Zip Co Ltd (ASX: ZIP) shares have enjoyed a remarkable comeback since notching one-year lows on 7 April.

On Monday, shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed up 2.6%, trading for $3.34 apiece.

That sees Zip shares up a whopping 180.7% since closing for $1.19 on 7 April.

Or enough to turn an $8,000 investment into $22,960.

While 2026 might not see the same share price surge, it is worth recalling that back in February 2021 Zip stock was fetching $12.35 a share. Or some 270% above Monday’s close.

Why this fundie likes Zip shares

QVG Capital’s Chris Prunty counts among the fund managers with a bullish outlook for the ASX 200 BNPL stock in 2026 (courtesy of The Australian Financial Review).

According to Prunty:

The model’s appeal for shareholders lies in very high returns on capital and lower-than-assumed risk: loans are small, short in duration, and the book turns rapidly, keeping losses contained and capital needs light.

Prunty also said that management is now walking the walk when it comes to cost management, noting that operating discipline “is finally aligned to unit economics”.

And he isn’t along in recommending Zip shares as a buy.

Consensus analyst recommendations on CommSec have the stock listed as a ‘strong buy’. Breaking that down, seven analysts recommend the BNPL company as a strong buy, one recommends it as a moderate buy, and two recommend holding. There are no sell recommendations listed.

BNPL stocks like Zip shares have proven to be highly sensitive to interest rates. And with the US Federal Reserve still expected to cut rates one or two times in this easing cycle, the company – which has a big operating footprint in the US – could well enjoy some added tailwinds in 2026.

What’s the latest from the ASX 200 BNPL stock?

Zip released its first quarter (Q1 FY 2026) results on 20 October.

Highlights from the three months included all-time high cash earnings before taxes, depreciation and amortisation (EBTDA) of $62.8 million, up 98.1% year-on-year. And Zip’s total transaction volume (TTV) of $3.9 billion was up 38.7%.

That was spurred by a 5.3% year-on-year increase in the company’s active customers, which reached 6.4 million at the end of the first quarter.

Looking ahead, Zip CEO Cynthia Scott said, “We remain focused on executing our strategic priorities of growth and engagement, product innovation and platforms for scale.”

Investors responded to the Q1 results by sending Zip shares up 4.3% on the day.

The post Up 179% since April, why it’s not too late to buy Zip shares for 2026 appeared first on The Motley Fool Australia.

More reading

• The best Australian stocks to buy in 2026
• Top brokers name 3 ASX shares to buy next week
• 2 great ASX shares to buy for 2026: experts
• Here are the top 10 ASX 200 shares today
• Buy, hold, sell: Flight Centre, Suncorp, and Zip shares

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.

Fortunately for investors that are focused on passive income, there is no shortage of opportunities on the Australian share market.

To narrow things down, let’s take a look at three that brokers believe could be top buys right now.

Here’s what they are recommending to clients:

Cedar Woods Properties Limited (ASX: CWP)

Bell Potter thinks that Cedar Woods could be an ASX dividend share to buy now.

Cedar Woods is one of Australia’s leading property companies. It owns a high-quality portfolio that is diversified by geography, price point, and product type. This leaves it positioned to be a big winner from Australia’s chronic housing shortage.

It is because of this that Bell Potter is so positive on its outlook. The broker expects this to support dividends per share of 35 cents in FY 2026 and then 39 cents in FY 2027. Based on its current share price of $8.65, this equates to 4% and 4.5% dividend yields, respectively.

The broker has a buy rating and $10.00 price target on its shares.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share that has been given the thumbs up by brokers is HomeCo Daily Needs REIT.

It is a property trust specialising in essential-service retail centres. Its portfolio comprises 47 assets with a market value of $4.9 billion. This includes supermarkets, pharmacies, healthcare clinics, and other everyday-needs retailers that typically hold long, stable leases.

The company’s focus on essential retail makes this REIT relatively resilient to economic swings, and the cashflows have historically supported solid distributions.

Speaking of which, UBS is forecasting dividends of 9 cents per share in FY 2026 and again in FY 2027. Based on its current share price of $1.40, this would mean sizeable dividend yields of approximately 6.4% for both years.

UBS currently has a buy rating and $1.53 price target on its shares.

Universal Store Holdings Ltd (ASX: UNI)

Finally, Universal Store could be a third ASX dividend share to buy now according to brokers.

It is a youth-focused fashion retailer behind the Universal Store, Perfect Stranger, and Thrills brands.

Bell Potter is positive on the company. It highlights that the company is executing very well on its national store rollout and private label expansion strategy.

It believes this will underpin fully franked dividends of 37.3 cents per share in FY 2026 and then 41.4 cents per share in FY 2027. Based on its current share price of $8.05, this equates to dividend yields of 4.6% and 5.15%, respectively.

Bell Potter has a buy rating and $10.50 price target on its shares.

The post Buy these amazing ASX dividend shares for passive income appeared first on The Motley Fool Australia.

More reading

• 3 strong ASX dividend shares I would buy and hold forever
• Beat low interest rates with these buy-rated ASX dividend stocks
• Top picks! Macquarie says these ASX stocks can rise 20% to 30%
• Experts say these ASX dividend stocks are cheap buys
• How does Bell Potter view this real estate stock after yesterday’s 10% rise?

Motley Fool contributor James Mickleboro has positions in Universal Store. 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 HomeCo Daily Needs REIT and Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When people think about Warren Buffett, they often picture someone poring over annual reports and hand-selecting individual stocks.

That approach has worked extraordinarily well for him. But what many investors don’t realise is that you can follow the style of Buffett’s strategy without ever having to choose a single ASX stock yourself.

In fact, Buffett has repeatedly said that most everyday investors are better off keeping things simple.

Investing like Warren Buffett

At the heart of Warren Buffett’s philosophy is a straightforward idea.

He likes to invest in high-quality businesses that can grow earnings over long periods of time. The Oracle of Omaha avoids speculation, short-term trading, and attempting to time the market.

Instead, he looks for durable companies with strong competitive advantages and fair valuations and then holds them patiently.

The good news is that you don’t need to identify those businesses one by one to apply this thinking. Broad, rules-based investing can achieve a similar outcome.

Use diversified ETFs as your foundation

One of Warren Buffett’s most famous pieces of advice is that most investors should simply buy a low-cost index fund and hold it for decades. That advice translates very neatly to the ASX.

A broad Australian market ETF, such as the Vanguard Australian Shares Index ETF (ASX: VAS), gives exposure to many of the country’s strongest businesses in one investment. Companies rise and fall over time, but the market as a whole has historically grown alongside the economy.

In fact, for every correction, crash, selloff, or meltdown, the Australian share market has eventually rebounded and hit new record highs.

Buying an index fund removes the risk of backing the wrong individual company while still capturing long-term growth.

You can also take this idea global. Buffett has often highlighted the strength of the US economy, and international-focused ETFs, such as the iShares S&P 500 ETF (ASX: IVV), allow Australian investors to benefit from the world’s most successful businesses without needing to analyse them individually.

Tilt towards quality

Another hallmark of Buffett’s style is his preference for businesses with economic moats. These are advantages that protect profits from competitors.

While identifying moats at a company level can be difficult, there are ETFs designed to tilt portfolios toward quality characteristics such as strong balance sheets, reliable cash flow, and pricing power. One of those is the VanEck Morningstar Wide Moat AUD ETF (ASX: MOAT).

By owning a basket of high-quality stocks rather than trying to identify the single best one, you reduce risk while staying true to Buffett’s core principles.

Let time and compounding do the work

Perhaps the most underrated part of Warren Buffett’s success is patience. He has often said that his favourite holding period is forever.

Long holding periods allow compounding to work quietly in the background, turning steady returns into substantial wealth over time.

Investing regularly, reinvesting dividends, and resisting the urge to react to short-term market noise are all ways to mirror this mindset without active stock picking.

By following these principles, you give yourself a great chance of success over the long term.

The post How to invest like Warren Buffett without picking ASX stocks appeared first on The Motley Fool Australia.

More reading

• The forever portfolio: 3 ASX stocks to buy in 2025 and hold forever
• How to invest your first $500 in ASX shares the smart way
• 3 super strong ASX ETFs to buy with $10,000
• 3 ASX ETFs I’m buying in January 2026
• 5 amazing ASX ETFs for beginners to buy in 2026

Motley Fool contributor James Mickleboro has positions in VanEck Morningstar Wide Moat ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Throughout 2025 we saw an unprecedented uptick of interest in artificial intelligence (AI). There was rapid adoption of AI across businesses, huge investment in AI infrastructure, and AI-focused ASX stocks soared as a result.

While some concerns about an AI bubble and overevalued stock dampened ASX AI and tech stocks over the past couple of months, annual gains are still significant.

As we head into 2026, it looks like interest in AI will only continue growing.

And there is only one ASX stock I’d bet on to boom in 2026.

The ASX AI stock I think will storm higher in 2026

Weebit Nano Ltd (ASX: WBT) develops and licenses a new memory technology (Resistive Random-Access Memory, or ReRAM) which is designed to replace traditional Flash memory.

It’s faster, uses less power and is more reliable. While it’s not primarily an AI stock, it enables AI capability because this new memory technology is used to run AI workloads.

Yesterday, shares climbed 18.37% to $5.80. Over the course of 2025, Weebit shares have jumped 80.69% although the majority of this was throughout the final quarter of 2025.

What pushed its share price higher?

In October, the next-generation computer memory technology company said it had made an “exceptionally strong” start to the financial year.

The company reported record quarterly customer payments of $7.3 million and said it was advancing discussions with multiple semiconductor fabricators. It also said it had received a $4.1 million research and development tax rebate during the first quarter.

The ASX stock also said it expects the strategic importance of its ReRAM technology to continue growing. 

Chief Executive Officer Coby Hanoch explained at the time that “very few” fabricators are able to develop the technology in-house. Therefore, Weebit expects the majority of companies will look to strike up licensing deals in order to accelerate their time to market. And this presents a great opportunity for Weebit Nano.

What’s next for the ASX stock in 2026?

According to TradingView data, analyst consensus is that Weebit shares are a strong buy. 

The maximum target price for the next 12 months is $8.07 a piece. At the time of writing this implies the tech stock could climb around 40% in 2026. 

To me, Weebit’s potential to dominate market share in the memory technology market, and it’s predicted outside suggests it could be a great opportunity amid a 2026 AI boom.

The post If I could buy only 1 ASX stock to bet on the AI boom in 2026, it would be this one appeared first on The Motley Fool Australia.

More reading

• Why Aeris Resources, Cobram Estate Olives, Metallium, and Weebit Nano shares are racing higher today
• Guess which ASX tech stock is rocketing 16% on huge news

Motley Fool contributor Samantha Menzies 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.

On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a decline. The benchmark index fell 0.4% to 8,725.7 points.

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

ASX 200 expected to edge higher

The Australian share market looks set to edge higher on Tuesday despite a poor start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 2 points higher. In late trade in the United States, the Dow Jones is down 0.4%, the S&P 500 is 0.3% lower, and the Nasdaq is down 0.45%.

Oil prices jump

It could be a good session for ASX 200 energy shares Karoon Energy Ltd (ASX: KAR) and Santos Ltd (ASX: STO) after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 2.4% to US$58.12 a barrel and the Brent crude oil price is up 2.15% to US$61.95 a barrel. Traders were buying oil after tensions flared in Yemen.

Ex-dividend day

Today is the day that a large number of shares go ex-dividend for their latest quarterly payouts. Among the ASX 200 shares that are going ex-dividend are APA Group (ASX: APA), Charter Hall Group (ASX: CHC), Goodman Group (ASX: GMG), Mirvac Group (ASX: MGR), Stockland Corporation Ltd (ASX: SGP), and Transurban Group (ASX: TCL).

Gold price sinks

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Ramelius Resources Ltd (ASX: RMS) could have a tough session on Tuesday after the gold price crashed overnight. According to CNBC, the gold futures price is down 4.4% to US$4,351.4 an ounce. This may have been driven by profit-taking from traders after strong gains this month.

NextDC shares on watch

Nextdc Ltd (ASX: NXT) shares will be on watch today after some big news in the data centre industry. Overnight, Japan’s SoftBank revealed that it has agreed to buy data centre investment firm DigitalBridge for US$4 billion. This is part of SoftBank’s artificial intelligence push. Masayoshi Son, Chairman and CEO of SoftBank, said: “DigitalBridge is a leader in digital infrastructure, and this acquisition will strengthen the foundation for next-generation AI data centers, advance our vision to become a leading ASI platform provider, and help unlock breakthroughs that move humanity forward.”

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

More reading

• Why Morgans rates these popular ASX shares as buys
• Leading brokers name 3 ASX shares to buy today
• Can surging ASX 200 gold shares like Evolution Mining keeping smashing the benchmark in 2026?
• Argo Investments launches 12-month on-market buy-back for up to 37 million shares
• Is now the time to buy Wesfarmers shares?

Motley Fool contributor James Mickleboro has positions in Goodman Group and Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group and Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group and Transurban Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The war in Ukraine has thrown into sharp relief how important drone warfare, and anti-drone technology, will be on the battlefield of the future.

For investors looking to gain exposure to this sector, in an environment where defence spending is increasing both at home and abroad, there are three main companies to have a look at.

DroneShield Ltd (ASX: DRO)

The best known stock in the sector listed on the ASX is unarguably DroneShield, which is heavily traded and a favourite among share market speculators.

The company’s shares have had a wild ride over the past year, increasing from lows of 58.5 cents to as much as $6.70 before crashing back below the $3 level in recent months.

The shares have made a recovery in December after investor confidence was shaken by major share sales among its executives, as well as the company’s gaffe in announcing a contract to the ASX which had already been announced.

Bell Potter Securities’ Christopher Watt, quoted in The Bull recently, said he had a hold recommendation on the stock, saying it had short-term headwinds, while its fundamentals were “sound”.

Elsight Ltd (ASX: ELS)

Elsight is a key supplier of communication modules to drone manufacturers.

The company in mid-December announced that it had won contracts worth more than US$20 million, for delivery across January to April next year, “reflecting strong beginning and forward demand for the Halo platform across multiple defence and uncrewed programs”.

The company’s Halo platform is a communications technology for “beyond visual line of sight” drone operations, according to the Elsight website.

As the company says:

Elsight’s Halo beyond visual line of sight communication module ensures uncrewed aerial and ground systems (UAVs/UGVs) remain securely connected to their command centres, across any terrain, spectrum disruptions, or network limitations. Powered by proprietary multilink bonding technology, Halo seamlessly aggregates cellular, SATCOM, and other RF networks into a virtual pipeline with built-in redundancy, enabling continuous transmission of video, telemetry, and control data. Proven across hundreds of thousands of operational hours in the most demanding environments, Halo delivers the connection confidence that military, commercial, and public safety operators demand.

Elsight shares are up more than 10-fold over the year to $3.17, which might mean it’s time for caution, with Bell Potter’s most recent price target for the shares well below that at $2.

Electro Optic Systems Ltd (ASX: EOS)

Electro Optic Systems has also had some recent contract wins, announcing in mid-December a new international contract worth $32 million for its R400 Remote Weapon System.

This built on a $125 million contract win in August for a high energy laser weapon and another R400 order worth $108 million in October.

Bell Potter said in a note to clients that, “we see upgrade potential to our revenue estimates, driven by increasing global capital allocation toward counter drone capabilities”.

Bell Potter has a price target of $8.10 on EOS shares compared with $8.82 currently.

The post If you think drones are the future of defence, these three ASX stocks might be for you appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has positions in Electro Optic Systems. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems. 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.

There are certain investments on the stock market that could deliver significant returns over many years and help us achieve an amazing result for our net worth. I’m going to highlight three of my favourite ASX stocks.

Owning a good investment forever can be a very powerful tool. If it performs well, then it can help grow wealth and potentially unlock larger dividends.

Owning it forever can mean getting the best out of the power of compounding, while ensuring the wealth building isn’t slowed down by capital gains tax. If we never sell, we won’t have to pay tax on those great gains.

Which ASX investments could we own forever? I’d back the following three ASX stocks.

Wesfarmers Ltd (ASX: WES)

I’d describe Wesfarmers as one of the most impressive businesses on the ASX. It doesn’t just have one leading business, but two: Bunnings and Kmart.

Kmart and Bunnings provide consumers with great value products, while delivering a high return on capital (ROC), allowing the parent business achieve a return on equity (ROE) of more than 30%. In other words, they make a high level of profit for the amount of money Wesfarmers has invested.

The ASX stock has strong core earnings and it’s using that to diversify its operations, which is one of the reasons why I’m comfortable suggesting owning it forever.

The company can buy into and sell out of industries, depending on the outlook. For example, it has sold coal assets and invested in a lithium project. Wesfarmers is also investing in the healthcare industry, which is a huge and growing sector, giving the company a long growth runway to expand in if it chooses to.

Currently, the initiative I’m most excited about is the Anko stores that the ASX stock is opening in the Philippines. Geographic expansion of the Kmart brand seems like a smart move.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This exchange-traded fund (ETF) is one of my favouites for long-term investing because the fund itself invests with a long-term mindset.

The MOAT ETF targets (US) shares that it believes have strong competitive advantages (also called an economic moat) that will allow the business to generate good profits almost certainly for the next decade and more likely than not for the next two decades.

Added to that, the fund only invests in these great businesses when they’re trading at a price that’s noticeably lower than how much Morningstar analysts think they’re worth.

The strategy appears to be working – in the past decade it has delivered an average return per year of 15.4%. Past performance is not a guarantee of future performance of course.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This list wouldn’t be complete without the ASX stock I’m most optimistic about for the long-term.

I’m not expecting huge returns, but a steady long-term compounding of capital value combined with a rising dividend.

The business has already operated for 120 years, and I believe the investment house will be successful for decades to come.

It has built a resilient portfolio of assets that produces an attractive level of cash flow each year. It has investments across resources, telecommunications, energy, swimming schools, agriculture, electrification, financial services, credit, building products, industrial property and more.

The ASX stock adds to its investment portfolio each year and this is increasing the potential of its future compounding ability.

This business could be worth a lot more in 20 years, in my view, making now a great time to invest. The 27-year streak of dividend increases helps being a forever shareholder. I’m planning to buy more of this business in 2026.

The post The forever portfolio: 3 ASX stocks to buy in 2025 and hold forever appeared first on The Motley Fool Australia.

More reading

• How to invest like Warren Buffett without picking ASX stocks
• The pros and cons of buying Wesfarmers shares in 2026
• My top 5 ASX 200 shares I would buy with $10,000
• Is now the time to buy Wesfarmers shares?
• 3 super strong ASX ETFs to buy with $10,000

Motley Fool contributor Tristan Harrison has positions in VanEck Morningstar Wide Moat ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With the calendar about to flip to a new year, plenty of Australians are thinking about fresh starts.

For many, that includes finally taking the plunge into investing.

If you plan to make a New Year’s resolution to start building wealth in 2026, putting your first $500 into ASX shares is a great place to begin.

It might not sound like much, but the most important step in investing is simply getting started. A small amount invested early can matter far more than a larger amount invested later, thanks to time and compounding.

Keep it simple

When you’re investing your first $500, the goal isn’t necessarily to find the perfect investment. It is to build good habits and avoid unnecessary mistakes. Many first-time investors get stuck trying to pick a winner and end up doing nothing at all. A smarter approach is to focus on broad exposure and quality.

This is where ASX exchange-traded funds (ETFs) can shine. With a single investment, you can gain exposure to dozens or even hundreds of companies, instantly reducing risk compared to buying one individual share.

Diversification from day one

With $500, diversification matters. Instead of putting all your money into a single business, you could consider spreading your risk across the market.

For example, an ETF like the Vanguard Australian Shares ETF (ASX: VAS) gives exposure to many of Australia’s largest shares in one trade. That includes household names such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woolworths Group Ltd (ASX: WOW).

If you would prefer global exposure, an ETF such as the iShares S&P 500 ETF (ASX: IVV) provides access to leading US stocks, including Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL), without needing to invest overseas directly.

Focus on building momentum

Your first $500 is less about the immediate return and more about creating momentum.

Once you’ve invested, you will likely find it easier to add more money over time. Even modest monthly contributions can turn a one-off investment into a meaningful portfolio over the years.

For example, based on a 10% average annual return, a consistent $500 monthly investment would turn into $100,000 in 10 years.

Foolish takeaway

As the new year begins, remember that investing doesn’t need to be complicated or intimidating.

Starting with a simple, diversified ASX share investment and a long-term mindset is one of the smartest financial decisions you can make. The key is to start, stay consistent, and give your money time to grow.

The post How to invest your first $500 in ASX shares the smart way appeared first on The Motley Fool Australia.

More reading

• 3 super strong ASX ETFs to buy with $10,000
• 3 ASX ETFs I’m buying in January 2026
• 5 amazing ASX ETFs for beginners to buy in 2026
• Did the ASX 200, NASDAQ 100, or S&P 500 perform better this year?
• The ASX ETFs that have stood the test of time

Motley Fool contributor James Mickleboro has positions in Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Microsoft, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool Australia has recommended Alphabet, Apple, BHP Group, Microsoft, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Buying Wesfarmers Ltd (ASX: WES) shares could be a smart move for the long-term because of the high-quality businesses it operates and its impressive long-term record. However, there are a few aspects of this impressive business that investors should keep in mind.

The company is the owner of some of Australia’s leading retail names such as Bunnings, Kmart, Officeworks, Priceline and Target. It also has other businesses including WesCEF (chemicals, energy and fertilisers), an industrial and safety division, and healthcare businesses like InstantScripts, skincare clinics and more.

When it comes to assessing a large blue-chip like this, I think it’s a good idea to consider whether the business will be able to continue growing profit. I don’t want to own a slow-growing company. Let’s consider the positives first.

Pleasing aspects of Wesfarmers shares

Kmart and Bunnings are two of the most impressive operators in the retail sector, in my opinion. In FY25, both businesses delivered revenue growth and faster earnings growth.

Bunnings Group saw revenue rise 3.3% to $19.6 billion and earnings increase 3.8% to $2.3 billion. Kmart Group’s revenue climbed 2.9% to $11.4 billion and earnings grew 9.2% to $1.05 billion.

At the annual general meeting (AGM), Wesfarmers revealed that both Bunnings and Kmart had continued growing in FY26 to October. If these two businesses continue growing, the company is likely to have a positive future, particularly with their high returns on capital (ROC).

In FY25, Bunnings’ ROC was 71.5% and Kmart’s was 67.6%. With such a high return, it shows how profitable Wesfarmers is with the amount of money allocated to those businesses. It also suggests very strong returns on additional capital invested in those businesses.

I’m impressed by Wesfarmers’ ability to find other growth avenues for each of these businesses to generate earnings. For example, Bunnings has expanded in pet care and auto care, while Kmart is selling Anko products in North America and the Philippines.

In FY26, I’m also hopeful that the healthcare and WesCEF divisions can improve their earnings following a period of investment (particularly with the new lithium project – Wesfarmers is a joint venture partner in the Covalent lithium project). Lithium production is expected to ramp-up to the end of FY27.

Analysts are forecasting ongoing profit growth for owners of Wesfarmers shares in FY26 and beyond. Broker UBS projects net profit of $2.8 billion in FY26, $3.08 billion in FY27, $3.46 billion in FY28, $2.8 billion in FY29 and $4.2 billion in FY30.

Negative aspects to consider

It’s good to see that the company is predicted to grow profit, however its price/earnings (P/E) ratio has increased over time.

According to UBS, the P/E ratio for Wesfarmers shares was 22 in FY23, 25.7 in FY24 and 31.5 in FY25.

Based on the UBS projection for FY26, the Wesfarmers share price is trading at 33x FY26’s estimated earnings. I do believe that the ASX blue-chip share is worthy of trading at a higher P/E ratio than FY23, but investors should be cautious about paying an increasingly high P/E ratio – it needs to justify the valuation with earnings growth.

We should also be aware that the larger Bunnings and Kmart become, the more Wesfarmers may be reliant on the earnings of those powerhouses.

I’m expecting long-term success for the Wesfarmers, but it’s not as cheap as it was, and I’m monitoring the growth plans of the two big retail divisions to see if the bottom line can continue climbing at a good pace. Having said that, I still think the Wesfarmers share price is a good long-term buy.

The post The pros and cons of buying Wesfarmers shares in 2026 appeared first on The Motley Fool Australia.

More reading

• My top 5 ASX 200 shares I would buy with $10,000
• Is now the time to buy Wesfarmers shares?
• 3 steps to replace your wage with dividends from ASX shares
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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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Silver has had a standout year.

The price of the metal has surged to a fresh all-time high above US$79 an ounce. That makes silver one of the best-performing commodities in 2025, outperforming gold, oil, and iron ore.

Unlike gold, silver is not just a safe-haven asset. It is widely used across industrial and technology sectors, including solar panels, electric vehicles, electronics, and energy infrastructure. Demand from these areas has been rising, while supply has stayed tight.

With silver prices pushing into record territory, investors are taking a closer look at companies that are directly exposed to the metal.

Here’s one ASX small cap that offers direct exposure to silver’s record-breaking run.

A rare pure-play silver stock on the ASX

Silver Mines Ltd (ASX: SVL) is different from most mining stocks on the ASX.

Many miners produce silver as a side product while mainly focusing on gold, copper, or other metals. Silver Mines is a pure-play silver company. Its future is closely tied to the silver price.

That means when silver prices rise, the potential upside for the business is much more direct. There is no dilution from other commodities.

This direct exposure has helped keep the stock firmly on investor watchlists during silver’s rally.

At the time of writing, the company’s shares last traded at 19 cents and are up more than 140% year to date.

Bowdens remains the core project

The company’s key asset is the Bowdens Silver Project in New South Wales.

Bowdens is one of the largest undeveloped silver projects in Australia. It is large enough to support a long mine life and meaningful production if it eventually moves ahead.

The project is currently going through a fresh approval process after its previous development consent was overturned by the courts. Recent updates show the company is completing additional environmental and ecological work before resubmitting its application.

Progress continues beyond Bowdens

While Bowdens works through approvals, Silver Mines is still active elsewhere.

Exploration at the Tuena project has delivered early encouraging results. It is a smaller and earlier-stage asset, but it adds optionality and shows the company is continuing to build value.

The latest quarterly update also showed the company remains well funded for now, with cash of around $43.7 million at the end of the quarter. That should be enough to keep progressing work without needing to rush back to the market.

What brokers are focusing on

Silver Mines is a small-cap stock, so broker coverage is limited.

Those who do follow it tend to highlight two things. First, the quality and scale of Bowdens, especially at current silver prices. Second, the uncertainty around timing and approvals, which remains the biggest risk.

At around 19 cents per share, Silver Mines has a market value just over $400 million. That reflects both the opportunity if silver stays strong and the risks that come with development-stage projects.

Until there is more clarity on approvals, most analysts appear content to sit on the sidelines.

Foolish takeaway

Silver’s record-breaking move has brought renewed attention to the metal.

For those looking for direct exposure, Silver Mines stands out as a rare pure-play silver stock on the ASX. If silver prices remain elevated and progress at Bowdens improves, investor sentiment could shift quickly.

That said, this is not a low-risk investment. The path forward depends on approvals, timing, and being extremely patient.

For now, Silver Mines looks like a long-term option on silver rather than a stock I would chase today.

The post Silver surges to a record high. Is this ASX small-cap about to shine? appeared first on The Motley Fool Australia.

More reading

• After a 22% fall, is now the time to buy Silver Mines shares?
• Why Aeris Resources, Capricorn Metals, Paradigm, and Silver Mines shares are sinking today
• Up 178% in a year, why is this ASX All Ords silver share sinking today?
• Silver price hits new record, firing up Aussie shares
• Up 109% or more! These 4 ASX mining stocks are booming as the silver price hits all-time high

Motley Fool contributor Aaron Teboneras 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.