The NASDAQ-100 Index (NASDAQ: NDX) and ASX tech shares had a really good performance in January 2023, after what was a really difficult 2022.

Over the last month, the NASDAQ-100 went up by 10.6%.

In January 2023, we saw the Xero Limited (ASX: XRO) share price climb by more than 9%.

The REA Group Limited (ASX: REA) share price went up by over 13%.

The Seek Ltd (ASX: SEK) share price rose by more than 15%.

The Carsales.com Ltd (ASX: CAR) share price climbed over 9%.

The WiseTech Global Ltd (ASX: WTC) share price rose 19%.

The Altium Limited (ASX: ALU) share price went up 10%.

Looking at the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC), an exchange-traded fund (ETF) that’s invested in 46 ASX tech shares, saw a rise of over 9% in the month.

Why are ASX tech shares doing so well?

Technology businesses were one of the hardest hit in 2022 as interest rates zoomed higher.

But, there are signs that inflation may have peaked and could now be reducing.

For example, in the US in the three months to December 2021, the Employment Cost Index rose by 15%, which was less than the 1.1% expected number and a slowdown from the 1.2% in the prior three months, according to reporting by the Australian Financial Review.

The AFR quoted National Australia Bank Ltd (ASX: NAB) head of fixed income research, Skye Masters, who said:

The clear point from this data is it’s showing that wages growth in the US is easing.

So, it does alleviate that concern that some Fed members might have had that maybe we’re entering into a wage price spiral, so it’s supportive of the view that the Fed can dial back its pace of tightening and possibly pause.

The AFR also reported on comments from Matt Wacher, chief investment officer at Morningstar for the Asia Pacific, who said that while the Reserve Bank of Australia (RBA) could increase the cash rate one or two more times, there could then be a cut later this year. Wacher commented:

I am sure the RBA would like to keep rates higher for longer, but this can put significant pressure on the economy here, more so than other regions given personal debt levels.

On the ASX tech share space, he said that the shares are “not cheap, even though they had fallen sharply, and are priced to perfection”, according to the newspaper.

My take

I don’t think the US Federal Reserve is going to make things easy for the share market.

Jerome Powell has promised to fight inflation “until the job is done”. I think that means that interest rates are going to stay high for longer than some investors are expecting. This is what he said a few months ago:

But, with many valuations still a long way below their 2021 levels, I think a number of ASX tech shares, like Xero, seem very promising for the long term even if they have risen a bit higher than a month ago.

Keep this in mind: it may not really matter what happens in February 2023 if the investment horizon is five years or more ahead with an ASX (tech) share.

The post The Nasdaq just had its best January in over 20 years. Are ASX tech shares back? appeared first on The Motley Fool Australia.

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More reading

• Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season
• ‘Incredible value’: 3 ASX 200 shares expert would buy now for long-term growth
• Should you buy Seek, Magellan, or Virgin shares?
• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• Could this ASX 200 share be an investment for explosive growth?

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Carsales.com, REA Group, and Seek. 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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Regardless of whether they think ASX shares will head up or down in 2023, one thing experts agree on is that volatility will continue this year.

The steep interest rate rises of the past nine months are finally starting to have an impact on real world consumers and businesses. And that means an economic slowdown is imminent, with some countries even plunging into recession.

However, there is one way investors can beat volatility.

That’s by buying quality ASX shares while adopting a long-term investment horizon.

The idea is that if the company can grow over a long period of time, the short-term ups and downs in the share price will not matter. The chances are that the stock will be worth more in five years than it is now.

Taking this mindset, Tribeca portfolio manager Jun Bei Liu this week named three S&P/ASX 200 Index (ASX: XJO) shares that she would buy now for the long run, despite short-term pressures bearing down on them:

Buy this company for the next 5 years’ earnings

Even for the technology sector, the Xero Limited (ASX: XRO) share price has taken a beating.

Over the past 15 months, the stock has halved in value.

What’s more, the company is now transitioning to a new chief executive and there has been some criticism that it is putting capital back towards expansion rather than fattening its bottom line.

“This company’s gone through a pretty tough time,” Liu told Switzer TV Investing.

“Xero has been sold off on the back of potential… recession worries for the UK.”

However, in the long term, Liu feels like Xero shares show an “incredible amount of value”.

“It may be volatile because it’s an expensive company, but our view is that you do not buy this company for the next six months’ earnings,” she said.

“You really buy it for the next five years. This company’s well on track to achieve the growth targets it’s put in place over the long term.”

Watch this stock take off later this year

Interest rate rises naturally mean a depressed real estate sector. So Liu reckons urging investors to buy REA Group Limited (ASX: REA) might be seen as “contrarian”.

“This is a high quality company you need to put your money in,” she said.

“Our view is that this is a business that delivers long-term growth.”

REA Group’s earnings are not driven just by the absolute volume of listings, according to Liu, but the “depth of penetration”.

“It’s getting more dollar for every listing it’s generating on its website,” she said.

“And it has created that phenomenal momentum across its business.”

The real estate classifieds provider is also a market leader, and has a “flexible” cost base that it has historically shown to dial down in tougher economic times.

“In the near term, there maybe a bit of weakness across listings,” said Liu.

“In six months’ time they will be cycling some of those weak numbers and we should expect that to improve.”

The REA share price has lost 16.8% over the past 12 months, but has picked up 12.2% so far this year.

Client contracts coming and maybe a takeover?

For a technology stock, NextDC Ltd (ASX: NXT) hasn’t been a complete disaster in recent times — but it has still lost 23% since the start of last year.

Liu doesn’t see the company as a typical tech firm.

“It’s an infrastructure stock. It needs to keep spending to grow its footprint.”

As well as the general tech malaise, the past year has seen investors disappointed with the lack of big-name client signings. 

“Our view is that, the next 12 months, the company will start announcing some smaller contracts. We heard there’s a lot more activity in that commercial space.”

Its dominant place in the Australian market might even make it a takeover target.

“M&A [mergers and acquisitions] globally is picking up in that whole space,” said Liu.

“We do see potential for a lot of suitors coming to Australia.”

The post ‘Incredible value’: 3 ASX 200 shares expert would buy now for long-term growth 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
• Top ASX shares to buy in February 2023
• Should I buy ASX 200 tech shares in early 2023 or wait?
• How I’d invest $20,000 in ASX shares in 2023
• ‘Incredibly cheap’: 2 ‘strong’ ASX shares expert would pounce on right now

Motley Fool contributor Tony Yoo has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one of this edition, we’re joined by Don Hamson, managing director at Plato Investment Management.

The Motley Fool: What sets the Plato Australian Shares Income Fund apart from the competition?

Don Hamson: The Plato Australian Shares Income Fund, which can also be accessed on the ASX via Plato Income Maximiser Ltd (ASX: PL8), is one of the only managed funds that has a strategy designed to meet the needs and taxation circumstances of retirees and other tax-exempt investors.

For example, we fully value franking credits when making investment decisions, because tax-exempt investors, like pension phase superannuation, receive the full value of franking credits.

MF: Now, you’re fairly active in the market, correct?

DH: Yes, I would also say we have quite a unique strategy for maximising income.

Most income managers take a set-and-forget style approach, whereas we’re very nimble and not afraid to trade our portfolio to capture strong dividends from a stock or sector going through a good period. This, in turn, also allows us to capture the share price run-up prior to the ex-dividend date that often occurs.

MF: Which ASX dividend shares performed best for you in 2022, delivering both share price gains and solid yields?

DH: It’s not surprising that many of our best performers in 2022 were in the commodity complex.

We generated both strong returns and dividends from BHP Group Ltd (ASX: BHP), Woodside Energy Group Ltd (ASX: WDS), and Whitehaven Coal Ltd (ASX: WHC) who each benefited from strong commodity prices in 2022.

MF: Will investors face any big changes when hunting for top ASX dividend shares in 2023 compared to 2022? 

DH: Markets are always changing; today’s hero can very well be tomorrow’s villain. This is why Plato has a nimble income generation strategy. Investors should never be fooled into thinking the good times for any dividend-paying stock will last forever. You must always be thinking about future dividend payouts and the ongoing strength of companies and sectors.

Future dividends, not the last payout, help keep the lights on, so active portfolio management is critical when it comes to income investing.

Clearly, the biggest change for investors to adapt to right now is a new investing landscape. There are investors and even fund managers who’ve only ever experienced a low or declining interest rate environment, but the economic cycle has returned, and we have rates coming off their lowest levels in history. So, this has implications on all sorts of things – liquidity and stock market preferences to name a few.

MF: What’s been your experience with markets and dividends under times of rising interest rates?

DH: Interestingly, I think this period could be quite similar to 1994 when I was working at Westpac. Then, interest rates went up for the first time in quite a while, inflation spiked, there was negative returns on bonds, negative returns on equity – but dividends kept rising.

MF: Which ASX dividend shares you’re most bullish on for 2023? 

DH: We think dividends from ASX shares will once again be a great way to generate income this year, especially for retirees. But diversification and active and tax-effective portfolio management is critical.

If I had to name just two companies we’re quite positive on for dividends across the year, I would say Macquarie Group Ltd (ASX: MQG) and Woodside Energy are among some of the top prospects.

MF: Why Woodside?

DH: From Woodside, we saw standout results through 2022 and think the set-up for energy over the coming 12 months will see prices of raw materials remain somewhat elevated.

The company also completed a merger with BHP’s petroleum business, which should generate some $400 million worth of synergies by early 2024.

MF: And Macquarie?

DH: When it comes to Macquarie, you have a very well-managed diversified financial services group. One of the most attractive aspects of the business is its diverse revenues, which is important for sustainable dividends moving forward.

Macquarie should benefit from increasing margins in its lending business. And, as we’ve seen in recent results, it is a beneficiary of volatility in commodity markets through its commodities trading desk.

**

Tune in tomorrow for part two of our interview, when Don Hamson looks at some promising ASX dividend plays for 2023 outside of the resources sector.

(You can find out more about the Plato Australian Shares Income Fund here.)

The post Two ‘top prospect’ ASX 200 dividend shares for 2023 revealed: fund manager appeared first on The Motley Fool Australia.

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More reading

• As the BHP share price flirts with $50, do I buy more?
• Experts say these ASX dividend shares are top buys right now
• Looking to buy Woodside shares? You might want to read this
• These ASX 200 shares were smashed in January
• 5 things to watch on the ASX 200 on Wednesday

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 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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The BHP Group Ltd (ASX: BHP) share price has been making strong gains over the last few months. It’s up more than 30% since the end of October.

Considering the huge size of BHP, this is a big gain in a short amount of time. BHP now has a market capitalisation of $249 billion according to the ASX.

The key cause of the improvement appears to be the strengthening outlook for commodities with China exiting COVID-19 lockdowns and returning to normal economic activity in the country.

The Asian superpower buys enormous amounts of resources like iron and copper, so a normalisation of activity in the country is helpful for BHP.

Is the BHP share price an opportunity?

The key question is whether iron ore prices will drop back down, or whether they will stabilise at this level (or even rise).

Commodity prices are notoriously difficult to predict. I’d suggest that’s why the BHP share price movements have been so significant over the last year.

The investment group Liberum Capital has indicated that the iron ore price rally may not be as strong as it appears, according to reporting by the Australian Financial Review:

The sharp market bounce in January would suggest that a strong fundamental lift is coming. [The] problem is, China’s steel mills haven’t seen it yet.

Domestic demand has slightly improved, typical for this time of year, but inventories are rising at their fastest rate since February 2020. Possible timing issue for the restocking indicator, given the earlier Chinese New Year, but the signals move from hold to sell anyway. So, we tell investors to be cautious chasing this rally.

Iron ore port stockpiles at 133 million tonnes are very close to the five-year historical average, and we do not expect any significant build or draw this year. There was some market speculation that the port draw following Chinese New Year was a bullish indicator, but we do not read it as such, in that mills maintain stockpiles to meet future needs and, if anything, the mild draw is a negative.

Rating on the business

Liberum Capital is currently bearish on BHP and Rio Tinto Ltd (ASX: RIO).

Looking at the analyst calls that Commsec covers, there are five sell ratings, 13 holds and nine buys. The experts are split at the moment.

I think the 2023 calendar year could be a good period of earnings for BHP, with an improving situation in China. However, I believe it’s better to buy commodity businesses when the commodity outlook is weak, not strengthening.

If I were already a shareholder, I’d be happy to keep holding shares and benefit from likely good dividends. But, I’d wait for a noticeably lower BHP share price before buying, even if that took at least six months.

The post As the BHP share price flirts with $50, do I buy more? 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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Share markets rose remarkably in January, with the S&P/ASX 200 Index (ASX: XJO) rocketing 6.22% during the month.

Whether the surge is sustainable or if it’s yet another bear market rally is up for debate. But the gains have caused many punters to wake up and pay attention to ASX shares once again.

With a looming economic downturn, it’s fair to say investors are looking at big brand names to seek quality businesses to buy.

Three such names are Seek Ltd (ASX: SEK), Magellan Financial Group Ltd (ASX: MFG), and Virgin Australia.

The first two have, in the past, made many investors wealthy but have crashed during the past 13 months for both external and internal reasons.

Virgin, meanwhile, was delisted and went into administration in 2020 after COVID-19 brought aviation to a standstill. But its private equity owner is expected to float it once again this year, taking advantage of a post-pandemic boom in travel.

So should you buy this trio? Shaw and Partners portfolio manager James Gerrish examined their prospects:

Aeroplanes, jobs and investments

Gerrish, in a Market Matters Q&A, warned that private equity initial public offers (IPOs) “generally have a history of underperformance”.

“It is also a fair assumption that Bain, the private equity firm… will unload some shares sooner or later given its 95% stake in the airliner.”

As a counterbalance to that, Gerrish does like Virgin’s recovery out of the coronavirus pandemic and its new fleet of fuel-efficient Boeing 737 Max-8 planes.

“However, this [will] not suffice and we like other opportunities in the market with much more depth and key macro themes to support it.”

Of course, the issue price per share at the IPO will also be a consideration. But Gerrish is not expecting a bargain.

“My best guess is it will be priced fairly richly following the strong advance by Qantas Airways Limited (ASX: QAN) post-COVID.”

Gerrish’s team has ridden Seek’s 20% rise over the past quarter but thinks the jobs classified site’s had its run now.

“If Seek was a standalone holding we would indeed have looked to sell into its recent pop to fresh 5-month highs,” he said.

“From a stock sector perspective, as we’ve alluded to over recent weeks, we are looking for tech names to continue their bounce in line with the Nasdaq Composite (NASDAQ: .IXIC), but we do intend to reduce our exposure into such a move.”

Magellan has horrifyingly lost 80% of its value over the past 18 months, as a series of highly publicised governance and performance issues dogged the fund manager.

Its funds were US tech-orientated, so the NASDAQ’s decline over that time hasn’t helped either.

According to Gerrish, Magellan has diversified a bit more in recent times.

“In December 2022, the High Conviction Trust’s top 5 holdings were Alphabet Inc (NASDAQ: GOOGL), Intercontinental Exchange Inc (NYSE: ICE), Microsoft Corp (NASDAQ: MSFT), Visa Inc (NYSE: V) and Yum! Brands Inc (NYSE: YUM).”

Therefore the performance of its funds will not necessarily strictly follow the NASDAQ anymore.

But Gerrish is not upbeat about the business. 

“Performance is what this stock needs to get back on track. However, if outflows continue at similar rates and possible management fees are lowered in an attempt to maintain FUM [funds under management], we think the stock will simply continue to slide lower.”

The post Should you buy Seek, Magellan, or Virgin shares? appeared first on The Motley Fool Australia.

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• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
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• Here are the top 10 ASX 200 shares today

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo has positions in Alphabet, Microsoft, and Seek. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Microsoft, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Intercontinental Exchange. The Motley Fool Australia has recommended Alphabet and Seek. 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 team at Morgans has been busy picking out its best ASX share ideas for February.

These are the shares that its analysts think offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

The first two shares we looked at can be found here. Read on for the next two:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Morgans has this pizza chain operator on its best ideas list again this month. Its analysts continue to believe that investors should be taking advantage of the share price weakness that has been caused by headwinds that will soon reverse. It explained:

DMP is, in our opinion, a high quality operator with significant brand strength, first class executive management and a global platform for long-term network expansion. Cost inflation and adverse FX movements present significant challenges to earnings at present, as evidenced by EBIT margins, which fell from 13.4% in FY21 to 11.5% in FY22. SSS sales, which averaged +6.9% in the ten years between FY11 and FY21, dropped to (0.3)% in FY22 and (1.0)% in FY23 YTD. We believe these pressures are transitory in nature. In our opinion, now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time. The recent equity raise will fund DMP’s acquisition of the remaining stake in its German joint venture and keep gearing low enough to allow for future M&A optionality.

The broker has an add rating and $90.00 price target on Domino’s shares.

Lovisa Holdings Ltd (ASX: LOV)

Another ASX share that Morgans has on its best ideas list is growing fashion jewellery retailer Lovisa. Morgans thinks very highly of the company and believes it could one day become a global force thanks to its ambitious leadership team and global expansion plans. It said:

LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious and well-incentivised new leadership in place, we think now is the time LOV steps up to become a global force. LOV has accelerated its organic rollout in the US and entered into a number of new markets, including Poland, Canada, Mexico and Hong Kong. It is also poised to enter the important market of Italy. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar. We think LOV’s products fill an underserved niche, offering fast fashion jewellery at prices that are attainable to the target demographic

Morgans has an add rating and $28.50 price target on Lovisa’s shares.

The post Morgans names 2 more of the best ASX shares to buy in February appeared first on The Motley Fool Australia.

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More reading

• How I’d invest $200 a month in ASX shares to make a $20,000 passive income for life
• Morgans names 8 ASX retail shares to buy
• Here are the top 10 ASX 200 shares today
• Buy and hold these fantastic ASX growth shares: experts
• Which ASX dividend shares I’d buy now to target $50,000 of annual passive income

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises and Lovisa. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Lovisa. 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 are wanting to bolster your portfolio with some ASX tech shares and have a high tolerance for risk, then the small caps listed below could be worth a look.

Both of these small cap tech shares have been tipped as buys by Goldman Sachs recently. Here’s what the broker is saying about them:

Readytech Holdings Ltd (ASX: RDY)

The first small cap ASX tech share that Goldman Sachs has named as a buy is Readytech.

It is a leading provider of mission-critical software-as-a-service (SaaS) solutions for the education, employment services, workforce management, government and justice sectors.

Goldman believes that the company’s shares are trading at an attractive level after pulling back following the collapse of a takeover approach. It said:

RDY remains a tech value play within our coverage universe, trading at a >50% discount to peers when accounting for its robust growth outlook. Government software has been a pocket of strength and resilience within TMT (~3/4 of RDY’s earnings) and we are positive on RDY’s ability to deliver mid-teens organic growth at an expanding profit margin through the cycle.

Goldman Sachs has a buy rating and $4.45 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another small cap that Goldman Sachs is a big fan of is online furniture and homewares retailer Temple & Webster.

Its analysts believe that Temple & Webster is well-positioned for strong long term growth thanks to its leadership position in a retail category that is in the early stages of shifting online.  It commented:

Our Buy thesis is predicated on the following key drivers: (1) we believe TPW is well positioned in the upcoming cycle to continue to grow market share, despite a weaker macro environment; (2) in our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories; and (3) greater focus on costs is a sensible strategy to balance near-term profitability with growth.

Goldman has a buy rating and $7.60 price target on its shares.

The post Goldman Sachs names 2 exciting small cap ASX tech shares to buy right now 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 ReadyTech and Temple & Webster Group. The Motley Fool Australia has recommended ReadyTech and 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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There are many Australians who invest in ASX shares on the basis that the businesses are on the right side of massive trends.

These could be themes like lithium production, electric vehicles, or the ageing population.

But one expert has warned that investing in mega-trends is a trap that could lose you significant amounts of money.

US financial expert and buy-and-hold advocate Brian Feroldi took the example of meat substitutes as an example in his newsletter.

“Last year, global sales of plant-based meat rose 31% to more than $10 billion, according to Statista. Over the next five years, that figure is expected to triple,” he said.

“This is clearly a mega-trend in the making.”

However, the winners from such explosive growth aren’t always investors.

“In the case of plant-based meat, consumers and society are most likely to reap the bulk of the rewards,” said Feroldi.

“That’s because we don’t see any discernible moat — or sustainable competitive advantage — for the largest players.”

The fake meat business is booming, but are investors cashing in?

Take a look at one of the pioneers, Beyond Meat Inc (NASDAQ: BYND).

As a first-mover in the industry, investors went crazy for the shares after the company listed in 2019. Within the first few months, the share price went from the US$60s to the US$230s. 

This is the sustainable future in a world craving better health and feeding a massive population, thought shareholders.

And that sentiment is still likely true, with more and more people consuming meat substitutes each year.

But now the Beyond Meat stock price is languishing around US$16.

Why? Because larger, deep-pocketed competitors joined the plant-based meat market when they saw how lucrative the business is.

“Scores of rivals like Tyson Foods Inc (NYSE: TSN), Kraft Heinz Co (NASDAQ: KHC), and Conagra Brands Inc (NYSE: CAG) have started offering plant-based meats of their own at cheaper prices,” said Feroldi.

“When that happens, gross margins — the price a burger sells for minus what it cost to make — contract.”

Feroldi presented the deterioration in Beyond Margin’s gross margins in black-and-white:

Year	Beyond Meat’s gross margin
2019	33.5%
2020	30%
2021	25.2%
2022	(6.2%)

“That’s right, the company has been forced to slash prices so much it is losing money with each sale.”

And that’s why a business’ moat matters much more than trends.

A company could be in the most exciting growth field in the history of humankind, but if everyone else can easily pile on then investors will lose.

“Before you run out [and] invest in the next mega-trend, ask yourself: what’s this company’s moat?” said Feroldi.

“Without that moat protecting profits, it’s just a matter of time before competitors show up to drive down prices. And when that happens, it is consumers — not investors — that stand to benefit the most.”

The post Mega-trends don’t make you rich: Why moats matter in investing appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX 200 shares for a passive income boost: analysts
• 5 things to watch on the ASX 200 on Thursday
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Beyond Meat. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Kraft Heinz. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are plenty of passive income options on the Australian share market to choose from. Two top ASX 200 dividend shares that brokers rate highly are listed below.

Here’s why they have been named as buys:

Endeavour Group Ltd (ASX: EDV)

Goldman Sachs believes that this drinks company could be a quality option for investors right now. Its analysts currently have a buy rating and $7.80 price target on the company’s shares.

The broker likes the company due to its industry-leading position and attractive valuation. It commented:

Xmas trading has been strong as evidenced by liquor retail sales acceleration and pubs growth feedback from peers is accelerating into Jan 2023. Our sensitivity analysis suggests the risk of cashless gaming is already largely priced in. […] EDV now trades at 19.7x FY24 P/E vs historical average of 24.3x and is value entry point for a high quality industry leader.

As for dividends, the broker is forecasting fully franked dividend of approximately 21.4 cents per share in FY 2023 and 24 cents per share in FY 2024. Based on the current Endeavour share price of $6.62, this equates to yields of 3.2% and 3.6%, respectively.

Telstra Group Ltd (ASX: TLS)

Analysts at Morgans believe that Telstra could be a quality dividend share to buy. The broker is a fan of the telco giant and has a buy rating and $4.65 price target on its shares.

Morgans likes Telstra due to its successful turnaround, positive outlook, and valuation. In respect to the latter, the broker feels Telstra’s assets are worth more than the market is pricing in. It said:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote on Telstra’s legal restructure, which opens the door for value to be released. TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders.

As for dividends, the broker is forecasting fully franked dividends per share of 16.5 cents in both FY 2023 and FY 2024. Based on the current Telstra share price of $4.15, this will mean yields of 4%.

The post Buy these ASX 200 shares for a passive income boost: analysts appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why TPG and Telstra shares could get a big profit boost in 2023
• Leading brokers name 3 ASX shares to buy today
• Here’s the Telstra dividend forecast through to 2025
• 2 ASX 200 shares to buy even as the world slips into recession

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and pushed higher. The benchmark index rose 0.3% to 7,501.7 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market may fall on Thursday following a wild night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 26 points or 0.35% lower this morning. In late trade in the United States, the Dow Jones is down 0.45%, the S&P 500 has risen 0.3%, and the NASDAQ is up 0.8%. US stocks were deep in the red at one stage.

US Fed raises rates

The US Federal Reserve has raised its benchmark interest rate by a quarter percentage point and given no indication that it is near to the end of this hiking cycle. This took its interest rate to a target range of 4.5% to 4.75%. While the hike was not unexpected, the market was looking for hints that the cycle could soon be over. US stocks plunged on the news but have now started to rebound.

Oil prices tumble

Energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a tough day after oil prices tumbled on Wednesday night. According to Bloomberg, the WTI crude oil price is down 2.8% to US$76.68 a barrel and the Brent crude oil price is down 2.8% to US$83.09 a barrel. This was driven by U.S. government data showing a big build in crude oil, gasoline and distillate inventories.

QBE named as a buy

The QBE Insurance Group Ltd (ASX: QBE) share price could be great value according to Goldman Sachs. This morning the broker has retained its buy rating and $16.67 price target on the insurance giant’s shares. This follows the release of a quarterly update from rival Chubb in the United States. It said: “Our US analyst views the result as favourable driven by better-than-expected core underwriting result ex crop and particularly in commercial lines.”

Gold price falls

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) will be on watch after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.25% to US$1,940.4 an ounce. The precious metal softened after the US dollar strengthened.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• 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
• Should I buy Qantas shares before the company’s ASX earnings update?

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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