Suncorp Group Ltd (ASX: SUN) shares have come under pressure with the rest of the banking sector this week.

This means that the banking and insurance giant’s shares have lost almost 8% of their value since this time last week.

In light of this decline, investors may be wondering if now is a good time to pounce on Suncorp’s shares. Let’s take a look.

Is it time to buy Suncorp shares?

One leading broker that thinks investors should be snapping up shares is Goldman Sachs.

Earlier this month, the broker retained its buy rating with a $14.47 price target. This implies potential upside of almost 21% for its shares over the next 12 months.

In addition, income investors may be pleased to learn that some very attractive dividend yields are expected in both FY 2023 and FY 2024.

Goldman is forecasting fully franked dividends of 78 cents per share and then 79 cents per share, respectively. Based on the current Suncorp share price of $11.98, this will mean yields of 6.5% and then 6.6%.

Why is the broker bullish?

Goldman revealed that it is feeling bullish on Suncorp shares due to the company’s favourable outlook. This is being underpinned by a number of tailwinds in the general insurance market. It commented:

We are favourably disposed to Suncorp noting in large part the tailwinds that exist in the general insurance market i.e., very strong renewal premium rate increases and the benefit of higher investment yields. We think the strong rate momentum that SUN is getting should likely offset volume pressures as they optimise their risk exposures in certain portfolios such as home but also likely policy lapses / buy downs.

And while it acknowledges that its underlying margin is facing pressures, it sees scope for price increases to offset this. It adds:

We note that SUN is putting through significant price increases to reflect these pressures but these benefits will flow through with a lag. Further, we note that we could start to see benefits of underlying claims inflation abating into FY24E.

Overall, the broker believes Suncorp shares look cheap compared to peers. It also sees potential for a capital return when it sells its banking business. Goldman concludes:

Despite reflecting some of these pressures in underlying margins, we think SUN trades relatively cheap compared to IAG hence we have a relative preference for SUN. We also see possible catalysts on the horizon for SUN including capital return post the bank sale and the possibility of a whole of account quota share arrangement similar to IAG. We are Buy-rated on SUN.

The post Are Suncorp shares a cheap passive-income buy after diving 7% in a week? appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• Bought $1,000 of Suncorp shares 10 years ago? Here’s how much passive income you’ve received

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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While the recent market volatility has been disappointing, this pullback is nothing compared to what some ASX growth stocks have experience over the last 12 months.

For example, the three growth stocks listed below are down between 40% and 65% during this time.

Here’s why this could prove to be a great opportunity for investors to buy and hold these stocks:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price has lost almost 50% of its value since this time last year. Investors have been selling the pizza chain operator’s shares due to inflationary pressures. As well as weighing on its costs, the cost of living crisis has led to consumers pushing back on price increases, impacting sales.

The good news is that inflation will ease in time and our love of pizza is unlikely to ever change. It is for this reason that Morgans is recommending its shares with an add rating and $70.00 price target.

Megaport Ltd (ASX: MP1)

The Megaport share price has lost approximately two-thirds of its value over the last 12 months. This has been caused partly by the market’s aversion to loss-making growth stocks and its slowing growth.

Goldman Sachs sees this as a buying opportunity for long term investors. This is due to the broker remaining “confident MP1 has a clear product advantage vs. peers and a decade-long runway for robust growth.” Its analysts recently put a buy rating and $8.20 price target on Megaport’s shares.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price may be rising today but it remains down 41% since this time in 2022. The rerating of growth stock valuations, softening online sales, and fears over housing market weakness appear to be behind this.

But once again, these are all temporary headwinds that will ease in time and could have created a buying opportunity for buy and hold investors. Goldman Sachs clearly thinks it has. Especially given that its analysts “forecast a 21% 10-yr EBITDA CAGR driven by consolidation of market share and growing online penetration.”

The broker has a conviction buy rating and $6.50 price target on this ASX growth stock.

The post 3 ASX growth stocks down 40%-65% to buy now and hold appeared first on The Motley Fool Australia.

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• Why Atlantic Lithium, Pushpay, St Barbara, and Temple & Webster shares are rising
• Temple & Webster share price higher on $30 million share buyback
• These 3 ASX shares just halved. I would buy one of them: experts
• Why did the Domino’s share price just hit a multi-year low?
• Here are the 10 most shorted ASX shares this week

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, Megaport, and Temple & Webster Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises, Megaport, 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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It’s been yet another rough day for the S&P/ASX 200 Index (ASX: XJO) so far this Thursday. At the time of writing, the ASX 200 has lost a chunky 1.47%, dragging the Index below 6,970 points. But let’s talk about the extraordinary outlier to this misery known as the De Grey Mining Limited (ASX: DEG) share price.

De Grey shares are on fire today. This ASX 200 gold miner is currently bucking the market with its gain of 0.35% so far today.

That puts the company up to $1.42 a share. It was even better for De Grey shares earlier this morning too, with the gold stock rising as high as $1.46 a share just before midday today. That was a gain worth almost 2% at the time: 

So what’s going so right for this ASX 200 gold miner this Thursday?

Why is the De Grey Mining share price destroying the ASX 200 today?

Well, this isn’t a hard one to figure out. De Grey is not the only gold share showing some green this session. Most of De Grey’s peers in the ASX 200 gold space are seeing similar, if not larger, gains. Take the ASX 200’s largest gold miner, Newcrest Mining Ltd (ASX: NCM). Newcrest shares are currently up by 1.14%

Northern Star Resources Ltd (ASX: NST) isn’t quite as strong, but it’s still put on a healthy 0.54%. Gold Road Resources Ltd (ASX: GOR) has risen by 1.78% so far, while Ramelius Resources Ltd (ASX: RMS) shares have been bumped up by 0.62%.

All of these gains point to one thing: a rising gold price.

ASX gold miners like De Grey are only as valuable as the precious metal they mine. And gold itself has been on a tear this week. Likely due to the fear and loathing in the markets right now, gold is fulfilling its old reputation as a safe haven.

As we covered this morning in our piece covering gold exchange-traded funds (ETFs), the precious metal has risen from US$1,867 an ounce to more than US$4,920 an ounce over the past week alone.

So given these rises in gold itself, it’s no wonder investors are flocking to ASX 200 gold shares like De Grey today.

The post Why is the De Grey share price smashing the ASX 200 on Thursday? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Here are the top ten ASX 200 shares today
• Why De Grey, Kogan, Mayne Pharma, and Mesoblast shares are charging higher

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. 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 Sayona Mining Ltd (ASX: SYA) share price is having a top run today.

Sayona Mining shares are up 1.16%, currently fetching 21.75 cents a share. In contrast, the S&P/ASX 200 Index (ASX: XJO) is 1.46% in the red at the time of writing.

Let’s check the news that may be lifting the Sayona Mining share price today.

‘Milestone’ lithium news

Sayona Mining is outperforming other ASX lithium shares today. At present, the Core Lithium Ltd (ASX: CXO) share price is down 4.07%, while Pilbara Minerals Ltd (ASX: PLS) shares are 3.13% lower amid wider market turmoil.

Today, Sayona announced a “new milestone“. The company has produced its first saleable commercial grade spodumene lithium concentrate at the company’s North American Lithium (NAL) operation in Quebec, Canada.

About 1,200 tonnes of lithium concentrate has been produced, including 6% lithium grade.

Sayona expects to ship lithium for the first time in July this year. The lithium company is aiming to produce between 85,000 and 115,000 tonnes of lithium in the first half of FY24.

Commenting on the news, Sayona managing director Brett Lynch said:

Congratulations to the whole team at NAL for delivering yet another milestone on time and within budget.

Having witnessed first‐hand the operation’s restart I can only express admiration for this achievement, which demonstrates we have the experience and expertise to run a successful operation.

For Sayona, the opportunity is only getting bigger and we are proud to play our part as North America’s emerging leading hard rock lithium producer.

Today’s announcement follows Sayona’s news on 8 March that it had produced its first lithium concentrate.

The North American Lithium restart is on schedule and within budget, Sayona said today.

Share price snapshot

The Sayona share price has soared 32% in the last year, while it has climbed 1.16% in the past month.

Sayona has a market capitalisation of about $1.9 billion based on the current share price.

The post Sayona Mining share price lifts on first saleable lithium production appeared first on The Motley Fool Australia.

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More reading

• ASX 200 trims losses amid employment data and Credit Suisse $80b central bank loan
• Is the Coles share price heading back up to $19?
• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• What’s going on with Credit Suisse and why is it impacting ASX 200 shares?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Monica O’Shea 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 CSL Limited (ASX: CSL) share price is defying the market selloff and pushing higher on Thursday.

In afternoon trade, the biotherapeutics giant’s shares are up almost 1% to $286.37.

This compares favourably to a 1.4% decline by the ASX 200 index.

Why is the CSL share price outperforming?

Investors have been buying CSL’s shares despite there being no news out of the company.

However, when market volatility is high and the global economic outlook becomes uncertain, companies with defensive earnings are often in favour with investors.

CSL ticks a lot of boxes here. Because it develops life-saving therapies, they are in demand with end-users whatever is happening in the economy.

In addition, plasma is a key ingredient in the company’s therapies. This means that it relies heavily on plasma donations at its collection centres.

When the global economy is booming, there is less need for people to donate plasma. This can lead to CSL having to increase its financial reward for donations. Whereas when there’s an economic downturn, there are more people willing to donate and collection costs tend to reduce accordingly.

The team at Citi is likely to approve of anyone buying CSL shares today. It currently has a buy rating and $350.00 price target on the company’s shares. This implies potential upside of 22% from current levels.

The post Why is the CSL share price smashing the ASX 200 on Thursday? appeared first on The Motley Fool Australia.

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• Here’s how much I’d need to invest in CSL shares to generate a $300 monthly income
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• Morgans names 3 more of the best ASX shares to buy in March
• Why is the CSL share price on the slide today?

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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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S&P/ASX 200 (ASX: XJO) shares are rebounding on news of stronger-than-expected jobs data and an $80 billion central bank bailout for Switzerland’s second-largest bank.

During morning trade, the benchmark ASX 200 index fell by more than 150 points following dramatic trading sessions across Europe and in the United States overnight.

At the time of writing, the ASX 200 has recovered somewhat to be down 101 points, or 1.43%.

What’s helping the ASX 200 recover this afternoon?

Credit Suisse Group AG has announced it is taking out an A$81 billion loan from Switzerland’s central bank.

This follows a 24% plunge in Credit Suisse shares overnight after its major shareholder refused to up their stake.

This caused a bank share rout in France, Germany, the United States, and here in Australia this morning.

Credit Suisse has been besieged by various problems over time, with its market capitalisation halved since 2021.

The bank’s shares have tumbled by more than 50% since early February.

In a statement, Credit Suisse said:

Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from the Swiss National Bank (SNB) up to CHF 50 billion under a Covered Loan Facility as well as a short-term liquidity facility, which are fully collateralized by high quality assets.

Credit Suisse also announces offers by Credit Suisse International to repurchase certain OpCo senior debt securities for cash of up to approximately CHF 3 billion.

The cash tender on 10 US-dollar-denominated senior debt securities will expire on Wednesday, 22 March.

What other news is pushing the ASX 200 higher?

The Australian Bureau of Statistics has released its monthly labour force data today.

The data revealed a surprise fall in the seasonally adjusted unemployment rate to 3.5%.

This is back to where it was in December. The rate went up to 3.7% in January.

ABS head of labour statistics Bjorn Jarvis said:

The latest monthly increase in trend employment was only slightly below the monthly average for the 20 years before the pandemic.

This now shows that, while underlying employment growth has slowed down compared with what we saw through much of 2022, it is still increasing at close to its long-term historical rate.

The better-than-expected data indicates the economy is still doing well despite inflationary pressure.

Low unemployment indicates businesses are thriving, which is why the ASX 200 is up on the news.

The post ASX 200 trims losses amid employment data and Credit Suisse $80b central bank loan appeared first on The Motley Fool Australia.

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• Is the Coles share price heading back up to $19?
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• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• What’s going on with Credit Suisse and why is it impacting ASX 200 shares?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Bronwyn Allen 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 past week has certainly not been kind to ASX shares and the S&P/ASX 200 Index (ASX: XJO). Over the past five trading days, the ASX 200 has fallen by a nasty 4.7% – a dramatic fall by any reading. But that’s nothing compared to the woes of the Flight Centre Travel Group Ltd (ASX: FLT) share price. 

Flight Centre shares have certainly had a week to forget. At the end of last Wednesday’s session, this ASX 200 travel stock was asking $19.70 a share. Today, Flight Centre is trading at just $17.50 at present.

That’s down a depressing 3.77% for the day alone, and down by an even more sobering 11.14% since last Wednesday:

So what’s going on with Flight Centre shares that have made this ASX 200 travel company such a poor performer over the past week?

Why has the Flight Centre share price seen so much turbulence this week?

Well, it’s hard to say. The last time we had any news from the company itself was on Monday. As we covered at the time, Flight Centre told investors that its recent share purchase plan (SPP) had been successful.

So much so that the company decided to raise $60 million instead of the original $40 million. That was despite demand of up to $350 million from investors. 

These shares were issued at a price of $14.60, which has probably played a major role in the share price weakness we have seen over the past week. The funds raised from investors will go towards the acquisition of the British luxury travel company Scott Dunn.

Together with Flight Centre’s ongoing presence on the ASX 200’s most shorted shares list, this share purchase plan looks like the most likely reason Flight Centre had had such a tough week. But it’s not the only ASX 200 travel share that has.

Most of Flight Centre’s peers in the travel sector have also dramatically underperformed the broader market since last Wednesday. The Qantas Airways Limited (ASX: QAN) share price has lost almost 7% over the same period, while Corporate Travel Management Ltd (ASX: CTD) shares are down by close to 8%.

So it was always going to be a tough week for the Flight Centre share price. No doubt investors will be hoping for a smoother end to the trading week tomorrow.

The post Why has the Flight Centre share price tumbled 11% in a week? appeared first on The Motley Fool Australia.

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• Why is the Flight Centre share price lagging the ASX 200 on Monday?
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• Should I buy Flight Centre shares at $19?
• Here are the 10 most shorted ASX shares this week

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 recommended Corporate Travel Management and Flight Centre Travel 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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S&P/ASX 200 Index (ASX: XJO) oil stocks are having a day to forget, with the big oil and gas companies facing multiple headwinds.

In early afternoon trade, the Santos Ltd (ASX: STO) share price is down 3.7% while Woodside Energy Group Ltd (ASX: WDS) shares have tumbled 5.17%.

Indeed, while the ASX 200 is down a hefty 1.42% at the time of writing, the S&P/ASX 200 Energy Index (ASX: XEJ) has dropped 4.4%.

So, what’s going on?

What are investors considering?

ASX 200 oil stocks are being hit with two related but separate concerns that have sent the Brent crude oil price to its lowest level since late 2021. Brent is currently trading for US$73.95 per barrel.

First, investors are broadly skittish as the contagion from the United States banking crisis has spread to Europe.

Last week markets were roiled by the collapse of US-based SVB Financial Group (NASDAQ: SIVB), or Silicon Valley Bank.

This week it’s Credit Suisse Group (SWX: CSGN) stoking investor fears. With the bank struggling to access additional funds, the Credit Suisse share price cratered 24% on the SIX Swiss Exchange overnight, reaching new all-time lows.

The prospect of a global banking crisis is sparking fresh recession fears. And a world in recession would demand less oil.

That’s the demand side.

The second concern hitting ASX 200 shares today is an oversupply of crude oil. At least in the short term.

According to a monthly report just out from the International Energy Agency (IEA), oil stockpiles are at 18-month highs. That’s partly due to Russia managing to actually up its crude production in February, despite international sanctions.

The IEA noted (quoted by Bloomberg):

World oil supply should comfortably exceed demand in the first half of the year. Much of the supply overhang reflects ample Russian barrels racing to re-route to new destinations… Russian oil supply has held up surprisingly well following its invasion of Ukraine … the country is still shipping roughly the same amount of oil to world markets.

Is now the time to buy ASX 200 oil stocks?

With ASX 200 oil stocks now well into the red in 2023, is now the time to buy?

That, of course, hinges on how crude oil prices track over the remainder of the year.

But for investors with a medium-term horizon of at least a year or so, I believe both the Santos and Woodside share prices will trade significantly higher inside the next 12 months than where they’re at today.

Of course, there are no guarantees. And both ASX 200 oil stocks may well slide further from their current levels in the short term.

But the outlook for oil demand in the latter half of 2023 remains robust.

Both the Organization of Petroleum Exporting Countries (OPEC) and the IEA believe oil demand from China – the world’s number two economy and most populous nation – will increase over the year.

CBA mining and energy analyst Vivek Dhar also believes China will help drive an uptick in global oil demand, along with the world’s second most populous nation, India.

Dhar said he expects the current ample supply scenario won’t last, which will drive crude oil prices higher in the second half of the year.

“We see deficit risks rising in H2 2023, as global oil supply growth, driven mainly by US, Norway and Brazil, fails to keep up with global oil demand growth,” he said.

Dhar forecasts the Brent oil price will increase to $US88 per barrel in the second half of 2023.

That’s up 19% from today’s oil price.

If that proves accurate, it should offer some strong support for the ASX 200 oil stocks.

The post ASX 200 oil stocks are tanking. Is now the time to buy? appeared first on The Motley Fool Australia.

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• Why Bendigo and Adelaide Bank, BHP, IPH, and Woodside shares are dropping
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• 5 things to watch on the ASX 200 on Thursday
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week

SVB Financial provides credit and banking services to The Motley Fool. 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 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. At the time of writing, the benchmark index is down 1.4% to 6,970.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The Bendigo and Adelaide Bank share price is down 3% to $8.83. This follows news that the banking crisis has spread to Europe with Credit Suisse the latest bank rumoured to be fighting for survival. And while the Swiss central bank has assured Credit Suisse that it will provide extra liquidity if needed, it isn’t painting a positive picture of the sector as a whole.

BHP Group Ltd (ASX: BHP)

The BHP share price is down 4% to $43.73. This follows a similarly large decline by the mining giant’s shares on the NYSE during overnight trade. This has been driven by concerns over the state of the global economy and what this might mean for commodity demand and pricing.

IPH Ltd (ASX: IPH)

The IPH share price is down 12% to $7.37. Investors have been selling this intellectual property services company’s shares after it was hit by a cyber-attack. IPH advised that it detected unauthorised access to a portion of its IT environment on 13 March. An investigation into the incident could take “some time to complete.”

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price is down 5% to $31.20. This has been driven by another pullback by oil prices overnight on global economic growth concerns. WTI crude oil futures fell more than 5% to settle at US$67.61 per barrel, whereas Brent crude oil fell 4% to settle at US$74.36 per barrel. WTI crude oil futures were at their lowest level since December 2021.

The post Why Bendigo and Adelaide Bank, BHP, IPH, and Woodside shares are dropping 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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended IPH. 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 Coles Group Ltd (ASX: COL) share price has performed quite well since the start of 2023, rising by around 7%.

That compares to a return of just 0.2% for the S&P/ASX 200 Index (ASX: XJO). The index is suffering today amid banking problems in the northern hemisphere with Silicon Valley Bank and now Credit Suisse.

As for Coles, its share price last traded above $19 in August 2022. But much has happened since then, with multiple interest rate rises in Australia, as well as annual inflation still stubbornly high.

For me, one of the biggest drivers of longer-term share price performance is profit improvement and plans for business improvement.

Despite the Coles share price being down close to 10% since August 2022, the company has actually delivered sales and earnings growth since then.

Earnings recap

In the recent FY23 half-year result for the 27 weeks to 1 January 2023, Coles said that its continuing operations sales revenue had increased 3.9% to $20.8 billion. At the same time, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 7.6% to $1.8 billion and earnings before interest and tax (EBIT) went up 9.9% to $1.06 billion.

Continuing operations net profit after tax (NPAT) increased 11.4% to $616 million, while earnings per share (EPS) rose 11.6% to 46.3 cents.

This enabled dividend growth of 9.1% to 36 cents per share.

Coles is divesting its Coles Express to Viva Energy Group Ltd (ASX: VEA), which is why the supermarket business has outlined its ‘continuing operations’ earnings so investors can see the performance of the ongoing business.

By the end of FY23, the business is expecting to achieve cumulative smarter selling benefits of $1 billion across its four-year program. Some of these benefits include trolley-assisted checkouts, energy reductions across heating, ventilation, and cooling, measures to tackle theft, and the use of advanced analytics and store-specific data to “markdown rates”.

Can the outlook drive the Coles share price higher?

Coles said that in the third quarter of FY23, its supermarkets’ volume growth returned to “modestly positive” from mid-January.

However, supplier input cost pressures remain, “particularly related to packaged goods, wages and energy”.

In January, the supermarket business commenced operations at the Witron automated Queensland distribution centre, with the receipt of its first inbound supplier deliveries. It’s expecting to ramp up operations in the fourth quarter of FY23.

I think that the new distribution centres can help improve Coles’ efficiencies and profit margins. The business has made the right moves, in my opinion, by investing in these impressive buildings.

With ongoing food inflation and a return to volume growth, I think Coles will be able to deliver profit growth and dividend growth.

With the current Commsec estimates, the Coles share price is valued at 22x FY23’s estimated earnings with a potential grossed-up dividend yield of 5.3%. With ongoing profit growth expected over the financial years to FY25, I think Coles will be able to generate more investor interest and rise to $19 and beyond.

My colleague James Mickleboro also reported on Citi’s $20.20 price target on Coles, which implies the next 12 months could be a promising time for investors.

The post Is the Coles share price heading back up to $19? 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 positions in and has recommended Coles 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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