If Australian Foundation Investment Co Ltd (ASX: AFI) shares are on your radar this October, you might be keen to know what you’d be investing in.
AFIC is a listed investment company (LIC) that trades on both the ASX and NZX, with a history dating all the way back to 1928.
The LIC invests in a portfolio of primarily ASX shares with a long-term, fundamental, bottom-up investment style. The suggested investment period is five to 10 years or longer.
While most exchange-traded funds (ETFs) passively track an index, LICs are usually actively managed investments.
The main difference between a LIC and an ETF is the structure. An ETF is open-ended, whereas a LIC is closed-ended, which means that a fixed number of shares are issued.
What’s more, ETFs tend to offer greater transparency. ETF issuers typically update their full list of holdings daily, whereas LICs usually provide a snapshot of their portfolio at the end of each month.
Compared to the S&P/ASX 200 Index (ASX: XJO), AFIC’s top 10 is less weighted towards the big banks and miners.
The ASX’s largest company, BHP, has lost its crown, being relegated to third place in AFIC’s portfolio. Australia and New Zealand Banking GroupLtd (ASX: ANZ) and Woodside Energy Group Ltd (ASX: WDS) are notably missing in action. Meanwhile, AFIC is giving Transurban a big vote of confidence.
At the end of September, AFIC’s largest sector weighting belonged to financials, which accounted for around 28% of the portfolio. Next up were materials at 15%, closely followed by health care at 14% and then industrials at 12%.
In contrast, the BetaShares Australia 200 ETF (ASX: A200), which aims to track the ASX 200 index, had a 29% weighting to financials shares at the end of September. A further 23% of the portfolio was exposed to materials, followed by health care at 11% and energy at 6%.
In terms of share price growth and dividends, AFIC has outperformed the S&P/ASX 200 Accumulation Index over a 10-year period. According to AFIC, it’s delivered an average of 11.1% per annum compared to the benchmark’s 10% per annum.
Motley Fool contributor Cathryn Goh has positions in BetaShares Australia 200 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited 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 Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Medallion Financial managing director Michael Wayne picks the ASX shares to buy now and hold onto long term.
The ASX share for a comfortable night’s sleep
The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?
Michael Wayne: A boring response would be to buy an index ETF, for instance. Again, you could buy an Australian index ETF — or a potentially NASDAQ — as a long-term hold wouldn’t be the worst thing at the moment, given the magnitude of the falls that we’ve seen. You can also look at different listed investment companies, that way you’re getting diverse exposure.
Because, look, it’s very difficult to say with any certainty what a company is going to be doing in four years. Obviously, there’s a lot of updates between now and then from the business but I think the company, one that I referred to earlier, like CSL Limited (ASX: CSL) is as good a bet as any, I think, on a four-year basis, if you couldn’t watch the markets or even look at it.
It’s had a wonderful track record, the business is growing at a rapid rate against the revenue line and the earnings line. Essentially, it’s a company which has a plethora of different biotech type projects under the one umbrella. You’re getting exposure to a whole range of potential kickers in growth.
It’s a company that we think has the runs on the board… has a very solid and renowned management team and also has a very good balance sheet for that. CSL will be a long-term company to hold.
MF: As you say, it’s almost like it has four or five companies in one, hasn’t it?
MW: Yeah, they’ve got all different projects and all different drug developments that they’re looking to target for all different types of medical conditions. And they’re able to allocate the funds to the projects that they believe have the biggest chance of success.
Obviously, because they’ve been doing this for so long, they have the best insight and the best experience, which improves your chances of success immeasurably, compared to if you were to go out into the market and buy an exciting biotech company. But [for] those single product biotech companies, it’s very much about finding the outcome.
Sure, they might succeed, they might go out and get FDA approval and enter all sorts of markets. But on the other hand, they might not meet those clinical trial requirements and they might end up amounting to nothing.
At least with CSL, you’re getting a diversified portfolio of biotech projects in one place. And they’re also able to fund themselves internally because they’ve got, obviously, a lot of different products, from the blood plasma to the flu vaccine, haemophilia vaccines, all sorts of things which are highly profitable. They’re able to then use the cash flow generated from those existing products to fund their research and development in new and emerging products, unlike, again, a single product biotech.
Motley Fool contributor Tony Yoo has positions in CSL Ltd. 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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Thus far, 2022 hasn’t been kind to investors in the share market. Although it’s well established that temperament and patience are equally as important — if not more important — than skill and knowledge to succeed as an investor, no doubt the magnitude of this bear environment has tested the resolve of even some of the more experienced investors.
The question is, should investors sell their shares, what could they do with the proceeds? Where in this environment can they hide?
High Yield Corporate Bonds
Well, there’s always corporate bonds. Rather than buying a company’s shares (i.e. equity), bonds are a form of debt sold by a business to raise capital. Investors will typically receive fixed interest payments (coupons) in return for effectively providing a loan to a business, but they won’t receive any extra income if the company performs well.
Depending on the business, bonds tend to be less risky (but also less rewarding) than shares because, in the event of liquidation, all creditors are repaid before shareholders may see a cent.
But bonds still carry risk. High-yield (HY) bonds, typically offered by companies with lower credit scores, naturally carry greater credit risk than investment-grade (IG) bonds (those offered by businesses with sound credit scores, like the big-four banks). If we were to have a recession, or if economic conditions continue to become more challenging generally, you’d tend to see more corporate defaults.
So whilst high yield corporate bonds sound good in theory, they do carry a higher risk because the underlying companies have poorer credit scores.
Because of that heightened risk, the returns required by investors in high yield bonds increases; that leads to a higher yield and, consequently, a lower bond price — a bad thing for bondholders (bond yields and prices move in opposite directions).
Investment-grade Corporate Bonds
Okay, so maybe you could look at IG bonds instead. The risk is lower (because the underlying businesses have a stronger credit rating) and therefore expected returns (the interest payments for investors) aren’t as high. You absolutely could do this, and bonds are a staple in many well-diversifiedportfolios. Would you want to put all your capital in them, though?
I’m not so sure.
Let’s assume for a minute that you focus on the short-dated bonds (say, 12 months or less). If you hold the bond to maturity, you might pocket a couple of coupon payments and get your principal repaid at maturity.
But the yield (your overall return) isn’t likely to be very significant; although some would justifiably make the case for capital preservation, particularly in the current environment. The return also might not be enough to exceed inflation. For instance, annual inflation in Australia reached 6.1% in the June quarter, and the Reserve Bank of Australia (RBA) expects inflation could end up at 7.75% this year. Inflation is even higher in countries like the US and UK, so investors are currently finding it difficult to generate real returns (returns above the rate of inflation) from defensive assets.
Investors could instead opt for longer-dated bonds (say, 5-10 years, or more!). These offer the potential for greater returns over time, partly through (typically) higher yields as well as due to shifts in the yield curve (which rises and falls based on expectations of future interest rate movements, amongst other factors). But if rates continue to rise, so too should the yield curve, which could negatively impact the value of your bonds – recalling that bond prices fall when yields rise.
Government Debt
The same goes for government bonds, which carry even less risk than IG bonds. As we know, the lower the risk, the lower return we can expect from our investments.
At the moment, 10-year Australian government bonds can be bought with a yield of 4.0%, meaning a negative real yield today (given that inflation is running hot) and minimal real return potential, assuming inflation returns to the RBA’s target range of 2%-3% over time.
Cash
So, rather than bonds, maybe investors should just carry cash. But as the least risky investment class (Australian deposit guarantees exist), we can expect the lowest returns from this asset class.
One positive for cash is that as interest rates rise, the variable rate (or yield) on savings accounts increases. This is in contrast to bond coupons which are typically ‘fixed’ payments.
Still, yields on cash are unlikely to generate a positive real (i.e. after inflation) rate of return.
Cash, however, does provide some optionality during volatile times, but it loses its usefulness over very long periods of time.
Real Assets
Real Assets (such as commercial property and infrastructure assets) can offer some protection against inflation, as they typically generate strong cash flows with contracted or regulated price increases over time. For instance, a shopping centre landlord may set annual rent increases linked to the consumer price index (CPI), or a regulated toll road operator may have CPI-linked toll escalations.
Listed real assets can also be bought and sold like other companies on the share market, and the market’s inherent volatility means these assets can be bought below fair value from time to time.
Like any asset class, though, real asset investments are subject to a range of risks, including economic, liquidity and operational risk. They can also be pet expensive to maintain. Because real assets are typically funded with significant debt, there’s also the potential for higher borrowing costs as interest rates rise, as well as declining valuations as asset prices and yields rebase across the economy.
The challenge with investing in real assets at the moment is that they are susceptible to rising interest rates which not only reduce their theoretical valuation but also reduce overall demand as less people can afford the mortgages and loans required to finance the purchase.
The Case For Shares
Overall, when inflation is running high, often the best place for investors (with long-term horizons) to hide is in strong cash flow generating assets with growth potential. As you may have guessed, high-quality operating businesses can exhibit both these characteristics, making listed equities one place for investors to find opportunities to ‘hide’.
Of course, shares aren’t without risk, either. We’ve witnessed plenty of businesses suffer from the impacts of inflation and supply chain pressures recently. And again, investors can absolutely make a strong case of ‘capital preservation’ for some of the above asset classes.
But bear in mind, the share market has already endured heavy falls. To cash out now (if you haven’t already) could be to do so at precisely the wrong time. Indeed, just as one investor could argue the case for capital preservation from government debt or holding cash, another investor could argue that those safer asset classes won’t be enough to help offset increases in inflation. They could also argue that there are plenty of attractive opportunities presenting themselves on the ASX for those willing to put up with temporary uncertainty.
Compared to other asset classes, the long-term income and capital growth potential of certain equities remains very attractive. With some equity indices materially lower than they were just at the start of the year, there are inflation-beating opportunities that are being thrown out with the rest of the market.
Vanguard’s study of asset class returns over 30 years shows that whilst shares are very volatile, they generally provide higher returns over the long-term.
Source: Vanguard 2022 index chart. Market returns as of 30 June 2022.
Foolish Bottom Line
It should be noted that we fully endorse investors having a well diversified portfolio.
Not only does that mean investing across different businesses within different industries, and with different risk exposures; it also means maintaining some cash and balancing your exposure across different asset classes (e.g. real estate, fixed income, etc.).
However, the point is that each asset class has its own risks and potential benefits. To withdraw everything from the share market in the face of volatility to put it in bonds, for instance, is still likely to leave you exposed to credit or other risks while potentially limiting your upside. Likewise, to move all your capital into real estate could yield you some real assets, although those real assets may come under pressure from rising interest rates and a cooling economy.
The reality is that, in such an uncertain environment, there is no ‘perfect’ place to hide. With shares down considerably from their highs, however, we firmly believe there are attractive opportunities presenting themselves. That is, investors have sold out — possibly out of either necessity or panic — of businesses that are worth more than they are currently trading for. It may take some time to get back to what we consider to be more reasonable values, but we firmly believe that will happen.
In that sense, we strongly encourage investors to sit tight. In fact, we’d go a step further and encourage them to buy while prices are down, and potentially put themselves in a position to outpace the rate of inflation over the coming years.
Motley Fool contributor Ryan Newman 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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According to a note out of Morgans, its analysts have retained their add rating on this mining giant’s shares with a trimmed price target of $47.40. Morgans has been looking at the mining sector and named BHP as one of its top two picks. This is due to its strong free cash flow generation, low risk profile, and belief that less can go wrong relative to its peers. The BHP share price ended the week at $40.02.
A note out of Citi reveals that its analysts have retained their buy rating and $8.75 price target on this regional bank’s shares. Although Bank of Queensland’s FY 2022 cash earnings were below consensus estimates, the broker highlights positive commentary on interest rate leverage. It believes the market has been underestimating the extent of rates leverage across the sector. And while disappointed with its cost outlook, it expects this to be offset by higher rates. The Bank of Queensland share price was fetching $7.73 at Friday’s close.
Analysts at JP Morgan have retained their overweight rating and lifted their price target on this airline operator’s shares to $7.50. This follows the release of a trading update for the first half that was well ahead of expectations. And with the domestic market remaining rational and its balance sheet recovering, JP Morgan remains very positive on the company’s outlook. The Qantas share price was trading at $5.80 at the end of last week.
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 first ASX 200 dividend share that could be a top option for income investors next week is Transurban.
It is one of the world’s leading toll road operators with a portfolio of important roads and a pipeline of development projects to drive future growth.
The team at Morgans is positive on the company. So much so, it has Transurban on its best ideas list with a $13.85 price target. The broker likes the company due to regional population, employment growth, urbanisation, and positive exposure to inflation. It explained:
TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from COVID) and toll escalation (roughly 70% by at least CPI and approximately one-quarter at a fixed c.4.25% pa). We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects
In respect to dividends, Morgans expects dividends per share of 53.4 cents in FY 2023 and then 65.8 cents in FY 2024. Based on the current Transurban share price of $12.54, this implies yields of 4.25% and 5.25%, respectively.
Another ASX 200 dividend share to consider is this retail conglomerate.
Woolworths could be a top option thanks to its strong retail brands, entrenched customer base, positive exposure to inflation, and defensive qualities. The latter were on display for all to see during the pandemic and could come in handy if the Australian economy falls into a recession.
In addition, the team at Goldman Sachs highlights the company’s digital and omni-channel advantage. The broker expects this advantage to drive further market share and margin gains in the coming years. Goldman said:
Despite a still volatile year ahead and noise in pcp data, most industry suppliers note that WOW is still firmly in a more advantaged position on omni-channel capabilities. This is largely attributed to the company’s early investments/advantage in digital and its more agile omni-channel supply chain network development.
It is partly for this reason that Goldman currently has a conviction buy rating and $42.70 price target on the company’s shares.
As for dividends, Goldman is forecasting fully franked dividends per share of $1.07 in FY 2023 and $1.16 in FY 2024. Based on the current Woolworths share price of $33.76, this will mean yields of 3.2% and 3.4%, respectively.
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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I’m a big fan of buy and hold investing and believe it is one of the best ways for investors to grow their wealth.
To demonstrate how successful it can be, now and then I like to pick out a number of popular ASX shares to see how much an investment several years ago would be worth today.
This time around, I have picked out the five ASX shares listed below with $5,000 investments over the last five years. Here’s how they have fared:
This electronic design software provider’s shares have smashed the market over the last five years. This has been driven by increasing demand for its software thanks partly to the Internet of Things and artificial intelligence booms. Over the period, Altium’s shares have generated an average total return of 26.4% per annum. This would have turned a $5,000 investment in 2017 into $16,100 today.
The Big Australian has been a great place to park your money since 2017. With commodity prices at very favourable levels, the mining giant has been generating significant free cash flow. This has sent its shares hurtling higher and allowed the company to pay some very big dividends. As a result, BHP shares have delivered an average total return of 17.9% per annum. This means that a $5,000 in BHP’s shares five years ago would now be worth $11,400. You’d also own a parcel of Woodside Energy Group Ltd (ASX: WDS) shares.
Another successful investment over the last five years has been biotherapeutics giant CSL. Thanks to acquisitions, its material investment in research and development each year, and strong demand for its immunoglobins, CSL’s shares have generated an average total return of 16.4% per annum. This would have turned a $5,000 investment into $10,700.
If you’ve been a long term investor in this lithium share, you will no doubt be smiling today. Thanks to insatiable demand for the white metal due to the rise of electric vehicles, Pilbara Minerals’ shares have rocketed higher. This has led to them generating an average total return of 44.3% per annum. This means that a $5,000 investment in 2017 would now be worth a staggering $31,300 today.
Finally, this retail giant’s shares have been positive performers over the last five years thanks to its strong market position, loyal customer base, and defensive qualities. During this time, Woolworths’ shares have generated an average total return of 11.7% per annum. This would have turned a $5,000 investment into approximately $8,700 today.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and 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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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.
2022 has been an eventful year for the video streaming industry. Following the sector’s strong growth at the height of the pandemic, companies such as Warner Bros. Discovery(NASDAQ: WBD) have experienced a slowdown in the rate of sign-ups, while Netflix(NASDAQ: NFLX) has lost subscribers overall.
Netflix has shed more than 1 million subscribers across the U.S. and Canada, though those losses have been mitigated somewhat by growth in other markets. Similarly, Warner Bros. Discovery has lost some 300,000 customers in the U.S., yet managed to add new sign-ups overseas.
Despite the corresponding patterns, Netflix and Warner Bros. Discovery have opted for starkly different content strategies going forward. Here’s why Netflix is on a path to success and why Warner Bros. Discovery may regret some of the choices it has made.
Netflix is all-in on overseas content
After Netflix reported its first drop in subscribers for more than a decade, the company announced a handful of plans designed to reignite growth. First, the company said it would begin cracking down on account sharing. Second, it shared plans for an ad-supported tier. Another strategy that the company has embarked upon is investing more heavily in non-U.S. content.
According to Ampere Analysis, Netflix has already commissioned or purchased 97 original first-run TV shows and movies from foreign production companies this year. That compares with 63 films and series from U.S. content makers. Ampere Analysis also notes Netflix now hosts around 30% of European content across all the countries it serves on the continent.
To give some context to those numbers, 60.2% of Netflix’s most popular content in Q4 2021 originated in the U.S. The second-most popular region for movies and shows was Asia, which was responsible for 16.6%.
Ultimately, it’s not just good for Netflix to invest in foreign-language programming to appeal to non-U.S. audiences — there’s always the prospect that some of that content could cross over to other audiences. Season five of Spanish crime thriller Money Heist drew 148 million global viewing hours in a single week last December, while South Korean hit Squid Game clocked up more than 1.6 billion hours watched in its first 28 days on Netflix.
Warner Bros. Discovery is focusing on its home turf
While Netflix is spending money overseas, Warner Bros. Discovery has been axing non-U.S. projects. Earlier this year, the company shuttered many HBO Max movies and TV shows that it was producing for audiences across Europe. Warner Bros. Discovery also opted to remove some of its regional catalog, saying it would instead license the content to other platforms.
At the time, Warner Bros. Discovery said it was still committed to European audiences, suggesting it would focus on commissioning content from regional partners. It’s also worth noting that Warner Bros. Discovery opted to maintain its production facilities in France and Spain, with some speculating that shows and movies in those languages travel well.
However, despite these concessions, it’s difficult to see how Warner Bros. Discovery will be able to compete globally without maintaining broad, long-term commitments to non-U.S. creators. After all, should the company find it has a non-English language hit on its hands (again, see Squid Game), the company behind the property will ultimately win the chips when it comes to licensing.
Warner Bros. Discovery does, of course, have a deep library of popular content all of its own. From Batman and Superman to Harry Potter and Bugs Bunny, the company has long had many recognizable characters that transcend language barriers.
But even so, content linked to those properties don’t necessarily translate into success: The $200 million Harry Potter film Fantastic Beasts: The Secrets of Dumbledore made just shy of $310 million at the international box office, while Space Jam: A New Legacy earned a touch over $160 million from non-U.S. audiences on its $150 million budget.
For investors looking at which stock to back, Netflix is the obvious choice. As things stand, the U.S. is the largest streaming market in the world, with 78% of consumers accessing at least one service. However, by 2027, streaming penetration in many other parts of the world is expected to catch up. Netflix is instituting a plan to take advantage of that growth, while Warner Bros. Discovery is seemingly hoping its homegrown content will be good enough for everybody.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Tom Wilton has had business dealings with Netflix but holds no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Warner Bros. Discovery, 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.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
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ASX healthcare shares have been a mixed bag in 2022. The industry was flourishing during the later part of the last calendar year but took a turn as early as November.
The downside continued along with the broader sell-off in equities. However, unlike most other industries, it has failed to reclaim a good portion of the losses.
The S&P/ASX 200 Health Care Index (ASX: XHJ) is down more than 10% this year to date and is sitting around the same over the past 12 months.
What are the projections?
Healthcare is seen as a ‘defensive‘ industry that is largely insensitive to the business cycle. With this in mind, the current and forward-looking economic climate are of interest to those looking at ASX healthcare shares.
Some of the largest players, such as CSL Limited (ASX: CSL), Resmed Inc (ASX: RMD), and Sonic Healthcare Limited (ASX: SHL), reside within this portion of the market.
Each of these dominant names has numerous bullish price targets that point to strength in the industry across a diverse array of services.
CSL is rated a buy from 13 out of 16 brokers covering the share, with a $320 consensus price target (all data sourced from Refinitiv Eikon). The CSL share price closed on Friday at $280.43.
Meanwhile, Resmed is also tipped as a buy from nine out of 14 analysts, with a consensus valuation of $36.10. Resmed shares ended Friday’s session trading for $34.14 apiece.
Sonic is rated a buy from six out of the 15 analysts covering it, with a $35.86 price target assigned. The Sonic share price is $30.55 as of Friday’s close.
Noteworthy is that each consensus price target is priced above the current market value of each share.
In addition, some of the largest ASX healthcare shares are posted in the table below, with their respective fundamentals. All figures are in millions of dollars (except earnings per share and percentage).
Motley Fool contributor Zach Bristow 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. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool Australia has recommended Sonic Healthcare 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 first ASX 200 share for investors to consider is Altium. It is a leading printed circuit board (PCB) design software provider. This is a great place to be because there has been an explosion in electronic devices globally thanks to the Internet of Things and artificial intelligence booms. And as PCBs are the boards you find inside almost all electronic devices and are integral to their operation, this bodes well for demand for Altium’s offerings. Management certainly believes this to be the case. It is very confident in the company’s outlook and is aiming to more than double its revenue to US$500 million by 2026.
Jefferies is positive on the company. It currently has a buy rating and $38.13 price target on its shares.
Another ASX 200 share that could be a buy is Cochlear. It is one of the world’s leading hearing solutions companies. It has been growing at a solid rate for many years. This has been driven by its portfolio of world class products, which has been developed thanks to its significant annual investment in research and development. Looking ahead, Cochlear appears well-placed for long term growth thanks to its strong position in a market benefiting from tailwinds such as ageing populations.
Goldman Sachs is bullish on Cochlear. Its analysts currently have a buy rating and $247.00 price target on its shares.
A final ASX 200 share that has been named as a buy is online travel agent Webjet. After a very difficult time during the pandemic, Webjet is now back on form thanks to rebounding travel markets. And with its costs reduced materially from pre-pandemic levels, the company looks set to be a much more efficient business in the future. This bodes well for its growth in the coming years.
Goldman Sachs is also very positive on Webjet. Its analysts currently have a buy rating and $6.80 price target on its 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 positions in and has recommended Altium and Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and 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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One of the LICs is called WAM Research, which looks at smaller businesses on the ASX.
WAM describes WAM Research as a LIC that invests in the most ‘compelling undervalued growth opportunities’ in the Australian market.
The WAM Research portfolio has delivered gross returns (that’s before fees, expenses, and taxes) of 13.6% per annum since the strategy changed in July 2010, which is superior to the All Ordinaries Total Accumulation Index (ASX: XAOA) return of 8% per annum.
These are the two ASX shares that WAM outlined in its most recent monthly update.
Myer is a department store retailer that has 58 locations across Australia, as well as an online presence.
The fund manager pointed out that last month Myer announced its FY22 result, which showed total sales growth of 12.5% to almost $3 billion. There was also a year-on-year increase of net profit after tax (NPAT) of 103.8% to $60.2 million, after excluding JobKeeper. Its net cash position improved by $74 million to $186 million.
WAM pointed out that the second half was the ASX share’s best second half in almost a decade thanks to “strong multi-channel execution”, with the online segment beating expectations. The investment team also highlighted that the company’s FY23 started strong.
The fund manager is “positive” on the outlook because “management continue to execute on their vision and deliver the turnaround”.
The other business that was named as an opportunity in the WAM Research portfolio was this international human services provider, which has more than 1,000 locations across Australia, New Zealand, the UK, Europe, North America, and Asia.
Last month, APM announced the strategic acquisition of Equus Workforce Solutions, an employment services provider in the US. WAM explained this will allow the ASX share to “materially expand its existing footprint in the North American market”.
The US is an attractive market for APM with funding increasing across most major government programs and the acquisition accelerating growth opportunities.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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