One critical action to take if you want your S&P/ASX 200 Index (ASX: XJO) shares to perform better than the market is to invest in stocks that others are ignoring.

After all, if you are only going for investments that everyone else is into, you can’t expect to receive results different from the average.

Shaw and Partners portfolio manager James Gerrish recently told his Market Matters newsletter that consumer staples is the big play for his team in 2024.

“The Australian consumer staples sector has struggled over recent years, but as Market Matters looks to position portfolios more defensively, it’s been on our radar of late,” he said.

“People have to eat.”

This might be considered a contrarian view, as many experts are forecasting a reduction in interest rates. That would boost public confidence and spending, which would conventionally be considered a boon for the consumer discretionary sector.

But Gerrish likes staples for similar reasons.

“With interest rates set to fall through 2024/5, inflation under control and supply chain issues in the rearview mirror, the outlook has improved for the sector. 

“The peak cost of living has passed, with spending growth on the horizon, helped by solid immigration, with supermarkets  likely to be a key beneficiary.”

Helpfully, he also picked out two ASX 200 stocks from the industry that are ripe for buying now:

‘An opportunity’ imminent?

On Thursday, groceries distributor Metcash Limited (ASX: MTS) confirmed it is in discussions to acquire the Superior Food Group business from private equity owner Quadrant.

Metcash shares were immediately placed in a trading halt.

Gerrish reckons there could be a major buying opportunity opening up if the $500 million transaction goes ahead.

“Speculation has been around the funding of the purchase, with many expecting a capital raise should the deal progress,” he said.

“At this stage, Metcash has several alternatives from a funding perspective, but if they do undergo a discounted equity raise as part of a wider funding package, it could provide an opportunity in the stock.”

Gerrish’s team is “long and bullish” on the owner of the IGA supermarket brand.

These ASX 200 shares are looking cheap

Woolworths Group Ltd (ASX: WOW) shares have gone largely sideways over the past three years.

With cost-of-living pressures bearing down on many Australian households, politically the company and its rival Coles Group Ltd (ASX: COL) are in strife.

“The ACCC is investigating ‘price gouging’, which will inconvenience Woolworths.”

The Woolies stock price has also dipped this year because of a $1.7 billion write-down of its New Zealand supermarket business. 

Gerrish’s team reckons this trough makes the stock “even more attractive”.

“When we saw the banks endure a Royal Commission, it ultimately delivered an excellent buying opportunity.

“If Metcash raises capital, it may create some sentiment selling across the sector.”

His analysts like Woolworths as a buy below $36.

It closed Friday at $36.44.

The post ‘Attractive’: 2 ASX 200 shares to buy right now from the boom sector for 2024 appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy next week
• Top ASX dividend shares to buy in February 2024
• Guess which ASX 200 stock is halted on $500m acquisition talks
• Top brokers name 3 ASX shares to buy today
• How big could the 12-month return be on Woolworths shares?

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 positions in and has recommended Coles Group. 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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Can you believe it’s February already? 2024 feels like it only just started.

This week will be huge for the direction of ASX shares and financial markets. Here are the biggest events to keep an eye on, according to eToro market analyst Josh Gilbert:

1. Australian reporting season

Reporting season in the United States — or ‘earnings season’, as the Yanks call it — is already well under way, but this week sees many big Australian names reveal their latest numbers.

“​​Australia’s reporting season will step up a notch with big names such as AGL Energy Limited (ASX: AGL), Mirvac Group (ASX: MGR) and Transurban Group (ASX: TCL) all releasing half-year results,” said Gilbert.

“Earnings growth for the S&P/ASX 200 Index (ASX: XJO) looks to be modest at around 3.4% for the first half of the financial year, and expectations will be high with the market sitting at record levels.”

He added that the market would be focused on “margins and cost control”.

“Given China’s economy is still not playing ball, miners will be in focus throughout the reporting season, especially with lithium prices continuing to free fall and the materials sector’s strong end to the year.”

The real estate sector was the best performer on the ASX in the final quarter of 2023.

“With [potential] rate cuts driving these stocks high, expectations will be high, and investors won’t want to be disappointed.”

2. Interest rate decision

The Reserve Bank board is back in action Tuesday after its January break.

According to Gilbert, the market has fully priced in a “no change” in interest rates this month, courtesy of plunging retail sales and favourable unemployment and Q4 inflation data.

“It’s all but guaranteed now that, barring a massive unforeseen economic event, the RBA is done with their hiking cycle. 

“The possibility of cuts is still months away, but recent data now points towards the potential of seeing three cuts in 2024, up from the two anticipated at the start of the year and the first cut very much on the table in June.”

Rather than the rate decision itself, the bigger interest is what RBA governor Michele Bullock has to say at the new post-board meeting press conference.

Even though the central bank will want to stamp out inflation, which is still too high, the recent economic data could make it hard for her to choose her words.

“It may be difficult for Governor Bullock to sway away from sounding dovish. 

“All of this is good news for the local market, with just one losing day in the last ten taking the ASX 200 to record highs.”

3. China inflation

The world’s second largest economy and Australia’s biggest trading partner continues to struggle with deflation.

“China’s CPI fell 0.5% in November – the sharpest decline in two years – and while Thursday’s CPI results aren’t likely to be as dramatic, markets are expecting the trend to continue falling for a fourth straight month with a 0.3% decline anticipated.”

The real estate sector, which had been for so long the engine of China’s economic rise, is in serious trouble with giant company Evergrande ordered into liquidation last week.

“More governmental reform seems all but guaranteed now, but sluggish movement here, as well as a delay in scheduling the third promised economic plenum, means investors don’t have much to look forward to yet.”

China’s woes have an adverse impact on ASX shares.

“The nation’s post-pandemic recovery has been anything but effective, with growth slowing and its ripple effect will likely continue to harm Australia’s export industries.”

The post 3 things ASX investors should watch this week appeared first on The Motley Fool Australia.

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More reading

• If you’d invested $20,000 in Pilbara Minerals shares in 2020, this is how much you’d have today
• 3 ASX blue-chip stocks I think every Aussie should own
• Own CBA shares? Here’s what to expect from its half year results
• Goldman Sachs says Telstra and these 6 ASX shares are buys
• 4 quality ASX ETFs to buy in February

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 positions in and has recommended Transurban 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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Regular readers know that ASX lithium shares have been an absolute bin fire the past 12 months.

Western consumers discouraged by rising interest rates and a Chinese economy already in strife have combined to dampen demand, so the price for the commodity has nosedived.

Just 14 months ago, the lithium carbonate price was touching the 600,000CNY per tonne mark. 

Now it can’t even make six figures.

But for those who are doubting the ability for the battery material to make a roaring comeback in the future, you just need to take a look at recent history.

Because lithium, like most other minerals, can make unsuspecting investors look silly with a furious turnaround in the supply and demand equation.

$20,000 into $470,000? Yes, please

Let’s take a look at lithium miner Pilbara Minerals Ltd (ASX: PLS) as an example.

Just under four years ago, in March 2020, Pilbara Minerals shares were going for 15 cents each.

Sure, COVID-19 had just struck the world and no one knew whether we’d be stuck at home for years.

But the rise of electric cars was already well under way, so it is not inconceivable that you could have put $20,000 towards buying Pilbara shares.

Such foresight would have paid off handsomely.

Pilbara Minerals shares closed Wednesday at $3.55, which means that $20,000 has now turned into an incredible $473,333.

What Pilbara Minerals shares teach us

There are two morals from this story.

First is that resource prices can turn around extremely quickly. A stock that seems hopelessly down and out can rocket in just a few weeks, and vice versa.

Second is that your portfolio need not be packed with winners for you to enjoy positive returns overall.

In fact, it is unrealistic to expect you will have a 100% success rate, or even 70%.

For most investors, a handful of multi-baggers will carry the load for the rest of the portfolio.

Good luck out there.

The post If you’d invested $20,000 in Pilbara Minerals shares in 2020, this is how much you’d have today appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 shares could rise 30% to 50%
• Top brokers name 3 ASX shares to buy next week
• BHP stock and more: 3 ASX commodity titans to watch in 2024
• Where will the bottom be for the scorched lithium price?
• Uh oh! Does this spell more bad news for ASX 200 lithium shares?

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.

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As we head into the second month of 2024, now could be a good time to look at adding some top ASX blue-chip stocks to your investment portfolio.

These companies have generally been around for many years, providing investors with a lengthy track record to review. They also tend to offer relatively stable long-term growth, compared to their small-cap peers.

And, thanks in part to their weighty market caps, ASX blue-chip stocks are often able to secure cheaper financing than lesser-known companies.

With that said, here are three ASX blue-chip stocks I think every Aussie investor should own.

ASX blue-chip bank stock

First up we have S&P/ASX 200 Index (ASX: XJO) bank stock Commonwealth Bank of Australia (ASX: CBA).

With a market cap of $191 billion, CBA is Australia’s largest bank and the second-biggest company listed on the ASX. CBA offers a range of integrated financial services, which is the kind of diversity I like to see with an ASX blue-chip stock.

The bank has been taking steps to retain its dominance in the lucrative Aussie mortgage markets. And it is well-placed to weather any financial shocks or economic slowdown, with a common equity tier 1 (CET1) ratio of 11.8%.

CBA shares are up 4% over the past 12 months and have really lifted off since November. The bank stock is up 18% since the closing bell on 31 October.

The ASX blue-chip stock also paid $4.50 in fully franked dividends over the last 12 months. At the current share price, that sees CBA trading at a trailing yield of 3.9%.

Which brings us to…

The biggest stock on the ASX

ASX 200 iron ore giant BHP Group Ltd (ASX: BHP) is the biggest company listed on the ASX. The ASX blue-chip stock has high-quality mining assets in Australia, North America, and South America.

Atop that geographic diversity, BHP’s revenue, while weighted towards iron ore, also comes from copper, coal, nickel, and uranium, among others.

BHP’s profits, share price growth, and the dividends it pays out are hinged on the price of the elements it digs from the ground. So you should expect a bit more volatility from this stock.

But longer term, global demand for its products should remain strong and is almost certain to grow. And the ASX blue-chip stock is well-positioned to continue delivering its supplies at the lower end of the cost curve.

Over the past 12 months, the BHP share price is down 3%. Shares are up 9% since 23 October.

BHP shares trade on a 5.5% fully franked dividend yield.

Rounding out the list of three ASX blue-chip stocks I think every Aussie investor should own is…

ASX blue-chip healthcare stock

CSL Ltd (ASX: CSL) counts among the world’s top biotechnology companies. Its segments include CSL Behring, CSL Vifor, and its Seqirus businesses.

The ASX blue-chip stock is the world’s biggest in the $38 billion plasma protein therapies industry and the second biggest in the $7 billion flu vaccines industry.

CSL is the third largest company listed on the ASX with some strong growth prospects ahead. In fact, management is forecasting annual double-digit earnings growth. They cite “significant unmet need” for the company’s products among growing global markets.

I also like that the ASX 200 biotech stock invests around 10% of its sales revenue into research and development. That includes exploring the growing powers of generative AI to enhance its global operations.

The CSL share price is down 1% over the past 12 months, having taken a big hit in June when sharper-than-expected foreign currency headwinds saw the company reduce its profit forecast.

The ASX blue-chip stock has enjoyed a strong rebound in recent months, however, with shares up 30% since 30 October.

CSL trades on a partly franked dividend yield of 1.2%

The post 3 ASX blue-chip stocks I think every Aussie should own appeared first on The Motley Fool Australia.

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• Own CBA shares? Here’s what to expect from its half year results
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. 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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Goldman Sachs has been busy running the rule over the ANZ telecoms, media, and technology (TMT) space and has picked out a number of ASX shares it rates as buys.

Let’s now take a look at the shares that the broker is tipping as buys this month.

Which ASX shares are buys?

Goldman thinks that the following ASX shares are buys in the TMT space:

• Elasticity connectivity and network services interconnection provider Megaport Ltd (ASX: MP1)
• Media giant News Corp (ASX: NWS)
• Data centre operator Nextdc Ltd (ASX: NXT)
• Media company Nine Entertainment Co Holdings Ltd (ASX: NEC)
• Property listings company REA Group Ltd (ASX: REA)
• Telco giant Telstra Group Ltd (ASX: TLS)
• Cloud accounting platform provider Xero Ltd (ASX: XRO)

The broker commented:

Our preferred names include: 1) Telstra (Buy) and NextDC (Buy) in the telco/digital infra space given resilient and predictable earnings growth (and dividends for Telstra); (2) REA, NWS & NEC in Media, given we are very positive on REA’s ability to continue growing yields into the medium-long term, with News Corp also exposed to this alongside the digital led growth at Dow Jones, while having a compelling underlying valuation; (3) XRO and MP1 in Technology, with both companies delivering a much improved earnings outlook under their (relatively) new CEOs.

In respect to Telstra, the broker currently has a buy rating and $4.65 price target on its shares. This offers 14% upside for investors from current levels. It commented:

We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn.

The post Goldman Sachs says Telstra and these 6 ASX shares are buys appeared first on The Motley Fool Australia.

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• 3 roaring ASX shares I’d hold for the next 20 years
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• Got $15,000? How I’d invest for a bulletproof ASX passive-income portfolio
• 2 world-class ASX 50 shares to buy for your portfolio
• What could happen to Telstra shares if interest rates fall?

Motley Fool contributor James Mickleboro has positions in Nextdc and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Megaport, REA Group, and Xero. The Motley Fool Australia has positions in and has recommended Telstra Group and Xero. The Motley Fool Australia has recommended Megaport, Nine Entertainment, and REA 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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Do you have room for some ASX exchange-traded funds (ETFs) in your portfolio this month? If you do, then it could be worth looking at the four listed below.

Here’s what you need to know about these funds:

Betashares Global Uranium ETF (ASX: URNM)

The first ASX ETF for investors to look at in February is the Betashares Global Uranium ETF. It aims to track the performance of an index that provides exposure to a portfolio of leading companies in the global uranium industry. These companies look incredibly well-placed for growth over the next decade thanks to strong demand and weak supply of the chemical element. Among its holdings are uranium shares Boss Energy Ltd (ASX: BOE) and Paladin Energy Ltd (ASX: PDN).

BetaShares NASDAQ 100 ETF (ASX: NDQ)

One of the most popular ASX ETFs out there at the moment is the BetaShares NASDAQ 100 ETF. And it isn’t hard to see why over $4 billion is invested in the fund. That’s because it gives investors easy access to 100 of the largest non-financial shares on the famous NASDAQ index. This includes many of the world’s largest tech companies such as Apple and Microsoft.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

If you’re looking for some exposure to the tech sector then the VanEck Vectors Video Gaming and eSports ETF could be worth considering. The fund manager, VanEck, highlights that the ETF gives investors access to a global video game market that is estimated to comprise close to 3 billion active gamers. Among its holdings are the biggest players in the industry such as Take-Two Interactive Software, Inc. (NASDAQ: TTWO) and Nintendo.

Vanguard Australian Shares Index ETF (ASX: VAS)

Another ASX ETF for investors to look at is the Vanguard Australian Shares Index ETF. It is an index-based fund that aims to track the ASX 300 index. This means that you will be buying a slice of Australia’s leading 300 listed companies. Among this diverse group of shares are companies as large as BHP Group Ltd (ASX: BHP) and as small as Adairs Ltd (ASX: ADH). Another positive is that the ETF provides investors with a decent yield. At present it sits around 3.8%.

The post 4 quality ASX ETFs to buy in February appeared first on The Motley Fool Australia.

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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 Adairs, Apple, BetaShares Nasdaq 100 ETF, Microsoft, and Take-Two Interactive Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nintendo. The Motley Fool Australia has positions in and has recommended Adairs and BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Apple, Betashares Global Uranium Etf, and VanEck Vectors Video Gaming And eSports ETF. 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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If you’re wanting to give your portfolio a boost in 2024, then it could be worth looking at the ASX 200 shares listed below.

These have been named as buys by analysts and tipped to rise materially from current levels. Here’s what you need to know about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The team at Citi thinks the pizza chain operator’s beaten down shares could be a great option for investors.

Its analysts have a buy rating and $61.10 price target on the ASX 200 share.

If Domino’s shares were to rise to that level, then it would mean a whopping 50% return for investors before dividend.

Speaking of which, the broker expects a 99 cents per share partially franked dividend in FY 2024. This represents a 2.4% dividend yield.

Gold Road Resources Ltd (ASX: GOR)

If you’re looking for exposure to gold, then you may want to check out this ASX 200 gold share.

That’s because Goldman Sachs believes its shares can rise materially from current levels.

The broker has a buy rating and $1.95 price target on its shares, which implies potential upside of 29% for investors over the next 12 months.

Goldman notes that “with GOR the only name in our coverage without significant upcoming growth capex spend/lower capex risk, we reiterate our Buy rating.”

Pilbara Minerals Ltd (ASX: PLS)

Morgans believes that weakness in the lithium industry has created a buying opportunity for investors.

Last week, the broker retained its buy rating on the ASX 200 lithium miner’s shares with a new reduced price target of $4.60.

Despite this valuation reduction, the broker’s price target still implies potential upside of approximately 30% for investors in 2024.

The post These ASX 200 shares could rise 30% to 50% appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• BHP stock and more: 3 ASX commodity titans to watch in 2024
• Where will the bottom be for the scorched lithium price?
• As the Domino’s share price continues to struggle, is it a no-brainer buy?
• Top ASX shares to buy in February 2024

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises and Goldman Sachs Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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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If you’re an income investor on the lookout for some new additions to your portfolio, then read on.

That’s because listed below are three ASX dividend shares that brokers have recently been named as buys.

Here’s what sort of dividend yields you can expect from them:

Accent Group Ltd (ASX: AX1)

Analysts at Bell Potter think that the owner of The Athlete’s Foot, Stylerunner, and HYPEDC could be an ASX dividend share to buy.

The broker currently has a buy rating and $2.50 price target on its shares.

As for income, it is forecasting fully franked dividends per share of 12 cents in FY 2024 and then 14.1 cents in FY 2025. Based on the current Accents share price of $2.09, this represents dividend yields of 5.75% and 6.7%, respectively.

Endeavour Group Ltd (ASX: EDV)

Another ASX dividend share that brokers rate as a buy is BWS and Dan Murphy’s owner Endeavour.

Goldman Sachs is fan of the company and feels its valuation is attractive given its “clear market leading position.” It has a buy rating and $6.40 price target on the company’s shares.

In respect to dividends, the broker is forecasting fully franked dividends of approximately 21 cents per share in FY 2024 and 23 cents per share in FY 2025. Based on the current Endeavour share price of $5.74, this will mean yields of 3.7% and 4%, respectively.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Finally, brokers are saying that Healthco Healthcare and Wellness REIT is an ASX dividend share to buy.

It is a leading health and wellness-focused real estate investment trust that owns a high quality, portfolio of assets such as hospitals, aged care facilities, and primary care properties.

Morgans is bullish and has an add rating and $1.67 price target on its shares.

As for income, it is expecting the company to pay dividends per share of 8 cents in both FY 2024 and FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.37, this will mean yields of 5.8% in both years.

The post Brokers say these ASX dividend shares are buys next week appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Accent 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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An old investment axiom is that higher the returns, the higher the risk.

And that is largely true.

But there is one neat trick that investors can pull to push up their returns without absorbing additional risk.

How? 

Betashares director Patrick Poke spilled the secret on a blog post:

Efficiency = higher returns

Poke describes the trick as “efficiency”.

“This means reducing fees and costs. By reducing costs, investors can improve their net returns, without needing to take on additional risk,” he said.

“These can be fixed fees like account keeping fees and brokerage fees, or they can be asset-based fees, charged as a percentage of your investment, such as management costs.”

There are also the less obvious expenses.

“One often overlooked cost is called ‘cash drag’. This is the cost of leaving parts of your money uninvested – i.e. sitting in cash.

“Depending on where those funds are sitting, you could be earning zero interest, a low interest rate, or a savings account interest rate.”

This isn’t money that you’re saving for some tangible purpose, such as to cover living expenses, reduce volatility, or to use to buy bargain shares.

“Cash drag occurs when you have money that you intend to invest but haven’t made those investments yet.”

Fees and cash drag — some investors might say they make negligible difference.

But just like how the magic of compounding turbocharges your investments over the long term, these costs add up and multiply over time.

Surely the investment returns couldn’t be that much higher?

Let’s take management fees in exchange-traded funds (ETFs) as an example.

If you have two funds with similar risk and performance, but one charges 1% per annum while the other levies a 0.04% annual fee, the end difference can be astounding.

Poke compared the results after 40 years of investing.

“Assuming the return is the same for both funds, the investor paying the higher fee ends up with $1,526,020, while the investor paying the lower fee ends up with $1,970,010,” he said.

“That’s $443,990, or 29% more!”

And check out the effect of cash drag. 

Poke looked at what happens when an investor adds $1,000 each month to the portfolio compared to if they saved up that cash to invest it all at the end of each year.

“The annual investor ends up with $1,838,577 at the end of year 40, while the monthly investor ends up with $1,970,010.

“Investing monthly resulted in a balance that was $131,433, or 7.1% higher.”

So the moral of the story is that a few dollars at the time of transaction may not seem like much, but they can have a significant impact on the performance of your portfolio.

“They can really add up over a long period. And when you account for the compounding of returns, the difference can be significant.”

The post How to easily boost your investment returns without increasing risk appeared first on The Motley Fool Australia.

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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.

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There are several reasons why I find the Brickworks Limited (ASX: BKW) share price particularly attractive right now.

Brickworks shares have climbed more than 10% in two months. While I’d prefer to have bought them at the price they were trading at two months ago, I believe it’s still worth buying great stocks after a rise because they can keep delivering value.

The Brickworks share price has hit 52-week highs plenty of times since 2000, as we can see on the chart below. At each of those previous 52-week highs, it would have been a mistake to think the share price was too expensive to reach even greater heights.

From everything I’ve seen, many of the well-established companies keep winning, just like how a great athlete keeps doing well until they get too old.

Brickworks is many decades old, but I’d suggest that’s a positive – its longevity is a sign of stability. There are (at least) three more reasons why it could still be a great buy.

Building product demand to rebound?

Brickworks is one of the largest building products companies in Australia. It’s the country’s biggest brickmaker but is also involved in other businesses. These include Austral Masonry, Bristle Roofing, Southern Cross Cement, Capital Battens and Terracade.

New home building has reportedly fallen to a decade low, according to reporting by the Australian Financial Review. That’s not exactly a positive for Brickworks.

But, with Australia’s ongoing population growth, I think there’s underlying future demand for building products in the future.

When interest rates start being reduced in Australia, this could accelerate demand for building products with a recovery of construction and renovation activity.

I fully expect Brickworks’ building product earnings to be cyclical, and sometimes there will be pain. But, it could be useful to look at Brickworks shares as a possible opportunity during times of demand weakness, such as now.

Ongoing success with its industrial properties

Brickworks has a large and growing joint venture that builds advanced industrial properties on land that was surplus to Brickworks’ manufacturing requirements.

By unlocking the value of that land, Brickworks gets a cash injection which it can use to pay down debt or for another purpose. The industrial properties create a pleasing net rental profit, and it also leads to a development profit after the completion of building.

The joint venture is seeing “strong lease enquiry for large-sized industrial facilities”. I think this bodes well for the foreseeable future.

High interest rates are hurting the valuation of these assets in the short term, but the rate cuts could help in the future and make them even more valuable than they already are.

The growing net rental profit is helping fund larger dividends over time for owners of Brickworks shares.

Excellent investment

The other key thing to know about Brickworks is that it owns a significant number of shares in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Soul Patts is a large investment business that invests in many varied sectors including telecommunications, resources, financial services, property, credit/bonds, swimming schools, agriculture and so on.

Soul Patts also owns a significant number of Brickworks shares. This has been a beneficial cross-holding that has lasted for decades and could continue for a long time.

Soul Patts’ returns have given Brickworks growing dividends and capital growth. The stability of that business helps offset the cyclical nature of the building products profit.

The post 3 reasons why I think the Brickworks share price is a buy appeared first on The Motley Fool Australia.

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More reading

• 2 excellent ASX dividend shares I’d buy with $3,000
• Are Brickworks or Soul Patts shares a better ASX buy? Here’s my take
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• Where I’d invest $3,000 into ASX dividend shares in January

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. 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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