ASX mining stock Cobre Ltd (ASX: CBE) more than doubled its market valuation in less than 30 minutes this morning after the company released an announcement.

The Cobre share price is up by 112.2% to 8.7 cents per share at the time of writing. The ASX mining stock closed at 4.1 cents yesterday.

Meantime, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.6%.

What’s the big news for this ASX mining stock?

The junior copper exploration company has been selected by BHP Group Ltd (ASX: BHP) to participate in the mining giant’s 2024 Xplor program.

BHP created the Xplor program to help young companies in the critical minerals space accelerate their operations and potentially establish a long-term partnership with the mining giant.

Xplor runs for six months, during which time BHP will give Cobre US$500,000 in non-dilutive funding, as well as access to its internal expertise and global network of suppliers, to advance its exploration activities.

Cobre will use the money to accelerate its Kitlanya West Project in Botswana.

The ASX mineral explorer controls approximately 5,348 square kilometres of tenements within the Kalahari Copper Belt (KCB). The KCB is one of the world’s most prospective areas for copper.

At the conclusion of the Xplor program period, Cobre is under no obligation to partner with BHP.

What did management say?

Cobre said the funds would be spent progressing targets that the company thinks may host tier-one copper-silver deposits.

It looks like BHP has confidence in Kitlanya West. Cobre announced “encouraging new targets” at the site in November. Drilling results led to an increased estimate of the target size to 4 km x 1.2 km.

Part of the Xplor deal is the option for BHP to retain certain pre-emption rights at Kitlanya West for 12 months after the program ends.

Cobre CEO Adam Wooldridge said:

The Xplor program provides us with a unique opportunity to partner with BHP experts to further our Kalahari Copper Belt targeting criteria and exploration programs.

We’re delighted to have successfully made it through the rigorous selection process, which is a great accolade for the technical merits of our team and exploration projects.

We’re looking forward to participating in the program and developing priority targets where the Xplor funding will provide further value for our shareholders.

What else is Cobre working on?

Cobre is also working on its Perrinvale project in the Panhandle Greenstone Belt of Western Australia.

It has discovered a globally rare VHMS deposit enriched in high-grade copper, gold, silver, and zinc.

Sandfire Resources Ltd (ASX: SFR) discovered Australia’s last significant VHMS deposit more than a decade ago.

Share price snapshot for this ASX mining stock

The ASX mining stock was listed on the ASX in early 2020 at 20 cents per share.

Here is its history:

The post ASX mining stock doubles in value in 30 minutes on news of BHP deal appeared first on The Motley Fool Australia.

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• ASX 200 mining stocks underperforming as Andrew Forrest shutters WA nickel mines
• How I invest and make money from ASX mining shares
• Top brokers name 3 ASX shares to buy next week
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• 3 ASX 200 dividend shares I think you could safely hold for decades

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Small-cap ASX shares have, on average, lagged their larger competitors over the past few years.

And smaller ASX stocks haven’t gotten any help from the rapid increase in interest rates since the RBA began its tightening cycle in May 2022.

On 3 May 2022, the official cash rate stood at a rock bottom 0.10%. On 4 May 2022 that was raised to 0.35% in what would be the first of 10 consecutive monthly interest rate hikes from the RBA.

Since 6 May 2022, the S&P/ASX 200 Index (ASX: XJO) has gained 3.7% (excluding dividends).

As for small-cap ASX shares, the S&P/ASX Small Ordinaries Index (ASX: XSO), which holds 200 companies but excludes the biggest 100 from the ASX 200, has lost 8.3%.

That’s not to say some smaller stocks haven’t delivered outsized returns.

Most of the roughly 2,200 companies listed on the ASX are small-cap ASX shares, after all.

But with interest rates in Australia and most of the developed world looking set to come down in 2024, The Motley Fool asked Andy Gracey, portfolio manager of the Emerging Companies and the Australian Shares Fund at Australian Ethical Investment, whether 2024 might be the time for small-cap ASX shares to regain their shine.

Will 2024 see a rebound for small-cap ASX shares?

“We are encouraged with the outlook for domestic inflation and interest rates,” Gracey told us.

“The market now expects the RBA to cut interest rates in the second half of 2024 and into 2025. This change in sentiment drove the share-market rally in late 2023.”

With lower rates on the horizon, Gracey said the appeal of risk assets like property and shares will be more attractive to investors going forward.

“The initial share-market beneficiaries have been large-cap or ASX 100 companies, with small companies also performing strongly in the December quarter,” he said.

And there could be some outperformance ahead for small-cap ASX shares in 2024.

“Small companies and particularly microcap companies have underperformed their Australia blue-chip peers over the last few years, so there certainly is rationale to anticipate some form of catchup for these emerging companies,” he told us.

But Gracey cautioned that inflation may prove stickier than many investors are hoping.

“We do, however, expect inflation to be persistent and don’t expect interest rates to retrace to the levels seen earlier this decade,” he said, pointing out there’s still a fair way to go before inflation comes back down to the RBA’s 2% to 3% target range.

“There are also challenges around company valuations,” he added of investing in small-cap ASX shares, noting the 25% price to earnings premium for the small companies’ index compared to the ASX 200.

According to Gracey:

Once you go outside the ASX materials and financials sectors it’s a real struggle to find compelling value, especially in the context of a risk free 10-year Australian government bond yield sitting at 4.3%

Another challenge for all companies and particularly small companies is that the RBA lowering interest rates is typically accompanied by a weakening economy and depressed company earning.

With these thoughts in mind, we asked Gracey about the pros and cons of investing in small-cap ASX shares versus blue-chips.

Benefits and risks of investing in the smaller end of the market

“The rationale for investing in ASX small caps versus blue-chips is superior capital growth over the long term,” he said.

“Small companies are more focused and specialised on their core markets and offer superior revenue and profit growth versus blue-chips.”

Another potential benefit of buying small-cap ASX shares, he said, was that these “are also more likely to be targets for private equity and strategic buyers”.

On the risk side of the ledger, Gracey cautioned that “these companies do have more volatile trading updates and share prices”.

He added:

This is because small companies are typically more vulnerable to macro, regulatory and industry challenges as they have fewer levers or tools to manage through these disturbances.

We have also seen the stock trading liquidity challenges in small and particularly microcap companies over recent periods as investors departed this section of the market.

The post Interest rates look near their peak. Time to invest in small-cap ASX shares? appeared first on The Motley Fool Australia.

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• Why this top broker just upgraded the outlook for Westpac shares
• Goldman Sachs says these ASX 200 mining shares can rise 20%+
• Guess which ASX All Ords stock is surging 14% on soaring profit
• Why is the Pilbara Minerals share price rebounding on Tuesday?
• This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me

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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Westpac Banking Corp (ASX: WBC) shares are in the green today.

The S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $23.45. In morning trade on Tuesday, shares are swapping hands for $23.55 apiece, up 0.4%.

For some context, the ASX 200 is up 0.2% at this same time.

Westpac shares have been off to a strong start in 2024, currently up 2.8% since the closing bell on 29 January. That’s a good sight better than the 1.3% year to date loss posted by the ASX 200.

And according to the analysts at Macquarie, Westpac shares look well-placed to outperform their banking peers.

Why did Westpac shares get an upgrade?

Commenting on Macquarie’s upgrade of Westpac shares to an ‘outperform’ rating, analyst Victor German said (quoted by The Australian), “We believe WBC issues are becoming well understood and more appropriately reflected in consensus numbers.”

German cited the large downgrades in FY 2023 as reducing the risk to earnings.

He added:

We expect WBC to benefit more than peers from its replicating portfolio, given less of the benefits have been captured to date, offsetting headwinds from deposit mix changes and higher term deposit pricing.

On a normalised basis, German said Westpac shares are now the cheapest among the ASX bank stocks “after incorporating through the cycle impairment changes”.

According to German, one of the red flags to keep an eye on in 2024 is Westpac’s ongoing and potentially costly franchise issues, which could take some time to resolve.

The bank is also vulnerable to competition which could pressure its margins and see it lose some of its market share.

Still, Macquarie increased its target price by 17% to $24 a share.

That’s 2% above the current level. And it doesn’t incorporate the two fully franked dividend payments that Westpac will (quite likely) pay out over the coming year.

How has the ASX 200 bank performed longer term?

Westpac shares remain down 1.3% over the past 12 months. The ASX 200 bank stock has gained 12.4% over two years.

The post Why this top broker just upgraded the outlook for Westpac shares appeared first on The Motley Fool Australia.

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• If you’d bought $10,000 of Westpac shares in January 2022, here’s what you’d have now!
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• 3 things ASX investors should watch this week
• Here’s how much I’d need to invest in Westpac shares for $3,000 a year in passive income
• The Westpac share price heavily underperformed the ASX 200 in 2023

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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If you’re looking for some mining sector exposure, then it could be worth checking out the two ASX 200 mining shares listed below.

That’s because Goldman Sachs has just put buy ratings on both of these shares. Here’s what the broker is saying:

Lynas Rare Earths Ltd (ASX: LYC)

According to the note, Goldman Sachs has a buy rating and trimmed price target of $7.50 on this rare earths producer’s shares. This implies potential upside of 28% for investors over the next 12 months.

The broker likes the ASX 200 mining share so much that it has it on its coveted conviction list. Its analysts highlight the company’s attractive valuation, the positive outlook for rare earths, and its production growth plans as reasons to buy. It explains:

Undervalued: the stock is trading at ~0.8x NAV (A$7.71/sh) and pricing in US$67/kg NdPr vs. spot at ~US$55/kg and our long run US$83/kg (real $, from 2028) NdPr price forecast. NdPr market balanced over medium term but deficits over long run on higher Chinese supply, but we see upside to current NdPr spot China at ~US$55/kg where we forecast US$75/kg across CY24 based on our SD model. Doubling NdPr production, LYNAS 2025 target (12ktpa NdPr) likely delivered in 2026 but could be upsized to >12ktpa NdPr (not in base case) based on the Mt Weld resource, possible third party feed, and ongoing supportive global government policy:

South32 Ltd (ASX: S32)

Another ASX 200 mining share that has been given the seal of approval by Goldman is South32.

Its analysts have a buy rating and $3.80 price target on its shares. This implies potential upside of 20% for investors from current levels.

The broker is feeling positive on the company due to the favourable outlook for a number of commodities that it produces. It said:

GS bullish copper, aluminium, zinc and met coal (~65% of S32 NTM EBITDA): leading to improving FCF in 2H FY24 FY25 (yield of ~10%) and forecast strong recovery in S32’s EBITDA (+50%) in FY25. In addition, we are bullish on the alumina market with forecast pricing over 2024/2025 of US$375/380/t based on the full curtailment of Kwinana, and we expect San Ciprian and other western world refineries to close, based on our cost curve analysis.

The post Goldman Sachs says these ASX 200 mining shares can rise 20%+ appeared first on The Motley Fool Australia.

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More reading

• Is the Lynas share price set to rise 60% in 2024?
• 5 things to watch on the ASX 200 on Tuesday
• South32 share price falls after disappointing December update
• Lynas share price sinks alongside 50% quarterly revenue fall
• How I invest and make money from ASX mining shares

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

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Judo Capital Holdings Ltd (ASX: JDO) shares are rebounding very strongly from yesterday’s selloff.

In morning trade, the ASX All Ords small business lender’s shares are up 14% to $1.13.

Why is this ASX All Ords stock jumping today?

Investors were hitting the sell button on Monday after analysts at Citi downgraded Judo Capital’s shares all the way from a buy rating to a sell rating.

The broker made the move on the belief that the market was expecting far too much from the company in FY 2025.

However, an update from the ASX All Ords stock today appears to suggest that those expectations may not be as outlandish as Citi believed based on its performance so far in FY 2024.

According to an update this morning, Judo Capital expects to release a half year result that is ahead of consensus estimates.

It notes that its unaudited profit before tax (PBT) was $67 million for the first half, which is up 24% on the prior corresponding period. Management advised that this was driven by continued above-system lending growth, strong net interest margins, continued investment in growth, and minimal write offs.

In respect to lending, Judo achieved net lending growth of ~$800 million for the six months, which represents approximately three times system business credit growth. This was achieved with a net interest margin of 3.02%.

Second half guidance

Looking ahead, the ASX All Ords stock expects more of the same in the second half. It is forecasting a second half PBT of $40 million to $45 million, resulting in FY 2024 PBT of $107 million to $112 million.

And while it is expecting its net interest margin to soften to between 2.85% and 2.90% for the 12 months, it believes the second half will mark a trough in margins.

Finally, looking to FY 2025, Judo is targeting profit growth of 15% or higher for the financial year.

The post Guess which ASX All Ords stock is surging 14% on soaring profit appeared first on The Motley Fool Australia.

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More reading

• Why is the Pilbara Minerals share price rebounding on Tuesday?
• This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me
• Is the Lynas share price set to rise 60% in 2024?
• The Zip share price has soared 147% in 3 months, can it keep going?
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Judo Capital. 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 Pilbara Minerals Ltd (ASX: PLS) share price is fighting hard to rebound from yesterday’s weakness.

In morning trade, the lithium miner’s shares are up 2% to $3.40.

Investors were selling Pilbara Minerals and other ASX lithium shares yesterday after a bleak update from Liontown Resources Ltd (ASX: LTR) sent shockwaves through the industry.

This latest decline by the Pilbara Minerals share price means that it was down over 15% in the space of a month prior to today’s session.

Why is the Pilbara Minerals share price rising?

With no news out of the company, it seems that some investors are buying shares today on the belief that its shares have been oversold.

One broker that would likely agree with this view is Macquarie. Last week, its analysts retained their outperform rating with a $4.40 price target.

This implies potential upside of approximately 30% for investors over the next 12 months.

And while the broker is expecting another dividend to be paid in FY 2024, it’s not going to be anything to get excited about unfortunately.

Macquarie is now forecasting a paltry 1 cent per share dividend for the year. This is less than a half a percent dividend yield based on today’s Pilbara Minerals share price.

The post Why is the Pilbara Minerals share price rebounding on Tuesday? appeared first on The Motley Fool Australia.

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• Here’s the lithium price forecast through to 2027
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• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie 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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Sonic Healthcare Ltd (ASX: SHL) is an S&P/ASX 200 Index (ASX: XJO) dividend giant, which looks like a hidden gem in my opinion.

How big is the Sonic Healthcare business? It has a market capitalisation of almost $15 billion, according to the ASX. It’s one of the larger businesses on the ASX, though it’s not quite as large as a company like Woolworths Group Ltd (ASX: WOW) and Telstra Group Ltd (ASX: TLS).

What does Sonic Healthcare do?

It’s best-known as being a global pathology business. In other words, it’s an ASX healthcare share that helps healthcare professionals test patients and figure out what’s wrong.

Sonic Healthcare has sizeable operations in a number of countries including the US, Australia, Germany, the UK, Switzerland, Belgium and New Zealand.

The business also has a large radiology division which made $796 million of revenue in FY23. In total, this ASX 200 dividend giant made total revenue of $8.17 billion last financial year.

Why it’s a dividend leader

The business has been paying a dividend for a number of decades and it increased the dividend most years. Indeed, the company’s leadership has a progressive dividend policy. In other words, the board of directors want to grow the dividend for shareholders, if possible.

There are very few businesses on the ASX that have grown their dividend as frequently as Sonic Healthcare over the last two decades.

The ASX 200 dividend giant is not guaranteed to grow its dividend every year, but I think being in the healthcare sector means the business is defensive enough to perform for income-focused shareholders every year.

It’s growing profit with organic growth – it’s benefiting from the ageing population tailwind as well as growing populations. Sonic Healthcare also has been steadily making acquisitions, increasing its scale in Australia, the US and Europe.

Sonic Healthcare is also investing in AI, which could help the company’s operations and margins in the future.

Dividend yield

In FY23, the business paid a dividend per share of $1.04. That translates into a trailing grossed-up dividend yield of 4.7%.

According to Commsec, the business could pay a dividend per share of $1.071. If it did pay that, this would translate into a forward grossed-up dividend yield of close to 5%.

While it’s not the biggest yield around, I like the history of reliability and growth that this ASX 200 dividend giant has offered.

The post This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me appeared first on The Motley Fool Australia.

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• Here’s why brokers are very bullish on these ASX 200 blue-chip shares
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• Got a lot of cash? Here’s why I’d start investing it in ASX shares in 2024

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 Telstra Group. The Motley Fool Australia has recommended Sonic Healthcare. 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 Lynas Rare Earths Ltd (ASX: LYC) share price is down 33% over the past 12 months. But, the ASX mining share could be one stock that delivers a rebound, according to an expert.

As the name suggests, this company is involved in mining what’s called ‘rare earths’. It’s the only major rare earth miner outside of China. Lynas points out rare earths are “essential inputs to​ high growth global manufacturing supply chains, including digital age technologies and green technologies such as electric vehicles and wind turbines.”

What’s gone wrong?

The second quarter of FY24 showed, financially, why investors aren’t as excited as a year ago. FY24 second quarter sales revenue was A$112.5 million, down from A$232.7 million in the FY23 second quarter, and down from A$128.1 million in the first quarter of FY24.

Its closing cash and short-term deposit are down to around $686.1 million at the end of December 2023, down from around $900 million three months before and a year before.

The average selling price for its production in the FY24 second quarter was A$28.7 per kilo, down from A$58.4 per kilo in the FY23 second quarter.

Is the Lynas share price an opportunity?

The broker UBS seems to be quite excited about the opportunity presented by the rare earth miner.

UBS has a price target of $9.20 on the rare earth miner, which suggests a possible rise of around 60% over the next 12 months.

The broker recently noted Lynas was issued with a variation of its Malaysian operating license, “importantly allowing it to continue cracking and leaching at its facility.” UBS thinks Lynas is more likely to hit its guidance on the ramp-up of the downstream post-expansion now that cracking and leaching are not an issue.

The broker is optimistic about how much Lynas can produce in the coming years – more than Lynas’ 2025 growth targets, and UBS thinks the approval can allow the business to hit its medium-term and long-term goals faster. It thinks Lynas can provide around 14kt per annum from FY27, assuming the license approval is extended again after 2026 which is when it expires.

UBS notes that Lynas is investing heavily in FY24 with the mine expansion, but it has a lot of cash to fund this.

There are three key reasons why UBS is positive about the Lynas share price. First is the miner’s “market-leading” position in the rare earth space. Second, Lynas has “increasing capabilities as a processor of third-party feedstock.” Third, there are “potential tailwinds from a government/funding perspective”.

However, the broker is “hearing mixed signals” about the price outlook for the commodity. It’s expecting NdPr demand growth of 25% in 2024 and slowing China NdPr quota growth, as well as consolidation of Chinese NdPr producers. But, on that final point, UBS is hearing Chinese domestic rare earth producers aren’t yet showing “supply discipline that was previously anticipated (to maintain market share).”

Valuation snapshot

Since the start of 2024, the Lynas share price is down 18%.

The post Is the Lynas share price set to rise 60% in 2024? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday
• Lynas share price sinks alongside 50% quarterly revenue fall
• How I invest and make money from ASX mining shares
• The 8 ASX mining stocks Goldman Sachs says are buys in 2024
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Zip Co Ltd (ASX: ZIP) share price has rocketed 147% over the past three months. In that same time period, we’ve seen the S&P/ASX 200 Index (ASX: XJO) go up by 8.3%.

With that level of return, past performance is definitely not a guarantee of future returns over the next three months. I wouldn’t expect returns of 100% in the next year or even the next five years.

The buy now, pay later business is facing a number of headwinds, including significantly higher interest rate costs, a reduced global growth runway following exits from multiple countries, increased regulation and a customer base facing challenging economic conditions.

Those are major problems, and risks, and I think it largely justifies the massive decline for the Zip share price we’ve seen over the past couple of years. It’s down over 90% from its peak in February 2021.

But, it’s not all bad news. There are a few positives that could help send the Zip share price higher.

Ongoing growth

Despite all of the problems that are happening for the ASX buy now, pay later share, the company is still delivering good top-line growth.

The latest we’ve heard from Zip is the quarter for the three months to December 2023, which saw transaction volume growth of 8.5% year over year to $2.8 billion. Transaction numbers for that quarter rose 4.1% year over year.

The company’s revenue margin improved from 7.1% in the second quarter of FY23 to 8.2% in the second quarter of FY24.

This led to group quarterly revenue of $225.6 million, which is an increase of 26.1% year over year.

In the FY24 second quarter, a number of key enterprise merchants launched during the period, including Amaysim, Bang & Olufsen, National Geographic and RM Williams. In the US, it announced a partnership with Google Pay, which went live in January.

Improving profitability

Being profitable didn’t seem to be a key focus for Zip during the 2010s as it looked to grow rapidly.

Zip’s scale has now reached a level where it’s a lot easier to make a profit. These days, the company is focused on making a profit, with the high interest rate environment making this goal even more important.

In the update for the three months to December 2023, the company said its cash transaction margin improved to 3.5%, up from 2.8% in the FY23 second quarter. It also pointed out that US bad debts “continued to perform well,” with the monthly cohort loss rates being approximately 1.3% to 1.4% of the total transaction value (TTV), which was below its target range of between 1.5% to 2%.

I think making profit will be key for the Zip share price from here..

It’s expecting to achieve positive group cash earnings before tax, depreciation and amortisation (EBTDA) in the second half of FY24 and for the whole FY24.

Sorted out the balance sheet

Zip announced in mid-December that it had completed new funding facilities to strengthen its balance sheet, simplify the capital structure and support ongoing profitable growth.

It executed an agreement for a new $150 million corporate debt facility which refinanced its existing corporate debt of $90 million.

Zip has worked hard to reduce the value of convertible notes on its balance sheet.

The business has refinanced its receivables funding in both the US and Australia as well.

Final thoughts on the Zip share price

Zip is doing the right things to grow its business during this difficult period. It could recover more if it reaches profitability in terms of the net profit, and proves it can make money sustainably, but it’s not the type of business I’d want to own in my own portfolio.

The post The Zip share price has soared 147% in 3 months, can it keep going? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended 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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Now could be the time to take profit on Fortescue Ltd (ASX: FMG) shares.

That’s the view of analysts at Bell Potter, which are tipping the iron ore miner’s shares to fall meaningfully from current levels.

What is the broker saying about Fortescue shares?

According to the note, the broker has reiterated its sell rating with an improved price target of $21.39.

Based on where Fortescue shares currently trade, this implies potential downside of 23% for investors over the next 12 months.

This bearish stance is based on the broker’s belief that Fortescue’s earnings and dividends will be in decline after FY 2024 as iron ore prices soften. It explains:

At this stage, FMG remains a pure-play iron ore exposure and its earnings, dividends and valuation are all highly leveraged to the iron ore price. Recent positive Final Investment Decisions (FIDs) have provided some transparency on projects and technologies being pursued by FMG’s Energy division, but these are small-scale in comparison with the iron ore business and some years away from production and revenue generation.

Our iron ore price increases result in earnings upgrades of 22%, 57% and 37% and DPS increases of 21%, 56% and 33% for FY24, FY25 and FY26 respectively. While our higher iron ore price forecast results in earnings upgrades, we still model declines in earnings and dividends over our forecast period.

Bell Potter is now forecasting earnings per share of $2.69 in FY 2024, $1.65 in FY 2025, and then $1.41 in FY 2026.

It concludes:

EPS changes in this report are: FY24: +22%, FY25: +57%; and FY26: +37%. Our NPV-based valuation is increased by 23% from $17.37/sh to $21.39/sh. While we have upgraded our prices on unexpectedly supportive factors we still see low growth in global steel demand and a deteriorating pricing environment. Dividend yield as a price support is coming back into play but we retain our Sell recommendation.

The post Why this broker thinks you should be selling Fortescue shares appeared first on The Motley Fool Australia.

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• 2024 could be the biggest year in history for the Fortescue share price. Here’s why!
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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