It’s been a great day, and week so far, for ASX shares and the S&P/SX 200 Index (ASX: XJO). This Tuesday has seen the ASX 200 rise by another 0.25% at the time of writing, having almost hit a new record high earlier in the trading day. But let’s talk about the Fortescue Ltd (ASX: FMG) share price.

Fortescue shares are on fire today. The ASX 200 iron ore mining giant closed at $29.25 yesterday. But this morning, those same shares opened at $29.50 each before climbing to a new record high of $29.75. The shares are hovering around that level at present at $29.70, up 1.54% for the day.

As recently as September 2023, it would have been unthinkable for most investors to picture Fortescue shares at $30 each. After all, that was when Fortescue stock was going for less than $20 a pop.

But as it stands today, these latest gains put the iron miner up a chunky 33.93% over the past 12 months, and up more than 400% since early 2019.

No doubt Andrew ‘Twiggy’ Forrest is a very happy man right now.

So why is the Fortescue share price sitting at almost $30 each today?

Why are Fortescue shares at a new record high this Tuesday?

Well, there’s little doubt that Forescue’s latest quarterly report is helping to lure investors into the stock. As my Fool colleague Bernd covered just last week, Forescue’s report covering the three months to 31 December was exceptionally well received.

The company revealed that it shipped 48.7 million tonnes over the period. That brought its shipments for the six months to 31 December to 94.6 million tonnes, the second-highest half-year in Fortescue’s history. What’s more, the company was able to achieve average revenue of US$116 per tonne. You do the maths.

Fortescue also maintained its guidance for the whole 2024 financial year at between 192-197 million tonnes.

In some other news, we also looked at broker Citi’s forecasts for the iron ore price just today. As my Fool colleague reported, Citi is expecting iron ore to surge as high as US$150 per tonne in the coming three months.

As such, it’s not difficult to see why investors are fighting over themselves to get a slice of the action over at Forescue. At the current Fortescue share price, this ASX 200 miner has a market capitalisation of $90.05 billion, with a dividend yield of 5.89%.

The post $30 each? Here’s why the Fortescue share price just hit a new all-time high appeared first on The Motley Fool Australia.

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More reading

• Buying ASX 200 mining shares? Here’s Citi’s 2024 prediction for the iron ore price
• Fortescue share price lifts off amid near-record iron ore shipments
• Why this broker thinks you should be selling Fortescue shares
• ASX 200 mining stocks underperforming as Andrew Forrest shutters WA nickel mines
• How I invest and make money from ASX mining shares

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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It’s been a joyous day for ASX shares and particularly the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday.

The ASX 200 has been on a stunning run for a few months now. It was only back in late October that the ASX 200 was at what was then a new 52-week low of 6,751.3 points. But fast forward to today, and we see that same index at over 7,600 points.

This means that the ASX 200 has gained a whopping 12.3% or so over just three months. That three-month gain well exceeds its annual average return.

What’s more, we’ve seen the ASX 200 hit a new high today. During this morning’s trading, the index climbed as high as 7,630.5 points. That exceeds the highest point the ASX 200 has ever closed at (7,628.9 points in August 2021).

However, it is just a tantalising whisker away from the index’s real all-time high of 7,632.8 points, which was achieved during intra-day trading in the same month.

At present, investors have cooled a little, with the index sitting at 7,599.8 points, up 0.28% for the day so far.

Saying that, the index got laughably close to this high earlier this month. On 2 January earlier this month, we saw the ASX 200 climb as high as 7,632.7 points – just 0.1 point from that August 2021 high.

Still, we can’t deny that this is exciting territory for ASX 200 shares to be exploring.

So what’s behind the recent runup for the Australian stock market that is seeing the market attempting to crack these records?

Why are ASX 200 shares at record highs today?

It’s difficult to pinpoint exactly why an entire share market might be at or near a new record high. But in this case, here are a few factors we can point to.

Firstly, the US markets are currently at all-time record highs. Just last night (our time), the S&P 500 Index (INDEXSP: .INX) hit an all-time high of 4,929.31 points.

At the same time, the Dow Jones Industrial Average (INDEXDJX: .DJI) also clocked a new record high of 38,343,93 points, while the Nasdaq Composite (INDEXNASDAQ: .IXIC) Index achieved a new 52-week high of 15,630.58 points.

As the financial centre of the world’s economy, the US markets often dictate the mood on the ASX. So it was always going to be fertile ground for a new high on the ASX today.

But more broadly, it’s likely that the ongoing success of both the US economy and the Australian economy are helping our respective stock markets too.

Across both the US and here at home, the respective central banks seem on track to achieve something that most commentators thought was an unachievable pipedream: cooling rampant inflation while preventing an economic recession.

The Goldilocks zone

In the past, most periods of high inflation have been broken only by rising interest rates sparking an economic contraction.

However, the US Federal Reserve, as well as our own Reserve Bank of Australia, seem to have softly landed the economic plane this time around.

The US economy in particular remains remarkably resilient. Inflation is falling, yet economic growth is robust, and unemployment remains at historic lows. Commodity prices, particularly oil, are also at relatively moderate levels.

What’s more, most American and Australian commentators think the next interest rate move will be a cut, rather than a hike. If that isn’t enough to elicit new records on the stock market, I don’t know what is.

Of course, the rest of 2024 is still unknown. There’s a chance that this economic miracle will come back to earth. If it does, we could see the US and Australian share markets retreat.

But equally, if the good economic news continues to flow in, then we could see even higher highs for both the ASX 200 and the S&P 500.

The post ASX 200 record! Here’s why Aussie shares are on the cusp of a new all-time high appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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Official data released by the Australian Bureau of Statistics (ABS) today shows retail turnover fell 2.7% in the month of December, but at the same time ASX retail share prices soared.

And they continued their upward trajectory in January, too.

Let’s review the ABS data and the price performance of ASX retail shares over the past two months.

ABS reports ‘large fall in retail turnover’ last month

In December, seasonally adjusted retail trade fell by 2.7%. This was better than the 4% fall expected by CBA analysts.

The ABS said Australians are changing the way they shop, with the Black Friday sales in November becoming much more popular.

This is impacting how much consumers are spending at the post-Christmas sales in December and January.

Retail turnover lifted by 1.6% in November after a fall of 0.2% in October.

Ben Dorber, ABS head of retail statistics, said:

The large fall in retail turnover in December was caused by a fall in discretionary spending. Consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales. 

This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November. 

In trend terms, Dorber said retail turnover rose by 0.1% in December, adding:

This shows that underlying retail spending remains subdued when we look through the volatile movements over recent months in the lead up to Christmas.

Retailers told us that trading conditions were slow in early December following the success of Black Friday before picking up again in the lead up to Christmas and Boxing Day sales where discounting activity returned.

But ASX retail shares kept climbing in December

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) lifted 6.3% over the month of December.

At the same time, the S&P/ASX All Ordinaries Index (ASX: XAO) rose by 7.3% during a strong Santa Rally.

Here is a snapshot of how ASX retail shares performed in December:

• The Lovisa Holdings Ltd (ASX: LOV) share price increased by 27.5%
• The Universal Store Holdings Ltd (ASX: UNI) share price rose by 24.3%
• The Myer Holdings Ltd (ASX: MYR) share price lifted by 15.4%
• The Super Retail Group Ltd (ASX: SUL) share price rose by 14.5%
• The Premier Investments Limited (ASX: PMV) share price advanced by 13%
• The Nick Scali Limited (ASX: NCK) share price rose by 12.1%
• The JB Hi-Fi Limited (ASX: JBH) share price rose by 10.9%
• The Accent Group Ltd (ASX: AX1) share price increased by 7.2%
• The Harvey Norman Holdings Limited (ASX: HVN) share price rose by 6.9%

And look what they did in January…

Only two of these ASX retail shares lost value this month after their December gains.

Meantime, the Consumer Discretionary Index is up 1.96% in January while the All Ords is up 0.17%.

The post Buying ASX retail shares? You’ll want to see these numbers appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Harvey Norman and Nick Scali. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has positions in and has recommended Harvey Norman and Super Retail Group. The Motley Fool Australia has recommended Accent Group, Jb Hi-Fi, Lovisa, Nick Scali, and Premier Investments. 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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Looking for ASX dividend stocks for your income portfolio? If you are, then you could check out the three listed below that have been named as buys and tipped to offer big yields.

Here’s what brokers are saying about these shares:

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

The first ASX dividend stock that could be a buy is Dalrymple Bay Infrastructure. It is the long-term operator of the Dalrymple Bay Coal Terminal (DBCT).

DBCT is the world’s largest metallurgical coal export facility, serving as a global gateway from the Bowen Basin and is a critical link in the global steelmaking supply chain.

Citi is feeling positive on the company thanks to its big yields and hedged debt.

In respect to the former, the broker is forecasting dividends per share of 20.6 cents in FY 2023 and 22 cents in FY 2024. Based on the latest Dalrymple Bay Infrastructure share price of $2.80, this will mean juicy yields of 7.35% and 7.9%, respectively.

Citi has a buy rating and $3.00 price target on its shares.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend stock that analysts are positive on is Dexus Convenience Retail REIT.

Bell Potter is a big fan of the convenience retail and service station property fund. It believes its shares are cheap and deserve to trade on higher multiples. Particularly given that it operates in a “sub-sector where there is clear price discovery, and investors for commercial real estate have a clear preference for smaller cheque size assets.”

In addition, the broker is expecting some big dividend yields. It is forecasting dividends per share of 20.9 cents in FY 2024 and 20.5 cents in FY 2025. Based on its current share price of $2.65, this equates to yields of 7.9% and 7.7%, respectively.

Bell Potter has a buy rating and $2.85 price target on Dexus Convenience Retail REIT’s shares.

Universal Store Holdings Ltd (ASX: UNI)

This youth fashion retailer could be another ASX dividend stock for investors to buy.

That’s the view of the bullish analysts at Morgans, which highlight the company’s “attractive array of medium-term growth prospects.”

The broker is expecting this to allow Universal Store to pay fully franked dividends of 26 cents in FY 2024 and then 29 cents in FY 2025. Based on the latest Universal Store share price of $4.10, this equates to yields of 6.3% and 7.1%, respectively.

Its analysts have an add rating and $4.55 price target on its shares.

The post Get a big income boost from these high-yield ASX dividend stocks appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Universal Store. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The iron ore price edged higher again overnight to be trading at just under US$136 per tonne.

That’s helping all three of the big S&P/ASX 200 Index (ASX: XJO) iron ore stocks outpace the benchmark today.

At the time of writing in early afternoon trade on Tuesday, the ASX 200 is up a healthy 0.5%.

Here’s how these top mining shares are performing at this same time:

• BHP Group Ltd (ASX: BHP) shares are up 0.8%
• Rio Tinto Ltd (ASX: RIO) shares are up 1%
• Fortescue Metals Group Ltd (ASX: FMG) shares are up 1.5%

That’s certainly welcome news to shareholders.

But if Citi’s outlook for the iron ore price proves out, then there could be more outperformance ahead for BHP, Rio Tinto and Fortescue shares.

Iron ore price flagged to hit US$150 per tonne

As you likely recall, the iron ore price dipped below US$100 per tonne in late May last year. The industrial metal, and the ASX 200 mining stocks, came under pressure amid concerns over falling steel demand from China.

At the time, a number of analysts were forecasting that the critical steel-making metal would remain below US$100 per tonne in 2024, as China’s policymakers were seen as not doing enough to spur the nation’s sluggish economy and property markets.

What a difference a few months can make.

Last week the People’s Bank of China (PBoC) said it will cut the reserve requirements for Chinese banks, commencing in February. China’s government is also moving to shore up its steel-hungry real estate sector.

This sees Citi upgrading its forecast for copper prices – the number two revenue earner for BHP shares and the other big ASX 200 miners – along with predicting the iron ore price will reach US$150 per tonne in the three months ahead.

According to Citi analyst Wenyu Yao (quoted by The Australian Financial Review):

We see these measures as positive and can see this risk rally continuing over the coming month on the back of further details regarding urban village redevelopment and anticipated strong total social financing figures.

And in further good news for investors in Rio Tinto, BHP and Fortescue shares, the iron ore price could get some added tailwinds heading into the second quarter, according to the broker.

“As policy momentum could gather speed ahead of the National People’s Congress in March, we see rising upside catalysts into the second quarter from both macro expectations and strengthening fundamental,” Yao said.

The post Buying ASX 200 mining shares? Here’s Citi’s 2024 prediction for the iron ore price appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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Looking at Coles Group Ltd (ASX: COL) shares, and investors might not grasp just how little they’ve managed to squeeze out of this ASX 200 consumer staples stock in recent years.

Coles shares have always been a bouncy investment. Over the past 12 months alone, the grocery and supermarket giant has fluctuated between $14.82 and $18.85 a share. That’s a difference worth more than 20%.

But at today’s share price of $15.74 (at the time of writing), one thing is painfully evident: Coles shares have gone nowhere over the past four years.

Yes, Coles was also going for around this same share price way back in November of 2019. So if you bought Coles shares back then, you’ve only had the company’s dividend to keep you warm at night.

See for yourself below:

Not that Coles’ dividend has been insubstantial. Investors have long enjoyed a dividend yield of just over 4% from the supermarket operator. That yield has always come fully franked as well.

But the fact remains that Coles has functioned as more of a term deposit over the past four years than a successful, compounding stock market investment.

Rubbing salt in the wound, shares of Coles’ arch-rival Woolworths Group Ltd (ASX: WOW) have enjoyed capital growth of around 10% over the same period.

So perhaps Coles investors are hoping that 2024 is the year that the company goes from loser to winner.

Can Coles shares turn it around in 2024?

Well, the good news is that while the Coles share price has been stagnant over the past four years or so, the company has still been growing. In its 2019 earnings report, Coles posted total group revenue of $38.18 billion, with an earnings before interest and tax (EBIT) of $1.47 billion.

Fast forward to the company’s full-year earnings for FY2023 from August last year, and we can see that group sales had increased to $41.47 billion, with an EBIT of $1.97 billion.

This should give investors some comfort as we head into 2024.

But let’s see what an ASX expert is predicting when it comes to Coles shares this year.

Just yesterday, my Fool colleague James covered the views of ASX broker Citi on Coles shares.

ASX broker names Coles as a buy

Citi indeed believes that Coles shares are going to have a great year in 2024. The broker has given Coles a 12-month share price target of $17.50 a share, alongside a buy rating. If realised, this would see the Coles share price gain approximately 11% from where the company sits today.

Citi is taking a long view of Coles. The broker reckons the grocer will struggle to grow its earnings over FY2024. However, it is also anticipating Coles will be able to bank solid earnings growth over both FY2025 and FY2026.

That in turn, according to Citi, will see the company increase its dividends substantially over those financial years as well, resulting in an annual dividend of 70 cents per share over FY2025. If Citi is on the money here, it could see Coles shares with a forward dividend yield of 4.45% today.

So that’s what one ASX expert has in mind for Coles this year. But we’ll have to wait and see whether the market does decide to yank the supermarket operator out of its four-year slump in 2024. No doubt investors have their fingers crossed.

The post Can Coles shares go from loser to winner in 2024? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles 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 All Ordinaries Index (ASX: XAO) is up 0.7% today, with this ASX All Ords stock doing a lot of the heavy lifting.

Up 24% in earlier trade today, the women’s clothing retail stock is currently trading for 53 cents a share, up 21.8%. That sees the ASX All Ords stock up an eye-popping 112% since the recent lows on 2 November.

Any guesses?

If you said City Chic Collective Ltd (ASX: CCX), go to the head of the virtual class.

Here’s what’s driving investor interest.

ASX All Ords stock lifts off on takeover potential

The City Chic share price looks to be taking off today after the company released its half year trading update for the six months to 31 December (H1 FY 2024) and responded to media speculations about potential interest in its North American business.

Starting with the potential acquisition of its North American business, the ASX All Ords stock said that it is “regularly involved in exploratory discussions with different parties regarding initiatives that could create value for its shareholders”.

The company highlighted that “there is no certainty that any of these opportunities, including any potential sale of City Chic’s North American business, proceed to a binding transaction”.

Luminis Partners has been a long-standing adviser to City Chic on various projects.

Turning to the half-year update…

City Chic share price lifts amid improving margins

The ASX All Ords stock reported global sales revenue of $106 million for H1 FY 2024. That’s down 29% from the prior corresponding period.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) for the six months came in at a loss of $7 million to $10 million.

However, the company reported a 10% improvement in margin in Q2 FY 2024 compared to Q1. Second-quarter revenue was also up from the first quarter, while costs were down following the company’s strategic action plans.

The inventory overhang was also reduced. City Chic reported inventories were down 27% since 2 July, with some $40 million of inventory cleared.

Commenting on the results that look to be giving the ASX All Ords stock a healthy boost today, City Chic CEO Phil Ryan said:

In the first quarter our focus was on clearing our inventory position and delivering new, relevant product to support our key trading period and we did that successfully.

This is reflected in stronger sell through at improved margins in the second quarter, especially in our stores business, and we remain on track to return to profitable trading overall in the second half.

As at 31 December, the ASX All Ords stock had a net cash position of $3.5 million.

The post Guess which ASX All Ords stock just rocketed 24% on takeover interest appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on form again on Tuesday. In afternoon trade, the benchmark index is up 0.6% to 7,621.6 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

29Metals Ltd (ASX: 29M)

The 29Metals share price is down 11% to 45 cents. Investors appear disappointed by the copper producer’s quarterly update. 29Metals reported copper production of 5.2kt for the fourth quarter. This brought its full year production to 18.1kt. Management is guiding to copper production of 18kt to 22kt for 2024.

Aroa Biosurgery Ltd (ASX: ARX)

The Aroa Biosurgery share price is down 9% to 65.25 cents. This follows the release of the medical device company’s quarterly update. That update revealed that management has reduced its FY 2024 total revenue guidance to between NZ$67 million and NZ$70 million. This has been driven by a decrease in expected revenue from TELA Bio due to a previous overestimation of Aroa’s revenue share on inventory supplied and a delay to a joint product development project.

Mader Group Ltd (ASX: MAD)

The Mader share price is down 6% to $6.26. Investors have been selling this specialist technical services provider’s shares despite the release of a solid quarterly update. Mader reported a 31% increase in total revenue to $189.3 million for the second quarter. In addition, the company has reaffirmed its confidence in “delivering FY24 revenue of at least $770m and NPAT of at least $50m.”

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price is down 5% to $16.49. This appears to have been driven by a broker note out of Macquarie this morning. According to the note, the broker has downgraded Netwealth’s shares to an underperform rating with a $14.80 price target. It notes that Netwealth’s quarterly update shows that its growth is continuing to moderate.

The post Why 29Metals, Aroa Biosurgery, Mader, and Netwealth shares are falling 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 positions in and has recommended Macquarie Group, Mader Group, and Netwealth Group. The Motley Fool Australia has positions in and has recommended Macquarie Group, Mader Group, and Netwealth 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 Zip Co Ltd (ASX: ZIP) share price lifted 6.75% in early trading on Tuesday to 79 cents.

This follows the release of the company’s cash flow report for the December quarter.

Zip shares have retreated slightly to 78 cents at the time of writing.

Let’s check out the details.

Zip share price lifts again on more positive quarterly news

Today’s quarterly cash flow report follows the release of Zip’s 2Q FY24 results and interim 1H FY24 update on 22 January, which resulted in a 17% increase in the Zip share price.

As covered by my colleague James, the buy now, pay later provider reported an 8.5% lift in transaction value over the prior corresponding period (pcp) to $2.8 billion in December.

Revenue rose by 26.1% to $225.6 million for the quarter, which equated to an improved margin of 8.2%.

Management said first-half group cash EBTDA was expected to be between $29 million and $33 million.

Today’s cash flow report reveals an increase in cash and cash equivalents from $260.7 million at the beginning of the quarter to $303.8 million as of 31 December.

Total funding available via cash and debt financing at the end of the quarter was $533.4 million.

BNPL stock price snapshot

The Zip share price has risen by 25% over the past month and by 72% over the past six months.

The BNPL share hit a new 52-week high of 80 cents on 24 January.

The post Zip share price surges 7% on quarterly cash flow report appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. 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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ASX travel share Webjet Limited (ASX: WEB) stock is on my buy list for a few different reasons. It has already recovered a long way from the COVID-19 weakness, but there could be more positivity to come.

Webjet operates three different businesses – an online travel agency (OTA) business, a business-to-business (B2B) segment called WebBeds, and a car and campervan rental website called GoSee.

The Webjet stock price is still 30% lower than where it was in January 2020, though there’s a higher share count these days after its capital raising ensured its balance sheet was good enough to survive.

But, from here, I think the business can excel for a few different reasons.

Improving market share

The pandemic was a rough time for many travel operators, but travel has seen a booming recovery. In the company’s FY24 first-half result, it reported a 35% increase in total transaction value to $2.9 billion.

When the company reported its HY24 result, it revealed Webjet OTA had seen a “material increase in international market share”. The business doesn’t have a physical presence, and households have been doing a lot more things digitally since the start of COVID-19 thanks to digital adoption.

Webjet said its OTA international flights market share grew 24% compared to the FY23 first half, with its software Trip Ninja “playing a key role providing unique content and real savings for customers.”

Strong cost control

Revenue is just one element of a company’s performance, costs also play an important part in profitability.

Webjet did a lot of work during the COVID-19 pandemic to reduce its cost base and increase its operating leverage.

As it processes more TTV, this can lead to even higher profit margins because of how profitable each extra transaction is for a digital business.

In HY24, the company saw its total revenue increase by 39%, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 40.6% and the profit before tax improved by 126%. These are strong improvements that can help Webjet stock.

If revenue can keep increasing, then I expect the profit before tax margin can keep growing thanks to its digital operations and cost controls.  

International travel recovery

Webjet said in its HY24 result that while there had been strong growth in international bookings for the period, capacity constraints by airlines “continued to subdue overall bookings”. But, the company suggested that it’s seeing “ongoing growth opportunities as capacity returns to 2019 levels.”

There is still scope for Webjet’s earnings to show more of a recovery from COVID-19 impacts with the recovery of international travel. As I’ve mentioned, more volume should be helpful for revenue and even better for margins and profit.

Foolish takeaway

According to Commsec, the Webjet share price is valued at 19 times FY25’s estimated earnings. I like the business now, but it’d be even more appealing if it was a bit cheaper.

The post Webjet stock: 3 reasons it’s on my buy list appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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