in the commodity price means the reduction in revenue mostly comes from the net profit after tax (NPAT).

Fall in production and revenue

In the first quarter of 2023, production was 13% lower and sales revenue was 13% lower than in the last quarter of 2022. There was lower production because of reduced domestic gas volumes in Western Australia, supported by extended production from the Bayu-Undan field.

Sales revenue came in at US$1.6 billion in the 2023 first quarter, while production was 22.2 million barrels of oil equivalent (mmboe).

The quarter saw the business generate free cash flow of around US$720 million in the first quarter. It also said that it had completed US$466 million of the announced US$700 million share buyback, at the end of March 2023.

Looking at the average realised price, Santos said that the LNG price was US$14.46, down from US$16.92 in the fourth quarter of 2022. The crude oil price had reduced from US$94.71 in the 2022 fourth quarter, down to US$87.59 in the 2023 first quarter.

Santos also told investors that it is making progress with its efforts to decarbonise the energy supply chain. This includes the Moomba carbon capture and storage (CCS) project, which is 60% complete, with the first injection expected in early 2024.

Is the Santos share price a buy?

I’m generally cautious about backing ASX oil and gas shares because it seems to me that demand could reduce in future years as the world moves to decarbonisation.

The spike in energy prices a year ago was certainly a boost for the business, but energy prices certainly seem to be settling down now. But, Santos is still making a lot of cash flow.

I think there is uncertainty thrown up by the intense focus on new gas projects, such as Barossa. A change to the petroleum resources rent tax (PRRT) could mean less future profit for producers like Santos.

Using Commsec earnings estimates, the Santos share price is valued at 9x FY23’s estimated earnings. That’s pretty cheap, so it may be able to achieve some outperformance in the short to medium term. However, it’s not one on my own watchlist to buy. There are other ASX resource shares that I’d rather invest in, such as miners involved with copper.

The post Are Santos shares worth buying following the oil giant’s latest results? 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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The last 18 months has demonstrated that it’s now more important than ever to ignore short-term volatility and instead focus on the long-term prospects of a business.

There are no better examples of that thinking than these two S&P/ASX 200 Index (ASX: XJO) examples, which Seneca Financial Solutions investment advisor Arthur Garipoli rates as buys:

‘Positive view’ on health devices giant

Healthcare is one of those industries that don’t fare too badly even through times of economic stress.

That’s because people will, understandably, prioritise their physical and mental wellbeing over other goods and services.

As such, a leader in its field like Resmed CDI (ASX: RMD) makes a sensible buy.

“This manufacturer of medical devices for respiratory disorders recently reported results that beat market expectations,” Garipoli told The Bull.

“Revenue of US$1.0337 billion for the three months ending on December 31, 2022 was up 16% on the prior corresponding period.”

The hardware company did encounter some roadblocks to growth last year as a global computer chip shortage hampered its own production.

But that short-term issue, Garipoli feels, is now past it.

“We retain a positive view on RedMed, given an improving supply chain,” he said.

“It will enable ResMed to meet additional demand for respiratory units, leading to revenue growth.”

The ResMed share price is 8.9% up over the past year.

Excellent dividend yield plus cheap share price

Deterra Royalties Ltd (ASX: DRR) is a mining royalty company, meaning it’s almost like a landlord collecting rent from sites where resource companies are operating.

This model has some advantages over directly owning mining shares, according to Garipoli.

“Deterra holds a 1.232% royalty in BHP Group Ltd (ASX: BHP)’s Mining Area C (MAC) involving iron ore operations in the Pilbara region of Western Australia,” he said.

“It gives Deterra price and volume exposure to a world class asset without taking on mining risk.”

Garipoli noted that the first half update showed BHP increasing production at the MAC site.

“We believe the stock is undervalued due to the quality of the asset, its discount to peers and providing investors with a forecast fully franked dividend yield of 6.6%.”

The Deterra share price has remained flat over the past year and so far in 2023.

The post 2 ‘undervalued’ ASX 200 shares to ‘beat market’ before everyone else wakes up appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
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Motley Fool contributor Tony Yoo has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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