Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.

WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There’s also one called WAM Microcap Ltd (ASX: WMI), which focuses on small-cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets “the most exciting undervalued growth opportunities in the Australian microcap market”.

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

iCollege Ltd (ASX: ICT)

WAM described this business as a provider of accredited and non-accredited courses and services across Australia. It also operates an international recruitment agency. The iCollege share price is up 60% since 24 August 2022.

It was noted that the COVID-19 period has been challenging, but the reopening of Australian borders and a range of government initiatives aimed at encouraging international students to return has led to iCollege seeing a “surge” in demand from overseas students.

The fund manager also said the small-cap ASX share is strongly positioned to benefit from this trend with the company revealing in its FY22 result that the number of English language students has exceeded pre-COVID levels. New student offers and enrolments at Go Study are increasing on a month-over-month basis.

The intake of international bachelor degree students is rising steeply and will “contribute to strong revenue growth into FY24 and onwards”.

Concluding its positive thoughts, WAM explained:

We believe the market is underestimating the company’s operating leverage associated with filling incremental classroom capacity, underpinning earnings upgrades. The strong balance sheet also provides opportunity to deploy capital into earnings accretive acquisitions over the medium-term.

CogState Limited (ASX: CGS)

The other small-cap ASX share mentioned, CogState, was described as a leading technology company optimising brain health assessments to advance medicine development and enable earlier clinical insights in healthcare. The CogState share price is up 30% since 27 September 2022.

Last month, its global commercial partner Eisai reported a successful phase three trial result for its new Alzheimer’s disease drug, which met both its primary and secondary endpoints.

WAM noted that the drug reduced clinical cognitive decline by 27% compared to a placebo in a study involving 1,795 participants with early Alzheimer’s disease.

Eisai will continue to seek approval for the drug in the US, Japan, and Europe.

The fund manager said the adoption of Cogstate’s technologies at scale has been predicated on a commercialised drug in the market to screen for potential patients suitable for treatment.

Assuming the drug is approved, WAM said:

We anticipate this to materialise in the 2023 calendar year, driving upgrades to revenue and earnings. Additional opportunities exist with highly-anticipated read-outs from two other pivotal phase three Alzheimer’s drugs, providing near-term catalysts for the company.

The post These 2 small-cap ASX shares have soared, but a fund manager still tips them as buys appeared first on The Motley Fool Australia.

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• Why Cogstate, Global Lithium, Premier, and Woodside shares are charging higher

Motley Fool contributor Tristan Harrison has positions in WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CogState Limited. The Motley Fool Australia has positions in and has recommended CogState 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 Wesfarmers Ltd (ASX: WES) share price will be in the spotlight this week as the ASX 200 conglomerate gears up to hold its 2022 annual general meeting (AGM).

On Thursday, Wesfarmers will hold its 41st AGM at the Perth Convention and Exhibition Centre. 

Shareholders will be able to participate in the AGM and ask questions either in person or online.

As usual, the formalities of the meeting will see shareholders vote on items such as the re-election of board members, the FY22 remuneration report, and the grant of performance shares to managing director Rob Scott.

But the real meat of the AGM will come through management’s addresses at the start of the meeting.

Chair Michael Chaney will be up first to introduce the proceedings and provide some commentary. 

Then, all eyes will be on Rob Scott’s address, which is what the market will be paying particular attention to.

Here’s what to watch for when Wesfarmers holds its AGM on Thursday.

Recent trading conditions

Unlike Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL), Wesfarmers doesn’t usually provide quarterly updates.

So, Thursday’s AGM is unlikely to get into the nitty gritty of Wesfarmers’ recent financial performance in FY23.

However, the managing director’s address usually pulls back the curtain and provides comments on recent trading.

This should include comments at a segment level, providing insight into performances across the likes of Bunnings, Officeworks, Kmart, Catch, chemicals, and industrials.

When Wesfarmers released its FY22 results, it noted that retail trading conditions had remained “robust” through the first seven weeks of FY23. 

Singling out its retail brands, the conglomerate said that sales growth had been particularly strong in Kmart Group. Bunnings was also ticking along, notching up positive sales growth. However, sales at Officeworks were flat compared to the prior year.

Wesfarmers also noted that its industrial businesses remain subject to international commodity prices, foreign exchange, competitive factors, and seasonal outcomes.

Inflation and cost of living pressures

Inflation is the topic on everyone’s lips at the moment. And as the nation’s largest retail conglomerate, there’ll be a lot of interest in what Wesfarmers has to say (or perhaps not say) on the matter.

Commenting on these conditions back in August, Wesfarmers said:

The Australian economy is starting from a strong base with low unemployment and high levels of household savings, but the effects of inflation and higher living costs are placing pressure on parts of the economy, including household budgets.

At the time, the conglomerate believed that it was well-placed to navigate through this environment, noting:

The Group’s retail businesses are well positioned as cost of living pressures impact household budgets and value once again becomes increasingly important to customers. The retail businesses will maintain their focus on meeting the changing needs of customers and delivering even greater value, quality and convenience.

Wesfarmers share price snapshot

As I covered recently, brokers have a mixed view on Wesfarmers shares. Morgans and UBS are camped among the bulls while Goldman Sachs and Citi remain sceptical. 

With Wesfarmers shares last closing at $44.18, they’ve slumped 26% in the year to date. This has largely been due to the conglomerate’s vulnerability to the impacts of rising inflation and interest rates, which could see consumer spending dry up across its portfolio of retail brands.

Wesfarmers reported net profit after tax (NPAT) of $2.4 billion in FY22, marginally lower than the prior year. So, Wesfarmers shares are trading on a trailing price-to-earnings (P/E) ratio of 21 times.

As for dividends, an annual payout of $1.80 puts Wesfarmers shares on a trailing dividend yield of 4.1%. With the benefit of franking credits, this yield bumps up to 5.8%.

The post Looking to buy Wesfarmers shares? Here’s what to watch at this week’s AGM appeared first on The Motley Fool Australia.

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Motley Fool contributor Cathryn Goh 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 COLESGROUP DEF SET and Wesfarmers 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.

What happened 

Chinese stocks were tumbling this morning after China’s President Xi Jinping broke precedent over the weekend and secured a third term as the country’s leader.

Xi’s past government policies have been generally unfriendly toward technology companies, and investors are worried that policies enacted by the newly emboldened Xi could hamper tech stocks even further. 

As a result, the share prices of Tencent Music Entertainment (NYSE: TME) dropped 8.3%, the commercial freight platform company Full Truck Alliance (NYSE: YMM) plunged 9.5%, and online education company New Oriental Education and Technology (NYSE: EDU) plummeted 20.5% as of 11:17 a.m. ET. 

So what 

The strong reaction from investors today comes amid the Chinese government’s stricter stance toward technology companies over the past few years. The most recent crackdown came just over the summer, when a large group of Chinese tech companies was fined for disclosure violations.

While many countries use governmental oversight of companies, China is particularly strict and enacted significant fines over the past couple of years for violations, including for data protection and antitrust rules. One particularly large fine was levied against Chinese e-commerce giant Alibaba last year for $2.8 billion.

The result of the Chinese tech crackdown has been billions of dollars worth of market value being wiped from tech companies based there. 

Tencent Music, Full Truck, and New Oriental investors are worried that with Xi having secured another term in power, the Chinese government will continue strict policies against companies, which will curb their growth. 

Those worries aren’t unfounded, either. New Oriental cut 60,000 jobs at the beginning of this year as sales plunged in response to new rules about online tutoring. Last year the Chinese government put tight restrictions on online tutoring companies, essentially erasing most of the for-profit tutoring market, causing New Oriental’s share price to fall 74% in just one month. 

Full Truck Alliance and Tencent Music have faced their own hurdles with the Chinese government. Last year, the government opened up a cybersecurity probe into Full Truck. When that happens, companies aren’t allowed to add new users. Also, last year, Tencent Music was ordered by the Chinese government to give up its exclusive music licensing rights, a huge blow to the largest music streaming service in China. 

Now what 

While there’s been some recent hope that China will back away from some of its strict policies toward tech companies, the general sentiment among investors right now is worry. 

China is still implementing its zero-COVID policy, which continues to bring companies and parts of the country to a standstill. That will likely continue to cause parts of the Chinese economy to slow down. Additionally, reports show that the current crop of political leaders in China, led by Xi, is not exactly pro-business. 

Tencent Music, Full Truck, and New Oriental investors may want to proceed with caution with these stocks and likely prepare for more volatility as investors anticipate China’s strict approach toward technology companies to continue.     

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

The post Here’s why these Chinese stocks fell hard today appeared first on The Motley Fool Australia.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended New Oriental Education & Technology Group. 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.    

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

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The Vanguard MSCI Index International Shares ETF (ASX: VGS) has seen plenty of volatility this year, along with the ASX share market.

For readers that don’t know, this exchange-traded fund (ETF) is an investment that tracks the MSCI World ex-Australia Index, in Australian dollars. This means it aims to track the combined return of almost 1,500 businesses that are listed around the world.

It gives exposure to names like Apple, Microsoft, Alphabet, Amazon.com, Tesla, Johnson & Johnson, Exxon Mobil, Berkshire Hathaway and Meta Platforms (Facebook).

Interest rates and inflation hit hard

The global share market has been through plenty of pain this year.

It has been a particularly painful time for names in the technology sector as interest rates hurt their valuation. The Vanguard MSCI Index International Shares ETF has a higher weighting towards tech than the overall ASX share market does.

Central banks have been increasing interest rates to try to put a lid on inflation and lower demand in the economy.

It has certainly impacted the global share market.

At the time of writing, the unit price of the ETF has fallen by 13.8% since the start of the year. That includes the impact of the Australian dollar weakening from being worth US 73 cents to currently being worth just US 63 cents.

This means $5,000 invested at the start of 2022 would have dropped to $4,310.

Currency reductions matter because the Vanguard MSCI Index International Shares ETF has around 70% of its portfolio invested in US shares. As the Australian dollar falls, it means the same US share is worth a higher amount in Australian dollar terms, assuming the share price stays the same.

Seeing as the Aussie dollar has been weakening, but the US share market has been falling in value, it has cushioned Aussie investors from some, but not all, of the decline.

We often see the share market go through volatile times, it’s just hard to say when the next rollercoaster will start. However, I believe it may be a good time to go hunting for cheaper shares.

Why do interest rates matter?

Legendary investor Warren Buffett once explained why interest rates are so important for shares (and all assets):

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

Don’t forget about the income

The return I quoted above only refers to the change in the unit price.

ETFs also pass through dividends from the underlying businesses to investors in the form of distributions. This particular one pays it to investors every quarter.

If I owned Vanguard MSCI Index International Shares ETF units at the start of the year, I would have been entitled to four distributions in this calendar year, with the distribution for 31 December 2021 going ex-entitlement on 4 January 2022.

Those four distributions would amount to $1.74 in total. Some of this comes from crystallised capital gains within the ETF, so it’s not just dividend income received by the ETF.

The distributions add a 1.6% return to the picture. That would offset $80 of the decline.

Therefore, the ETF’s return has only been a fall of 12.2%, implying that an investor would have $4,390 left.

What’s next for the Vanguard MSCI Index International Shares ETF?

The performance of an ETF is dictated by the returns of its underlying holdings.

That means that whatever happens next will be decided by the global share market’s blue chips.

For many of the names involved, it will depend on how high interest rates have to go to tame inflation. But, it will also depend on how their earnings go through the upcoming period. Will this economic environment hurt their profit growth? Or can earnings keep rising at a good rate? Time will tell.

The post If I’d invested $5,000 in Vanguard’s VGS ETF at the start of 2022, here’s what I’d have now appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., 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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With ASX investor interest in exchange-traded funds (ETFs) continuing to remain strong, it might be beneficial to take a look at some of the best-performing funds of 2022 thus far.

As most investors would know, this year has been an especially tough one.

Given the S&P/ASX 200 Index (ASX: XJO) has lost about 10.6% over the year to date, ASX 200 index funds would have suffered a similar fate. So let’s take a look at which ASX ETFs have been winners for investors this year.

The 3 best-performing ASX ETFs of 2022 (thus far)

BetaShares Strong U.S. Dollar Fund (ASX: YANK)

This is a rather unique ETF in that it doesn’t cover companies at all. Rather this fund has been designed to give exposure solely to the performance of the US dollar compared to the Aussie dollar. So if the US dollar rises against our own (and our dollar falls), the value of this fund is supposed to rise.

This fund also uses leverage to amplify these movements. So it’s perhaps no surprise that the Strong Dollar ETF has had a cracking year.

This fund has given investors a return of 25.1% year to date, thanks to the rampant greenback that has come to dominate the currency markets this year.

BetaShares Global Energy Companies ETF (ASX: FUEL)

This ETF, as its code so aptly implies, is a fund that tracks a basket of global energy companies. Its primary holdings are the US oil giants Chevron and Exxon Mobil, but also includes Royal Dutch Shell and BP.

As motorists everywhere would be painfully aware, 2022 has seen energy prices explode. This has been detrimental for energy users, but highly lucrative for energy shares like those above. So it’s perhaps no surprise that this ETF has given investors a 32% return over the year to date.

Global X Ultra Short NASDAQ 100 Hedge Fund (ASX: SNAS)

Here we have another rather special ETF. This NASDAQ Hedge Fund is another ETF that uses leverage. But it is also an inverse ETF. This means that it has been engineered to rise in value when the index it tracks falls (and vice versa). In this case, it is the US-based NASDAQ-100 (NASDAQ: NDX).

As it happens, the NASDAQ 100 has had a shocker, falling by a nasty 31.46% on yesterday’s pricing. But investors of this Ultra Short ETF will find that music to their ears. That’s because this fall has enabled an eye-popping 76.3% increase in the value of this fund over 2022 thus far.

The post These are 3 best-performing ASX ETFs so far in 2022 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Chevron. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BP. 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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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.

What happened

Tesla (NASDAQ: TSLA) shares plunged as much as 7.4% Monday morning, dropping to their lowest level in almost 18 months. The move stemmed from two related reasons. As of the market close, the stock had recovered some ground, but was still down 1.49%.

So what

The main cause of today’s pessimism likely came from a pricing move reported by The Wall Street Journal. Tesla is dropping the price of its Model 3 and Model Y vehicles for Chinese customers. That’s not the only news impacting Tesla shares today, but the other item is also about China. 

Investors are concerned the price cut could mean the company is seeing waning demand in the important Chinese market. It comes just as Chinese President Xi Jinping secured a third term and stacked his government with loyalists that are considered less friendly to private companies.

Now what

Chinese tech stocks also dropped sharply today because investors fear policies including lockdowns to control the spread of COVID-19 and tighter regulations on businesses could hurt economic growth in the country. But Tesla investors likely focused more on the pricing move, especially on the heels of comments made by CEO Elon Musk last week. 

Musk said during the EV maker’s third-quarter earnings conference call that China is experiencing “a recession of sorts” related mostly to the property markets. After the company just dropped prices there by 5% and 9% for the Model 3 and Model Y, respectively, investors are wondering if that critical market might actually be faring worse than Musk indicated. 

The new prices will have the Model Y selling for under the equivalent of $40,000 and the Model 3 for about $36,600 to Chinese consumers. It’s a real concern for investors if the company is lowering prices due to slowing demand. Tesla’s plant in Shanghai was recently upgraded and produced a record 83,135 EVs in September. Declining raw material costs could also be what spurred the price drop. Commodity prices have dipped from peak levels recently, and investors might have nothing to worry about if lower costs are the reason. But combined with the concerns about potential future government policies, Tesla stock took a dive.

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

The post Why Tesla stock tanked today appeared first on The Motley Fool Australia.

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Howard Smith has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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.

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

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The Westpac Banking Corp (ASX: WBC) share price will be in focus on Tuesday after the bank revealed a $1.3 billion hit to its half-year earnings.

The hit – born from notable items, including a loss on the sale of Westpac Life Insurance – will dint the S&P/ASX 200 Index (ASX: XJO) bank’s second-half net profit and cash earnings.

Westpac revealed the upcoming impact after the market closed on Monday. The bank’s stock ended Monday’s trade at $23.87.

Let’s take a closer look at the news that might drive the Westpac share price on Tuesday.

Westpac share price in focus on $1.3b impact

The Westpac share price could be one to watch after the bank announced its second-half results will include a significant dint.

Much of the $1.3 billion post-tax hit from notable items relates to the sale of its life insurance business.

The bank completed the sale of the business to a Dai-ichi Life Group subsidiary for $900 million in August.

That saw Westpac recognise a $1.37 billion loss, $270 million of which impacted its financial year 2021 earnings. The other $1.1 billion will be recognised in its results for the second half of financial year 2022.

Other notable items resulted from:

• The sale of Advance Asset Management and successor funds transfer of BT’s personal and corporate superannuation funds
• The sale of the bank’s motor vehicle and its vendor finance businesses
• Shrinking the bank’s corporate and branch footprint
• Higher provisions for customer refunds, associated costs, and litigation costs

Most of the notable items were previously disclosed to the market as divestments were announced.

They left a positive 12 basis points impact on the bank’s common equity tier 1 capital ratio. The completion of the life insurance sale added 17 basis points, while the other notable items had a 5 basis point impact.

The $83 billion banking giant will release its full-year results on 7 November.

The post Westpac share price on watch following $1.3b earnings hit appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Medibank Private Ltd (ASX: MPL) share price remains suspended from trade on Tuesday.

But that hasn’t stopped the embattled private health insurer from releasing another cyber-attack update to the market this morning.

Unfortunately, things continue to go from bad to worse for the company.

What’s the latest?

Incredibly, it seems that every few days the Medibank cyber-attack incident escalates further.

Originally, the company believed that it had foiled a ransomware attack and advised that there was no evidence that data was taken from its systems. However, it was soon contacted by hackers informing it that data was taken and demanding a ransom.

At that point, the company believed that only its AHM and international student businesses had been impacted by the cyber-attack.

But that no longer remains the case. This morning the company advised that the hackers have “taken data that now includes Medibank customer data, in addition to that of ahm and international student customers.”

Worryingly, once again, Medibank was unable to see that its data had been stolen and the hacker had to produce a sample file to show that this was the case.

In light of this, the company advised that it is unable to say just how much data has been taken that could ultimately be leaked to the world. It commented:

Given the complexity of what we have received, it is too soon to determine the full extent of the customer data that has been stolen. We will continue to analyse what we have received to understand the total number of customers impacted, and specifically which information has been stolen. We have taken the step of making this announcement as we believe it is important to notify our customers of this development. As we continue to investigate the scale of this cybercrime, we expect the number of affected customers to grow as this unfolds.

Premium increases on hold

Perhaps in an effort to stop customers churning to another provider, the company has decided to postpone its premium increases for Medibank and AHM customers until 16 January 2023.

In addition, Medibank’s CEO, David Koczkar, once again apologised for the incident. He said:

I unreservedly apologise to our customers who have been the victims of this serious crime. As we continue to uncover the breadth and gravity of this crime, we recognise that these developments will be distressing for our customers, our people and the community – as it is to me. This is a malicious attack that has been committed by criminals with a view of causing maximum fear and damage, especially to the most vulnerable members of our community. We continue to work closely with the agencies of the Federal Government, including the ongoing criminal investigation into this matter. We thank them for their ongoing support and assistance.

When will the Medibank share price return to trade?

As things stand, the Medibank share price is scheduled to return to trade on Wednesday.

However, given the state of things, it seems quite likely that the company will push back its return date until things are resolved.

The post Medibank share price remains suspended amid worsening cyber incident appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Treasury Wine Estates Ltd (ASX: TWE) share price could be great value at current levels.

That’s the view of analysts at Goldman Sachs, which have just upgraded the wine giant’s shares.

What is Goldman Sachs saying about the Treasury Wine share price?

According to the note, the broker has upgraded the company’s shares from neutral to a buy rating with an improved price target of $14.70.

Based on the current Treasury Wine share price of $12.64, this implies potential upside of 16% for investors over the next 12 months.

The broker is also expecting a 3% dividend yield in FY 2023, bringing the total potential return on offer to approximately 19%.

Why is Goldman bullish on this ASX 200 share?

Goldman has been looking at just how sustainable the growth of Penfolds is in Asia-ex-Mainland China.

The good news is that the broker believes its growth is sustainable with a high earnings margin. It explained:

Whilst our analysis are directional estimates only, we expect sufficient premium market demand to support a revenue range of A$380mn-A$450mn (TWE FY22 A$385mn) with a relatively high quality distribution model focused on modern trade and on-premise key accounts. This revenue range implies ~21% market share of the premium import market and ~6% total wine market across these 7 Asia Focus Markets. As a result, we now have higher confidence of sustainable revenue growth at ~42.5% EBITS margin (vs prior ~40%) for Penfolds.

The broker has also been looking at the recently acquired Frank’s Family Vineyards (FFV) business and highlights that the latest US data supports a more sizeable distribution opportunity at accretive margins. As a result, it now expects “FFV to contribute >20% of Americas sales and >40% of EBITS by 2030.”

All in all, this has led to the broker bumping its earnings forecasts higher for the coming years. Which it believes makes the Treasury Wine share price great value based on current multiples. It concludes:

With proven redirection of Penfolds China volumes as well as refocusing Treasury Americas on premium/luxury, TWE is now re-entering a growth phase with a more diverse and defensive business. We have increased our FY23-25e sales and NPAT by 1%-5% and 5%-13% and now expect the company to deliver ~16% NPAT 2022-25e CAGR. The company is trading at a 12m forward P/E of 22.6x, vs our TP implied P/E of 26.3x. Upgrade to Buy (from Neutral), A$14.7/sh TP (previous A$12.0) implying 19% TSR.

The post Why Goldman Sachs just upgraded this ASX 200 share to a buy rating appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates 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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If you’re looking to boost your income with some dividend shares, then you might want to consider the ones listed below.

Both dividend shares are rated as buys and expected to provide investors with attractive yields in the near term. Here’s what you need to know about them:

National Storage REIT (ASX: NSR)

The first ASX dividend share to look at is National Storage. It is a leading self-storage operator with a portfolio of over 225 centres. From these centres, the company provides tailored storage solutions to over 90,000 residential and commercial customers.

The good news is that management still sees plenty of room to expand its network in the future. It notes that the self storage industry remains highly fragmented, giving it plenty of high-quality acquisition opportunities. This bodes well for National Storage’s income and distribution growth over the long term.

Ord Minnett is positive on the company and has a buy rating and $2.70 price target on its shares.

In respect to dividends, it is forecasting dividends per share of 11 cents in both FY 2023 and FY 2024. Based on the current National Storage share price of $2.39, this equates to yields of ~4.6%.

Rural Funds Group (ASX: RFF)

Another ASX dividend share for income investors to look at is this agricultural focused real estate investment trust (REIT).

Rural Funds has a high quality portfolio of assets across a range of agricultural industries. These include almond and macadamia orchards, premium vineyards, water entitlements, cropping and cattle farms.

These properties are leased to major players in the industry such as Australia’s largest meat processor, JBS Australia, wine giant Treasury Wine Estates Ltd (ASX: TWE), and leading almond producer Select Harvests Limited (ASX: SHV) on long term agreements.

Bell Potter is a fan of the company and recently upgraded its shares to a buy rating with a $2.75 price target.

As for dividends, the broker is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.441, this represents yields of 4.8% and 5.2%, respectively.

The post Experts name 2 ASX dividend shares to buy with great yields appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended RURALFUNDS STAPLED. 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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