The A2 Milk Company Ltd (ASX: A2M) share price has seen plenty of volatility over the last couple of years.

Since the start of July 2020, A2 Milk shares have fallen by around 70%.

But, interestingly, the company has gone on a strong run over the past six months, rising by 44%.

So, with the recent rise from the low, can investors say that the worst is over?

A2 Milk is expecting growth

After a couple of years of revenue declines, with regular earnings downgrades, A2 Milk is finally expecting to deliver growth again.

When the dairy company announced its FY22 result, it also gave some comments about expectations for FY23. It said that it’s expecting continued revenue and earnings growth.

The company said that it’s expecting high single-digit growth in FY23. FY23 first-half growth is expected to be “significantly higher” than the FY23 second half.

The FY23 gross profit margin is expected to be “broadly in line” with FY22, with cost of goods sold headwinds related to increasing milk, ingredient and packaging costs offset by price increases, product mix benefits and cost mitigation initiatives.

Overall, the business is expecting earnings before interest, tax, depreciation and amortisation (EBITDA) growth in FY23 and a modest improvement in the EBITDA margin. It’s expecting the FY23 second-half EBITDA margin to be better than the first half.

Is the worst over?

The latest win for the business came as the United States Food and Drug Administration approved A2 Milk to supply infant milk formula to the US to help with the shortage there.

The FDA had deferred further consideration of A2 Milk’s US application. But, after ongoing engagement with the FDA, the agency has given A2 Milk approval to supply infant formula. The business is expecting to sell up to 1 million cans, all within the second half of FY23.

According to reporting by the Australian Financial Review, Spheria Asset Management portfolio manager Matt Booker said:

It’s done reasonably well despite the challenges and headwinds, particularly in China. They are growing again, and rolling out into more stores there.

My feeling is they won that a2 category years ago. They sold the brand hard into China, and it’s hard to displace – consumers tend not to like copycats and rather have the original brand. I think the brand still resonates with Chinese consumers.

They are coming off that low base in terms of margins. I think they can get back to the 20 per cent EBITDA margins from where they are now. This is a far more sustainable business today.

The AFR also referred to Barrenjoey head of consumer research Tom Kierath liking the ASX share, saying the US news is incrementally positive, but not a “game changer”, and China remains its opportunity.

Snapshot

Over the last month, the A2 Milk share price is up around 4%.

The post Has the worst been and gone for A2 Milk shares? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today  
• Why A2 Milk, Cettire, Lottery Corp, and Weebit Nano shares are rising
• Why is the A2 Milk share price surging 5% on Tuesday?
• Broker tips A2 Milk share price to jump 24%
• Why did the A2 Milk share price go backwards in October?

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 recommended A2 Milk. 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 volatile times like 2022, it’s worth paying attention to ASX shares that are on a winning streak.

That’s because they must be doing something right to consistently attract support from investors while other stocks yo-yo up and down.

The analysts at Celeste Funds Management, in a memo to clients this week, pointed out two small-cap stocks that each had a spectacular October. 

They are still holding on to them, confident of further rises:

Bright future even after ‘ongoing consistent performance’

Litigation fund Omni Bridgeway Ltd (ASX: OBL) saw its share price rocket 19.6% upwards last month, reported the Celeste team, on the back of “ongoing consistent performance”.

“Income conversion for the quarter was lower than expected as a Fund 5 investment was realised earlier than the previously forecast FY27, resulting in an internal rate of return (IRR) of 152%,” read the memo.

“Estimated portfolio value (EPV) in FY23 experienced normal slippage to outer years, although pleasingly total EPV increased by 4.4% [from] the June quarter.”

Against the odds in a turbulent stock market, Omni Bridgeway shares have climbed in excess of 25% year to date.

The outlook for the coming years is bright, according to Celeste analysts.

“Commitments of $69 million and indicative investment opportunities of $214 million imply the business is on track to meet FY23 commitments guidance.”

As of the end of October, Omni Bridgeway was the Celeste Australian Small Companies Fund’s largest holding.

Coverage is sparse from other professionals on the litigator, but three out of the four analysts currently surveyed on CMC Markets are rating it as a strong buy.

Rare business where increased debt facility is to be celebrated

Lifestyle Communities Ltd (ASX: LIC) develops, owns and operates land lease properties for older Australians.

The stock price enjoyed a 15.7% rise in October, despite unfavourable conditions for real estate assets.

The Celeste team attributed the ascent on the news of new debt capacity.

“Lifestyle Communities increased its [debt] facility size from $375 million to $525 million, secured as a $150 million, five-year tranche.”

The facility in totality now has expiries spread over mid-2025 to late 2027, according to Celeste analysts.

“The debt is earmarked for ongoing land acquisitions and development costs as the business scales up to enable the sale of two communities per annum to move towards three over the next few years.”

Celeste’s peers are less convinced about Lifestyle Communities than Omni Bridgeway.

According to CMC Markets, three analysts each think the stock is a strong buy and a hold respectively, while one recommends it as a moderate buy.

The post 2 small-cap ASX shares to buy that had a MASSIVE October: fund appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

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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ASX earnings fans are likely having a great month as reporting season for S&P/ASX 200 Index (ASX: XJO) banks nears its end.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) kicked off the action among the big four, posting its full-year earnings late last month. Westpac Banking Corp (ASX: WBC) followed suit earlier this week and National Australia Bank Ltd (ASX: NAB) posted its earnings this morning.

Next up will be Commonwealth Bank of Australia (ASX: CBA). The financials giant will drop its first quarter update next week after reporting in August.

So, with most of the market’s biggest banks having now dropped their full-year earnings, are the ASX 200 financials giants worth buying? Here’s what experts are saying.

Are ASX 200 bank shares a buy right now?

ASX 200 banks could be a buy, according to some experts, while others warn investors not to over-expose themselves to the sector.

Head of investments and capital markets at VanEck, Russel Chesler warns non-performing home loans could rise as the property market slows down, The Australian reports. The expert was quoted as saying:

Higher costs including wage inflation are limiting the expansion of bank profits. Looking forward the significantly higher interest rates will see loan growth continuing to slow and bad debts will increase.

We do not believe these risks are fully factored into the major bank’s share prices.

That’s in comparison to many previous predictions that rate hikes would allow ASX 200 banks to reprice their loan offerings, thereby increasing their net interest margins (NIMs) and profits.

However, soaring NIMs haven’t quite come to fruition just yet. The sector was bolstered when Bank of Queensland Ltd (ASX: BOQ) reported a final quarter NIM of 1.81% last month. Though, that’s since proven to be among the best of the bunch.

ANZ reported an exit NIM of 1.8% and that of NAB reached 1.72%.

Meanwhile, Westpac saw a NIM of 1.9% in the second half. However, its full-year NIM dropped 17 basis points to 1.87%.

Still, on an individual level, many top brokers are bullish on most of the ASX 200’s big four banks.

What do brokers expect from the big four?

Morgans added CBA shares to its November ‘best ideas‘. The broker believes the bank is “the highest quality bank and a core portfolio holding for the long term”. Though, it did note the biggest bank is also the most expensive on key valuation metrics.

Meanwhile, Westpac retained its place on the monthly list. The broker said it has “the greatest potential for return on equity improvement… if its business transformation initiatives prove successful”.

Citi and Goldman Sachs also tipped Westpac shares as buys with as much as 16% upside following the bank’s full-year results, my Fool colleague James reports.

The pair also expect big things from ANZ shares. They both believe the smallest of the ASX 200 big four banks could up its dividends in coming years, with Citi slapping it with a buy rating and Goldman Sachs remaining neutral on the stock.

Finally, Goldman Sachs believes NAB shares are a buy right now. It expects the bank to outperform due to its exposure to commercial real estate, helping it to grow its dividends.

The post ASX 200 bank shares: Buy, hold, or fold? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday
• Why has the Sayona Mining share price dumped 33% in 2 months?
• Here are the top 10 ASX 200 shares today
• Top fund manager sounds alarm bells for bank shares
• Here are the 3 most traded ASX 200 shares on Wednesday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Goldman Sachs. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 Origin Energy Ltd (ASX: ORG) share price will be one to watch on Thursday.

That’s because the energy company has just made a major announcement.

Why is the Origin share price on watch?

The Origin share price is likely to jump on Thursday after the company revealed that it has received a takeover approach.

According to the release, the company has received an indicative, conditional, and non-binding proposal from Brookfield Asset Management and MidOcean Energy to acquire Origin by way of a scheme of arrangement at a price of $9.00 cash per share. This will be reduced by any dividends declared and paid in the future.

This represents a massive 54.9% premium to the Origin share price at the close of play on Wednesday and values the company at $18.4 billion on an enterprise value basis. It could also be increased by 3 cents per share if completed by 15 May 2023.

Brookfield Asset Management is a Canadian investment company and MidOcean Energy is an LNG company formed and managed by EIG. Under the terms of the proposal, Brookfield would acquire Origin’s Energy Markets business and MidOcean would acquire the Integrated Gas business.

Not the first offer

The release reveals that this isn’t the first time that the consortium has tabled an offer. Previous offers of $7.95 cash per share in August and $8.70 to $8.90 per share in September were rejected.

On this occasion, due diligence has been granted and the Origin board has stated that if the consortium were to make a binding offer at $9.00 cash per share, then its current intention is to unanimously recommend that shareholders vote in favour of the proposal. This would be in the absence of a superior proposal.

It would also be subject to the parties entering into a binding scheme implementation agreement on terms acceptable to Origin and an independent expert concluding that it is fair and reasonable and in the best interests of shareholders.

Origin’s chairman, Scott Perkins, commented:

This proposal confirms that Origin, its operations and management team represent a highly strategic platform, well-placed to benefit from the energy transition. Our confidence in Origin’s prospects underscored our engagement with the Consortium and delivered a material increase on their initial offer. While the due diligence process advances, we will remain focussed on the successful execution of our strategy.

Origin CEO, Frank Calabria, added:

Over the past year, Origin has executed a number of important strategic initiatives that have strengthened the balance sheet, sharpened our strategic focus and positioned the company to prosper from the energy transition. At the same time, we have a dedicated, engaged and highly-skilled workforce who are committed to delivering good outcomes for our customers and communities. We believe Origin is in a strong position to lead the energy transition, capture opportunities and create value for shareholders.

The post Origin share price on watch amid $18.4b takeover offer appeared first on The Motley Fool Australia.

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More reading

• Why are Origin shares burning 4% brighter today?
• Here’s why the Origin share price is storming higher today
• 5 big ASX announcements making news this week
• Origin share price higher on earnings guidance update
• Here are the top 10 ASX 200 shares 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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Are you looking for dividend shares to buy? If you are, then the two named below could be worth checking out.

Both have been named as buys by analysts and tipped to provide attractive yields. Here’s what you need to know about them:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to look at is Dicker Data. It is one of the largest technology hardware, software, cloud, cybersecurity, access control and surveillance distributors in Australia and New Zealand.

Dicker Data could be a quality option for income investors thanks to its long track record of earnings and dividend growth and its positive long-term outlook. The latter is being supported by the recent expansion of its warehouse by 70%. This provides a significant runway to capture additional growth in the coming years and is also expected to deliver cost savings.

Morgan Stanley is positive on the company and recently retained its outperform rating and $14.00 price target on its shares.

As for dividends, its analysts are forecasting fully-franked dividends per share of 35.3 cents in FY 2022 and 40.5 cents in FY 2023. Based on the latest Dicker Data share price of $9.89, this will mean yields of 3.6% and 4.1%, respectively.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Another ASX dividend share that has been tipped as a buy is Healthco Healthcare and Wellness REIT.

It is a health and wellness focused real estate investment trust that invests in hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties.

Goldman Sachs is a fan of the company and has a conviction buy rating and $2.14 price target on its shares. Goldman likes Healthco Healthcare and Wellness due to its strong balance sheet and its exposure to government-backed sub-sectors. In fact, the broker said that these qualities make it “one of our top picks in the sector.”

In respect to dividends, Goldman expects dividends per share of 7.5 cents in both FY 2023 and FY 2024. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.41, this will mean yields of 5.3% for investors.

The post Analysts name 2 ASX dividend shares to buy right now appeared first on The Motley Fool Australia.

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• Why A2 Milk, Argosy Minerals, Dicker Data, and Life360 shares are falling
• Brokers name 2 ASX dividend shares to buy with big yields
• What’s going on with the Dicker Data share price on Monday?
• These ASX dividend shares have been named as buys
• If you invested $5,000 in each of these ASX shares 10 years ago, you’d be a millionaire 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 positions in and has recommended Dicker Data Limited. The Motley Fool Australia has positions in and has recommended Dicker Data Limited. 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 uncertain investing environment continues to make stock-picking a hazardous task.

However, buying ASX shares that represent prudent business models increases the chances of making money in the long run, after riding out shorter-term bumps.

This is especially true of small-cap companies, which have been heavily discounted over the past 12 months. They are often high beta, meaning that while they lose heavily in dark times, they can also gain spectacularly as conditions recover.

The team at QVG Capital this week named three small-cap ASX shares that it holds and explained why they have such faith in them:

The resiliency of this business is still under the radar

Imdex Limited (ASX: IMD) is a stock not often mentioned, but the business has been quietly plugging away serving clients in a very profitable sector in Australia.

The company provides technology, equipment and services to the mining industry.

It seems investors are starting to notice, with the Imdex share price climbing 4.9% in October after a 14.3% climb in September.

“Imdex reported September quarter revenue 22% ahead of the same quarter last year and 12% ahead of the June quarter,” read QVG Capital’s memo to clients.

“This was greater than our and consensus expectations.”

The cyclical nature of mining makes investors anxious about buying into companies like Imdex, but the analysts insisted this was not a concern. 

“Fears around… cyclicality cause investors to under-appreciate the operational changes that have gone on within Imdex to make it a more resilient business,” read the memo.

“This and significant investment in R&D make us very bullish on the long term outlook for the company.”

A fundies’ favourite at the moment

Investment software provider Hub24 Ltd (ASX: HUB) similarly gave a positive performance report, according to the QVG team.

“HUB24 had a very strong September quarter trading update, which showed resilient inflows on to the platform,” read the memo.

“Given the nature of financial markets, we were impressed with the strength of HUB’s flows. Commentary around revenue margins and operating cost growth were also encouraging.”

The Hub24 share price has fallen 15.2% since the start of the year, although it has returned more than 180% over the past five years.

Stocks for the investment platform seem to be a bit of a darling among professional investors at the moment.

According to CMC Markets, nine out of 13 analysts currently rate Hub24 shares as a strong buy.

Not love at first sight

The QVG Capital team admitted it was not a fan of US family safety app Life360 Inc (ASX: 360) when it first floated three years ago.

“Due to the company being loss-making and high churn in the user-base we were initially slow to warm to the 360 story and did not participate in its IPO.”

But now the analysts like what they see.

“In the three or so years since the company listed it has made good progress in improving the product, reducing churn and moving towards profitability,” read the QVG memo.

“The announcement of significant price increases for the monthly subscription saw a strong re-rating in October as the market came to understand the [company’s] latent pricing power and implications of this for an accelerated path to profitability.”

The team also noted Life360 already boasts a significant user population and a paying customer base.

“The app is particularly popular in the US with over 40 million free users and over 1.3 million paid users.”

After losing as much as three-quarters of its valuation this year, the Life360 stock price has now recovered to be 35% down in 2022.

The post ‘Very bullish’: 3 small-cap ASX shares QVG is loving right now appeared first on The Motley Fool Australia.

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• 5 reasons I would avoid BrainChip shares at all costs
• US$10 billion was just wiped from the value of Atlassian. How are ASX 200 tech shares responding?
• Leading fund manager names the 3 ASX stocks that drove its returns higher in October
• Why A2 Milk, Argosy Minerals, Dicker Data, and Life360 shares are falling
• These were the best-performing ASX 200 shares in October

Motley Fool contributor Tony Yoo has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24 Ltd, Imdex Limited, and Life360, Inc. The Motley Fool Australia has positions in and has recommended Hub24 Ltd and Imdex Limited. 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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Are you interested in adding some ASX growth shares to your portfolio this month?

If you are, you may want to look at the two listed below that have recently been named as buys by analysts at Goldman Sachs.

Here’s what you need to know about them:

Breville Group Ltd (ASX: BRG)

The first ASX growth share to look at is kitchen appliance manufacturer Breville.

Goldman Sachs believes that Breville is well-placed for growth in the coming years thanks to its three-pronged strategy. The broker expects this to underpin an EBITDA compound annual growth rate of 7% between FY 2023 and FY 2025. It recently commented:

We see BRG as having a three-pronged growth strategy: 1) building on secular growth of the portioned and roast & ground (R&G) coffee market and achieving market share gains; 2) new market entry; and 3) options – ecosystem revenue streams.

Goldman has a buy rating and $24.70 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share that Goldman Sachs rates as a buy is online furniture and homewares retailer Temple & Webster.

Goldman Sachs believes the company is well-placed for long term growth due to its leadership position in a retail category that is still only in the early stages of shifting online.  It commented:

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

Goldman has a buy rating and $7.55 price target on the company’s shares.

The post Goldman Sachs says these ASX growth shares are buys appeared first on The Motley Fool Australia.

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• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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 has dropped 2.9% over the past month.

That’s despite a solid rally over the first seven trading days in November, which has seen shares in the S&P/ASX 200 Index (ASX: XJO) mining giant charge 16.7% higher.

The monthly drop in the Fortescue share price, and the rebound in November, are largely tied in with the iron ore price.

But there’s more to the outlook for Fortescue than the iron ore price. We’ll look at another key factor shortly. But first…

What’s been happening with the iron ore price?

The iron ore price has been trending lower amid a slowing global economy. Lower demand from China, which continues to pursue growth-hampering COVID-zero policies,

The industrial metal traded at all-time highs of US$240 per tonne in May 2021. This year it topped out near US$160 in March. Since then, it’s trended lower.

As for the past month, iron ore fetched US$98 per tonne on 10 October, dropping to US$81 per tonne on 1 November. Hence the significant pullback in the Fortescue share price.

As for the past week’s bounce in Fortescue shares, iron ore has since lifted to US$89 per tonne.

But as we said, there’s more to the outlook for Fortescue than the price of iron ore.

Under pressure from decarbonisation strategy

While seeing the ASX mining giant take a lead in the decarbonisation push may be heartening, analysts have serious concerns about the costs and benefits of that strategy and the green hydrogen ambitions at Fortescue Future Industries (FFI).

As reported by The Bull, Sequoia Wealth Management senior wealth manager Peter Day said Sequoia had downgraded Fortescue “to a sell recommendation”.

Day noted that the cost increases at FMG were “comparable or at the lower end of inflation forecasts across the sector”.

However, he added, “FMG’s decarbonisation strategy is the key driver in reducing our valuation by 19%. We downgrade to a sell recommendation.”

Bell Potter has similar concerns over the outlook for the Fortescue share price. The broker said:

The capital being committed to FFI is increasing significantly, as is the timeframe over which it is being committed. While the energy independence and savings guidance are attractive, much of the technology remains to be commercially developed and quantifying the benefits remains problematic.

Bell Potter also downgraded Fortescue to a sell recommendation.

According to the broker, “The increased expenditure commitment to FFI and FMG’s decarbonisation strategy is the key driver of a 19% reduction to our NPV-based valuation, from $17.33/sh to $14.09/sh.”

The Fortescue share price closed yesterday at $17.12, more than 20% above Bell Potter’s price target.

Fortescue share price snapshot

While down in 2022, the Fortescue share price remains up 20% over the past 12 months. That compares favourably to the full-year loss of 6% posted by the ASX 200.

The post The Fortescue share price has leapt 17% in November. Here’s why it may not last appeared first on The Motley Fool Australia.

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• Why is the Fortescue share price bolting out of the gate on Wednesday?
• Why is the Fortescue share price firing up 4% today?
• Why are ASX 200 mining shares bolting out the gates on Monday?
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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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Medibank Private Ltd (ASX: MPL) shares have come under considerable selling pressure following the company’s massive data breach last month.

On 26 October, when the S&P/ASX 200 Index (ASX: XJO) private health insurer emerged from a multi-day trading halt, shares plunged 18.1% over the day.

What’s going on with the data breach?

In a nutshell, hackers — apparently Russian-based — stole sensitive data from 9.7 million of Medibank’s former and current clients. That data includes customer names, dates of birth, addresses, phone numbers and email addresses.

The cybercriminals also accessed health claims data for approximately 480,000 customers.

Earlier this week, the healthcare stock said it would not cave into any ransom demands from the hackers, which saw Medibank shares rise on the day.

The hackers responded by threatening to publish all of the customer data on the dark web. A threat they began to follow through with yesterday.

Do Medibank shares now represent a buying opportunity?

Medibank shares remain down 21% since the company exited its trading halt on 26 October.

So, is it a buying opportunity?

Eliot Hastie, markets analyst at Australian brokerage platform Stake, said that for the platform’s clients, the answer looks to be yes.

“Stake customers have seen this as a buying opportunity, with a 1,426% increase in buys last month, suggesting that many are still positive about Medibank’s long-term outlook,” he said. “In fact, Medibank saw the biggest change from sales to buys of all Australian stocks in October when compared to September.”

According to Hastie:

Cyber security incidents often cause an instant hard shock to a share price, but strong companies have generally been able to recover over the long term. That said, there’s no way of knowing the true consequences of Medibank’s current breach.

There has been a suggestion of a class action lawsuit, which could affect the share price over a longer period, but this situation is still developing, and its impact is yet to be seen.

If you’re considering investing in Medibank shares, there’s also the potential income stream to keep in mind.

As at yesterday’s closing share price of $2.77, Medibank pays a trailing dividend yield of 4.8%, fully franked.

How have Medibank shares been tracking in 2022?

The Medibank share price was in the green, significantly outperforming the ASX 200 over the calendar year, right up until the big selloff on 26 October. That selling now sees Medibank shares down 19% in 2022, compared to an 8% loss posted by the benchmark index.

The post Do Medibank shares now represent a buying opportunity? appeared first on The Motley Fool Australia.

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More reading

• Medibank share price lifts despite hackers leaking data
• Medibank share price slides following latest blows from hackers and customers
• Medibank share price on watch amid class action and new data threat
• Medibank share price lifts on cyberattack ransom update
• Here are the top 10 ASX 200 shares today

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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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one of this edition, we’re joined by Romano Sala Tenna, co-founder of Katana Asset Management.

The Motley Fool: In November 2021, you told us, “We are seeing some real structural elements [to inflation]… That is going to have an impact on the Australian landscape.” That’s certainly come to fruition. With interest rates ratcheting up to tame inflation, has that impacted your cash holdings?

Romano Sala Tenna: It has. In terms of our cash weighting, we were up at 38% recently. We’ve gone back to 30% because we’re expecting a short-term bounce. And once we think this current rally’s run its course we’ll start to build our cash position back up again.

MF: How does that compare to your positioning in early 2021, during the ASX bull run?

RST: We generally hold 15% to 35% cash through the cycle, and only very rarely go above or below those two numbers. So for us to be sitting at 38% is at the very extreme end of where we’d normally have cash.

We’re back at 30% at the moment, as I said. But we’d look to build that up to closer to 35% to 40% as we think this current rally runs its course.

MF: Has the higher inflation and interest rate environment changed your investment approach in other ways?

RST: It hasn’t had much impact in terms of our weighting across small and large caps. Generally speaking, we don’t do a lot in the small-cap space. The vast majority of what we do is in the S&P/ASX 100 Index (ASX: XTO).

At a strategical top-down level, going back six months, with the increased volatility we were seeing then, we did make a conscious decision to reduce illiquid holdings. So, if we were to come in one day and need to increase our cash rating dramatically, we didn’t want any anchors in the portfolio that prevented that in terms of liquidity.

Kina Securities Ltd (ASX: KSL) is a great example. A really good company. We are going to own it again at some stage. But the liquidity there was a concern, so we sold our holding.

The major change in the portfolio has been that we normally hold 55 to 65 stocks. We’re currently holding 43. That’s the smallest number we’ve held for a long period of time. And that’s really predicated on the fact that there are many companies we don’t want to hold right at the moment. Great companies with good long-term prospects, but right at the moment, we don’t want to be holding them.

We’re sitting on a large cash weighting. Once we think we’ve seen the bottom, there are a lot of companies we’ll start to invest in.

MF: Atop Kina Holdings, what other ASX shares are on your watchlist once you’re convinced the bottom is in?

RST: For example, the non-bank space is screaming value. All 10% plus yields on a trailing basis, and PEs are four to five times. But they are really in the crosshairs still with what we’re seeing here. Because they don’t even have what banks have, which is the capacity to use their margin from deposits to fund profits.

We think there are a number of NBFIs, non-bank financial institutions, that are rapidly growing market share and executing well.

There’s some like Pepper Money Ltd (ASX: PPM) that will be a big holding in our fund at some stage. Growing at a rapid rate, executing really well, using great fintech, really flexible. We think they’ll really hit it out of the park at some point. But we’ve got to get through the current washout yet before we really start to build a large position.

MF: What do see as the biggest threat for ASX investors in the year ahead?

RST: The washout from central bank policy.

Namely, the impact on consumer spending; the impact on corporate profitability; and the impact on valuations for long-duration assets. Those three things are all directly related to central bank policy and a consequence of inflation.

Those, I think, are the biggest challenges facing our market over the next 12 months.

MF: And what’s the biggest opportunity for investors?

RST: I think there are some sectors that have been well and truly oversold. There are some large opportunities in our universe. But you have to be patient. There are a number of cheap sectors, but they are likely to get cheaper.

The non-banks are a great example.

There are also some fantastic long-term consumer discretionary stocks like Wesfarmers Ltd (ASX: WES) or Domino’s Pizza Enterprises Ltd (ASX: DMP). Some great long-term opportunities.

We’re pretty excited about the next 12 to 24 months. We just think we need to be patient during this phase and make sure we time it as best we can in terms of starting to pick up some of these opportunities.

**

Tune in tomorrow for part two of our interview with Romano Sala Tenna.

(You can find out more about the Katana Australia Equity Fund here.)

The post 4 ‘fantastic long-term’ ASX shares to put on your watchlist: fund manager appeared first on The Motley Fool Australia.

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More reading

• Morgans says these top ASX dividend shares are buys
• This ASX 200 share dumped 16% in the first 3 days of November, and a director went thrift shopping
• A director has been buying up Wesfarmers shares. Should you?
• 3 ASX 200 directors buying up their company shares in the past week
• Here are the top 10 ASX 200 shares today 

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 positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. 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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