The Whitehaven Coal Ltd (ASX: WHC) share price has been on fire this year.

Despite losing more than 10% last week, the S&P/ASX 200 Index (ASX: XJO) coal stock is up an astounding 241% in 2022 on the back of soaring coal prices.

This year has also seen Whitehaven resume its dividend payments for the first time in two years. At the current share price, Whitehaven Coal trades on a trailing dividend yield of 5.1%.

But both the share price and its future dividend payouts could come under pressure if coal prices fall as low and as rapidly as was laid out in the federal budget estimates last week.

Why did coal prices rocket this year?

Energy prices were already trending higher heading into 2022 as the world reopened from the lengthy pandemic shutdowns.

Then Russia’s invasion of Ukraine sent energy prices soaring as the West moved to ban Russian oil, gas and coal exports, among other sanctions.

Thermal coal (primarily used to generate electricity) saw prices rocket even faster than metallurgical coal (primarily used for steel making).

Whitehaven mines both varieties, earning more than half its revenue from thermal coal.

In early March, Newcastle coal (thermal) was trading for US$440 per tonne, a record high. At the time, the Whitehaven Coal share price was ‘only’ up 50% for the calendar year.

As of Friday’s close, thermal coal was trading for US$385 per tonne.

But if last week’s federal budget forecast is correct, coal prices are likely to head in the other direction heading into 2023.

Why the Whitehaven Coal share price could outperform forecast

The federal budget forecasts that coking coal prices will slide to $US130 per tonne (Free on Board (FOB) Australia) by Q1 2023. Meanwhile, thermal coal prices are forecast to fall to $US60 per tonne (FOB Australia) by the end of Q1 2023.

That kind of retrace would clearly throw up some headwinds for the Whitehaven Coal share price.

But the coal mining giant might perform far better than the budget’s coal price forecasts suggest.

Last week Commonwealth Bank of Australia (ASX: CBA) published its Economic Insights report, scrutinising the budget forecasts.

When it came to the outlook for coal prices, CBA’s analysts were far more bullish.

On metallurgical, or coking coal, the bank said:

The Budget’s coking coal price view is markedly lower than our view from 2022/23 to 2025/26… We think the disruption to Russian coking coal exports (~10% of the seaborne market) will take years to replace fully, helping keep a premium entrenched in coking coal prices over the Budget’s outlook period.

CBA also believes thermal coal prices will hold up better and longer than the budget has estimated. According to the report:

Like coking coal, we see the disruption to Russian thermal coal exports (~15% of the seaborne market) to be more long-lasting than the Budget over the outlook period. Replacing Russian thermal coal exports in the seaborne market will be challenging given the underinvestment in the sector over the last few years.

If CBA’s analysts have got this right, the Whitehaven Coal share price should fare considerably better than under the budget’s outlook.

The post Why the Whitehaven Coal share price could outperform this government forecast appeared first on The Motley Fool Australia.

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More reading

• 5 ASX shares that have crushed the market this year
• If CBA is right, ASX 200 coal shares should keep the good times rolling
• Why is the Whitehaven Coal share price rebounding strongly today?
• How to find wealth compounders inside the ASX 200 right now
• Why is the Whitehaven share price getting beaten up 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week deep in the red. The benchmark index fell 0.9% to 6,785.7 points.

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

ASX 200 expected to jump

It may be Halloween, but there’s nothing scary about the Australian share market’s expected performance today. The benchmark index looks set to start the week very strongly after a great session on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is poised to open the day 92 points or 1.35% higher this morning. On Wall Street, the Dow Jones was up 2.6%, the S&P 500 rose 2.45%, and the NASDAQ stormed 2.9% higher. This was driven by a softer inflation reading in the US.

Oil prices fall

Energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a subdued start to the week after oil dropped on Friday night. According to Bloomberg, the WTI crude oil price was down 1.3% to US$87.90 a barrel and the Brent crude oil price fell 1.2% to US$95.77 a barrel. Concerns over COVID restrictions in Chinese were to blame for this decline.

IGO update

The IGO Ltd (ASX: IGO) share price will be one to watch on Monday when the battery materials miner releases its quarterly update. Investors will no doubt be keen to see how the company’s lithium operations are faring. In addition, the market will be looking to see if IGO is on track to achieve its production and cost guidance for FY 2023. Management is aiming for full year Greenbushes lithium production of 1,350kt-1,450kt with costs of A$225 to A$275 a tonne.

Macquarie rated as a buy

The Macquarie Group Ltd (ASX: MQG) share price is good value according to analysts at Morgans. This morning the broker retained its add rating with a slightly trimmed price target of $214.30. The broker commented: “MQG is a quality franchise, well exposed to structural growth areas, and the company is managing a more difficult FY23 environment well.”

Gold price falls

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a poor start to the week after the gold price fell on Friday. According to CNBC, the spot gold price was down 1.2% to US$1,644.8 an ounce during the session. Rising treasury yields weighed on the precious metal.

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

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More reading

• Is the Macquarie share price in the buy zone? Here’s what Goldman Sachs thinks
• Why did the AGL share price outperform the ASX 200 on Friday?
• Here were the 3 most heavily traded ASX 200 shares on Friday
• Here are the top 10 ASX 200 shares today
• ‘Some market trends are now entrenched’: Why this expert tips greatness for Santos shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Bear markets can often feel like doomsday events for investors, but there’s good that comes out of these healthy downturns. Bear markets separate the wheat from the chaff.

In other words, they make apparent the companies that are worthy of investor dollars, as well as those that probably should have never gone public in the first place.

There’s one very distinguishable trait that nearly all bear market winners have in common: Healthy cash levels on their balance sheets.

Having a lot of cash allows strong companies to take advantage of cheap valuations in the form of acquisitions.

While cash-poor companies struggle to keep their boats afloat, those with strong balance sheets can bolster their businesses by buying out their competitors or acquiring entire new product lines.

How to identify a cash-rich balance sheet

If diving deep into financial statements isn’t your thing, then you’re in luck, because identifying a strong cash position is very easy.

Simply add the cash and cash equivalents and short-term investments/securities lines on the balance sheet, and you’ll arrive at the company’s total cash.

Comparing this number to the current liabilities (expenses the company will pay in the next 12 months) gives you a good idea of how cash-rich the business is.

Take Shopify (NYSE: SHOP), for example. The company has nearly $7 billion in cash and only $700 million in current liabilities. Not only does that tell us the company is more than capable of self-funding its operations, it also has plenty of cash to deploy in this bear market.

Winners from past bear markets

Some of the most prolific and profitable companies today were built on tremendous acquisitions made when the market was selling off.

Had these companies not had adequate cash reserves during these periods, they would likely not be nearly as prominent as they are today.

Let’s take a look at some examples:

Company	Acquisition	Year	Price paid	Current annual revenue from acquisition
Disney (NYSE: DIS)	Marvel	2009	$4 billion	~ $2.8 billion*
Alphabet (NASDAQ: GOOG)	YouTube	2006	$1.65 billion	$28 billion
Meta (NASDAQ: META)	Instagram	2012	$1 billion	$47 billion

Data source: Public company filings and box office data. Table by author. * Does not account for revenue from Disney Plus subscribers.

In the wake of the Great Financial Crisis, Disney made one of the most important acquisitions in film history, buying up a relatively obscure comic book company called Marvel. As we all know now, the Marvel Cinematic Universe is one of the world’s most successful franchises, bringing in a whopping $2.8 billion in annual revenue for Disney.

That number is pretty astounding, considering the company only paid $4 billion to acquire Marvel. And the real annual revenue is likely much higher, since it’s difficult to estimate how much of Disney’s streaming revenue is due to its Marvel titles.

If the Marvel acquisition looks impressive, then the YouTube and Instagram buyouts are downright silly. Alphabet paid just $1.65 billion for YouTube in the years following the dot-com bubble, and today it accounts for $28 billion in revenue for the Google parent company.

Meta (at the time Facebook) might have made the greatest acquisition of all time when it bought Instagram for a ridiculously cheap price of $1 billion in 2012. Today, Instagram accounts for roughly 44% of Meta’s total revenue. To call this acquisition a home run would be the understatement of the century.

All three companies owe a meaningful amount of their success to the high-quality acquisitions made in past down markets.

Cash-rich companies are uniquely positioned to prosper in recoveries

The examples above highlight just how important it is to have cash in bear markets. An abundance of capital not only protects the business from bankruptcy, it gives the company the ability to buy up cheap assets to strengthen its competitive advantages.

Very few acquisitions will be as dramatically important as the examples above, but the discounts created by bear markets can turn average buyouts into meaningful sources of revenue and income in the future.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Look for stocks with this balance sheet trait to outperform in the coming recovery appeared first on The Motley Fool Australia.

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More reading

• Meta Is betting billions that AI will fix its advertising business
• Better buy: Disney vs. Netflix stock
• Alphabet’s ad business slows to a trickle. Time to sell?
• Meta just dropped a metaverse bomb on investors. Here’s what you need to know
• Why Meta Platforms stock was down more than 20% today

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Mark Blank has positions in Shopify and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., Shopify, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify, long January 2024 $145 calls on Walt Disney, short January 2023 $1,160 calls on Shopify, and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Searching for big dividend yields? If you are, then read on because listed below are two ASX dividend shares that offer investors very generous yields.

Here’s what you need to know about these ASX dividends shares:

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The first option for income investors to consider is actually an ETF.

The Vanguard Australian Shares High Yield ETF provides investors with exposure to ASX-listed shares that have higher than average forecast dividends.

But it does this with diversification in mind. Rather than just loading up on banks and miners, the ETF restricts the proportion invested in any one industry to 40% and 10% for any one company.

Among the ASX dividend shares that you’ll be owning a slice of with this ETF are mining behemoth BHP Group Ltd (ASX: BHP), Australia’s largest bank Commonwealth Bank of Australia (ASX: CBA), and telco giant Telstra Corporation Ltd (ASX: TLS).

At present, the Vanguard Australian Shares High Yield ETF trades with an estimated forward dividend yield of 6.3%.

Westpac Banking Corp (ASX: WBC)

A second option for income investors to consider is banking giant Westpac.

Goldman Sachs is very positive on Westpac due to its “strong leverage to rising rates” and “cost management initiatives.”

In fact, Westpac is the broker’s number one pick in the sector and has its coveted conviction buy rating on its shares with a $27.07 price target. This implies potential upside of 13% for investors.

The broker is also expecting some big dividends in the coming years, sweetening the deal further. Goldman has pencilled in fully franked dividends of 123 cents per share in FY 2022 and 139 cents per share in FY 2023. Based on the current Westpac share price of $23.99, this will mean yields of 5.1% and 5.8%, respectively.

The post These ASX dividend shares have big yields appeared first on The Motley Fool Australia.

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More reading

• Will the RBA raise rates again next week? Here’s what Westpac expects
• 5 big ASX announcements making news this week
• Own Westpac’s shares? Here’s what Citi is saying about the bank’s pursuit of Tyro
• Here’s how ASX 200 banks stand to benefit from the budget
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield Etf and 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 Reserve Bank of Australia (RBA) will be gathering again next week to decide on the cash rate.

At the last meeting, the central bank surprised the market with a smaller than expected rate hike.

The market was forecasting a 0.5% increase, but the RBA lifted rates by 0.25% to 2.60%.

How big will the RBA’s rate hike be in November?

According to the latest cash rate futures, the market is sitting on the fence with this meeting, pricing in only a 51% probability of a 0.5% increase to 3.10%. It appears to believe a smaller 0.25% increase to 2.85% is the more likely route that the central bank will take.

However, the economics team at banking giant Westpac Banking Corp (ASX: WBC) don’t agree with this view and are predicting a 0.5% increase.

According to its latest weekly economic report, Westpac’s chief economist, Bill Evans, believes that the latest quarterly inflation reading was a major surprise and will force the RBA to act. He said:

The September quarter inflation report has come as such a major surprise that we think the Reserve Bank Board will decide to raise the cash rate by 50bps at the next Board meeting on November 1.

The quarterly CPI print was an increase of 1.8% for the trimmed mean (the accepted measure for underlying inflation) well above market expectations of 1.5%. Annual trimmed mean inflation lifted to 6.1%yr. This is the highest quarterly and annual increase in underlying inflation since the ABS began producing estimates in 2002. Historical estimates compiled by the RBA show the quarterly rise is the biggest since 1988.

But why raise rates?

Evans believes the RBA needs to take strong action now before things get out of control. He explained:

During this period of rising inflation we have been most concerned about a strong inflationary psychology becoming entrenched in the Australian psyche. As this develops, businesses become more confident that they can raise their prices; consumers become more accepting of such action and see significant wage increases, in the context of tight labour markets, as necessary to compensate, sustaining the whole inflation process.

Evidence from the survey that pricing power is becoming widespread across expenditure items should be of considerable concern to an inflation–targeting central bank. The Budget papers have raised the prospect of a 50%+ increase in electricity prices over 2022 and 2023. This means inflation overall will remain more elevated and poses further pressures on inflation psychology. The best way for the central bank to break this nexus is to adopt strong rhetoric and strong action.

The post Will the RBA raise rates again next week? Here’s what Westpac expects appeared first on The Motley Fool Australia.

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More reading

• 5 big ASX announcements making news this week
• Own Westpac’s shares? Here’s what Citi is saying about the bank’s pursuit of Tyro
• Here’s how ASX 200 banks stand to benefit from the budget
• Top brokers name 3 ASX shares to buy today
• 22 high-yield ASX dividend shares Wilsons is targeting

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Coming into Alphabet Inc‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) third-quarter earnings report on Tuesday night, there were already signs that growth would be sluggish.

Fellow digital advertising stock Snap Inc said revenue growth slowed to just 6% in its third quarter, and Alphabet management had already warned about macroeconomic uncertainty in its second-quarter earnings report.

Those fears were validated when the Google parent posted third-quarter results that were even worse than expected.  

Revenue increased just 6%, or 11% in constant currency, to $69.1 billion and ultimately missed estimates at $70.6 billion. On the bottom line, operating income fell 19% to $17.1 billion, and earnings per share shrank from $1.40 in the quarter a year ago to $1.06 (below the analyst consensus of $1.25). The stock fell 6.6% in the after-hours session on Tuesday night. 

Advertising screeches to a halt

While Google Cloud and the projects in the “other bets” segment, like the autonomous driving service Waymo, get some attention from investors, Alphabet is fundamentally an advertising business, and advertising makes up essentially all of its profits, as Google Cloud and other bets lose billions of dollars each year.

Google Search still drives a majority of the company’s revenue and profits, making it the biggest determinant of the company’s success.

In the third quarter, revenue from the search segment increased just 4.3% to $39.5 billion, while YouTube’s top line fell for the first time since the company broke out its results, declining 2% to just over $7 billion. Revenue at Google Network, which is made up of Google ads on non-Google properties, also fell 1.6% to $7.9 billion.

Management noted that the stronger dollar was partly responsible for the weak growth and said that lapping rapid growth in the quarter a year ago when overall revenue jumped 41% was the main reason for the underwhelming performance.

However, Alphabet’s overall revenue also declined sequentially, and advertising revenue slipped 3.2% from Q2 to $54.5 billion, a clearer sign that macroeconomic headwinds are weighing on the business.

On the earnings call, the company said it saw a pullback in verticals, including financial services like insurance, loans, and crypto, and that negative trends in ad demand strengthened from the second quarter to the third quarter.

Is this a red flag?

Advertising is a cyclical business, and in uncertain economic environments like the current one, it’s often one of the first expenses that businesses cut back on, which makes sense. Companies anticipating a decline in consumer spending are likely to cut back on marketing, and digital advertising in particular can be easily ramped up or down according to demand. Cutting ad budgets also doesn’t come with the baggage that laying off employees or slashing capital expenditures does.

Alphabet management seems to expect the headwinds to get worse before they get better. The company doesn’t give guidance, but it said it expects stronger currency headwinds in the fourth quarter and plans to slow spending growth in the fourth quarter and in 2023, which should help shore up the profit decline.

After headcount jumped 25% to 187,000 year over year in the third quarter, CEO Sundar Pichai promised that employee additions would be significantly slower in the fourth quarter and in 2023. In Q4, the company plans to add less than half the new employees it did in Q3.

As a public company, Alphabet has been through two advertising cycles before. Both times, in the financial crisis and the coronavirus pandemic, advertising growth fell sharply but quickly rebounded as the economic climate improved, and that should be the case again. 

Google’s advertising products are essential tools for a wide range of businesses, and it has a near monopoly on search, with around 90% in market share in the countries where it operates. Despite the decelerating growth, this is not a broken business by any means. 

Investors should expect slow growth over the next few quarters, as ad demand is likely to be weak, but Alphabet’s strengths are still intact. Furthermore, the stock is reasonably priced at a price-to-earnings ratio of roughly 20 based on this year’s estimates.

If the bear market persists, the stock could decline further, but for a dominant business and a profit machine, this isn’t a bad entry point at all.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Alphabet’s ad business slows to a trickle. Time to sell? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 tech shares getting bashed around today?
• Why are Bitcoin, Ethereum, and Dogecoin leaping higher today?
• Why were Meta and Amazon stocks falling today?
• Why did Alphabet stock crash 9% on Wednesday?
• The bear market rally has seen the ASX 200 jump five percent higher in October. It could all be about to run out of steam

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Snap Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Are you looking to add some growth shares to your portfolio when the market reopens next week?

If you are, the ASX growth shares listed below could be worth considering. Here’s why analysts are bullish on these shares:

Altium Limited (ASX: ALU)

The first ASX growth share that has been named as a buy is Altium. It is the printed circuit board (PCB) design software provider behind the world class Altium Designer platform. Thanks to its dominant position in an industry growing due to the explosive artificial intelligence and internet of things markets, management is very confident in its growth outlook. In fact, the company is aiming to more than double its revenue to US$500 million by 2026.

Jefferies is positive on the company and currently has a buy rating and $38.13 price target on its shares. 

Life360 Inc (ASX: 360)

A second ASX growth share that has been tipped as a buy is Life360. It is the location technology company behind the eponymous Life360 mobile app. This hugely popular freemium app had over 40 million active users at the last count. It also has a growing number of paid subscribers, who have just been hit with prices increases. While this is expected to lead to some level of churn, management revealed strong results from a recent trial of price increases. The company has also made a couple of key acquisitions that open the door to significant cross-selling opportunities.

Bell Potter was pleased with the price increase news and believes Life360 will now be profitable a year earlier than previously expected. This certainly is good news in the current environment where investors have an aversion to loss-making tech companies. Bell Potter currently has a buy rating and $9.25 price target on its shares.

The post Analysts name 2 ASX growth shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• If you invested $5,000 in each of these ASX shares 10 years ago, you’d be a millionaire today
• Down 32% in 2022, this ASX All Ords share is a bargain-buy opportunity: WAM
• Why are ASX 200 tech shares getting bashed around today?
• 5 ASX shares to buy for the Christmas rally: expert
• How I’d build a portfolio by investing in top ASX shares now

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and Life360, Inc. 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 investment team at Wilson Asset Management (WAM) were touring the country in October to meet more than 150 companies to “check the pulse” of corporate Australia. It has found ASX share opportunities in sectors like tourism and mining services.

Let’s have a look at some of the companies that the fund manager has unearthed as ideas.

Mining services

WAM said that the outlook for mining services companies is “positive” with commodity prices “continuing to boost activity” coupled with borders reopening. The fund manager noted that Australia’s open borders are leading to an easing of labour constraints.

There are various businesses in this sector that the company named, of various sizes. To give context for the size of these companies, I’ll quote the market capitalisations from the ASX.

There’s Seven Group Holdings Ltd (ASX: SVW) with a market capitalisation of $6.5 billion.

SRG Global Ltd (ASX: SRG) was another pick in the mining services sector, with a market cap of around $310 million.

NRW Holdings Limited (ASX: NWH), with a market cap of $1.1 billion, was another of the fund manager’s picks from the sector.

Travel and international migration

While the investment team are noticing strong sales from the retail sector thanks to ongoing consumer spending, WAM is going with a “cautious view” because the impact of interest rate rises are yet to flow through to the industry.

However, in terms of consumer spending, the fund manager named tourism as an interesting sector to look at.

ASX travel shares are being bolstered by the reopened borders and consumer spending shifting from goods to services. It named Webjet Limited (ASX: WEB) as one of the ASX shares that is benefiting from the improvement of movement.

The fund manager also said that international migration is “finally recovering” and this is helping businesses that are involved in education and student placements, with Idp Education Ltd (ASX: IEL) also holding a place in the portfolio.

Getting insights into business performance

At the moment it’s annual general meeting (AGM) season, with many companies giving updates as they tell shareholders how FY22 went, trading updates for FY23 and expectations for future growth.

WAM said:

Strong results are not being reflected in the share prices, due to the current uncertainty with the consensus view that a weaker economy will lead to earnings downgrades in the future. This is providing the team with plenty of strong opportunities to invest in companies trading at record low valuations.

One trend is clear, the market has a preference for companies with strong balance sheets that will give them the ability to weather the storm. A select group of companies are demonstrating that strength and taking advantage of depressed share prices by announcing capital management initiatives, including buy backs.

It will be interesting to see how the WAM portfolios develop as interest rate impacts start to flow through to households and ASX share reports.

The post WAM visited 150 companies in October. Here are 5 ASX shares they are super positive on right now appeared first on The Motley Fool Australia.

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• 3 ASX 200 dividend shares you may have overlooked: Wilsons
• Could now be a good time to buy Webjet shares?
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• Webjet share price higher on bullish Goldman Sachs note

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 Idp Education Pty Ltd. The Motley Fool Australia has recommended Webjet 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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Are you looking to make some additions to your portfolio? If exchange traded funds (ETFs) are of interest to you, then you might want to look at the three listed below.

Here’s what you need to know about them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

It has been a nightmare year for the normally reliable BetaShares NASDAQ 100 ETF. Since the start of 2022, the hugely popular ETF has lost 26% of its value. While this is disappointing, it could prove to be one of the best buying opportunities in years for patient investors. That’s because this ETF is home to 100 of the largest non-financial companies listed on the famous NASDAQ index. This means you’ll be buying household names such as Google parent Alphabet, Amazon, Apple, Meta (Facebook), Microsoft, Netflix, Nvidia, Starbucks, and Tesla.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF for smart investors to look at is the VanEck Vectors Morningstar Wide Moat ETF. This ETF aims to provide investors with a way to invest in the type of shares that Warren Buffett buys. That’s because the index it tracks has strict rules that means it only contains shares that are attractively priced and have sustainable competitive advantages or moats. The ETF changes constituents periodically, but generally it holds 50 shares at any given time. Right now, these include Alphabet (Google), Boeing, Intel, Kellogg Co, and Walt Disney.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ETF for smart investors to consider is the Vanguard MSCI Index International Shares ETF. This popular ETF provides investors with exposure to ~1,500 of the world’s largest listed companies. This means that investors can use the fund to take part in the (eventual) long term growth potential of international economies. Among the many shares that you’ll be investing in are giants such as Amazon, Apple, JP Morgan, Nestle, and Visa.

The post Here are 3 ASX ETFs for smart investors 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 positions in and has recommended BETANASDAQ ETF UNITS and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

At a time when inflation is running amok, it’s worth taking a lesson or two from longtime investors who’ve seen it all before.

Consider Warren Buffett’s thoughts on the matter. When inflation was rampant in 1977, he wrote, “Our acquisition preferences run toward businesses that generate cash, not those that consume it. As inflation intensifies, more and more companies find that they must spend all funds they generate internally just to maintain their existing physical volume of business.”

Not surprisingly, some of Buffett’s largest and longest-held positions are excellent dividend stocks. Dividend stocks are focused on cash generation, and that protects their businesses during these inflationary periods. They also provide generous passive income. Some of the best are Coca-Cola (NYSE: KO), Kroger (NYSE: KR), and Procter & Gamble (NYSE: PG). Let’s take a closer look at each.

One of the best dividend stocks on the market

Berkshire Hathaway has held shares of Coca-Cola for more than 30 years, and it currently owns 9.2% of the stock. The beverage giant makes up 6.8% of the total Berkshire Hathaway portfolio and is its fourth-largest holding.

Coca-Cola is a classic Buffett stock, mostly because of its focus on cash generation and its dividend, which is really a commitment to its own business. The company is a Dividend King, having raised its payout annually for the past 60 years — even through the massive sales declines at the beginning of the pandemic.

While the company innovates with new products, its well-oiled business churns out cash through its core brands, giving it enough to plow back into the business while maintaining and growing the dividend. Coca-Cola’s payout ratio is presently a bit high at 77%, but the company has tons of cash to cover its dividend, which is super-important to management.

KO Payout Ratio data by YCharts

Coke’s shares are down slightly this year. At the current price, its dividend yields 3.1%, which should please new investors.

Big supermarkets, lots of cash

Among U.S. supermarkets, Kroger comes in third in size after Walmart and Costco Wholesale (leaving out Amazon as a different kind of business). But unlike the other two, it doesn’t follow a discount model; rather, it offers a premium experience through its network of 2,800 stores.

Over the past few years, Kroger has benefited from customers spending on essentials, and it has revamped its digital channels to handle more demand. Revenue has climbed in this environment. 

It’s been in the news lately as it has proposed a merger with the next-biggest U.S. supermarket company, Albertsons Companies. The deal is facing regulatory scrutiny as it would combine the two largest non-discount grocery retailers. If it does indeed go through, the newly merged company will likely overtake Costco as the second-largest food retailer in the U.S.

Buffett first took a position in Kroger in 2019. At that time, it was just getting ready to remake itself. What he might have seen then was a foothold in stability. The company paid a dividend but stopped for several decades before resuming it again in 2006, and it’s now a growing a reliable dividend, as are all of the stocks on this list.

KO Dividend data by YCharts

Kroger stock is down just under 4% this year, and at this price, the dividend yields 2%.

A solid business with beloved brands

A theme through all of these stocks is a well-established company with well-loved products that bring in tons of cash. Procter & Gamble is no exception. The company owns popular brands, such as Tide laundry detergent and Bounty paper towels. It makes products that people across the globe use every day and frequently purchase.

Buffett first came to own its shares in 2005 through Berkshire Hathaway’s acquisition of the Gillette razor company. Procter & Gamble is another example of a company with slow but consistent growth and the ability to keep producing sales well into the future. 

Inflation has been hitting Procter & Gamble’s margins and profits, and volume was down in the company’s 2023 fiscal first quarter (ended Sept. 30).

The company has been increasing some of its prices, taking the risk that some customers will head toward discount brands. But management noted that 26 of 50 global brands maintained or increased market share in the latest quarter, which was the first to really reflect high inflation.

It expects profitability to suffer in the near term and is counting on brand power to carry it through. 

The company’s stock is down 21% this year, and its dividend yields 2.8% at this price.

KO Dividend Yield data by YCharts

Procter & Gamble is also a Dividend King, and it has one of the longest dividend-raise streaks on the market, at 66 years. It’s as reliable as you can get for steady and growing passive income.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The best Warren Buffett stocks you can buy with huge passive income potential appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and recommends Amazon, Apple, Berkshire Hathaway (B shares), Costco Wholesale, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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