Commonwealth Bank of Australia (ASX: CBA) shares have been on form again this week.

So much so, Australia’s largest bank’s shares climbed to a record high of $110.81 on Wednesday.

This means the CBA share price now up 16% since this time last year.

Have CBA shares peaked?

Interestingly, it appears as though some retail investors have started to take profit on the belief that CBA’s shares may have peaked.

According to CommSec data, Commonwealth Bank was the 14th most traded ASX share on its platform last week.

However, only 26% of trades involving the bank were buys. The remaining 74% of trades were CommSec customers selling the bank’s shares.

And given that CommSec is the most widely used brokerage platform in Australia, this is arguably a fair representation of what’s happening across other platforms.

What are brokers saying?

The broker community is likely to be supportive of this profit taking. At present, I’m not aware of a single broker with a buy rating on the bank’s shares.

One of the most positive brokers out there is UBS with its neutral rating. However, with a price target of $100.00, CBA shares are trading 10% ahead of this level.

Elsewhere, Goldman Sachs is one of the more bearish brokers with its sell rating and $91.60 price target. This suggests that the banking giant’s shares could tumble almost 24% from current levels.

Goldman believes that the company’s shares don’t deserve to trade at such a premium to the rest of the big four banks. Particularly given the sector headwinds it is facing. Last month, it commented:

We are Sell rated on CBA given: i) while operating trends remain strong with volume growth best amongst the major bank peer group , and ii) CBA has the best leverage of the major banks to higher rates, iii) it is also more exposed to sector wide headwinds such as intense mortgage price competition, as well as further potential macro downside that appears likely to more adversely impact the household this cycle. Overall, we do not believe its fundamentals justify the 12-mo forward PER premium it is currently trading on versus peers, compared to the 19% historic average.

Food for thought for CBA shareholders.

The post ASX 200 investors are selling off CBA shares! What should I do? appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in February 2023
• 5 ASX 200 shares smashing new 52-week highs on Wednesday
• CBA share price hits new record high again on Tuesday
• Why did the CBA share price just hit a new 52-week high?
• Investing in ASX 200 bank shares? Here’s the dividend outlook for 2023

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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The US markets had a very pleasing day of trading last night (our time). By the end of the trading day, the S&P 500 Index has risen by 1.05%, while the NASDAQ 100 was up an even rosier 2.16%. But let’s talk about the Meta Platforms Inc (NASDAQ: META) stock price.

Meta, the company formerly known as Facebook, looked like it had a pretty decent day on the surface. The company closed at US$153.12 a share, up a robust 2.79%. But in after-hours trading, the story was dramatically different.

By the time after-hours trading finished up, Meta shares had risen by a whopping 19.81% all the way up to US$183.45 each.

So what was behind this dramatic jump in value?

Well, the company’s latest earnings report, of course.

Meta has been under intense pressure over the past two years or so. Between September 2021 and November 2022, the company’s shares fell from close to US$380 to just over US$88. That’s a fall of over 76%:

Ouch.

Investor concerns ranged from increased competition to Meta’s social media apps like Facebook and Instagram from rivals like TikTok to Meta’s ambitious and expansive plans to expand into the ‘metaverse‘.

But it appears that the company’s latest quarterly earnings report has restored a lot of faith.

Meta stock jumps, but why?

But, initially, it’s not too easy to see why.

Meta reported falls in revenue, income and earnings per share (EPS) for the quarter ending 31 December 2022. Against the prior corresponding quarter, the company’s revenue fell 4% to US$32.17 billion. Net income dropped 55% from US$10.29 billion to US$4.65 billion. Diluted EPS also fell, sliding from US$3.67 per share to US$1.76.

The only positive metric was a big reduction in costs and expenses. These dropped from US$12.59 billion for the three months to December 2021 to US$6.4 billion for the three months to 31 December 2022.

So what then has gotten investors so excited with Meta shares?

The company has announced a massive increase to its share buyback program.

Meta reported that over the quarter just gone, the company bought back US$6.91 billion of its own stock. That took 2022’s annual total to US$27.93 billion, with US$10.87 billion left in the kitty for further buybacks.

But Meta announced this morning that it would be increasing its funds available for buybacks by a whopping US$40 billion ($56 billion).

Investors love share buybacks because they reduce the total share count of a company. This has the effect of reducing supply, therefore pushing up share prices over time. Further, a reduced share count increases earnings per share, since there are fewer shares to divide a company’s earnings amongst.

So it’s this monster expansion to Meta’s share buyback program that has probably gotten investors so hot under the collar for Meta stock.

The post Meta stock price rockets 19% on $56 billion buyback appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 tech shares going gangbusters on Thursday
• What to watch on the US stock market this week: ANZ
• Why Fortescue shares could be facing a Meta-like problem

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Meta Platforms. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Meta Platforms. The Motley Fool Australia has recommended Meta Platforms. 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 Fortescue Metals Group Limited (ASX: FMG) dividend is a popular option for income-seeking investors.

And it isn’t hard to see why, given the tens of billions of dollars of dividends that the mining giant has dished out to its shareholders in recent years.

For example, in FY 2022, Fortescue paid a fully franked A$3.58 per share dividend, which represents total dividends of US$6.7 billion.

But will the big dividends be sticking around? Let’s take a look at what one leading broker is expecting from the iron ore miner.

Fortescue dividend forecast

According to a note out of Morgans this week, its analysts believe the Fortescue dividend has peaked and is now on a rapid descent. This is due largely to the company’s Fortescue Future Industries business and its decarbonisation plans.

After polluting the world for a couple of decades, Fortescue is now aiming to help the environment. But this will come at a significant cost and weigh on its free cash flow. Morgans commented:

Significant capex is still to come from FMG’s decarbonisation spend and various projects targeting FID in CY23. FMG expects to fund this spending through its iron ore cash flow, which sees its FCF yield reducing significantly over the next few years, and increasing its sensitivity to any unexpected market volatility.

Morgans is expecting this to lead to the miner paying a 92.9 US cents (129.9 Australian cents) per share fully franked dividend in FY 2023. Based on the current Fortescue share price of $22.39, this will mean a 5.8% dividend yield.

Looking to FY 2024, Morgans expects the Fortescue dividend to almost halve to 54.8 US cents (76.7 Australian cents) per share. This equates to a fully franked dividend yield of 3.4% for investors.

Unfortunately, the broker expects things to get even worse in FY 2025 and has pencilled in a 22.2 US cents (31 Australian cents) per share dividend that year. This would mean a paltry yield of 1.4%.

In light of this bleak dividend forecast, it will come as little surprise to learn that Morgans has the equivalent of a sell rating on Fortescue’s shares.

It currently has a reduce rating with a $15.60 price target, which implies potential downside of approximately 30%.

The post Here’s the Fortescue dividend forecast through to 2025 appeared first on The Motley Fool Australia.

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• Has the Fortescue share price topped out?
• Fortescue share price hits 52-week high on record half
• 5 things to watch on the ASX 200 on Friday

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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The ASX share market has a range of high-yielding ASX dividend shares across banking, retail and resources. These are good for high levels of passive income. But there aren’t many with long consecutive annual dividend growth records.

There are a group of businesses in the US that have increased their dividends every year for more than 25 years. They are called dividend aristocrats. Examples include McDonald’s, Coca Cola, Procter & Gamble, and S&P Global.

On the ASX, there aren’t any names that have managed to do that, though the investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is getting very close, having increased its dividend every year since 2000.

This article is going to be about two ASX dividend shares that could pay (growing) dividends for many years ahead. I’m looking for businesses that could achieve resilient cash flow and that could enable the dividend payments to keep flowing.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop has increased its dividend every year since 2017, meaning it kept increasing during COVID-19.

It currently has a grossed-up dividend yield of 11.7% after a payment of 10 cents per share in FY22. The numbers on Commsec suggest that the business could grow the dividend and pay 10.5 cents per share in FY23, translating into a grossed-up dividend yield of 12.3%.

By FY25, the business could pay an annual dividend per share of 12 cents, which be a grossed-up dividend yield of 14%.

This business doesn’t just sell advanced shavers, clippers and trimmers, and wet shave items, it also sells products across oral care, hair care, massage, air purity treatment, and beauty categories.

Shaver Shop is expanding its product ranges, growing its store network, benefiting from scale and selling the latest products.

I think people are going to keep shaving, even if fashion trends do change over time. In my opinion, this could be one of the underrated ASX passive income ideas with a market capitalisation under $1 billion.

Brickworks Limited (ASX: BKW)

Brickworks is the largest brickmaker in Australia and the northeast of the US. It recently signed a deal to start sending large quantities of bricks to the UK as well. The business also sells other building products in Australia, such as roofing, masonry, and cement.

But, the parts that make it an interesting dividend idea are its other assets.

It owns a large chunk of Soul Pattinson shares, which gives Brickworks a steady and growing stream of dividend cash flow to fund its own dividend. Plus, Soul Pattinson is achieving capital growth for Brickworks as well.

Brickworks also has a growing industrial property trust which it owns alongside Goodman Group (ASX: GMG). The idea is to build high-quality warehouses on excess land that Brickworks no longer needs. This unlocks the potential value of the land, plus creates strong rental cash flow. I think businesses will always need good logistics locations (warehouses), so this property trust could do well for many years ahead, helping the passive income.

The Soul Pattinson dividend and property trust rental income essentially funds the Brickworks dividend, with building product earnings being a bonus.

Brickworks has grown its dividend each year since 2014 and hasn’t cut its dividend for more than 40 years.

It currently offers a grossed-up dividend yield of 3.7%.

The post Can these next-gen dividend heroes provide a passive income for life? appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• ASX passive income: My game plan to reach $30,000 per year
• Which ASX dividend shares I’d buy now to target $50,000 of annual passive income
• ASX income stocks: A once-in-a-decade chance to get rich?
• My ASX shares fell 15% last year. Here’s what I’m doing now

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’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Goodman 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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While the Australian share market typically provides investors with an average dividend yield of 4%, income investors don’t have to settle for that.

That’s because a number of ASX 200 shares are forecast to deliver even greater yields to investors in 2023.

Here are three ASX 200 shares with 6%+ forecast yields:

Charter Hall Retail REIT (ASX: CQR)

Analysts at Citi are positive on this supermarket anchored neighbourhood and sub-regional shopping centre markets-focused property company. Last month, the broker put a buy rating and $4.30 price target on its shares.

Citi is expecting the company to be in a position to increase its dividend to 26 cents per share in FY 2023. Based on the current Charter Hall Retail REIT share price, this will mean a 6.3% yield for investors.

New Hope Corporation Limited (ASX: NHC)

This coal miner has been tipped to reward its shareholders with some very big dividends in the near term.

For example, according to another recent note out of Citi, its analysts are forecasting fully franked dividends per share of $1.84 in FY 2023. Based on the current New Hope share price of $5.82, this will mean a mammoth 31% dividend yield for investors.

Citi also sees upside potential for New Hope’s shares with its buy rating and $6.70 price target.

Pilbara Minerals Ltd (ASX: PLS)

Lithium shares aren’t just about growth anymore. The team at Macquarie expect this ASX 200 lithium giant to return a decent portion of its free cash flow to shareholders this year. It is partly for this reason that Macquarie has an outperform rating and $7.50 price target on Pilbara Minerals’ shares.

As for dividends, the broker is forecasting a 30 cents per share dividend in FY 2023. This equates to a 7.2% dividend yield at current levels.

The post Dividend forecasts: 3 ASX 200 shares with 6%+ yields appeared first on The Motley Fool Australia.

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More reading

• Should I buy ASX 200 lithium shares now or not?
• Jeremy Grantham just warned shares could crash 50%, but did he also suggest lithium stocks may have “a substantial advantage” over the long-term?
• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?
• These were the best performing ASX 200 shares in January
• Why was the Lynas share price hit so hard on Tuesday?

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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The S&P/ASX 200 Index (ASX: XJO) is off to a smashing start today.

Again.

In early trade, the benchmark index is up 0.58%.

That puts the ASX 200 up a remarkable 7.2% so far in 2023.

The latest push higher comes with a hearty thanks to the United States Federal Reserve.

ASX 200 charges higher on Fed rate call

Yesterday, overnight Aussie time, the Fed opted to raise the official US interest rate by 0.25%. That brings the Fed target rate to 4.75%.

Like the ASX 200 today, US markets celebrated the announcement. The S&P 500 rallied on the news, closing up 1.1% overnight. Tech stocks fared even better, with the NASDAQ Composite Index closing up 2%.

While markets are generally averse to rate hikes, the 0.25% increase comes after a 0.5% hike in December and four earlier 0.75% increases.

The more subdued hike this week comes as Fed chair Jerome Powell indicated inflation pressures are showing signs of easing. Though he warned a few more rate increases were on the horizon.

“We think we’ve covered a lot of ground. Even so, we have more work to do,” Powell said following the announcement.

“Restoring price stability will likely require maintaining a restrictive stance for some time,” he added.

The ASX 200 is following the bullish lead of US markets despite the prospect of more rate increases and higher rates “for some time” yet.

According to a statement released by the Fed, “The committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”

What the experts are saying

Commenting on the Fed’s decision that’s helping push the ASX 200 higher today, co-founder of EQM Indexes Jane Edmondson said (courtesy of Bloomberg):

Markets seemed to be shrugging off the Fed’s tough talk and celebrating that the rate hikes are smaller, and the end is in sight given that inflationary pressures seem to be abating. Still room for a soft landing that avoids a recession. I think the fact that the job market and corporate earnings have survived all these rate hikes is a testimony to underlying strength of the economy.

Chief global strategist for LPL Financial Quincy Krosby added:

Powell’s comments, so far, have been more reassuring to the market in that he’s acknowledged that they can possibly reach price stability without harming the labour market to get there. Moreover, he’s laid out a clear roadmap for what the Fed is increasingly focused on, that is, disinflation to reach services.

Head of US economic research at Renaissance Macro Research LLC Neil Dutta cautioned that the lower increase today could lead to a larger correction down the road.

“Powell has said that financial conditions have tightened considerably despite the fact that they have eased considerably,” he said. “The odds are increasing that the Fed is declaring victory too soon. The Fed’s flirtation with the soft landing today increases the risk of a harder landing later.”

As to how investors in US stocks should respond, partner at Advisors Capital Management JoAnne Feeney said (quoted by Bloomberg), “It remains time to be highly selective because some areas of the economy will contract further, while others continue to grow.”

I reckon the same advice would serve ASX 200 investors well as we move ahead into 2023.

The post ASX 200 leaps ahead on subdued Federal Reserve interest rate hike appeared first on The Motley Fool Australia.

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More reading

• Can these next-gen dividend heroes provide a passive income for life?
• Dividend forecasts: 3 ASX 200 shares with 6%+ yields
• How I’d invest $20k in ASX 200 shares in 2023 to aim for a million
• Why is the DroneShield share price halted on Thursday?
• Why I’m preparing now for a 2023 stock market correction

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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Yesterday I wrote about building a portfolio with the ultimate aim of growing its value to one million dollars. You can read about that here.

Part of this involves investing $20,000 into a handful of the very best ASX 200 shares each year.

If you do this and can achieve a return greater than the long-term market average, you could theoretically grow your portfolio to the $1 million mark in 15 years.

One thing I didn’t include in that article was the ASX 200 shares that I would buy with this first $20,000 investment. So, let’s do that now.

Here are two ASX 200 shares I would buy now:

CSL Limited (ASX: CSL)

I continue to believe that CSL is one of the highest-quality companies on the Australian share market. So, with the biotherapeutics giant’s shares still trading at a decent discount to their pre-COVID high, I think it could be an opportune time to invest.

Particularly given CSL’s increasingly positive outlook. The significant headwinds the company was facing with plasma collections during the pandemic have now eased, which is expected to be a big boost to its margins. Especially with the rollout of its new plasma collection technology, which has been designed to deliver greater plasma yields.

In addition, strong demand for immunoglobulins, the company’s ongoing US$1 billion+ annual investment in research and development, and its blockbuster acquisition of Vifor Pharma appear supportive of solid growth over the coming years.

Xero Limited (ASX: XRO)

Another ASX 200 share that I would invest $20,000 into is Xero. It is a leading cloud-based accounting platform provider with 3.5 million subscribers globally.

While this is undoubtedly a large number of subscribers, it is still barely even scratching at the surface of its huge market opportunity. For example, Goldman Sachs estimates that Xero has a total addressable market of 100 million small to medium sized businesses globally.

And with the shift to the cloud still relatively early on and its platform highly regarded in the industry, Xero looks well-placed to capture a growing slice of its TAM over the next decade and beyond. I believe that this, combined with the growing revenue it earns from its app store, the stickiness of its platform, and periodic price increases, positions Xero to grow its earnings at a rapid rate over the remainder of the 2020s.

The post How I’d invest $20k in ASX 200 shares in 2023 to aim for a million appeared first on The Motley Fool Australia.

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• The Nasdaq just had its best January in over 20 years. Are ASX tech shares back?
• ‘Incredible value’: 3 ASX 200 shares expert would buy now for long-term growth
• Should I buy CSL shares before this month’s earnings update?
• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• Top ASX shares to buy in February 2023

Motley Fool contributor James Mickleboro has positions in CSL and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 DroneShield Ltd (ASX: DRO) share price isn’t going anywhere on Thursday as the company prepares to announce a capital raise.

The stock was put in the freezer at the request of the company this morning, where it could remain until Monday.

The DroneShield share price last traded at 37 cents.

Let’s take a closer look at the artificial intelligence-based drone detection software provider’s trading halt.

DroneShield share price on ice amid capital raise

 It might be a long day for fans of ASX defence stock DroneShield, as the company’s share price remains frozen ahead of potentially big news.

It’s expecting to make an announcement regarding a proposed capital raise. That’s all we know for sure.

However, reports claiming DroneShield is aiming to raise between $9 million and $11 million to fund its inventory build and grow its engineering and sales teams have emerged.  

The company is offering new shares for 30 cents apiece under a placement and share purchase plan, the Australian Financial Review reports.

The stock will remain on ice until the announcement’s release or Monday’s open, whichever is sooner.

Interestingly, the company described its “strong bank balance” earlier this week. It held $10.3 million in cash at the end of the December quarter. That figure had grown to $14.1 million by Tuesday.

It also brought in a record $15.6 million of cash receipts in 2022 and boasts a record order backlog of $19 million and a sales pipeline of more than $200 million.

And that might just be the start. DroneShield CEO Oleg Vornik said the company anticipates “another record year”, continuing:

2023 is expected to be a transformative year for DroneShield, following our maiden $11 million sale order in December followed by another $11 million order from a different government, as the counterdrone industry continues to rapidly grow, with DroneShield as a pioneer and global leader in this sector.

The DroneShield share price has more than doubled in the last 12 months, lifting 118%. Most of that gain has come over the last seven weeks, wherein the stock has surged 95%.

The post Why is the DroneShield share price halted on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Why have 2 DroneShield directors sold off 10 million of their shares in the past fortnight?
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Motley Fool contributor Brooke Cooper 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 DroneShield. The Motley Fool Australia has recommended DroneShield. 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 Australian stock market has kicked off 2023 on the right foot. The S&P/ASX 200 Index (ASX: XJO) has already recuperated all of last year’s losses, soaring to hit its highest point in nine months yesterday.

But the market typically ebbs and flows. While it has historically always moved higher, it’s done so over time, with its ups outweighing its downs.

Experts were taken aback when inflation unexpectedly increased last quarter, leading many to predict the Reserve Bank of Australia will hike rates again next week. Meanwhile, major economies around the world are expected to fall into recession this year.

All that (and potentially more) is likely to impact the stock market in 2023. Indeed, experts at ANZ Group Holdings Ltd (ASX: ANZ) recently tipped the ASX to “test a new bottom” this year.

That’s why I’m preparing for a stock market correction now so I can build wealth during any potential downturn. Here’s how.

Share price versus value

Correctly valuing a company is a tricky thing, and the market doesn’t always get it right.

An ASX company’s market capitalisation is simply its share price multiplied by the number of outstanding shares it has. Meanwhile, its true value considers its underlying business and assets.

The two measures don’t always move in line, however. For example, if many investors all like the look of a single stock and decide to buy in, demand will generally see the price increase despite no change to a company’s business.

Thus, when sentiment abates amid a stock market correction, it can lessen demand for quality companies, thereby lowering prices.

Getting ready for an ASX stock market correction

My method for preparing for a stock market correction in 2023 is simple. I’m building a list of ASX shares I wish to own now, if only the price was right.

That way, if their price suddenly dives amid a market downturn, I’ll be ready to pounce on businesses I’ve previously deemed to be worth owning for a price I believe to be good value.

That’s a philosophy famously employed by investing great Warren Buffett. And it’s a strategy I’m preparing to engage in 2023.

Embracing downturns

Of course, there’s no guarantee the stock market will see a correction in 2023. However, I believe one will occur at some point in the future. And when it does, things will likely move fast.

Corrections can last anywhere from days, to weeks, to months, and I might not have time to decipher which shares I believe to be buys amid the chaos.

A little proactivity now could see me ready to snap up quality stocks in the bargain bin amid a downturn. And by doing so, I could be positioned to make the most of what I believe would be an inevitable recovery.

The post Why I’m preparing now for a 2023 stock market correction appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Bears beware! ASX 200 recoups all of 2022’s losses plus more in January
• Investing in ASX 200 gold shares? Here’s what to expect from the yellow metal in 2023
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• ASX shares investors rejoice! RBA says inflation has now peaked

Motley Fool contributor Brooke Cooper 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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While reporting season has technically begun with the release of the Credit Corp Group Limited (ASX: CCP) half year result on Wednesday, it won’t really ramp up until Monday.

So, that gives us a bit of time to look at some of the ASX shares that Goldman Sachs is tipping to outperform or underperform expectations this month.

Potential to outperform

Goldman believes that the following ASX shares have the potential to outperform the market’s expectations in February. Here’s what it is saying:

Breville Group Ltd (ASX: BRG)

The broker has warned short sellers that this appliance manufacturer could surprise to the upside with its full year guidance this month when it releases its half year results. It said:

On Discretionary our top pick remains Breville – De’Longhi 4Q came in better than expected and the stock is likely to short squeeze on stronger than expected full year EBIT guidance at 1H23 results.

Temple & Webster Group Ltd (ASX: TPW)

Its analysts are also very bullish on this online furniture and homewares retailer. In fact, the broker not only expects a stronger than consensus half year result, it is expecting Temple & Webster to outperform over the medium term. The broker commented:

Our FY23/FY24/FY25 revenue forecasts are +2.6%/+5.2%/+3.9% ahead of the market (Visible Alpha Consensus Data). We are more constructive around the medium term revenue outlook despite category level headwinds.

Woolworths Group Ltd (ASX: WOW)

Goldman is expecting this retail giant to deliver a strong result this month. In light of this, it appears to believe the market is being too negative and that it deserves to trade on higher multiples than its arch rival. It said:

We expect an outperformance trend for WOW vs. COL in comp sales see margins beginning to come through from 2Q23 on stronger omni-channel Xmas trading as well as more targeted promotions. On GSe, WOW is trading at a similar FY23E P/E vs. COL.

At risk of underperforming

Unfortunately, Goldman isn’t very positive about the prospects of these ASX shares this month. Here’s why it is tipping them to underperform expectations:

Altium Limited (ASX: ALU)

This electronic design software platform provider has been tipped to fall short of the market’s expectations during the first half. Goldman is expecting Altium to deliver first half EBITDA of US$43 million, which is 3.6% short of consensus estimates. Its analysts are then expecting the same for its full year earnings.

Coles Group Ltd (ASX: COL)

Another ASX share that could underperform expectations according to Goldman Sachs is Coles. It believes that margin compression is weighing on the supermarket giant’s performance. As a result, although it expects Coles’ sales to be a fraction ahead of the market’s estimates in FY 2023, its net profit assumption is 5.2% lower than the consensus. For the first half, Goldman said:

In 1H23, we expect group sales growth of 3.7% and EBIT growth of 0.4% as we expect ~10bps margin compression to 4.6% EBIT margin.

Wesfarmers Ltd (ASX: WES)

Finally, Goldman isn’t feeling very positive on this conglomerate’s prospects this month due largely to its Bunnings business. It warned:

We remain Sell-rated on WES as weaker home improvement trend and negative comps in 2H23 with Bunnings, at highest risk of volume deleverage impacting EBIT margins.

The post Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season appeared first on The Motley Fool Australia.

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More reading

• The Nasdaq just had its best January in over 20 years. Are ASX tech shares back?
• Goldman Sachs names 2 exciting small cap ASX tech shares to buy right now
• ASX shares investors rejoice! RBA says inflation has now peaked
• Why Argosy Minerals, Credit Corp, Flight Centre, and Mesoblast shares are racing higher
• Guess which ASX 200 share dropped then popped on a 30% profit dive

Motley Fool contributor James Mickleboro has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Coles Group and Wesfarmers. The Motley Fool Australia has recommended Temple & Webster 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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