The National Australia Bank Ltd (ASX: NAB) share price has dropped 7% since 8 February. The S&P/ASX 200 Index (ASX: XJO) has only dropped by 1.6% over that time, so NAB has seriously underperformed.

Last week, the ASX bank share announced its quarterly update for the three months to 31 December 2022.

Earnings recap

I thought that NAB revealed an impressive set of numbers in its quarterly result.

It said that it generated $2.15 billion of cash earnings, which was 18.7% higher than the first quarter of FY22. Cash earnings before tax and credit impairment charges increased 27%.

NAB revealed that its net interest margin (NIM) improved by 12 basis points (0.12%) to 1.79%. Excluding ‘markets & treasury’ and the impact of liquids, the NIM rose 15 basis points (0.15%) to 1.82%. Certainly, NAB benefited from rising interest rates, partly offset by home lending competition.

Revenue rose by 15%, reflecting higher margins, stronger markets & treasury income, and volume growth. Expenses only rose by 4%, with higher staff-related costs partly offset by productivity and lower remediation charges.

The NAB CEO Ross McEwan said that “continued strong employment conditions and healthy savings buffers mean most customers look well placed to manage through this period”.

McEwan also said that NAB is in “good shape for this environment” and that “capital and provisioning remain strong”.

Is the NAB share price great value now?

I think it was a strong result for NAB that it was able to grow cash earnings by almost 20%.

Ultimately, ASX share investors should want to see long-term growth from businesses. NAB is achieving growth under the stewardship of Ross McEwan.

The bank’s profits are riding the wave of higher interest rates – being able to pass on higher rates to borrowers more strongly than savers is boosting NAB’s profitability.

Of course, there’s a major concern that these much-higher interest rates could also mean households run into trouble if they’re not able to absorb the higher interest rate costs.

While NAB included a credit impairment charge of $158 million in this quarter to reflect the impact of lower house prices and business lending volume growth, specific charges remain at low levels. We can see why with the ratio of loans that are 90+ days past due. NAB’s ratio was 0.62% in the FY23 first quarter (this reported quarter), compared to 0.66% for the FY22 fourth quarter and 0.81% for the FY22 first quarter.

The key question is: what level of bad debts will NAB see over the next year or two? With NAB having a group common equity tier 1 (CET1) ratio of 11.3%, I think its balance sheet is well-positioned with good capital levels to weather whatever happens next.

According to Commsec, it’s currently valued at just 12 times FY23’s estimated earnings.

For me, at the current NAB share price, it’s the pick of the domestic banking sector. I’d be happy to own it in a blue-chip-focused portfolio. I think its loan book could perform relatively well in the coming months and years.

The post The NAB share price is sinking this month. Time to pounce? 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

• Should I buy NAB shares after the ASX 200 bank’s latest update?
• 5 things to watch on the ASX 200 on Friday
• NAB share price higher on stronger than expected Q1 update
• NAB share price in focus following Q1 $2.15b cash profit
• Earnings preview: Here are the ASX shares reporting on Thursday

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/JfrTjVb

The A2 Milk Company Ltd (ASX: A2M) share price will be on watch on Monday.

This follows the release of the infant formula company’s first half results this morning.

A2 Milk share price on watch amid double-digit growth

• Revenue up 18.6% to NZ$783.3 million
• EBITDA up 10.5% to NZ$107.8 million
• Net profit after tax up 22.1% to NZ$68.5 million
• Cash balance of NZ$707.2 million
• Outlook: Low double-digit revenue growth and steady margins

What happened during the half?

For the six months ended 31 December, A2 Milk reported an 18.6% increase in revenue to NZ$783.3 million. This was driven by a 54% increase in China and Other Asia sales and a 61.8% jump in US sales, which offset a 24.6% decline in ANZ sales.

Infant formula sales were up 18%, with China label sales up 43.5% and English label sales up a modest 1%. Whereas Liquid milk sales were up 5.6% in the ANZ market and 62% in the USA.

A2 Milk’s EBITDA came in 10.5% higher year over year at NZ$107.8 million, which equates to an EBITDA margin of 13.8%.

This reflects a 46% increase in marketing investment and a 15.8% increase in administrative and other expenses due to continued capability build, further investment in innovation and research projects, timing of long-term incentives, plus higher insurance and travel costs.

On the bottom line, the company’s net profit after tax rose 22.1% to NZ$68.5 million, which was ahead of the consensus estimate of NZ$60.6 million, which could bode well for the A2 Milk share price today.

And thanks to its NZ$150 million share buyback, which is 60.1% complete, A2 Milk’s earnings per share rose at a slightly quicker rate of 24.1% to 10 cents per share.

Management commentary

A2 Milk Company’s Managing Director and CEO, David Bortolussi, was pleased with the half and the early success of its new growth strategy. He said:

We are pleased with progress in implementing our refreshed growth strategy focused on the China market and improving our execution in the face of significant market headwinds and COVID-19 related challenges.

Our performance in the China IMF category has been a significant highlight – growing sales 18.0% while the market was down 12.5% driven by strong growth in our China label MBS and DOL channels. As the China market continues to evolve, we are focused on refining our English label distribution model which resulted in a modest increase in sales with market share increases in the CBEC and Daigou channels.

Outlook

Bortolussi appears cautiously optimistic on the company’s outlook. He added:

We are in good shape heading into an increasingly challenging period with the rolling impact of the decline in the birth rate and a market wide transition of China label product to the new GB standard. We have made solid progress towards achieving our sustainability goals, including breaking ground on our 100% renewable energy electrified boiler project at MVM which is the first of its kind in New Zealand.

Management revealed that it is expecting low double digit revenue growth in FY 2023, supported by growth in China label infant formula, ANZ liquid milk, and USA liquid milk sales. English label infant formula revenue is expected to be broadly in line with FY 2022 and any USA infant formula sales in FY 2023 are expected to be immaterial.

Finally, EBITDA growth is expected for the full year, with an EBITDA margin similar to FY 2022 levels (13.6%).

The post A2 Milk share price on watch amid double-digit sales and profit growth 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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher
• Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday?
• The A2 Milk share price has lagged the ASX 200 in 2023. Time to pour in?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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/R5fTyju

Investors are told all the time to buy ASX shares with a long horizon. Think long term, ignore short term fluctuations in the market.

But so much of the published stock tipping advice is designed for shorter timeframes.

This could be because professional investors are forced to chop and change more frequently. Performance of their portfolios are scrutinised on a monthly, quarterly and yearly basis.

They have to avoid a potentially career-killing period of underperformance. They can’t afford patience.

Just occasionally these professional fund managers reveal their honest thoughts about what the best long-term investments could be.

These are the stocks that one could just hold onto for years, even if they have a bad month, quarter or year.

The team at Firetrail, in a memo titled Three themes that will shape the coming decade, did exactly this earlier this month.

In the document they laid out what they thought were the best opportunities not over the next year, but the next decade.

The Firetrail analysts identified three themes that they thought would have “vast, long-term impacts on economies”: deglobalisation, decarbonisation and “de-dollarisation”.

Some other professional investors would call these structural growth drivers.

According to the Firetrail team, these forces would be the “major drivers of stock market performance over the coming decade”.

Deglobalisation: energy security over cost

Globalisation was the pre-eminent force in the international economy over the past few decades. The movement of goods, capital and even services across national borders became more and more unimpeded, raising the standard of living for its participants.

But something odd started happening just before COVID-19 struck the planet.

“The deglobalisation trend started to emerge in 2019 with the US-China trade war,” read the Firetrail memo.

“The trend has continued ever since. Australia has had its own trade war with China, and the Russia-Ukraine war has highlighted the risks inherent with concentrated supply chains.”

Firetrail analysts believe over the next decade both governments and the private sector will “prioritise supply chain security over cost”. Businesses operating in “friendly” countries with political and legal stability would dominate.

Australia, as a stable democratic state, would reap the benefits.

“Australia also has the resources that the world needs. Not just iron and coal — but also uranium, gas and decarbonisation metals.”

The Firetrail team, as an example of a beneficiary of this theme, named Santos Ltd (ASX: STO).

“An Australian natural gas and LNG producer, [Santos] is well positioned to benefit from higher energy prices as a result of increased global demand for energy security and lack of investment in traditional energy projects.”

Decarbonisation: battery materials

The majority of the world is now making efforts to reduce carbon emissions.

The Firetrail team reckons Australia will again be “a major player” in this transition to net-zero.

And again our mining and resources companies will be the winners.

“While it would be fantastic to switch from fossil fuels to renewables today, technology and infrastructure still has some way to go… In the future, uranium and hydrogen could provide the world with near-zero emissions baseload energy.

“Under all scenarios, Australia is a winner. Australia has significant stores of coal, gas, and uranium, and is developing clean hydrogen technology.”

To store cleanly generated energy, the world will also rely on powerful batteries.

“To make batteries, we need lithium, rare earths, nickel, cobalt and copper,” read the memo.

“We hold Lynas Rare Earths Ltd (ASX: LYC) in our Australian portfolios. Lynas is the world’s only rare earths producer of scale outside China and a key beneficiary of increased demand for energy security and battery minerals.”

‘De-dollarisation’: a golden comeback 

The last theme, which the Firetrail team named “de-dollarisation”, is the global movement away from using US dollars as the reserve currency.

“Since 2020, US money supply has increased by over 40%, budget deficits are running at over a trillion dollars, and national debt is at elevated levels,” read the memo.

“The result is higher inflation in the US, putting pressure on the US dollar’s reserve currency status.”

So will the world see another currency emerge as the standard for international trade?

“Our view is no. However, we can see a world in which a group of three or four currencies share dominance. These would include the US dollar, the Euro, and the Chinese Yuan.”

So how does this affect investors? If multiple currencies start changing hands, the world still needs a reserve base.

“We believe gold can play that role,” the Firetrail memo read.

“Gold was the world’s reserve currency for 5,000 years. It was only usurped by the US dollar 40 years ago following the breakdown of the gold standard.”

The resurgence of importance in gold will mean a windfall for producers of the precious metal.

“A greater role in world finance will put upward pressure on the gold price to the benefit [of] low cost, long life gold miners such as Newcrest Mining Ltd (ASX: NCM).”

The post Here are the best ASX shares to buy for the coming decade: Firetrail 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 Monday
• Santos share price edges lower amid allegations of disastrous deception
• ‘Attractive opportunities’: Fund reveals why 2 ASX 200 shares are its biggest holdings
• 3 ASX 200 shares Firetrail Small Companies fund is overweight in right now
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Tony Yoo 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/pwfK0L7

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a disappointing note. The benchmark index fell 0.9% to 7,346.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 futures largely flat

The Australian share market looks set to have a subdued session on Monday following another mixed finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day a single point lower this morning. On Wall Street, the Dow Jones was up 0.4% but the S&P 500 fell 0.3% and the NASDAQ dropped 0.6%.

Oil prices tumble

ASX 200 energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a tough start to the week after oil prices tumbled on Friday. According to Bloomberg, the WTI crude oil price was down 2.7% to US$76.34 a barrel and the Brent crude oil price fell 2.5% to US$83.00 a barrel. This was driven by concerns that interest rate hikes could weigh on demand and comes at a time of mounting signs of ample crude and fuel supply.

A2 Milk half year results

The A2 Milk Company Ltd (ASX: A2M) share price will be one to watch on Monday when the infant formula company releases its highly anticipated half year results. According to CommSec, the market is expecting the company to return to form in FY 2023 and report a first half net profit after tax of NZ$60.6 million. No dividend is expected to be paid, but A2 Milk is sitting on a huge cash balance, so it cannot be ruled out.

Bendigo and Adelaide Bank results

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price will be one to watch closely. This morning, the regional bank is scheduled to release its half year results. According to a note out Goldman Sachs, its analysts expect cash earnings growth of 7.9% to $281.3 million. This will be ahead of consensus estimate of $275.2 million. The broker also expects an interim 32 cents per share dividend, compared to the consensus estimate of 29 cents per share.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price softened on Friday night. According to CNBC, the spot gold price edged a fraction lower to $1,851.30 per ounce. This led to the precious metal recording its third weekly decline in a row.

The post 5 things to watch on the ASX 200 on Monday 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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy now
• Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher
• Santos share price edges lower amid allegations of disastrous deception
• Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday?

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 positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended A2 Milk. 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/SpcWnxj

Exchange traded funds (ETFs) can be great additions to a balanced portfolio.

That’s because they provide investors with easy access to a large and diverse number of different shares that you wouldn’t ordinarily have access to.

But which ones would be top options for investors right now? Listed below are three tech ETFs that could be worth considering:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is the BetaShares Asia Technology Tigers ETF. This ETF tracks the performance of the 50 largest technology companies, or Tigers, that have their main area of business in Asia (excluding Japan). This means you’ll be buying shares in the likes of Alibaba, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent Holdings. With these companies revolutionising the lives of billions of people in the region, they have been tipped to have very bright futures. And with China reopening from the pandemic, now could be the time to pounce.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another tech focused ETF for ASX investors to look at is the BetaShares Global Cybersecurity ETF. As we saw last year with the hacks of Medibank Private Ltd (ASX: MPL) and Optus, cybersecurity has become incredibly important for businesses. As a result, it is no surprise to learn that the industry is tipped to grow materially in the future. This bodes well for the HACK ETF and the companies held by it. This includes leading cybersecurity players such as Accenture, Cisco, Cloudflare, Crowdstrike, Fortinet, Okta, Palo Alto Networks, and Splunk.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

A third and final tech ETF for investors to consider is the very popular BetaShares NASDAQ 100 ETF. It gives investors access to many of the highest quality tech companies in the world. This includes the likes of Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, and Tesla. And with many of these shares still down materially from their highs, now could be a great time to make a patient long term investment in the ETF.

The post 3 top tech ETFs for ASX investors to buy right now 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

• Hedged or unhedged: Which ASX ETF do I buy?
• Here are 3 quality ETFs for ASX investors to buy right now
• Does the BetaShares Nasdaq 100 ETF share price fall make it a no-brainer buy?
• These top ETFs could be great options for beginner ASX investors
• Growth and income: 2 excellent ETFs for ASX investors to buy this month

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended VanEck Vectors Video Gaming And eSports ETF and Betashares Capital – Asia Technology Tigers Etf. 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/cyJV7HZ

The Novonix Ltd (ASX: NVX) share price finished Friday’s session down a nasty 4.75% to $1.505. It was well below the performance of the S&P/ASX All Ordinaries Index (ASX: XAO) which closed 0.86% lower.

Over the past 12 months, the battery technology and materials company has lost 73.4% of its value.

But we should probably break this performance down into two parts.

In 2022, the Novonix share price fell by 84%. In 2023, it’s up 6%.

Why is the Novonix share price rising in 2023?

There’s been little price-sensitive news relating to this ASX tech share so far this year.

The last significant news was Novonix’s quarterly activities report for December, which was released on 31 January. Investors weren’t thrilled and the Novonix share price fell 6.2% on the day to close at $1.815.

So, without any positive news to explain why the Novonix share price is up, we can assume the stock is simply riding the wave of new momentum in the share market in 2023.

The S&P/ASX All Ordinaries Index (ASX: XAO) is up 6% year to date along with the Novonix share price.

What’s the latest news from Novonix?

As my colleague Brooke reported, the December activities report revealed that Novonix had spent US$18 million during the quarter while taking in just US$2.17 million in receipts.

But the company was left with a $99 million cash balance, which it estimated would give it 11 quarters of funding.

On the positive side, Novonix has reported several advancements in its operations in Canada and the United States.

The company officially opened its cathode pilot facility in Canada and is now testing its all-dry cathode synthesis technology there.

Novonix is also expanding its Riverside facility in Chattanooga, Tennessee with the help of a US$150 million grant from the US Department of Energy. The aim is to produce 10,000 tonnes of synthetic graphite anode materials per annum.

In 2024, Novonix will begin exclusively supplying graphite anode materials to US company KORE Power.

The deal between Novonix and KORE is the first large-volume graphite contract between a US company and a US-based supplier. Therefore, it has broader significance in the context of America trying to establish a domestic battery supply chain to service the burgeoning US electric vehicles (EVs) market.

According to BloombergNEF, more than 50% of new car sales in the US will be EVs by fiscal 2030.

The five-year deal will begin with Novonix supplying 3,000 tonnes of graphite anode materials to KORE in 2024.

The post Down 70% in a year, what’s next for beaten-up Novonix shares? 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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 reasons I won’t touch the ‘cheap’ Novonix share price with a bargepole!
• Why is the Novonix share price having such a stellar end to the week?
• Up 35% so far in 2023, is the Novonix share price on the road to recovery?
• Novonix share price plummets 6% as losses continue
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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/JLO8ijD

A $1 million portfolio might seem like a far-off dream unless you start by investing an already large sum of money. Though, picking ASX shares with the potential for returns greater than 2,000% over the long term makes this dream much more achievable.

I know… a 20-bagger can sound outlandish — but, rest assured, it is entirely possible. In fact, 14 ASX-listed companies have seen their share prices skyrocket more than 2,000% between 2015 and now. You might recognise some of the ASX shares that fall into this bucket — including Hub24 Limited (ASX: HUB), Pilbara Minerals Ltd (ASX: PLS), and Pro Medicus Ltd (ASX: PME).

But, to tap into opportunities now to build a $1 million portfolio, I think it’s essential to look at the small dogs on the block.

Searching small to make it big with ASX shares

The law of large numbers implies that it can become difficult for big companies to grow at high rates.

Put simply, it is harder to go from $1,000,000 to $2,000,000 than it is to go from $1,000 to $2,000. But in percentage terms, they are the same — both being a 100% increase. Based on this, the greatest growth is plausibly found among the small caps of the market.

Research conducted by Dede Eyesan and Jenga Investment Partners further supports this. In the book titled Global Outperformers, Eyesan looked at companies that returned more than 1,000% during the 10 years between 2012 and 2022.

We briefly explored some other factors: insider ownership, the impact of acquisitions, risk and return of debt, activist campaigns, etc., on page 31.

11/68

— Dede Eyesan (@dede_eyesan) January 3, 2023

https://platform.twitter.com/widgets.js

As shown in the extract above, 97% of global outperformers during the reviewed decade started out as small caps — or even smaller. That is some strong evidence to support the smaller end of the market as the best place to go hunting for a chance at a $1 million portfolio.

Where I’d shoot for a million

There are two ASX shares that I believe tick the boxes needed for massive upside.

Both companies operate in large addressable markets and are in the midst of structural tailwinds. Furthermore, both have delivered exceptional revenue growth, increasing more than tenfold over the past five years.

The first company I’d consider is counter-drone equipment maker Droneshield Ltd (ASX: DRO). A $10 billion market opportunity — combined with a track record of growth, a foot in the door with the world’s biggest defence spender, and a geopolitical environment conducive to greater protection measures — Droneshield has a lot to like.

It’s still early days. Though, Droneshield’s continued product development leads me to believe this company could take a considerable slice of a market that is becoming increasingly relevant.

Shares in the company are already up 88% over the last 12 months.

The other ASX share which I think could be primed for remarkable returns is Alcidion Group Ltd (ASX: ALC).

In my opinion, healthcare costs are reaching a breaking point globally. The cost of care is spiralling toward an amount that exceeds what the taxpayer can shoulder. At the same time, the rising cost of living could be forcing more people into the public system.

That’s why I think digital patient management solutions — like those provided by Alcidion — are going to become critical to increasing productivity and controlling costs.

The company is not yet profitable. However, revenue has grown at a compound annual growth rate (CAGR) of 69% over the past four years. Given the scalability of its product, attractive profits could be simply a matter of time for this ASX share.

Shares in Alcidion are down 40% over the last 12 months.

The post ASX shares: Invest in these 2 stocks for a legit chance at $1 million 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

• Why is the DroneShield share price halted on Thursday?
• 3 ASX All Ordinaries shares getting hammered on quarterly updates

Motley Fool contributor Mitchell Lawler has positions in Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alcidion Group, DroneShield, Hub24, and Pro Medicus. The Motley Fool Australia has positions in and has recommended Hub24 and Pro Medicus. The Motley Fool Australia has recommended Alcidion Group and 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/o1lMpFJ

The S&P/ASX 200 Index (ASX: XJO) stock could be a very effective choice for passive income. I’m going to talk about Macquarie Group Ltd (ASX: MQG) shares.

The ASX financial share has done a good job at growing earnings and the dividend since the GFC by diversifying and growing segments of the business that can deliver consistent earnings.

Higher earnings have helped grow the Macquarie share price – over the past five years it’s up 85%.

How to make $1,000 of monthly income from Macquarie shares

There are very few ASX stocks that pay monthly. I think it’s better to think of a monthly income as an annual amount that can be divided equally into 12.

To make $1,000 a month, we need to generate $12,000 of annual dividend income.

In FY23, according to Commsec, Macquarie is expected to pay an annual dividend per share of $6.78, not including the effect of franking credits. That’s a cash dividend yield of 3.6%.

If we owned 1,770 Macquarie shares, then we’d receive $12,000 of annual passive income of dividends in cash. The franking credits would be a bonus on top of that.

The current Commsec forecasts for Macquarie suggest that the dividend could be increased to $6.80 per share in FY24. At the current Macquarie share price, that suggests the ASX 200 stock could pay an FY24 cash dividend yield of 3.6%.

There could be another dividend increase in FY25. Commsec numbers currently predict a dividend per share of $7.20. That’s a possible forward cash dividend yield of 3.8%.

If we think about FY25’s payout, investors would only need to own 1,667 Macquarie shares to get $12,000 of annual dividends.

How is the ASX 200 stock performing?

The latest update that investors have seen was the quarterly update for the three months to 31 December 2022.

It said that varied conditions for its diverse businesses resulted in a good quarter.

Macquarie said that net profit after tax (NPAT) for the nine months to 31 December 2022 was “slightly up” on the nine months to 31 December 2021.

The cause for the profit increase was that its commodities and global markets (CGM) business profit was “up substantially” in the latest quarter, driven by commodities, including gas and power contributions across all regions.

Macquarie remains well capitalised, with a group surplus of $12.5 billion.

At the current Macquarie share price, the ASX 200 stock is valued at under 15 times FY23’s estimated earnings.

The post For $1,000 in monthly passive income, buy 1,770 shares of this ASX 200 stock 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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Buy these ASX dividend shares next week: experts
• 5 ASX 200 shares I would buy if I was starting from scratch: expert
• Forget term deposits! I’d listen to Warren Buffett and invest $250 a month to try to retire rich
• Macquarie has these ASX 200 dividend shares in its income portfolio
• These ASX 200 shares are top picks in Macquarie’s growth portfolio

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 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/5UPtaKR

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Bapcor Ltd (ASX: BAP)

According to a note out of Citi, its analysts have retained their buy rating on this auto parts retailer’s shares with an improved price target of $9.18. This follows the release of the company’s half year results. Citi was happy with the results but is particularly positive on Bapcor’s transformation program and believes it will offset any short term performance risks. It also feels that any inventory concerns are unnecessary and expects levels to moderate in the second half. The Bapcor share price ended the week at $6.33.

CSL Limited (ASX: CSL)

A note out of Morgans reveals that its analysts have retained their add rating and lifted their price target on this biotherapeutics company’s shares to $337.92. Morgans was pleased with CSL’s results and believes that its strong plasma collections and ongoing demand across both Behring and Seqirus, coupled with Vifor’s added breadth, suggests strong growth and momentum ahead. The CSL share price was fetching $298.40 at Friday’s close.

Endeavour Group Ltd (ASX: EDV)

Another note out of Morgans reveals that its analysts have upgraded this drinks giant’s shares to an add rating with an improved price target of $7.80. This follows the release of Endeavour’s half year result, which was comfortably ahead of expectations. And while Morgans acknowledges that the regulatory environment remains uncertain, it feels that the risks are to the upside with the underlying business performing well. The Endeavour share price ended the week at $6.78.

The post Top brokers name 3 ASX shares to buy next week 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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How to generate passive income the Warren Buffett way with ASX shares
• Brokers name 3 ASX shares to buy now
• Why did the ASX 200 leap higher on rising unemployment data?
• Why Bapcor, Magellan, Sonic Healthcare, and Telstra shares are charging higher
• Bapcor share price surges 5% on record half

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended Bapcor. 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/sDv6XMj

If you’re looking for dividend shares to buy when the market reopens, then the two listed below could be worth a look.

Both have been named as buys by experts recently and tipped to provide attractive yields. Here’s why they are bullish on them:

Macquarie Group Ltd (ASX: MQG)

The first ASX dividend share that could be in the buy zone is this investment bank.

Morgans is a fan and spoke very positively about the company following its recent quarterly update. It said:

MQG is a quality franchise, exposed to structural growth areas, and the company has performed exceptionally well in a more difficult FY23 environment. MQG has also consistently delivered attractive returns over time (~15% average ROE) and with >10% share price upside to our price target (A$214), we maintain our ADD recommendation.

Morgans has an add rating and $214.51 price target on the company’s shares.

In respect to dividends, the broker is expecting partially franked dividends of $7.41 per share in FY 2023 and $7.13 per share in FY 2024. Based on the current Macquarie share price of $189.00, this will mean yields of 3.9% and 3.8%, respectively.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX dividend share that has been named as a buy is youth fashion retailer Universal Store.

Goldman Sachs recently named it as a key pick in the retail sector due to its exposure to younger consumers, which it expects to continue spending in 2023. The broker commented:

In addition to a strong outlook for Gen-Z spending, we see an opportunity for ongoing store roll-out for UNI which is the market leader in youth multi-brand apparel. Relative to youth footwear, the youth apparel category is under-penetrated in terms of store footprint; we forecast an additional 22 Universal stores will be rolled out in the next three years.

Goldman Sachs has a buy rating and $7.55 price target on its shares.

As for dividends, the broker is expecting fully franked dividends of 27 cents in FY 2023 and 31 cents in FY 2024. Based on the latest Universal Store share price of $5.45, this equates to yields of 5% and 5.7%, respectively.

The post Buy these ASX dividend shares next week: experts 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 shares have big yields and bigger upside potential: experts
• Why Challenger, SG Fleet, Sims, and Universal Store shares are rising
• 5 ASX 200 shares I would buy if I was starting from scratch: expert
• Forget term deposits! I’d listen to Warren Buffett and invest $250 a month to try to retire rich
• If I had a spare $1,000, here’s where I’d invest in the stock market now

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 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/l1CgkVm