Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Chester Asset Management portfolio manager Rob Tucker explains why he reckons two particular ASX 200 shares are the best buys currently.

Hottest ASX shares

The Motley Fool: What are the two best stock buys right now?

Rob Tucker: It’s a good question because I look at the 35 stocks in my portfolio and I think they’re all quite interesting. That’s why I own them! We’re optimistic by nature. 

I think Brambles Limited (ASX: BXB) is still a really interesting company. Because we’re focused on assets that are really difficult to replicate, and I think Brambles has proven itself to have 360 million pallets, and a replacement cost to a pallet would be about $50 Australian. That would say the replacement cost of their asset base is about $18 billion, which is where the market cap is.

They’ve had competitors that in a lower interest rate environment have had access to capital and been competing on price. But now no longer, because interest rates have gone up, so their competitors are actually struggling. 

Brambles has actually raised prices by 14% the last 12 months, and their customers need Brambles pallets because they’re the only one that can supply them reliably with full service to every jurisdiction. This is the Walmart Inc (NYSE: WMT) and the Home Depot Inc (NYSE: HD) of the world in America. I think Brambles just has a pricing lever to play out over the next 12 months.

Now, the free cash generation of Brambles has always been tricky because of the capEx spend with the pallets. But the lumber prices have fallen 60% or 70% in the last 12 months, so I think there’s a really strong free cash flow story to emerge with Brambles over the next 12-18 months.

MF: Are you worried about the US Dollar exposure at all?

RT: Again, I’ve been doing this for 22 years or so, so over that period of time, I’ve worked out you can’t ever try and be too beholden to currency fluctuations. So I just try and say, “Well, I’m just trying to buy the best companies I can find.” 

The currency might sort itself out eventually. The US Dollar might be stronger in the short term for various terms. It might be weaker in the longer term because the US government has too big a fiscal deficit and expanding forever. I’ve got various thoughts about what happens to the US Dollar, but I’m not a currency expert. I’m not going to try and sit here and say I’m not going to have US currency exposure. I think Brambles is a good company.

MF: Your second best buy ASX share right now?

I would say the same thing for CSL Limited (ASX: CSL). 

The last result, CSL’s collection volumes increased by 36%. The working capital cycle says there’s about 12 to 18 months, so that says to me there’s a really clear line of sight to what their selling volumes can be in the next 12 to 18 months. As collections recover, the demand is still very strong so they’ll have more product to sell over the next 12 to 18 months in their core business. 

The Vifor acquisition will add certain products into their product suite and they’ve got a really impressive R&D portfolio, led by a product called CSL112. CSL112 is a — this might get a bit technical — a reconstituted, high-density lipoprotein, or RHDL. It is a waste product of the plasma fractionation process.

They have been trialling RHDL in humans for about the last eight years, and they’re at the end of a phase three trial through about 1500 patients. What it does is if you’ve had a heart attack, because your cholesterol and your arteries [are] too high, this RHDL actually removes a lot of the cholesterol in your arteries. It’s reducing the physical significance of having another heart attack if you’ve already had one. 

It’s an untapped market and it could be a material increase to CSL’s earnings over the next three to five years, should this phase three trial be successful. But we’ve been speaking to a couple of cardiologists that say the statistical success rate is looking increasingly likely that this will end up being a commercial product. I think that’s another leg of earnings growth over the next three to five years for CSL, which is probably not necessarily baked into the share price.

MF: Yeah, CSL’s great that way, isn’t it? It has the existing businesses that maintain its earnings momentum but also has these side projects going on that make it seem like a biotech startup.

RT: Yeah, and they’ve always had very conservative accounting. Full expense every bit of R&D they’ve ever spent. The headline PE you see for CSL, I think, is inflated.

They could easily cut $600 million out of their expense base because it could be capitalised. Because that’s R&D spend on future products like CSL112. Their accounting standards are very, very conservative, which I think overstates the PE ratio.

The post Fundie says buy these 2 ASX 200 shares that have the planets aligned appeared first on The Motley Fool Australia.

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More reading

• Does the CSL share price fall finally make it a no-brainer buy?
• 3 ASX 200 shares cracking multi-year highs on Tuesday
• Why these 3 ASX 200 shares could be leading picks for dividends and growth
• Top brokers name 3 ASX shares to buy next week
• Want to boost your portfolio with ASX blue chips? Analysts say buy these shares

Motley Fool contributor Tony Yoo has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Home Depot, and Walmart. 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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Even before the recent failures of US banks and Credit Suisse, the team at DNR Capital collectively felt funny in their tummy about the industry.

For them, even the Australian banks, which are well-shielded from the chaos overseas, showed several red flags in their latest results.

“Firstly, reporting season also highlighted that the tailwind from higher interest rates now appears to be coming to an end, or at least the end is nigh,” said DNR Capital Australian Equities Income Portfolio and Fund portfolio manager Scott Kelly.

“Commonwealth Bank of Australia (ASX: CBA)’s result in particular showed that monthly net interest margins may have actually peaked last October.”

The second alarm bell was that home loan growth is slowing. 

“[This] is a function of the uncertainty in the property market, and in response, banks pricing competition appears to be stepping up as well,” said Kelly.

“We are already seeing the big banks offer discounts and attempt to match competitors in mortgages.”

So many red flags for the banks

Since interest rates have become more palatable for deposit holders, competition in that area has really heated up.

“That will unwind some of the funding cost gains that the banks have benefited from over the last few years.”

Moreover, cheap federal government capital lent out during the COVID-19 pandemic is all due to mature soon.

“The majority of this becomes due over the June, September, and December quarters this year. That’ll need to be replaced with more expensive wholesale funding,” Kelly said.

“Inflationary pressures will continue to put pressure on the cost base, and people still account for two-thirds of the bank’s cost base, so that remains a significant headwind.”

Another dark cloud is that bad debts are a genuine worry for banks for the first time in many years.

“Asset quality will come under pressure as consumers struggle. In our view, the risk of high bad debts is rising, and that could be a negative surprise for many.”

Lastly, regulatory and political pressure could mount on the banks.

“There remains the likelihood of increased political scrutiny, particularly as consumers face increased challenges through higher cost of debt, broader increase in living expenses, and also the potential for unemployment.”

Here’s where to invest your money instead

So it would be no surprise to hear Kelly say that his team has reduced its exposure to the banking sector.

“Overall, we see better risk-return opportunities elsewhere and more attractive dividend yields on offer elsewhere, particularly companies that are growing their dollar income over time.”

Then where are they putting their money instead?

“Relative to the banks, we prefer the insurers and we think they provide a meaningful offset to our underweight bank’s position.”

He added that specifically the DNR team prefers QBE Insurance Group Ltd (ASX: QBE) and Suncorp Group Ltd (ASX: SUN).

“Operationally, domestic and international premium rate increases continue to be strong. We are seeing moderate volume growth and benign customer churn,” said Kelly.

“Both also benefit from higher interest rates through higher yields on their investment books.”

Both those insurance stocks are going for cheap, too.

“They’re low double-digit PE multiples and attractive dividend yields of over 6%,” Kelly said.

“In addition, we expect balance sheets to provide capital management opportunities on a two to three year view.”

The post Stay away from this ASX sector (and buy this one instead): expert appeared first on The Motley Fool Australia.

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More reading

• Own CBA shares? This could be the banking major’s next acquisition
• How much do I need to invest in ASX shares for $100 in weekly passive income?
• Is right now a once-in-a-decade opportunity to buy ASX 200 bank shares?
• Investing in ASX 200 banks for dividends? Read this
• Will the turmoil among global banks trigger a stock market crash?

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 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was in fine form and stormed higher. The benchmark index rose 1.05% to 7,034.1 points.

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

ASX 200 expected to tumble

The Australian share market looks set to tumble on Wednesday following a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 29 points or 0.4% lower this morning. In late trade on Wall Street, the Dow Jones is down 0.35%, the S&P 500 is down 0.4% and the Nasdaq is 0.8% lower.

Oil prices rise

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a decent session after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 0.65% to US$73.29 a barrel and the Brent crude oil price has risen 0.7% to US$78.68 a barrel. Kurdish supply risks boosted prices again.

Liontown shares are still a buy

The Liontown Resources Ltd (ASX: LTR) share price may have rocketed 68% higher on Tuesday following a takeover approach, but one broker believes it can keep rising. Bell Potter believes Albemarle’s offer is fair but not full and has retained its buy rating with an improved price target of $3.35.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a good day after the gold price rose overnight. According to CNBC, the spot gold price is up 1.1% to US$1,975.6 an ounce. US dollar weakness gave the precious metal a lift.

Dividend payday

A large number of ASX 200 shares will be paying their latest dividends on Wednesday. This includes stock exchange operator ASX Ltd (ASX: ASX), iron ore giant Fortescue Metals Group Ltd (ASX: FMG), gold miner Northern Star, energy producer Santos Ltd (ASX: STO), and engineering company Worley Ltd (ASX: WOR).

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

• Fortescue share price lifts on production update
• Here are the top 10 ASX 200 shares today
• How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 8 ASX 300 lithium stocks surging over 10% 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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A new month is upon us, so what better time to look at making some new portfolio additions.

If exchange traded funds (ETFs) are on your radar in April, then you might want to look at the three listed below.

Here’s what you need to know about these popular ETFs:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The BetaShares Asia Technology Tigers ETF could be a top option for investors to look at in April. This ETF tracks the performance of the largest technology companies in Asia (ex. Japan). It could be a top pick for long term focused investors due to the quality on offer in the Asian tech sector and its huge addressable market. Among the tigers you’ll be owning are Alibaba, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent Holdings.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ETF that investors may want to check out is the BetaShares Global Cybersecurity ETF. It provides investors with exposure to the rapidly growing global cybersecurity sector. BetaShares notes that with cybercrime on the rise, demand for cybersecurity services is expected to grow strongly for the foreseeable future. This means the fund’s holdings, which includes Accenture, Cisco, and Cloudflare, Okta, Palo Alto Networks, and Trend Micro, could experience strong demand for their services over the next decade.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ETF for investors to look at is the extremely popular Vanguard MSCI Index International Shares ETF. This ETF is a great option for investors that are looking to diversify their portfolio. That’s because it provides investors with access to around 1,500 of the world’s largest listed companies. This offers significant diversity and also allows investors to take part in the long term growth potential of international economies. Among its holdings are the likes of Amazon, Apple, Nestle, Nvidia, Procter & Gamble, Tesla, and Visa.

The post 3 fantastic ETFs for ASX investors to buy in April appeared first on The Motley Fool Australia.

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More reading

• Why I think the Vanguard MSCI Index International Shares ETF (VGS) is a buy for any portfolio
• Down over 25% from the peak, can these 2 ASX tech ETFs deliver big returns by 2025?
• Invested $1,000 in the Vanguard MSCI Index International Shares ETF (VGS) in 2018? Here’s how much dividend income you’ve received
• 3 high quality ETFs for ASX investors to buy after the market selloff
• Want to invest in cybersecurity but don’t know how? Try this ASX ETF

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 BetaShares Global Cybersecurity ETF and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended Betashares Capital – Asia Technology Tigers Etf 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 Fortescue Metals Group Ltd (ASX: FMG) share price closed 1.18% higher on Tuesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore stock finished the day at $20.56 apiece after closing at $20.32 a share on Monday.

Here’s what helped push the Fortescue share price higher today.

What are ASX 200 investors considering?

Fortescue looks to be receiving some tailwinds from an increase in the iron ore price.

The critical steel-making metal gained 0.5% overnight to US$118.85 per tonne.

And it was not just the Fortescue share price that marched higher today. The S&P/ASX 300 Metals & Mining Index (ASX: XMM) closed up 2.45%.

ASX 200 investors were also likely poring over Fortescue’s non-price sensitive production update, released this morning.

Fortescue reported that first production at its Western Australia Iron Bridge Magnetite Project has been revised to the second half of April. First production had previously been planned to commence in the March quarter.

The project is an unincorporated joint venture between Fortescue’s subsidiary, FMG Magnetite (69%) and Formosa Steel (31%).

The miner said that despite inclement weather impacting activity and associated infrastructure at Iron Bridge, crews continue to make “significant progress”. Amid that progress, Fortescue reported the entire steel concentrate and return water pipelines have been welded and buried.

Once fully operational, Iron Bridge will produce 22 million tonnes of high-grade 67% iron magnetite concentrate every year.

According to the release, the project’s capital estimate won’t be affected by the revised production date. Capex remains estimated at US$3.9 billion. Fortescue’s share of that investment works out to approximately US$3 billion.

Fortescue share price snapshot

As you can see in the chart below, the Fortescue share price has gained 6% over the past 12 months. This compares to a loss of 5% posted by the ASX 200 over that same period.

The post Fortescue share price lifts on production update appeared first on The Motley Fool Australia.

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More reading

• How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month
• Guess which ASX All Ords stock is lifting on a $55m deal with Fortescue
• Fortescue share price marching higher amid green iron ‘major breakthrough’
• Why did the Fortescue share price slide today?
• How big will the Fortescue dividend be in 2024?

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

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The S&P/ASX 200 Index (ASX: XJO) took off on Tuesday, rising 1.04% to close at 7,034.1 points amid rallying lithium stocks.

The Liontown Resources Ltd (ASX: LTR) share price rocketed on news it had turned down a $5.5 billion takeover bid from international lithium giant Albemarle.

Many of the ASX 200 company’s peers also leapt higher – bolstering the S&P/ASX 200 Materials Index (ASX: XJO) to gain 2.2%.

Meanwhile, a $1.5 billion takeover offer posed to United Malt Group Ltd (ASX: UMG) was better received. The maltster has entered an exclusivity deed with French suitor Malteries Soufflet.

Stock in the takeover target led the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) 0.4% higher today.

But it was the S&P/ASX 200 Energy Index (ASX: XEJ) that came in as today’s top-performing sector, leaping 4.1%.

On the other hand, the S&P/ASX 200 Health Care Index (ASX: XHJ) underperformed all others, falling 0.9%.

But which share posted the index’s biggest gain on Tuesday? Keep reading to find out.

Top 10 ASX 200 shares countdown

Surprise, surprise! Today’s top-performing ASX 200 stock was, of course, Liontown.

The lithium hopeful’s share price leapt a whopping 68.5% today to close at $2.57 following Albemarle’s rejected $2.50 per share acquisition offer.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
Liontown Resources Ltd (ASX: LTR)	$2.57	68.52%
United Malt Group Ltd (ASX: UMG)	$4.50	30.81%
Core Lithium Ltd (ASX: CXO)	$0.90	15.38%
Allkem Ltd (ASX: AKE)	$11.53	13.71%
Pilbara Minerals Ltd (ASX: PLS)	$3.85	11.92%
Sayona Mining Ltd (ASX: SYA)	$0.205	10.81%
Paladin Energy Ltd (ASX: PDN)	$0.605	9.01%
Chalice Mining Ltd (ASX: CHN)	$6.84	8.92%
Lake Resources N.L. (ASX: LKE)	$0.45	8.43%
Beach Energy Ltd (ASX: BPT)	$1.385	7.78%

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

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 8 ASX 300 lithium stocks surging over 10% today
• Why Chalice Mining, Core Lithium, Liontown, and United Malt shares are racing higher
• Here’s why the Sayona Mining share price is shooting 14% higher today
• 3 ASX 200 shares cracking multi-year highs on Tuesday

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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As any investor who hasn’t found a new home under a rock lately would know, the ASX share market has had a very rough few weeks lately. After climbing over 7,500 points back in February (representing a year-to-date gain of 8.8% at the time), the S&P/ASX 200 Index (ASX: XJO) promptly cratered.

By mid-March, it was back under 6,900 points, having lost close to 9% of its value peak to trough. Although the market has seen a bit of an upswing over the past few days, we convincingly remain well below where we were at the start of February.

So why has the stock market dropped so convincingly over the past few weeks, in stark contrast to the happy start it had to 2023?

Well, it’s hard to put a finger on exactly. But there’s little doubt that the crises we have seen with the global financial system have played an outsized role.

It all started with the unexpected collapse of the SVB Financial Group (Silicon Valley Bank) in early March. SVB is, or at least was, a specialty bank catering to startups, tech companies and other businesses that inhabited the United States’ famous Silicon Valley tech hub.

It seems that the rapid rate of interest rate rises in most countries around the world (including and especially the US) destabilised SVB’s finances to such a degree that it endangered the entire company.

If it was just SVB then perhaps the markets would be back to where they were in February. But SVB’s collapse started something of a chain reaction, with the giant Swiss bank Credit Suisse following suit shortly after. Credit Suisse has since been acquired by its fellow Swiss bank UBS. But fears of financial contagion are clearly well-entrenched now.

So it’s this banking crisis, together with high interest rates, that we can probably blame for the share market’s recent woes.

And now, onto the question everyone wants to know: when will the markets recover?

When will the stock market be as it was?

Well, I have a simple answer: I have no clue. And nor does anyone else, no matter what they might say.

If someone knew how to consistently pick the tops and bottoms of any share market, they would be richer than Warren Buffett, Jeff Bezos or Elon Musk. But seeing as the global rich list is devoid of stock pickers, it just goes to show how tricky this business is.

So I’m not trying to ‘time a bottom’ here. And nor should you. Instead, do what has always worked in the stock market: find quality businesses you can buy for a reasonable price. That’s how Warren Buffett got (and stays) rich.

And that’s the best ticket that any of us have to gain real wealth from ASX shares. Don’t worry about tops and bottoms, or crises and banks.

Both the stock market and the many quality shares it houses have never failed to regain previous all-time highs. That’s despite global recessions, depressions, wars and pandemics. I don’t think this trend will end with the collapse of a couple of banks in 2023.

The post Why has the stock market dropped and when will it recover? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price lifts on production update
• Here are the top 10 ASX 200 shares today
• How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month
• Why I think the Qantas share price can keep soaring higher
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

SVB Financial provides credit and banking services to The Motley Fool. 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 positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial. 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) has fallen 4% since its March peak, and the downturn has likely left plenty of shares boasting notable dividend yields. That means now could be an ideal time to work on building a second income.

This month has brought the collapse of Silicon Valley Bank, UBS’ takeover of Credit Suisse, and worries Deutsche Bank could also be in trouble.

That’s likely left many wondering if such liquidity concerns among international financial giants could be the first sign of a market crash. Such sentiment may have, in turn, weighed on quality shares.

As a result, now might be a good time for me to consider building my passive income by buying ASX 200 dividend shares.

How I’d invest for a second income, starting TODAY

Falling share prices often herald more appealing dividend yields. I think I could find some particularly juicy offerings in the aftermath of the ASX 200’s recent 4% fall.

In fact, I think I could find a handful of ASX 200 shares capable of providing an average dividend yield of more than 8.5%.

If I invested $20,000 in such stocks, I could realise $1,700 of annual passive income without lifting a finger. That’s more than $140 a month.

At the same time, I’d make a point to manage the risks associated with investing.

First, I’d diversify my passive income portfolio. By buying at least five shares across different industries, I could better protect my investments from single-sector falls.

Second, I’d also aim to hold my investments for at least 10 years. That way I’d hope to make the most of the stock market’s volatility.

5 ASX 200 shares yielding over 8.5%

But what handful of shares can provide an average dividend yield of more than 8.5%?

These five ASX 200 shares each offer a dividend yield of more than 7% and, together, provide an average yield of 8.8%. Take a look:

ASX 200 share	Dividend yield at the time of writing
New Hope Corporation Ltd (ASX: NHC)	8.51%
Fortescue Metals Group Ltd (ASX: FMG)	9.48%
Harvey Norman Holdings Ltd (ASX: HVN)	10.1%
Fletcher Building Limited (ASX: FBU)	8.83%
Bank of Queensland Ltd (ASX: BOQ)	7.09%
Average:	8.8%

If I were to invest $20,000 equally across the five above stocks, I could secure an 8.8% average dividend yield.

At that point, my portfolio would be capable of providing $1,760 of passive income each year – or approximately $147 a month.

And that could be just the beginning.

I would hope the value of my investments rises over the coming years and decades, thereby growing my passive income in the future. Who knows, my ASX 200 shares might even allow me to retire a little bit earlier than I could have otherwise.

Though, no investment is guaranteed to provide returns and past performance doesn’t indicate future performance.

The post How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month appeared first on The Motley Fool Australia.

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More reading

• Is right now a once-in-a-decade opportunity to buy ASX 200 bank shares?
• Guess which ASX All Ords stock is lifting on a $55m deal with Fortescue
• Goldman Sachs says these ASX dividend shares with 7%+ yields are buys
• BHP share price dips as coal mines catch attention
• 8 ASX All Ords shares trading ex-dividend this week

SVB Financial provides credit and banking services to The Motley Fool. 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 Harvey Norman and SVB Financial. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended SVB Financial. 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 Qantas Airways Limited (ASX: QAN) share price has risen more than 20% over the last six months. I think the ASX travel share can keep flying higher as the industry recovers from COVID-19 impacts.

There are few businesses that saw as much of a demand decline as airlines during COVID-19 with the closure of international borders, and even state borders, with lockdowns.

However, there has been a huge amount of pent-up demand that is now coming through, which Qantas is benefiting from.

I think that the ongoing normalisation of domestic and international demand could mean the Qantas share price is undervalued. Its international capacity is still not back to pre-COVID levels.

Demand and earnings drive Qantas share price higher

The FY23 first half showed a lot of promising numbers, with underlying profit before tax of $1.43 billion, statutory profit after tax of $1 billion, the net debt declined $2.4 billion, and the statutory earnings per share (EPS) came in at 53.9 cents.

Qantas explained that the drivers of this result were “consistently strong travel demand, higher yields and cost improvements”.

Leisure demand is leading the recovery, according to Qantas, while business travel remained “strong”. The company is benefiting from freight earnings being above pre-COVID levels, with a permanent increase of e-commerce domestically leading to a “structural shift” in freight volumes and earnings. That sounds like good news for the Qantas share price.

It also revealed that ‘Qantas Loyalty’, which includes the Qantas points, saw revenue of $1 billion and underlying earnings before interest and tax (EBIT) of $220 million for the half (a 73% rise). It saw a solid increase in bookings via its holidays offers, a 14% rise in Qantas health insurance customers, growth of travel insurance, and so on.

Every single area of the business seems to be doing well, which bodes well for the future in my opinion.

Why I think it can fly higher

In the second half of FY23, the business is expecting domestic capacity to increase from 94% to 103% of FY19 levels, while international capacity is expected to rise from 60% to 81%.

FY23 second-half fares are expected to remain “significantly above” FY19 levels. The most promising thing for the Qantas share price, in my opinion, is that travel demand is expected to remain strong throughout FY23 and into FY24.

I think a return of Asian, American, and European tourists to Australia will be a very useful support for Qantas earnings.

According to Commsec, the business is expected to generate 99.7 cents of EPS in FY24, which would put the Qantas share price at just 6.5x FY24’s estimated earnings. Even a forward price/earnings (p/e) ratio of eight could lead to a rise of more than 20% for Qantas.

Shareholder returns like dividends and share buybacks could also be a boost for the Qantas share price.

In a world of uncertainty amid higher interest rates, I think Qantas is one of the ASX shares that can still do well because of pent-up demand and reopened borders, which can help maintain and grow earnings over the next two financial years.

The post Why I think the Qantas share price can keep soaring higher appeared first on The Motley Fool Australia.

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More reading

• Beach and bling: 2 ASX 200 shares Firetrail is loving right now
• Refuelled with profits, how ASX 200 favourite Qantas plans to stick the landing on growth
• Why Adairs, Liontown, Qantas, and Synlait shares are dropping today
• Qantas share price takes a dive amid more takeover delays
• Top brokers name 3 ASX shares to buy next week

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

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The S&P/ASX 200 Index (ASX: XJO) is building on the gains we saw yesterday and is pushing higher during Tuesday’s session. Investors seem to be in a good mood, with the ASX 200 presently basking in a pleasing 1.02% rise, which lifts the index back over 7,000 points.

But let’s dive a little deeper into these happy gains by taking stock of the shares currently at the peak of the ASX 200’s share trading volume charts, according to investing.com. And boy, do we have some volumes to discuss today.

The 3 most traded ASX 200 shares by volume this Tuesday

Pilbara Minerals Ltd (ASX: PLS)

First up is the ASX 200 lithium leader Pilbara Minerals. So far this Tuesday, a significant 46.23 million PIlbara shares have been changed on the ASX. We haven’t had anything out of Pilbara itself that could explain this volume. But it’s pretty obvious what is behind so many shares bouncing around.

As my Fool colleague Brooke covered this morning, one of Pilbara’s lithium peers on the ASX has received (and rejected) a takeover offer. As a result, all ASX lithium shares are going through the roof today. Pilbara is no exception, with the company recording a happy 13% rise so far this session, leaving the company at $3.88 a share.

Sayona Mining Ltd (ASX: SYA)

Next up is another ASX 200 lithium stock in Sayona Mining. This Tuesday has seen a massive 49.7 million Sayona shares change hands as it currently stands.

It seems we have a very similar situation to that of Pilbara today. In Sayona’s case, this lithium producer has bagged a chunky 11.9% rise, putting the company at 21 cents a share. This easily explains the high volumes on display here.

Liontown Resources Ltd (ASX: LTR)

Thirdly today, it’s another ASX 200 lithium stock in Liontown Resources, with a monstrous 113.8 million shares bought and sold.

The mystery ASX 200 lithium stock that has swatted away a takeover bid today is none other than Liontown. As we discussed this morning, Liontown has received a takeover offer from US lithium company Albemarle to acquire the company for $2.50 a share.

Liontown has rejected the offer outright, calling it “opportunistic”. But investors have gone to town celebrating anyway. The Liontown share price is currently up a whopping 64% to $2.50 a share. So it’s no surprise to see more than 100 million shares flying around today.

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

• 8 ASX 300 lithium stocks surging over 10% today
• Why Chalice Mining, Core Lithium, Liontown, and United Malt shares are racing higher
• Here’s why the Sayona Mining share price is shooting 14% higher today
• 3 ASX 200 shares cracking multi-year highs on Tuesday
• Why are ASX lithium shares going gangbusters 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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