We are indisputably in the midst of a bull market on the S&P/ASX 200 Index (ASX: XJO). Technical definitions aside, it’s hard not to call ‘bull… market’ when the ASX 200 has hit multiple new record highs over the past month or two alone.

If you want a number to go off, the ASX 200 has gained an impressive 14.9% or so since the beginning of November 2023. That’s more than one-and-a-half times the index’s average gain for a year, let alone five months.

Most investors can’t help but love a bull market. After all, who doesn’t enjoy the feeling of becoming wealthier, even if it’s only ‘on paper’?

But it does make the whole investing process a little more taxing, both mentally and financially. It’s harder to buy ASX shares, again both financially and mentally, when their prices have appreciated meaningfully. After all, we’re all taught to ‘buy low and sell high, not buy even higher.

However, I would argue that there are almost always bargains to be found in any market, especially for small, nimble retail investors.

So how does one find these said bargains?

How to find ASX share bargains in a bull market

I think there are two strategies that investors can use to find bargain stocks during a bull market.

The first is to look for cheap ASX shares on a sector-by-sector basis. The big money funds that tend to move the stock market day to day and week to week are always looking to ‘rotate money out of what they might perceive as poor sectors into more lucrative ones.

We, as small investors with long time horizons can take advantage of this.

For example, right now, real estate investment trusts (REITs) and gold stocks are hot. But mining and energy shares? Less so.

Iron ore miners like BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG) have lost quite a lot of steam in recent months, perhaps thanks to falling iron ore prices and expectations of a slowing global economy. Ditto with energy stock Woodside Energy Group Ltd (ASX: WDS).

Now I’m not saying that I would buy any of these shares right now. But investors seem to be rejecting these companies in favour of others right now. As such, this would be an ideal hunting ground for a bargain.

Be greedy when others are fearful

The second way you can find an ASX bargain in my view is by looking for quality companies that have temporary issues. Many investors (particularly large fund managers) are impatient. If a company is having an issue that might be affecting its short-term sentiment or financials, it is often sold off, even if its long-term future still looks unchanged.

I think a good example of this right now is Telstra Group Ltd (ASX: TLS). Last year, Telstra disappointed the market by revealing that it would not be selling off some of its highest-quality assets that are housed in its InfraCo Fixed division. These include fibre optic cables and data centres.

Many investors seemed disappointed by this news, and the company has missed out on the recent share market bull run as a result. Telstra shares fell from a high of $4.46 in June last year to the ~$3.80 levels we see today.

However, as a Telstra shareholder, I am happy to forgo a short-term sugar hit from selling off these jewels and am happy that the company still owns and will continue to profit from them. As such, I think Telstra is an example of a cheap ASX share and a bargain buy in the current bull market.

Foolish takeaway

Sure, bull markets and record ASX highs do make investing more difficult for thrifty investors. But there are ways to find cheap ASX shares regardless. You just might need to look a little deeper and think outside the box.

The post In this bull market, where are the bargain buys to be found? appeared first on The Motley Fool Australia.

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More reading

• The BHP share price is down 12% in 2024. What’s next for the iron ore price?
• Why I’d confidently buy these 3 ASX blue-chips while others grow fearful
• Fortescue shares climb amid Australian first for clean energy
• The pros and cons of buying BHP shares right now
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen has positions in Telstra 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock is enjoying what feels like a rare “up” day Monday morning, as investors parse some confusing news. Last week Reuters reported that Tesla has abandoned its plans to build a Model 2 electric car priced at less than $25,000, in order to focus its efforts on building “robotaxis” instead.

CEO Elon Musk quickly dismissed the rumor on social media platform X, saying Reuters was “lying.”

But Tesla stock still took a hit on Friday, falling nearly 4%. Today, however, Tesla is winning back its losses — and more — as its stock bounces 4.2% through 10:05 a.m. ET.

Tesla tweets

Citing unnamed sources, Reuters reported last week that Tesla has entirely “canceled” plans to build the Model 2 electric car — which at a rumored price of $25,000 could be key to Tesla’s efforts to compete with low-priced electric cars from China. Musk was quick to dismiss the report in part, but he did seem to endorse the other half of what Reuters was saying — the bit about the robotaxi.

In a tweet following up on Reuters’ article, Musk confirmed that Tesla will announce a new self-driving electric vehicle (EV), which he called his “robotaxi,” on Aug. 8.

Tesla Robotaxi unveil on 8/8

— Elon Musk (@elonmusk) April 5, 2024

Is Tesla stock a sell?

And that’s really all he said on the matter. So what are investors supposed to make of these dueling Tesla reports, one from a respected news organization quoting inside sources at Tesla, and the other from Tesla’s CEO himself?

Clearly, nothing’s 100% clear right now. But the most likely scenario seems that Tesla has made robotaxis its new top priority, while pouring money into developing a cheap EV is now taking a back seat. In the middle of an EV price war, that seems a sound strategy that could preserve profit margins for Tesla. It’s not a reason to sell Tesla stock.

But it might be a reason to buy. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock put pedal to metal today appeared first on The Motley Fool Australia.

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• 3 ASX shares boasting better revenue growth than Tesla
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Rich Smith 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 Tesla. 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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Life360 Inc (ASX: 360) shares were on form yet again on Monday.

The ASX tech stock started the week with a 17% gain to $14.18.

This means that the location technology company’s shares have now risen 88% since the end last year.

To put that into context, if you had invested $20,000 into Life360’s shares on the final trading day of 2023, your investment would now be worth almost $38,000.

Why is this ASX tech stock rocket on Monday?

Investors were fighting to get hold of the company’s shares following the release of a trading update.

That update revealed that Life360 had a record first quarter with global Monthly Active Users (MAU) reaching 66.4 million at the end of the first quarter.

This represents an increase of 4.9 million since the end of the fourth quarter and means a record for a first quarter. It is also more than double the net additions of 2.2 million the company recorded in the prior corresponding period.

The company also reported record first quarter net additions to global paying circles of approximately 96,000. This was split approximately 65%/35% between its U.S. and International operations.

Finally, also catching the eye was news that the ASX tech stock has its eyes on a dual listing on Wall Street. It is looking to make some changes to its Certificate of Incorporation to bring the company in line with typical U.S. corporate practices. This is something which could pave the way to a listing in the United States.

Broker response

Analysts at Goldman Sachs were blown away by the quarterly update. While the broker doesn’t do quarterly estimates, it highlights that this update is run-rating significantly ahead of expectations for the first half. Goldman said:

Life360 has provided a trading update for 1Q24. We do not model Life360 quarterly but note that the company is run-rating well ahead of our 1H24 expectations, particularly for U.S. subscription net adds (most important driver of Life360’s revenue/earnings). Operating metrics can be volatile quarter to quarter, and we note that this follows a relatively softer 4Q23, however in our view Life360 has started FY24 strongly and should be comfortably tracking to meeting revenue guidance and potentially exceeding EBITDA guidance.

The team at Bell Potter was equally impressed with the update. The broker said:

Life360 provided a positive and unexpected market update with two key metrics in 1Q2024 materially exceeding both our and market expectations. […] Both metrics are clearly very strong but in our view the growth in paying circles is key as this metric disappointed somewhat in 4Q2023 with an increase of only 55k – albeit after very strong growth in 3Q2023 – so growth of 96k in 1Q2024 signals a strong rebound.

In response, Bell Potter has reiterated its buy rating on the ASX tech stock with an improved price target of $16.25. This implies potential upside of almost 15% for investors from current levels.

The post This hot ASX tech stock can keep rising: Bell Potter appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday
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• Why Life360, Qantas, Qoria, and Silver Lake shares are racing higher today
• Why is the Life360 share price rocketing 22% to a record high?
• Buy this high-flying ASX 200 tech stock for a big return

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 and Life360. 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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Qantas Airways Limited (ASX: QAN) shares were on form on Monday and raced higher.

The airline operator’s shares ended the day almost 5% at $5.69.

Investors were fighting to get hold of the Flying Kangaroo’s shares amid news that it is making “one of the biggest ever expansions” of its frequent flyer program.

This will see Qantas add 200 million more reward seats with the launch of Classic Plus Flight Rewards.

Qantas’ CEO, Vanessa Hudson, commented:

The Qantas Frequent Flyer program is an integral part of Qantas and has always been about recognising our customers for their loyalty. The widespread availability of Classic Plus means that frequent flyers have more options to fly where they want, when they want and more often, using their points.

Are Qantas shares a buy?

Analysts at Goldman Sachs have responded to the news. And while the broker expects the change to have a slightly negative impact on its earnings this year, this will be offset by positive impacts down the line. The broker said:

We update our FY24E-26E estimates to reflect the latest updates in the Loyalty Program. Overall, our FY24E NPAT estimate reduces by 2%, while our FY25E estimate remains unchanged. Our FY26E NPAT estimate increases by 2%.

In light of this, Goldman has reiterated its buy rating and $8.05 price target on Qantas’ shares. This implies potential upside of approximately 41% for investors over the next 12 months.

Why is the broker so bullish?

Goldman continues to believe that Qantas’ shares are severely undervalued at current levels based on its structurally improved earnings. It also highlights that its market capitalisation remains lower than pre-COVID times despite this. Goldman explains:

Qantas Airways is the flagship carrier of Australia and is the largest airline in Australia by capacity share, serving destinations domestically and internationally. As a key beneficiary of the re-opening of the world post-COVID, we expect the airline’s traffic capacity to return to 95% of pre-COVID levels by FY24e, with the airline’s earnings capacity (EPS) expected to exceed that of pre-COVID levels by ~52%. We forecast a ~24% FY19-24e cumulative uplift in unit revenues (c. 4.4%pa), and ~50% drop-through of QAN’s A$1bn+ structural cost-out program. QAN’s current market capitalisation and enterprise value are 10% below and 11% below pre-COVID levels. As such, we believe QAN is not priced for a generic recovery, let alone prospects for improved earnings capacity. We continue to see upside associated with substantially improved MT earnings capacity.

The post Why Qantas shares are a buy and could rise 40% appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
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• Qantas share price takes off on ‘biggest ever expansions’ of core loyalty program
• Why one fund manager thinks Qantas shares are cheap and ‘incredibly underappreciated’
• These ASX 200 shares could rise 20% to 50%

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.

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There are plenty of options for investors to choose from in the lithium industry.

But according to Goldman Sachs, there’s only one ASX lithium stock worth buying right now.

What is the broker saying?

Ahead of the release of quarterly updates this month, the broker has been running the rule over the industry.

This has seen its analysts declare three ASX lithium stocks as sells and one as a buy.

Let’s take a look and see what Goldman is saying about these miners and the lithium industry.

Bear market is not over

Firstly, Goldman Sachs has warned investors that the lithium bear market is not over despite a recent uptick in prices. In fact, it believes that a larger surplus is looming in 2025, which could weigh heavily on prices and sentiment. It said:

Our global team highlights that the recent rally in lithium prices should not be interpreted as the end of the bear market, where further supply rationing is needed to reduce both the 2024E surplus and now larger surplus in 2025E, with the top end of the integrated cash cost curve dominated by Chinese lepidolite (US$8k-12k/t LCE) and integrated African concentrates (US$7k-13k/t LCE).

Buy this ASX lithium stock (and sell these)

The one lithium miner that Goldman is recommending as a buy despite its bleak view for the battery making ingredient is IGO Ltd (ASX: IGO). It has a buy rating and $7.50 price target on IGO’s shares.

Goldman likes IGO due to its low cost Greenbushes operation, which remains profitable in the current environment. It said:

We are Buy rated on: (1) Valuation, trading on ~0.9x NAV and pricing ~US$1,080/t spodumene (peers ~1.2x NAV and ~US$1,300/t), where near-term FCF yields remain attractive vs. peers; (2) Greenbushes is one of the lowest cost lithium assets (production growth more than offsets increasing strip ratio), where we reiterate further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects with a breakeven/incentive LT spodumene price of ~US$400-500/t, with further optionality from the addition of ore sorters; (3) TLEA dividends support growing net cash.

The broker thinks investors should be selling Core Lithium Ltd (ASX: CXO, Mineral Resources Ltd (ASX: MIN), and Pilbara Minerals Ltd (ASX: PLS) shares. It has sell ratings and price targets of 12 cents, $48.00, and $2.90, respectively. It adds:

We remain Sell on PLS/CXO/MIN, continuing to prefer IGO (Buy) on valuation/FCF, and see increasing corporate positioning for lower lithium prices for longer (reaffirmed by our recent Perth trip) with an increasing focus on reducing costs and upfront capex at projects via purchases of legacy infrastructure from other commodities (MIN, WR1, and others).

The post Sell these ASX lithium stocks and buy this one instead appeared first on The Motley Fool Australia.

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• Here is the earnings forecast to 2026 for Pilbara Minerals shares
• The best ASX shares to buy with $1,000 right now
• The ASX 200 lithium stock this fundie is backing for the global lithium comeback
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• Bell Potter names more of the best ASX 200 shares to buy

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.

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There are plenty of ASX dividend shares for investors to choose from on the local market. So many, it can be hard to decide which ones to buy.

But don’t worry, in order to narrow things down for you, I have picked out a couple of dividend shares that analysts have recently named as buys and tipped to provide income investors with some juicy dividend yields.

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

APA Group (ASX: APA)

Income investors might want to take a look at APA Group if they are looking for some new additions to their portfolio this month.

APA Group is an energy infrastructure business that owns, manages, and operates a diverse, $27 billion portfolio of gas, electricity, solar and wind assets.

It caught the eye of analysts at Macquarie last month when it released its half-year results. APA Group delivered revenue, earnings, and distribution growth. The latter builds on 19 years of distribution growth.

Macquarie responded to the results by upgrading APA Group’s shares to an outperform rating with a $9.40 price target. This implies potential upside of approximately 11% for investors over the next 12 months.

In addition, the broker is expecting its shares to provide investors with some great yields in the near term. Macquarie is forecasting dividends per share of 56 cents in FY 2024 and then 57.5 cents in FY 2025. Based on the current APA Group share price of $8.48, this equates to 6.6% and 6.8% yields, respectively.

Aurizon Holdings Ltd (ASX: AZJ)

Another ASX dividend share that could be a buy for income investors this month is Aurizon.

It is Australia’s largest rail freight operator. Each year, its network transports more than 250 million tonnes of Australian commodities and connecting miners, primary producers, and industry with international and domestic markets.

The team at Ord Minnett thinks investors should be snapping up its shares. In response to its half-year results in February, the broker put an accumulate rating and $4.70 price target on its shares. This suggests potential upside of approximately 17% for investors over the next 12 months from current levels.

In respect to income, the broker is forecasting partially franked dividends of 17.8 cents per share in FY 2024 and then 24.3 cents per share in FY 2025. Based on the latest Aurizon share price of $4.02, this will mean attractive dividend yields of 4.4% and 6%, respectively.

The post Buy these ASX dividend shares in April for very big returns appeared first on The Motley Fool Australia.

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• Here’s how the ASX 200 market sectors stacked up last week
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group and Macquarie Group. The Motley Fool Australia has recommended Aurizon. 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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Owners of Pilbara Minerals Ltd (ASX: PLS) shares saw considerable profit generation in 2022. But things have gone downhill since then as the lithium price slumped — it’s no wonder the Pilbara Minerals share price has dropped around 30% since November 2022, as we can see on the chart below.

The tricky thing about estimating profit generation for ASX mining shares is that it’s quite dependent on what happens with the commodity price. ASX lithium shares have taken a battering recently because investors are now expecting lower profitability and smaller cash flow.

But how much lower could profit be in future results compared to FY23? Could reality be better than what the market is fearing? Let’s take a look at one set of forecasts.

FY24 estimates

In its FY24 half-year result, the ASX lithium share reported that its statutory net profit after tax (NPAT) plunged 82% to $220 million after its realised price for lithium production sank 67% to US$1,645 per tonne.

Broker UBS has forecast that Pilbara Minerals might make $264 million of net profit in FY24 on revenue of $1.1 billion. The broker isn’t expecting the ASX lithium share to pay a dividend in FY24.

FY25 projection

Owners of Pilbara Minerals shares may be disappointed to hear that the FY25 profit projection is even worse than FY24.

UBS has forecast that net profit could halve again to $131 million amid the low lithium prices and the large investment program that Pilbara Minerals is working on to increase its exposure to the lithium supply chain. The FY25 revenue is projected to be $962 million, according to the broker.

FY26 forecast

The 2026 financial year might be the year that the ASX lithium share sees a sizeable increase in profit.

According to UBS, the business could generate A$1.8 billion of revenue and make $582 million of net profit, which would translate into earnings per share (EPS) of 19 cents. If it achieves this forecast, the Pilbara Minerals share price will be valued at around 20x FY26’s estimated earnings.

The business is also projected to start paying a dividend again. In FY26, the annual pay might be 7 cents per share, which would be more than 70% smaller than the FY23 payout.

Interestingly, UBS thinks that the P1000 project, where the miner wants to reach 1mt of production, will become P1100 based on mining rates, grades, recoveries and a targeted grade for the production of between 5.2% to 5.3%.

Pilbara Minerals said it was not looking to slow any progress in response to low lithium prices.

The post Here is the earnings forecast to 2026 for Pilbara Minerals shares appeared first on The Motley Fool Australia.

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• The best ASX shares to buy with $1,000 right now
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• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices

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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Wildcat Resources Ltd (ASX: WC8) shares were on form again on Monday.

The ASX 300 lithium explorer’s shares ended the day with a gain of 3% to 63 cents.

This was despite there being no news out of the company.

Has this ASX 300 lithium share been a good place to invest $1,000?

It sure has.

One year ago, you could have picked up the company’s shares for an average of 3 cents per unit.

This means that a very brave $1,000 investment would have led to you picking up 33,333 shares in the micro cap at the time.

If you held tightly to them, today your 33,333 shares would have a market value of approximately $21,000.

That’s 20 times your original investment!

Why has it been rocketing?

Investors have been buying this ASX 300 share due to the excitement around its Tabba Tabba Lithium Project near Port Hedland in Western Australia.

Interestingly, the Tabba Tabba project was one of four significant lithium-cesium-tantalum (LCT) pegmatite projects in Western Australia that were previously owned by the now defunct Sons of Gwalia. The others were Greenbushes, Pilgangoora, and Wodgina, which are all now tier-1 hard-rock lithium mines.

It is also worth noting that Tabba Tabba is near to these lithium mines. For example, it is 47km from the 414Mt Pilgangoora Project owned by Pilbara Minerals Ltd (ASX: PLS) and 87km from the 259Mt Wodgina Project owned by Mineral Resources Ltd (ASX: MIN).

In addition, it is only 80km by road to Port Hedland’s port, which would make the potential exporting of lithium in the future a breeze.

Tabba Tabba excitement

Clearly there is a lot of potential from the Tabba Tabba Lithium Project. But does the exploration back this up?

So far, the company has delivered impressive results from drilling.

For example, the company highlights that the exciting Leia Pegmatite is one of six significant prospects (Leia, Boba, Chewy, Tabba Tabba Ta, Han and The Hutt) within the 3.2km long outcropping LCT pegmatite field.

At the end of last year, the Leia pegmatite was over 2.2km long, with mineralisation from surface and continuing at depth with the thickest intercept to date 180m @ 1.1% Li2O.

In light of these results, the company is undertaking a huge drilling program during the first half of 2024.

In January, Wildcat’s managing director, AJ Saverimutto, commented:

XRD has confirmed that spodumene is the dominant lithium mineral at our Leia discovery. The geology team has been able to utilise the information to prioritise its exploration concepts and we are eager to commence drilling additional targets whilst simultaneously progressing Leia, with 100,000m of drilling planned at Tabba Tabba over the next six months to rapidly advance our understanding of the project’s geology and scale. Leia is still open along strike and at depth and is the first of six pegmatites with exploration potential.

Time will ultimately tell whether it is another major lithium asset, but the early signs are positive.

The post $1,000 in this ASX 300 share a year ago would be worth $20,000+ now 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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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a small gain. The benchmark index rose 0.2% to 7,789.1 points.

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

ASX 200 expected to rise again

The Australian share market is expected to rise again on Tuesday despite a flat start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 33 points or 0.4% higher. In the United States, the Dow Jones and the S&P 500 were down slightly and the NASDAQ edged ever so slightly higher.

Life360 shares can keep rising

Life360 Inc (ASX: 360) shares started the week with a bang on Monday. They ended yesterday’s session 17% higher thanks to the release of a quarterly update which revealed a record three months. Life360 reported 4.9 million net adds to monthly active users during the quarter, bringing its total beyond 66 million. Bell Potter was impressed with the update. In response, it has reiterated its buy rating and lifted its price target to $16.25. It said: “Life360 provided a positive and unexpected market update with two key metrics in 1Q2024 materially exceeding both our and market expectations.”

Oil prices fall

ASX 200 energy shares Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) could have a subdued session on Tuesday after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 0.45% to US$86.51 a barrel and the Brent crude oil price is down 0.7% to US$90.50 a barrel. Traders were selling oil after Middle East tensions eased.

Flight Centre shares downgraded

The Flight Centre Travel Group Ltd (ASX: FLT) share price could be overvalued according to analysts at Goldman Sachs. This morning, the broker has downgraded the travel agent’s shares to a sell rating with a trimmed price target of $18.30. This implies potential downside of approximately 15% for investors from current levels. Goldman Sachs has warned that “moderating corporate travel and intensifying SME competition could lead to margin disappointment.”

Gold price rises

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good session after the gold price pushed higher again on Monday. According to CNBC, the spot gold price is up 0.5% to US$2,357.4 an ounce. Demand from Asian central banks helped take the gold price to a new record high during Monday night’s session.

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

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More reading

• The best ASX shares to buy with $1,000 right now
• Here are the top 10 ASX 200 shares today
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• Why one broker thinks the gold price could glisten 9% brighter
• Why is the Life360 share price rocketing 22% to a record high?

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 and Life360. The Motley Fool Australia has recommended Flight Centre Travel 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 BHP Group Ltd (ASX: BHP) share price soared from late October through to the end of 2023.

Between 23 October and 28 December, shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner rocketed 17% to $50.72 apiece.

This came amid a surge in the iron ore price, BHP’s largest revenue earner.

Iron ore leapt from US$114 per tonne in late October to trade for US$140 per tonne at the beginning of 2024.

Since then, it’s been mostly downhill for the steel-making metal, with iron ore futures dropping to US$98 per tonne on Thursday before rebounding to US$102.80 per tonne earlier today.

As you’d expect, the big drop in 2024 has also put pressure on the BHP share price. Shares in the ASX 200 miner are down 12.4% in 2024.

While BHP also derives significant revenue from copper, alongside other important revenue streams from coal and uranium, the miner’s share price performance – and future dividend payouts – are clearly closely linked with the iron ore price.

With that said, what can ASX 200 investors expect from the iron ore price in the year ahead?

How will iron ore impact the BHP share price next?

For the six months to 31 December, BHP produced 129 million tonnes of iron ore, selling it for an average realised price of US$103.70 per wet metric tonne. That saw the miner rake in earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US$9.7 billion from its iron ore division, up 27% year on year.

With that in mind, the BHP share price could continue to struggle to match its late 2023 performance if iron ore prices remain near current levels.

Which is precisely what Caroline Bain, chief commodities economist at Capital Economics, is forecasting.

“Given subdued demand, regional steel prices are likely to come under downward pressure this year. We expect prices in China to fall as supply continues to outstrip domestic and foreign demand,” Bain said (quoted by The Australian Financial Review).

Capital Economics forecasts the industrial metal will trade for US$100 per tonne at the end of the current quarter, where Bain also expects it to end the year.

Correction territory ahead

2025 could be an even tougher year for the BHP share price to deliver outperformance, with Bain forecasting iron ore will fall to US$85 per tonne by the end of next year.

That’s largely based on her expectations of ongoing weak demand for steel from China and much of the rest of the world.

She said of the world’s largest economy: “In the US, steelmakers plan to expand output, but we think demand will be weaker than they expect.”

As for Europe, Bain said: “Lower interest rates will only offer scant support to prices in Europe as economic growth remains weak.”

She believes that China, the world’s largest iron ore importer, is unlikely to offer any relief as the nation’s steel-hungry property sector continues to struggle.

According to Bain (quoted by the AFR):

The correction in the construction sector and steel demand is inevitable and is only delayed through policy support.

Property activity is likely to halve by the end of the decade, with average annual falls of 10%, causing similar falls in construction inputs like steel. Overall, we expect steel consumption to be flat in 2024 and fall by 0.5% in 2025.

At the current BHP share price, the ASX 200 miner trades on a fully franked 5.3% dividend yield.

The post The BHP share price is down 12% in 2024. What’s next for the iron ore price? appeared first on The Motley Fool Australia.

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More reading

• Why I’d confidently buy these 3 ASX blue-chips while others grow fearful
• The pros and cons of buying BHP shares right now
• Top brokers name 3 ASX shares to buy next week
• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices
• 5 things to watch on the ASX 200 on Friday

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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