Qantas Airways Limited (ASX: QAN) shares were caught up in the market selloff on Tuesday.

The airline operator’s shares tumbled 2.5% to $6.07.

Are Qantas shares in the buy zone?

The team at Goldman Sachs believes investors should be taking advantage of this pullback to buy Qantas shares.

According to a note this morning, the broker has reiterated its conviction buy rating and $8.20 price target on the company’s shares.

This implies potential upside of 35% for investors over the next 12 months.

And with Goldman expecting a 10 cents per share dividend in FY 2023, the total return on offer with Qantas shares extends to almost 37%.

What did the broker say?

Goldman highlights that while overall capacity is expected to remain below pre-COVID levels in FY 2023, it expects profitability to be materially better thanks to strong pricing momentum, supply demand discipline, and cost saving initiatives.

In light of this and its significantly improved debt position, the broker believes that Qantas shares are trading at a very attractive level right now. It explained:

Against the backdrop of substantially improved earnings capacity, we believe the stock is not even priced for a generic recovery. Specifically, QAN’s market capitalisation sits 4% above pre-COVID level and enterprise value (based on last reported net debt) is 12% below pre-COVID levels based on latest reported net debt of A$2.4b.

[O]ur FY23e EPS forecast is 58% above FY19a levels with group capacity still 21% below pro-COVID levels. Even as the yields moderate (with capacity restoration) our FY24e EPS (100% of FY19 capacity) is 46% above FY19 levels.

All in all, this could make Australia’s flag carrier airline one for investors to consider if they are looking for options in the travel sector right now.

The post Why Qantas shares could be a bargain buy – Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• 3 ASX 200 shares that have ‘significant share price upside’: fund manager
• Is Qantas stock a cheap ASX 200 buy right now?
• Why this one top fund manager is optimistic about 2023, and one little-known IPO that has hit it out of the park
• Brokers name 3 ASX shares to buy today

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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If you’re searching for cheap ASX dividend shares to buy, then it could be worth looking at the two named below.

Here’s what you need to know about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX dividend share for investors to consider is Domino’s. Its shares have been sold off this year after tough trading conditions and inflationary pressures weighed on its performance.

While this is disappointing, it may have created a buying opportunity for patient investors. Particularly given that management expects the company’s performance to be back on track with longer term targets in the second half.

The team at Morgans is positive on the company and believes that “now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time.”

Morgans has an add rating and an $90.00 price target on the company’s shares.

In addition, the broker is forecasting partially franked dividends per share of $1.55 in FY 2023 and $1.89 in FY 2024. Based on the current Domino’s share price of $63.84, this will mean yields of 2.4% and 3%, respectively.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX dividend share to look at is Universal Store. It is an omnichannel retailer focused predominately on the youth apparel industry through its Universal Store and Thrills brands.

Its shares have also fallen heavily this year. This has been driven by concerns over consumer spending amid the cost of living crisis.

However, Goldman Sachs believes this is a mistake and has recently put a buy rating and $7.30 price target on its shares. The broker highlights that Universal Store’s target demographic will be less impacted by rising interest rates and also stands to benefit from an increase in the minimum wage.

Another positive is that Goldman is forecasting some big dividend yields in the near term. It has pencilled in fully franked dividends of 26.1 cents in FY 2023 and 29.9 cents in FY 2024. Based on the latest Universal Store share price of $5.11, this equates to yields of 5.1% and 5.85%, respectively.

The post 2 cheap ASX dividend shares to buy now: brokers appeared first on The Motley Fool Australia.

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More reading

• Morgans has put these ASX shares on its Christmas wishlist
• If I was 40 and had never invested, here’s how I’d aim to build a $500,000 ASX share portfolio
• 3 ASX 200 shares in the spotlight for 2023 as consumer sentiment ‘bounces’
• Top ASX dividend shares to buy in December 2022
• Here are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. 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 Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BetaShares NASDAQ 100 ETF (ASX: NDQ) is one of my favourite exchange-traded funds (ETFs) on the ASX. Let’s discuss three reasons why I think it could be worth buying before 2023.

Exposure to US tech

The US markets house some, nay most, of the world’s top-quality tech shares. Technology has changed the world in a massive way over the past two decades. That’s thanks to names like Apple, Microsoft, Tesla, Amazon and Netflix.

It’s hard now to imagine a world without iPhones, Microsoft Office, Netflix binging or ordering whatever your heart desires on Amazon. Luckily, the BetaShares NASDAQ 100 ETF enables ASX investors to participate in the profits of the companies that provide these goods and services.

The NASDAQ-100 (NASDAQ: NDX) that this ETF tracks is renowned as the place that most of the US tech giants call home. You’ll get the names listed above in the top of this ETF’s portfolio. But also other dominant companies like Adobe, NVIDIA, Intel and Starbucks.

The BetaShares NASDAQ 100 ETF is cheap for what you get

At its core, the NASDAQ 100 ETF is an index fund. This ETF might not charge the lowest fees for an ETF on the ASX. But the annual charge of 0.48% per annum (or $4.80 per year for every $10,000 invested) is still very competitive on the ETF scene. Let alone against what a typical managed fund charges.

For getting 100 top-notch US shares in one easy, hands-off investment, I think that 0.48% per annum is quite reasonable. Especially considering that this fund, as of 30 November, has delivered an average return of 16.81% per annum over the past five years.

You’re buying a dip

The BetaShares NASDAQ 100 ETF, as we’ve just deduced, has an impressive performance track record. Saying that, it has also had a very rough year in 2022. Year to date, this ETF has gone from $36.58 per unit to the $25.59 it closed at yesterday. That’s a fall worth just over 30%:

Are you bullish on the future of US tech and the continuing dominance of companies like Apple, Tesla and Netflix? If so, then this might represent one heck of a buy-the-dip opportunity.

There’s every chance that this ETF will have another tough year in 2023. But for a serious long-term investor, I think that the current pricing on this ETF is well worth a look before we end the year.   

The post 3 reasons to buy the BetaShares Nasdaq 100 ETF (NDQ) before 2023 appeared first on The Motley Fool Australia.

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• 2 high quality ETFs for ASX beginner investors to buy in 2023
• New kids on the ASX block: Why did Gen Z flock to the BetaShares Nasdaq ETF (NDQ) in 2022?
• Down 27% this year, is the Betashares Nasdaq 100 ETF (NDQ) a buy before 2023?
• Why is the BetaShares NASDAQ 100 ETF (NDQ) having such a stellar run today?
• 3 fantastic ETFs for ASX investors to buy in December

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Adobe, Amazon.com, Apple, Intel, Microsoft, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Intel, Microsoft, Netflix, Nvidia, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $57.50 calls on Intel, long January 2024 $420 calls on Adobe, long January 2025 $45 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $92.50 puts on Starbucks, short January 2024 $430 calls on Adobe, short January 2025 $45 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Adobe, Amazon.com, Apple, Netflix, Nvidia, and Starbucks. 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 Tuesday, the S&P/ASX 200 Index (ASX: XJO) was sold off and sank deep into the red. The benchmark fell 1.5% to 7,024.3 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set to rebound strongly on Wednesday following a positive night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 78 points or 1.1% higher this morning. In late trade on Wall Street, the Dow Jones is up 0.35%, the S&P 500 is up 0.2%, and the Nasdaq is up 0.1%.

Oil prices rise

It could be a decent day for energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 0.8% to US$75.80 a barrel and the Brent crude oil price has risen 0.1% to US$79.85 a barrel. Oil prices were boosted by a softer US dollar and a plan to restock petroleum reserves.

Qantas rated as a buy

The Qantas Airways Limited (ASX: QAN) share price could still be great value according to analysts at Goldman Sachs. This morning, its analysts have reiterated their conviction buy rating and $8.20 price target on its shares. It said: “With the market capitalization 4% above pre-COVID levels and EV (based on last reported net debt) 12% below pre-COVID, we believe the stock is not appropriately pricing QAN’s improved earnings capacity.”

Gold price jumps

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a good day after the gold price stormed higher overnight. According to CNBC, the spot gold price is up 1.6% to US$1,826.2 an ounce. A softer US dollar gave the precious metal a boost.

Buy the REA dip

The REA Group Limited (ASX: REA) share price was sold off on Tuesday and Goldman Sachs thinks investors should be taking advantage of the decline. The broker has reiterated its conviction buy rating with a trimmed price target of $158.00. The broker said: “Following the recent decline in share prices, REA/DHG are now trading on 19x/13x 12mf EBITDA, which we see as very attractive vs. historical levels (>20% discount).”

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

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More reading

• Here are the top 10 ASX 200 shares today
• I’d buy these 3 ASX 200 shares in 2023 and hold them for a decade
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Guess which ASX 200 director just sold off $27 million worth of their company’s shares
• Why is the Woodside share price smashing the ASX 200 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 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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The All Ordinaries Index (ASX: XAO) had a fairly dreadful day of red ink this Tuesday. By the end of the trading session, the All Ords had slipped by a nasty 1.66%, putting the index at 7,199.6 points. But that loss pales in comparison to the performance of the Arafura Rare Earths Ltd (ASX: ARU) share price.

Arafura Rare Earths shares had an absolute shocker today. The rare earths share started the session at 48 cents a share, but ended the trading day at just 44 cents a share, a fall worth a whopping 9.37%.

So what went so wrong with Arafura that might have caused this sharp share price fall?

Why did the Arafura share price tank 9% on Tuesday?

Well, it’s hard to say. It certainly wasn’t sparked by anything out of Arafura itself, seeing as the company hasn’t made any ASX announcements today.

We did see some falls with many of Arafura’s compatriots though. Its fellow rare earths producer Lynas Rare Earth Ltd (ASX: LYC) fell by close to 3%. And lithium shares like Pilbara Minerals Ltd (ASX: PLS) and Core Lithium Ltd (ASX: CXO) had fairly depressing days as well.

But none of these shares fell by almost 10%.

So perhaps my Fool colleague James’ recent theory of profit-taking is the most likely explanation here. Although Arafura had an awful day today, it has hardly put a dent in this company’s stellar run this year.

Even after today’s near-10% drop, the Arafura share price remains up an incredible 89% or so in 2022 thus far. The company is also up an even more impressive 141% over the past 12 months, including by 45% in the past six:

Thus, it’s possible that, with the broader market taking a bit of a hit this December, investors are getting nervous and pulling some of these profits off the table.

At the last Arafura share price, this ASX All Ords rare earths share has a market capitalisation of $953.54 million.

The post Why did the Arafura Rare Earths share price dive 9% on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Arafura, Aurizon, and Star shares are sinking today
• Why is the Arafura Rare Earths share price rocketing 13% today?
• Why Arafura, Block, Leo Lithium, and St Barbara shares are storming higher
• Why Arafura, Megaport, Nitro, and Sayona Mining shares are storming higher today
• It’s not all bad news for the ASX All Ords on Monday. Here are 3 big gainers

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

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The exchange-traded fund (ETF) Vanguard MSCI Index International Shares ETF (ASX: VGS) has been on a rollercoaster ride this year. At one point it was down over 20% in the year to date, though it has recovered a little since then.

This offering from Vanguard is one of the most compelling passive ways to invest in the global share market in my opinion.

For investors that haven’t heard of Vanguard, it’s an organisation that offers investment funds, like ETFs. A key point of difference with Vanguard is that it aims to offer its funds for as little cost as possible because the owners of Vanguard are the investors themselves. Vanguard shares the profit in the form of lower management fees.

This ETF specifically looks to provide “exposure to many of the world’s largest companies listed in major developed countries.” The idea is that it’s invested in over 1,000 businesses outside of Australia, to get exposure to those international economies.

With that in mind, here are three reasons why it could be a good time to invest in the Vanguard MSCI Index International Shares ETF:

Lower valuation

Part of investing is about choosing an investment that can grow well over time. But, a key element of the return is the purchase price. So, for whatever investment we’re looking at, it’s obviously better to buy it at a lower price.

The share market doesn’t fall over 10% for no reason, the higher interest rates and elevated inflation are justifiably hitting businesses in different ways.

But, I think the fact that it’s down around 15% makes it much more interesting. When something declines by 15%, getting back to the same level would be a rise of 18%.

Great holdings

When investing, I think it’s important to go for quality businesses or assets that can do well even during a downturn. When the going gets tough, it’s the low-quality stuff that could quickly get into trouble.

Looking at the holdings in the Vanguard MSCI Index International Shares ETF, these are some of the strongest national, or even global names, within the 1,460-plus positions in the portfolio.

The top 10 holdings are: Apple, Microsoft, Alphabet, Amazon.com, Tesla, UnitedHealth, Johnson & Johnson, Exxon Mobil, Nvidia and Berkshire Hathaway. I’d be happy to own most of those names myself, so I’d be happy to have a portfolio with them. All of this diversification comes with a low management fee of 0.18%.

Don’t try to time the market

If investors are regularly investing in the Vanguard MSCI Index International Shares ETF, then I don’t think they should be put off by changes in the unit price.

A regular investment plan can take out the guesswork, and trying to time the market could mean missing out on opportunities and long-term growth.

To the end of November 2022, the ETF had returned an average return per annum of 10.2% over the prior five years. I’m not sure what the future holds in terms of the returns, but, a return on equity (ROE) of just over 18% is promising for long-term double-digit returns.

The post 3 reasons to buy the Vanguard MSCI Index International Shares ETF (VGS) before 2023 appeared first on The Motley Fool Australia.

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More reading

• 2 ASX ETFs trading ex-dividend next week
• If I was 40 and had never invested, here’s how I’d aim to build a $500,000 ASX share portfolio
• A recession could be coming in 2023. Here’s Warren Buffett’s investing advice
• This simple investing plan could save the retirement plans of millions of retail investors
• One ASX ETF that could make you a stock market millionaire with little to no effort

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon.com, Apple, Berkshire Hathaway, Microsoft, Nvidia, Tesla, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Berkshire Hathaway, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) plummeted in afternoon trade amid the release of the minutes from the Reserve Bank of Australia’s (RBA) latest meeting. The index closed Tuesday’s session 1.54% lower at 7,024.3 points.

Also likely driving the market lower were announced changes to the Bank of Japan’s monetary policy. The central bank has decided to modify the conduct of yield curve control.

Meanwhile, the RBA revealed it considered both hiking rates by 0.5% and keeping them flat amid continuous inflation at its last meeting of 2022. Of course, it ultimately declared a 0.25% hike earlier this month.

The S&P/ASX 200 Energy Index (ASX: XEJ) outperformed for much of today following a strong night’s trade for oil prices. However, by the end of Tuesday’s trade, it had dropped 1.4%.

Coming in as today’s top-performing sector was instead the S&P/ASX 200 Utilities Index (ASX: XUJ), which dropped 0.1%. The worst performer, meanwhile, was the S&P/ASX 200 Information Technology Index (ASX: XIJ). It fell 4.4%.

So, with all that in mind, which ASX 200 shares come in as today’s top performers? Keep reading to find out.

Top 10 ASX 200 shares countdown

The index’s biggest gains today were posted by shares in Steadfast Group Ltd (ASX: SDF). That was despite no news having been released by the insurance broker.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Steadfast Group Ltd (ASX: SDF)	$5.44	2.06%
AUB Group Ltd (ASX: AUB)	$22.59	1.99%
AGL Energy Limited (ASX: AGL)	$8.03	1.77%
Oz Minerals Ltd (ASX: OZL)	$27.79	1.42%
Orica Ltd (ASX: ORI)	$15.43	1.11%
Bendigo and Adelaide Banking Ltd (ASX: BEN)	$9.59	1.05%
Silver Lake Resources Limited (ASX: SLR)	$1.22	0.83%
Suncorp Group Ltd (ASX: SUN)	$11.83	0.42%
Pendal Group Ltd (ASX: PDL)	$4.90	0.41%
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	$23.79	0.3%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• I’d buy these 3 ASX 200 shares in 2023 and hold them for a decade
• Little downside protection for popular ASX 200 shares as 2023 looms a much tougher year for blue chip stocks
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Guess which ASX 200 director just sold off $27 million worth of their company’s shares
• Why AGL, Invictus Energy, Maas, and Mach7 shares are pushing higher today

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 Steadfast Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Steadfast Group. The Motley Fool Australia has recommended Aub 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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Since we’re now barreling towards the end of 2022, it’s a good time to look to 2023 and the ASX 200 shares that investors might want to buy next year.

The legendary investor Warren Buffett once said that his favourite length of time to own a share is forever. So with that sentiment in mind, here are three ASX 200 shares that I think investors can comfortably buy next year and hold for at least a decade.

3 ASX 200 shares to buy in 2023 and hold for a decade

Coles Group Ltd (ASX: COL)

Coles might not be the most exciting ASX 200 company out there. But that’s exactly why I think this share could be a long-term winner.

Coles is a dominant supermarket chain that supplies millions of Australian households with food, drinks, and other household essentials. I don’t see any reason why Coles won’t be fulfilling this role for a larger Australian economy in a decade’s time.

Coles is also a formidable ASX 200 dividend payer, offering investors a fully franked dividend yield close to 4% right now. Some brokers are expecting these dividends to rise materially over at least the next few years too.

Telstra Group Ltd (ASX: TLS)

Next up is another ASX 200 name we’d probably all be familiar with. Telstra is the most dominant telco in the country, with market share statistics across both fixed-line and mobile communications that are the envy of its rivals.

It’s probably fair to say that internet usage is only going to keep rising over the coming decade. And you can bet that Telstra will be one of its key facilitators. This is a company that I see as having a recession-proof earnings base, thanks to the inelasticity of demand for internet services.

The recent restructuring could also provide an avenue to a higher valuation thanks to the importance of its core assets like its mobile towers. Telstra also offers a strong, fully franked dividend, which is over 4% right now as well.

Westpac Banking Corp (ASX: WBC)

Finally, let’s check out the ASX 200 banking giant Westpac. As a member of the elite big four banks, Westpac has a firmly-established share of the banking and financial services market in Australia.

If the Australian economy is larger in ten years than it is today (which is highly likely if we look to history), it’s a good bet that Westpac will be too, thanks to the pivotal role the big four plays in the financial fabric of this country.

Westpac has paid strong dividends for most of its history, and again, some ASX brokers think that its current dividends (currently offering more than a 5% fully-franked yield) will keep growing for at least a few years. 

All in all, Westpac is the third share that I think an investor can comfortably buy in 2023 and hold for at least the coming decade.

The post I’d buy these 3 ASX 200 shares in 2023 and hold them for a decade appeared first on The Motley Fool Australia.

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• Little downside protection for popular ASX 200 shares as 2023 looms a much tougher year for blue chip stocks
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Guess which ASX 200 director just sold off $27 million worth of their company’s shares
• Why is the Woodside share price smashing the ASX 200 on Tuesday?
• Building a passive income for retirement? Check out these ASX 200 dividend shares – analysts

Motley Fool contributor Sebastian Bowen has positions in Telstra 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 positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Westpac Banking. 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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1) It has been a brutal year for those of us invested in growth and/or small cap stocks, with sharply rising interest rates having the effect of sending share prices of many such companies down 50% or more.

And the fight against inflation is not over yet, with central banks around the world still tightening, hoping to pull off a miracle soft landing, but more likely sending many economies into recession.

The narrative is shifting from questioning how high interest rates need to rise, and when central banks will pivot to lowering them, to predicting the severity and duration of the economic downturn. 

“Wall Street’s 2023 profit decline could rival GFC,” says the headline in the AFR, with Michael Wilson, Morgan Stanley’s chief US equity strategist, saying the earnings recession could be similar to what transpired in 2008-09.

Based on its bearish earnings forecast, the investment bank is suggesting US equities could plunge more than 20% from current levels. Thankfully, “Morgan Stanley does not see signs of distress in the housing market or systemic financial risk, meaning it does not expect 50 per cent downside for shares, as seen in 2008,” according to the AFR article.

“The fixation on inflation and the Fed continues, but markets appear to have moved past it and onto the real concern – earnings growth/recession,” Mr Wilson said. “Rates and inflation may have peaked, but we see that as a warning sign for profitability.”

2) Right on cue, enter plus size retailer, City Chic Collective Ltd (ASX: CCX) which today warned of continued volatile trading, with overall demand below expectations.

In response, City Chic has increased its promotional activity to drive demand, resulting in further gross margin compression. The company now expects to report a small underlying EBITDA loss in the first half, a half that encompasses the peak Black Friday and Christmas trading periods. Or should that be Red Friday, given Black Friday is thought to derive its name from the day when retailers go from losses to profits in the trading year?

The City Chic share price has taken yet another bath today, down 22% to 46 cents, and is now down 91% in the past 12 months.

Buying a falling knife – like City Chic – is fraught with danger. Profit warnings often come in threes, and turnarounds either don’t turnaround, or can take longer than expected to recover.

It appears the Spheria Asset Management Australian Microcap Fund has been on the wrong side of the City Chic trade – so far at least – given comments in its November monthly update…

“We believe the share price fall has created an opportunity to buy a business at a significant discount to our view of its intrinsic value. The core driver of their earnings continues to be their Australian City Chic store business. Given the share price weakness you are buying the Australian business for ~5x normalised EBIT with potentially more upside for profit turnarounds at its international online businesses – Avenue (US based) and Evans (UK based).”

Stock picking – especially in this economic environment – is tough, especially in the retail sector. Consumers’ willingness to spend on discretionary items is clearly going to deteriorate in 2023 as higher interest rates eventually take their toll. 

Beware the falling knife.

3) Coal, lithium and energy stocks have helped the S&P/ASX 200 Index (ASX: XJO) avoid the big falls seen on US markets, the Whitehaven Coal Ltd (ASX: WHC) share price taking the gold medal for the biggest gain in 2022, up over 300%, showing coal demand to be anything but in terminal decline.

Also helping prop up the ASX 200 index have been three out of the four big bank shares, with Westpac Banking Corp (ASX: WBC) shares up 8.9%, National Australia Bank (ASX: NAB) shares up 4.9% and Commonwealth Bank of Australia (ASX: CBA) shares up 4.6%. The odd bank out is Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares down 13.8% so far in 2022.

Beloved for their full franked dividends, bank shares also prop up many self managed super funds, helping deliver a solid year for many retirees. 

As thoughts turn to 2023, a year of falling house prices and subdued consumer confidence – and with them, lower lending demand and higher default rates – the premium valuation afforded CBA shares leaves little downside protection. 

Even the famed CBA fully franked dividend is not looking overly attractive, yielding just 3.6%, about the same as you can earn risk-free in a bank savings account. 

CBA shares are not the only popular blue chip stock trading on a premium valuation. According to S&P Capital IQ, Telstra Group Ltd (ASX: TLS) shares trade on 28 times earnings and Woolworths Group Ltd (ASX: WOW) shares trade on 27 times earnings. 

Put another way, that’s an earnings yield for both stocks of about 3.5%, a rating that might make sense when interest rates are at close to zero, but leaves little downside protection with the RBA cash rate likely headed to 3.6% before Easter. 

Retirees looking to preserve capital whilst banking fully franked dividends from popular blue chip stocks might be looking at a much tougher 2023.

The post Little downside protection for popular ASX 200 stocks as 2023 looms a much tougher year for blue chip stocks appeared first on The Motley Fool Australia.

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More reading

• Why BWX, City Chic, Domain, and John Lyng shares are sinking today
• Why did this ASX All Ordinaries share just crash 19%?
• Should I buy NAB shares for 2023?
• Building a passive income for retirement? Check out these ASX 200 dividend shares – analysts
• Are Westpac shares worth buying now for dividend income in 2023?

Motley Fool contributor Bruce Jackson 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 Westpac Banking. 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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Hopes of a last-minute Santa rally this December seem to be fading fast, as the S&P/ASX 200 Index (ASX: XJO) records another loss so far this Tuesday. At the time of writing, the ASX 200 has tanked by a nasty 1.55%, putting the index at just over 7,025 points.

Rather than trying to figure all of that out, let’s instead take a gander at the ASX 200 shares currently at the top of the share market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Tuesday

Star Entertainment Group Ltd (ASX: SGR)

Once again, ASX 200 casino operator Star Entertainment makes an appearance on this list today, with a chunky 14.91 million shares traded thus far. And once again, it’s bad news for shareholders. Fresh off of yesterday’s horrid 17.8% drop, Star shares have fallen another 9.67% so far this Tuesday to a new 52-week low of $1.92 a share at the time of writing.

It seems that news of a new state government tax on casino earnings is continuing to weigh on this gaming share today, and explains the high volumes we are seeing.

Pilbara Minerals Ltd (ASX: PLS)

Now time for a regular on this list in ASX 200 lithium share Pilbara Minerals. This Tuesday has had a decent 19.44 million Pilbara shares swap hands as it currently stands.

With no fresh developments out from the company, this looks like a consequence of the share price falls we are seeing with Pilbara today. At present, Pilbara has lost a nasty 3.72% and is back down to $3.88 a share. The lithium leader has now lost around a third of its value since its record high of $5.66 last month.

Core Lithium Ltd (ASX: CXO)

Finally today we have another ASX 200 lithium share in Core Lithium. This session has had a massive 21.18 million Core Lithium shares bought and sold on the share market so far. Just like Pilbara, this looks like it is the result of a depressing share price move.

Unfortunately for Core Lithium investors, the market seems intent on singling out Core for punishment. This lithium share has lost a painful 5.83% so far this Tuesday, putting it down to $1.02 a share. Core shares are now down close to 50% from last month’s record high of $1.88 per share.

The post Here are the 3 most heavily traded ASX 200 shares on Tuesday appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 director just sold off $27 million worth of their company’s shares
• Why is the Woodside share price smashing the ASX 200 on Tuesday?
• Core Lithium share price has 25% upside: Macquarie
• While the ASX 200 struggled in 2022, investors doubled down on lithium shares. Here’s why
• 5 things to watch on the ASX 200 on Tuesday

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

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