Stock Pick

  • I’ve already made 158% on Bitcoin. Here’s why I keep holding

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

    Man sitting at desk with hands folded

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

    I first purchased Bitcoin (CRYPTO: BTC) on April 24, 2020, when the price of one token was roughly $7,509. This means that my position has generated a return of 158% (as of Oct. 13) in about two and a half years. That’s impressive any way you look at it, and that figure has far outpaced popular stocks like Apple and Costco Wholesale. 

    Even with such an outstanding investment gain, especially when compared to the S&P 500‘s total return of 34% during the same period, I have no intention of selling my Bitcoin holdings anytime soon. Here’s why. 

    Not a good time for risky assets 

    After hitting an all-time high of nearly $69,000 per token last November, Bitcoin has fallen 72%. This has followed the general negative trajectory of the overall stock market as well. 

    Inflation started to surge more than a year ago, and it hasn’t abated. This has forced the Federal Reserve to hike interest rates to slow down rising prices across the US economy. Investors have soured on risky assets in favor of safer ones, and this shift has hurt Bitcoin and the cryptocurrency market as a whole.  

    Tightening liquidity, coupled with a softening economic environment, might pave the way for a recession in the near future. Consequently, this could mean even more downward pressure on Bitcoin in the foreseeable future. 

    Maybe I would’ve looked smart in hindsight had I exited my Bitcoin position at its peak in November last year, but it’s difficult to correctly time the market on a consistent basis or call the exact top. And sitting on a paper gain of 158% right now might encourage one to sell and take the profits. But this is not my approach. 

    Keep a long-term mindset 

    Despite its price decline, Bitcoin has still generated an incredible return of nearly 14,000% since the spring of 2013. And to be clear, I remain extremely bullish on the world’s most valuable cryptocurrency over the next decade. This is why I remain a holder. 

    Bitcoin is being viewed by a growing number of market participants as a legitimate store of value, the equivalent of digital gold. But Bitcoin is more divisible, useful, and portable than gold. And these key characteristics could propel the cryptocurrency’s current market cap of $371 billion, bringing it closer to the $12.5 trillion total value of gold worldwide. Supporting my argument here is the younger generations’ increasing familiarity with and appreciation of all things digital, a trend that will only strengthen. 

    Large corporations, like Block and MicroStrategy, have allocated portions of their balance sheets to Bitcoin. And big-time institutional investors are getting in, too. Ark Invest, the investment firm headed by Cathie Wood, is extremely bullish on Bitcoin. Additionally, Coinbase recently signed a partnership with BlackRock, giving the massive asset manager’s clients easy access to Bitcoin. Rising investor demand, especially for a digitally scarce asset like Bitcoin, helps to support a higher price over time. 

    I know the path to greater Bitcoin adoption will be full of extreme volatility, just as it has been in the past. But as long as I maintain a very long-term time horizon, as I do with my entire portfolio, then I have no doubt that I’ll be able to maintain my conviction and remain a Bitcoin holder.

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

    The post I’ve already made 158% on Bitcoin. Here’s why I keep holding appeared first on The Motley Fool Australia.

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    Neil Patel has positions in Apple, Bitcoin, Block, Inc., and Coinbase Global, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bitcoin, Block, Inc., Coinbase Global, Inc., and Costco Wholesale. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 positions in and has recommended Block, Inc. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool Australia has recommended Apple. 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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  • Medibank share price sinks on cyber incident and trading update

    a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.

    a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.The Medibank Private Ltd (ASX: MPL) share price has returned from its trading halt and dropped deep into the red.

    In morning trade, the private health insurer’s shares are down 4.5% to $3.35.

    Why is the Medibank share price falling?

    Investors have been selling down the Medibank share price today despite the company releasing a positive update on last week’s cybersecurity incident.

    Last week, Medibank revealed that it detected unusual activity on its network. In response, the company took immediate steps to contain the incident, and engaged specialised cyber security firms.

    The good news is that Medibank doesn’t believe that any customer data has been removed.

    According to the release, ongoing investigations continue to show that there remains no evidence customer data has been removed from its IT environment. As a result, normal operations have resumed. Though, Medibank will continue to investigate the incident as part of its ongoing forensic analysis.

    Management notes that as a health company providing health insurance and health services, Medibank holds a range of necessary personal information of customers. In light of this, it stressed that the protection of customers’ data security is its highest priority.

    As a result, Medibank has deployed additional security measures across its network, strengthening the integrity of its systems.

    What actually happened?

    At this stage, Medibank’s investigation indicates that its cyber security systems had detected activity consistent with the precursor to a ransomware event. This initial finding was shared with the Australian Cyber Security Centre, who provided Medibank with additional guidance in support of this conclusion.

    Medibank’s systems were not encrypted by ransomware during this incident and there is no indication that the incident was caused by a state-based threat actor.

    Trading update

    In other news, Medibank has taken this opportunity to provide the market with an update on its performance so far in FY 2023.

    Positively, during the three months to 30 September, Medibank has continued to show good momentum and is tracking in line with the FY 2023 outlook provided with its full year results.

    Management does not expect this short disruption to impact this momentum.

    The post Medibank share price sinks on cyber incident and trading update 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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  • IAG share price takes centre stage on $350 million buyback news

    A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computerA woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer

    The Insurance Australia Group Ltd (ASX: IAG) share price is increasing on Monday as the company announces a return of capital to shareholders.

    At the time of writing, shares in Australia’s largest general insurer are 1.6% in the green at $4.89 a pop. That may not sound spectacular at first. However, compared to the 1.5% decline in the S&P/ASX 200 Index (ASX: XJO) this morning, it’s a welcomed sight for shareholders.

    Let’s take a look at what IAG investors are cheering about today.

    More money, fewer problems

    Market participants are gazing upon the IAG share price more fondly at the start of this new week following the insurer’s latest announcements. This comes after the company entered a trading halt on Friday amid the High Court’s ruling on business interruption insurance.

    According to today’s release, IAG plans to conduct an on-market share buyback to the value of $350 million. The substantial capital return will come out of the previous provision IAG had kept up its sleeve in the event of the courts ruling mostly unfavourable verdicts for payment on claims invoked by COVID-19.

    Out of the $950 million provision allotted, IAG has determined that a $615 million buffer is sufficient. In turn, the $350 million difference will go toward buying back IAG shares.

    Additionally, the insurer said the provision is open to further adjustments in the future as more information becomes available.

    One negative for IAG from the High Court’s latest ruling is how JobKeeper payments will be considered. Reportedly, the court ruled that any such payments will not be deducted from the amount of a claim regarding business interruption.

    Furthermore, the company reiterated its satisfactory capital position in light of today’s news. Inclusive of the $350 million to be poured into buybacks, IAG still retains a CET1 ratio of 0.99. This is within the desired bound of 0.9 to 1.1.

    How does the IAG share price compare in 2022?

    Despite the raft of natural disasters (namely flooding) and deteriorating equity markets, the IAG share price has outperformed so far this year.

    While the broader market is down a disappointing 12% in 2022, the insurance company is up 10% year-to-date. For those lucky shareholders, this works out to be a sturdy outperformance of around 22%.

    On top of that, IAG shares trade on a dividend yield of approximately 1.9%. Making it even more appealing for those scouting out additional income.

    The post IAG share price takes centre stage on $350 million buyback news appeared first on The Motley Fool Australia.

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    Motley Fool contributor Mitchell Lawler 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 Insurance Australia 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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  • How is the Woolworths share price handling the MyDeal cyberattack news?

    A woman sits on sofa pondering a question.

    A woman sits on sofa pondering a question.

    The Woolworths Group Ltd (ASX: WOW) share price is trading lower on Monday.

    In morning trade, the retail giant’s shares are down 0.5% to $33.60.

    However, this is better than the ASX 200 index, which is down 1.4% at the time of writing.

    What’s going on with the Woolworths share price?

    The Woolworths share price is holding up quite well today despite the company revealing that it has become the latest to be hit by hackers.

    According to the release, a compromised user credential was used to gain unauthorised access to the customer relationship management systems of the recently acquired MyDeal business.

    Woolworths revealed that MyDeal is now in the process of contacting an estimated 2.2 million customers that have been affected by the breach. The company has also commenced engagement with relevant authorities and government agencies.

    What has been accessed?

    The customer data which has been accessed by hackers includes customer names, email addresses, phone numbers, delivery addresses, and date of births (if provided for alcohol purchases).

    A small positive is that for 1.2 million customers included in the breach, only their email address has been exposed. Though, their spam folders will no doubt be working very hard in the coming months!

    One bigger positive is that MyDeal doesn’t store payment data, drivers’ licences, or passport numbers, so these important details have not been leaked. Furthermore, account passwords have not been compromised by the breach.

    Finally, given that MyDeal and Woolworths operate on completely separate platforms, none of the retail giant’s other businesses have been impacted by the cyberattack.

    MyDeal CEO, Sean Senvirtne, commented:

    We apologise for the considerable concern that this will cause our affected customers. We have acted quickly to identify and mitigate unauthorised access and have increased the monitoring of networks. We will continue to work with relevant authorities as we investigate the incident and we will keep our customers fully informed of any further updates impacting them.

    Woolworths’ chief security officer, Pieter van der Merwe, added:

    Woolworths Group’s cyber security and privacy teams are fully engaged and working closely with MyDeal to support the response.

    The post How is the Woolworths share price handling the MyDeal cyberattack news? 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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  • This bear market risk indicator suggests we could head a lot lower

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

    shadow bear with woman terrified and a falling share price

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

    Though you probably don’t need the reminder, it’s been an abysmal year for professional and everyday investors alike. Since hitting their respective all-time highs between mid-November and the first week of January, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-dependent Nasdaq Composite (NASDAQINDEX: ^IXIC) have plunged by as much as 22%, 26%, and 34%, through Oct. 10, 2022, and are firmly in the grips of a bear market.

    Regardless of whether you’re a tenured or new investor, bear markets can be scary. The velocity and unpredictability of moves lower are enough to make investors question their willingness to stick around. Of course, history also shows that buying during these bear market dips is the smartest thing patient investors can do.

    The thing is, the stock market might not be anywhere near a bottom.

    This risk-focused indicator portends new lows for the stock market

    To be fair, if there were an indicator that perfectly called stock market corrections and bear markets, as well as market bottoms, everyone would be using it by now. There simply isn’t an indicator that can accurately predict where the stock market will move next 100% of the time.

    However, there are a handful of indicators with impressive track records. Select valuation-based indicators portend the S&P 500, Dow Jones, and Nasdaq will ultimately head lower. But it’s an oft-overlooked risk indicator — outstanding margin debt — that could really tell the tale of where the broader market heads next.

    “Margin debt” describes the amount of money investors have borrowed from their broker, with interest, to buy or short-sell securities. Although some trading activity requires the use of margin, such as short-selling, most outstanding margin debt is viewed as a snapshot of risk tolerance. In other words, margin is usually used as a tool to increase leverage or exposure to a security or the broader market.

    Over time, it’s perfectly normal for the amount of outstanding margin debt to increase in lockstep with the overall value of the stock market. What isn’t normal is when the amount of outstanding margin debt skyrockets over a short time frame.

    FINRA Margin Debt Chart.

    FINRA Margin Debt data by YCharts.

    Since the beginning of 1995, there have been three instances where margin debt surged 60% or more on a trailing-12-month (TTM) basis. This happened immediately prior to the dot-com bubble bursting, just months before the financial crisis took shape, and in March of last year. Upward percentage spikes in margin debt have preceded three of the past four bear markets (the one-month coronavirus crash being the exception).  

    Not only has outstanding margin debt been a good predictor of an eventual bear market, but it’s done a good job of forecasting bear market bottoms. When the dot-com bubble and financial crisis found their respective troughs, TTM declines in margin debt ranged between 40% and 50%. Current TTM declines in margin debt are only down a little over 20%. The implication is that we’d need to see additional unwinding of margin-based positions before a true market bottom is in place.

    For added context, the S&P 500 subsequently lost 49% and 57% of its respective value the previous two times margin debt skyrocketed by 60% or more in a 12-month stretch. It’s lost a peak of “just” 26% of its value in 2022.

    Here’s why you’re smart to buy stocks during bear market declines

    But the interesting thing about peril on Wall Street is that it also breeds opportunity. For investors, there’s been no greater ally than time.

    If you were to bet on which direction the stock market would head over the next 12 months, your chance of being correct is around 50%. But if your bet spans multiple decades, your chance of being correct goes way up.

    Every year, market analytics company Crestmont Research publishes data on the rolling 20-year total returns, including dividends paid, of the S&P 500 and expresses this data as an average annual total return. Crestmont has done this for 103 ending years (1919-2021). For example, if you wanted to know the rolling 20-year total return for 1939, Crestmont would factor in the total returns for years 1920 through 1939 and express it as an annual average total return.

    Here’s the interesting part: Out of the 103 end years examined, every single one — I repeat, every single one — produced a positive average annual total return over 20 years. No matter when you bought an S&P 500 tracking index since the beginning of 1900, you made money as long as you held onto that position for 20 years.

    Something else worth pointing out is that most folks would have made quite a bit of money. You can count on one hand the number of end years that produced an average annual total return of between 3.1% and 5%. By comparison, approximately 40% of these 103 end years delivered an average annual total return ranging from 10.9% to 17.1%. 

    In case you need even more evidence that being patient and optimistic is a winning strategy, consider this: The average double-digit percentage correction in the S&P 500 since the beginning of 1950 has lasted just 189 calendar days or about six months. Although we’re dealing with a longer bear market decline at the moment, history conclusively shows that bull markets last disproportionately longer than corrections.

    Eventually, this bear market will share the same fate as others before it and be placed in the rearview mirror by a bull market rally. 

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

    The post This bear market risk indicator suggests we could head a lot lower appeared first on The Motley Fool Australia.

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    Sean Williams 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.  

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

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  • Why is Core Lithium share price outperforming the ASX 200 today?

    a man sits at his computer screen scrolling with his fingers with a satisfied smile on his face as though he is very content with the news he is receiving.

    a man sits at his computer screen scrolling with his fingers with a satisfied smile on his face as though he is very content with the news he is receiving.

    The Core Lithium Ltd (ASX: CXO) share price is outperforming the market on Monday.

    In morning trade, the lithium miner’s shares are flat at $1.15.

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

    Why is the Core Lithium share price outperforming?

    The Core Lithium share price is performing better than most today after the market responded positively to an announcement this morning.

    According to the release, Core Lithium’s managing director, Stephen Biggins, will bring forward his resignation from the role and exit the company with immediate effect.

    Mr Biggins had announced his resignation in March and planned to step down from the role before the end of 2022.

    However, with the recent official opening of the Finniss Lithium Mine and appointment of Gareth Manderson as CEO, Biggins has decided it is the appropriate time to complete his role as managing director and as a director of Core Lithium.

    He commented:

    The Finniss Lithium Mine official opening was the culmination of 12 years of rewarding dedication to achieve this rare milestone and I feel that now is the right time to step down as Managing Director.

    Now is the ideal opportunity to hand over the leadership to Gareth as he has settled into the role as CEO. The business is now in great shape, the financial performance is strong, and at the Finniss Lithium Project, we have built a platform for sustainable growth for many years to come.

    Core Lithium’s chairman, Greg English, notes that Biggins “has left a significant long-lasting legacy and has set Core up for strong earnings growth.” He concludes:

    On behalf of the Core team, I would like to thank Stephen for his outstanding contribution to the Company, and we wish him well in his other ventures.

    The post Why is Core Lithium share price outperforming the ASX 200 today? 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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  • Why is the WAM Capital share price having such a lousy start to the week?

    A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.

    The WAM Capital Limited (ASX: WAM) share price is down 5.42% in early trading on Monday at $1.745.

    But don’t worry, it’s just a simple case of the listed investment company (LIC) going ex-dividend today.

    WAM is set to pay its final dividend for the 2022 financial year on 28 October.

    Here’s the lowdown.

    WAM Capital’s next dividend coming soon

    WAM Capital will be paying a final dividend of 7.75 cents per share to its investors later this month.

    The dividend is 100% franked, which means investors will benefit from franking credits at tax time.

    WAM has paid 7.75 cents per share in dividends twice per year for the past five years.

    One of the reasons WAM Capital’s dividend is so stable is that the fund saves profits in strong years.

    This profit reserve enables WAM Capital to keep paying the same or similar level of dividend each period.

    Based on today’s share price, WAM Capital has a trailing annual dividend yield of 8.64%.

    As my Fool colleague Tristan reported last week, WAM Capital has generated gross total returns of 14.7% per annum since its inception in August 1999 through to 30 June 2022.

    WAM’s latest monthly update

    WAM released its latest monthly update on Friday.

    The value of the WAM Capital fund went down in the month of September.

    The net tangible assets (NTA) per share before tax at the end of the month was 140.53 cents. This is down from August when it was 152.35 cents.

    WAM reported that Premier Investments Limited (ASX: PMV) was a strong performer for the fund in September.

    Conversely, Event Hospitality and Entertainment Ltd (ASX: EVT) was a drag.

    The post Why is the WAM Capital share price having such a lousy start to the week? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Bronwyn Allen has positions in WAM Capital Limited. 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 Premier Investments 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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  • Why is the Endeavour share price having such a great start to the week?

    Two men standing on a balcony cheers their bottles.Two men standing on a balcony cheers their bottles.

    The Endeavour Group Ltd (ASX: EDV) share price is in the green this morning after the company posted a trading update for the first quarter of financial year 2022.

    The liquor and hotel giant’s shares are currently trading at $6.97, 1.46% higher than their previous close.

    That’s compared to the S&P/ASX 200 Index (ASX: XJO)’s 1.32% tumble at the time of writing.

    Endeavour share price lifts as quarterly sales reach $3 billion

    Here are the key takeaways from the Woolworths Group Ltd (ASX: WOW) spin-off’s unaudited sales for the 14 weeks ended 2 October:

    • Retail sales came in at $2.49 billion – a 6.2% fall on the same quarter of last financial year
    • Hotels sales lifted to $538 million – a 90.8% improvement
    • Total sales increased 3.1% to around $3 billion
    • On a three-year compound annual growth rate (CAGR), the company’s retail sales lifted 4.4%
    • Its hotels sales also increased 4.8% on a three-year CAGR basis.

    Endeavour’s sales continued to grow on a multi-year basis in the first quarter as its hotel and retail portfolio cycles through previous COVID-19 lockdowns.

    The first quarter of financial year 2022 saw key population centres in Victoria and New South Wales impacted by lockdowns and restrictions. That negatively impacted the company’s hotels segment, with 40% of its hotels closed in the prior comparable period. However, it saw sales at its retail portfolio – housing brands such as Dan Murphy’s and BWS – surge.

    Compared to the same period of financial year 2020 (pre-pandemic), Endeavour’s hotel and retail businesses saw sales increase 15% and 13.9% respectively last quarter.

    What else happened in Q1?

    The Endeavour share price fell 7.5% over the first quarter of financial year 2022 amid rising inflation and interest rates.

    It also plummeted 12.3% on the back of the company’s full-year earnings, released in August.

    The company added one Dan Murphy’s store and seven new BWS stores to its portfolio last quarter. It also acquired three hotels, leaving it boasting 347 hotels at the end of the quarter.

    What did management say?

    Endeavour managing director and CEO Steve Donohue commented on the results driving the company’s share price today, saying:

    Our hotels are thriving, as Australians embrace both large and small social occasions after years of COVID-19 disruption.

    There has been a rebound across all hospitality categories, with bars, food, gaming, and accommodation all performing strongly. Live entertainment is also becoming a feature of our business again, with music fans enjoying a range of sold-out gigs across our hotels.

    We’ve also seen consistent, strong sales in retail. Our year-on-year comparison shows a predictable decline as we cycle the unique spikes in demand created by COVID-19 restrictions … This cycling impact is easing as we head into the second quarter.

    What’s next?

    The company is gearing up for a busy holiday period, set to mark the first restriction-free festive season in three years.

    Donohue noted function bookings are already strong in the company’s hotels and its retail brands will offer a range of products to meet various tastes, trends, and price points over the holiday season.

    The company will also host its annual general meeting (AGM) tomorrow.

    Endeavour share price snapshot

    The Endeavour share price has outperformed the broader market so far this year.

    The stock has gained 2% since the start of 2022. It’s also trading 1% higher than it was this time last year.

    Meanwhile, the ASX 200 has fallen 11% year to date and 8% over the last 12 months.

    The post Why is the Endeavour share price having such a great start to the week? 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 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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  • 2 ‘outstanding value’ ASX shares to buy now going in opposite directions: fund

    volatile asx share price represented by two investors on a seesawvolatile asx share price represented by two investors on a seesaw

    Unfortunately, the major influence on ASX shares in 2022 has been external factors, not company performance.

    Inflation, fear of interest rate rises, actual rate hikes, supply chain dysfunction, and surging energy prices have all brought the market to its knees at one point or another.

    It’s kind of crazy if you think about it. 

    Shares are a part-ownership in a business. For the worth of that to swing wildly up and down despite not much variation in the underlying business is pretty illogical.

    This is why more than one expert will tell you to ignore all the “noise” and just buy ASX shares on business fundamentals.

    Because eventually this craziness will abate, and investors will once again start paying attention to the quality of companies.

    With this in mind, the team running the IML Australian Share Fund explained why it is backing two ASX shares with great conviction, even though one rocketed up last quarter while the other plummeted. 

    This business will perform through tough economic times

    In the winner’s corner was Brambles Limited (ASX: BXB), which went up 8.2% over the quarter ending 30 September.

    The IML team was impressed with the pallet and supply chain company’s reporting season update.

    “It reported a very strong result, with profits up 11%, helped by the company’s margin expansion in its US operations thanks to its ability to pass on costs despite strong inflation,” read its memo to clients.

    The outlook continues to look positive for Brambles, as the IML analysts feel the business will be resilient through an economic downturn.

    “Given Brambles’ strong market position, its pricing power and customer base of predominantly food and beverages companies, we remain confident in the company’s ability to continue to perform well despite uncertain economic times.”

    Many of IML’s peers agree with the bullish view on Brambles.

    According to CMC Markets, 11 out of 17 analysts currently rate the stock as a buy. However, four of the dissenters do recommend it as a sell.

    ‘Offers outstanding value’

    Not so fortunate during the quarter was the Orica Ltd (ASX: ORI) share price, which fell 16.2%.

    IML analysts attributed this to the dilution from a capital raising round.

    “Investors reacted poorly to a capital raising at $16 a share which the company earmarked to fund the acquisition of Axis, as well as to help bolster its working capital position.”

    Despite this fall, Orica shares have held up fairly well in a year when many other stocks have stumbled. Orica is down just 2% so far in 2022.

    The team at IML is ignoring the recent market hate and is keeping the faith in the industrial explosives provider.

    “We believe it offers outstanding value,” he said.

    “It has a reinvigorated management team and we believe its earnings are set to benefit greatly in the years ahead from higher explosive prices and the repricing upwards of many of its contracts.”

    The IML Australian Shares Fund actually increased its holding in Orica during the September quarter, taking advantage of the discount.

    The post 2 ‘outstanding value’ ASX shares to buy now going in opposite directions: fund appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why is the CSL share price dropping today?

    A CSL scientist looking through a telescope in a lab

    A CSL scientist looking through a telescope in a labThe CSL Limited (ASX: CSL) share price is starting the week in the red.

    At the time of writing, the biotherapeutics giant’s shares are down 1.5% to $276.17.

    Why is the CSL share price falling?

    The weakness in the CSL share price today has been driven by a broad market selloff following a very poor finish to the week on Wall Street.

    Unfortunately, this has offset any positives from the company’s briefing on its new CSL Vifor business.

    In respect to its briefing, this morning CSL outlined the market opportunities that this newly acquired business has.

    CSL Vifor’s massive market opportunities

    CSL highlights that iron deficiency (ID) is a massive market. In fact, it estimates that there are over 3 billion people suffering from ID and around 1.2 billion people suffering from iron deficiency anaemia (IDA). This gives its Ferinject therapy a major market opportunity.

    Management also notes that the renal disease market is expected to grow from US$13 billion in 2020 to US$25 billion in 2026.

    Furthermore, it highlights that Chronic Kidney Disease (CKD) is a leading cause of mortality and morbidity around the world. In the United States, approximately 15% of adults suffer from CKD. Despite this, there is a “significant lack of access to therapies to support CKD patients.”

    Overall, this gives the CSL Vifor business a major growth opportunity over the long term, which will be supported by its strong product portfolio and ongoing investment in research and development.

    CSL guidance for FY 2023

    As expected, management has now revealed its guidance for FY 2023 including the CSL Vifor business.

    CSL was previously guiding to constant currency net profit after tax of US$2.4 billion to US$2.5 billion excluding Vifor Pharma.

    Including an 11-month contribution from the business, it expects net profit after tax before amortisation (NPATA) of US$2.7 billion to US$2.8 billion. This represents annual constant currency growth of 13% to 18%.

    The post Why is the CSL share price dropping today? 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 CSL Ltd. 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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