ASX mining shares were some of the standout performers over what was a tough year in 2022. While the S&P/ASX 200 Index (ASX: XJO) went backwards by 5.5% last year, many ASX mining shares smashed that loss.

Take the BHP Group Ltd (ASX: BHP) share price. BHP is the largest mining company on the ASX. BHP shares rose by a healthy 9.95% last year. Add on BHP’s impressive dividends in 2022, and we get a return that could be double that (depending on what price you bought the shares for).

It wasn’t just BHP though. Fortescue Metals Group Limited (ASX: FMG) shares rose by more than 6.7%, which were also juiced up by monster dividends.

Rio Tinto Limited (ASX: RIO) shares were up more than 16% as well, while coal miner Whitehaven Coal Ltd (ASX: NHC), while technically an ASX 200 energy share, rocketed an extraordinary 185%.

As such, it was a fantastic year to own most ASX mining shares in 2022.

But that doesn’t mean it’s automatically a good idea to keep owning these companies in 2023. So today, let’s discuss whether or not we should be buying ASX mining shares.

The problem with miners

Mining shares are a rather unique beat in the investing world. Most companies have a lot of control when it comes to what they sell their goods and services for. For example, if Woolworths Group Ltd (ASX: WOW) wanted to boost its profits, it could quite easily boost its supermarket prices almost instantly.

But miners don’t run that way. They are forced to accept whatever price the international market sets their chosen commodity at. If iron ore is going for US$100 per tonne, BHP can’t go to a buyer and tell them they are charging US$150 per tonne.

The only control miners generally have over their products is how much it costs them to extract said products.

As such, miners are hostages to the whims of the global commodity markets.

This can be great at times, of course. Miners had such a strong 2022 because commodity prices surged last year.

Wars, inflation and supply chain bottlenecks all combined to push up oil, iron ore, copper, gas and coal to very expensive levels. That’s why some of these companies were making money hand over fist in 2022.

But what of 2023?

Is 2023 the year to buy ASX mining shares?

Well, my philosophy when it comes to miners is very simple. They are inherently cyclical businesses. Therefore, they will not steadily compound your wealth the same way a well-run company in another sector might.

So it only really makes sense to buy a miner at the bottom of a commodity cycle. In 2021, iron ore was at record highs of over US$200 per tonne. But the price has come down significantly. As of today, this base metal is asking just over US$123 per tonne.

But this is certainly not even close to the lower bounds iron ore has plummeted in the past. In 2016, for example, iron ore was under US$50 a tonne.

Iron ore could well bounce back to above US$200 a tonne in 2023. But it could also go back to below US$50. I have no idea which way it’s going to go, nor do most investors.

As such, I see investing in miners now as not being too different to deciding between red or black at the roulette table. I’m an investor, not a gambler. So I’ll be staying away from miners in 2023 until I’m reasonably confident a commodity only has one way to go – up.

The post Should I buy ASX mining shares now or not? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX 200 share is projected to pay the biggest dividend yield in FY24?
• Top brokers name 3 ASX shares to buy next week
• 3 all-star ASX 200 shares ECP is going all-in on
• Could the coal price cap hold BHP shares hostage?
• Should I buy Rio Tinto shares in 2023?

Motley Fool contributor Sebastian Bowen 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.

from The Motley Fool Australia https://ift.tt/OTrt7CP

The Zip Co Ltd (ASX: ZIP) share price is having a stellar start to the week.

At the time of writing, the buy now pay later (BNPL) provider’s shares are up 18% to 80.5 cents.

Though, as you can see below, the Zip share price remains down 75% over the last 12 months.

Why is the Zip share price racing higher?

Today’s gain appears to have been driven by the release of a trading update from BNPL rival and former merger target Sezzle Inc (ASX: SZL).

That update revealed that during December, Sezzle delivered its second consecutive month of profitability. And while its profit was certainly on the modest side, it is a big step in the right direction for an industry known to burn through cash and raise capital.

This appears to have sparked hopes that Zip’s profitability targets are not as farfetched as many feared.

Sezzle update

For the month of December, Sezzle reported a 15.7% year-over-year and a 1.7% month-on-month increase in revenue to US$19.9 million.

This helped take the company’s net income for the fourth quarter to US$500,000, which compares very favourably to a net loss of US$25.9 million in the same period a year earlier. What a difference 12 months makes!

Sezzle’s CEO, Charlie Youakim, appears to believe this could mean the end of capital raisings for the company. Particularly given its cash balance of US$69.7 million. He said:

In 2022, we set out on a mission to become profitable by year end… We are excited, as we have shown investors that we are clearly on the path to profitability with a well-capitalised balance sheet that does not require additional capital.

All in all, this could be interpreted as a positive read through for other BNPL providers, which explains why the Zip share price has responded so positively today.

The post Why is the Zip share price rocketing 18% higher today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Should I buy the dip on Zip shares right now?
• Why Arafura, Data#3, Leo Lithium, and Zip shares are charging higher today
• Will Zip deliver a profit in 2023?
• 4 ASX All Ordinaries shares surging over 10% on Monday
• Here are the 10 most shorted ASX 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 Zip Co. 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.

from The Motley Fool Australia https://ift.tt/bWB8F6g

Buy now, pay later (BNPL) shares were the kings of the ASX over much of 2020 and 2021.

However, they appeared to fall out of favour as inflation reared its ugly head last year, spurring central banks to hike interest rates, thereby dinting consumers’ pockets. Add in the market’s distaste for unprofitable companies, and most BNPL stocks crumbled.

Now, the ASX looks like it could soon be down a BNPL share.

Laybuy Holdings Ltd (ASX: LBY) shares are in a trading halt this morning. Meanwhile, the company appears to be preparing to announce its removal from the Aussie bourse.

Let’s take a closer look at what’s been going on with the tiny BNPL outfit lately.

Are Laybuy shares about to be stripped from the ASX?

The Laybuy share price is in the freezer on Monday as the company prepares to release news on an application to be removed from the ASX.

It follows a dire period for the stock and its BNPL peers. The Laybuy share price has tumbled 69% over the last 12 months to trade at 6 cents at Friday’s close.

Longer-term investors have had a worse time, however.

The company – which says it boasts a market-leading position in New Zealand and the United Kingdom, as well as a presence in Australia – offered shares for $1.41 apiece in its $80 million initial public offering (IPO), undergone in 2020.

Sadly, while its future seemingly appears brighter, the market might not see the company’s maiden profit. Commenting on its outlook in November, managing director Gary Rohlof said:

We anticipate strengthening results and are on track to achieve [earnings before interest, tax, depreciation, and amortisation (EBITDA)] profitability in March 2023, making Laybuy one of the first pure play publicly-listed BNPL providers to achieve profitability.

ASX BNPL shares have suffered in recent years

Fortunately or unfortunately, Laybuy shares have been far from alone in their recent suffering.

Iconic ASX BNPL stock Zip Co Ltd (ASX: ZIP) rocketed to a record high of $14.53 in 2021. It’s since fallen 95% to trade at 75 cents today.

Meanwhile, shares in recently-profitable BNPL stock Sezzle Inc (ASX: SZL) peaked at around $11.34 in mid-2020. The stock is currently swapping hands for 65 cents after the company revealed a second consecutive month of profitability this morning.

Even former-market darling Afterpay saw its share price tumble 30% over the course of 2021. It was snapped up by Block Inc (ASX: SQ2) in January 2022.

The post One less fish in the sea: ASX BNPL share prepares to jump ship appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX BNPL share just rocketed 24% on return to profitability
• Why Alumina, Block, Liontown, and Nanosonics shares are dropping today
• Should I buy the dip on Zip shares right now?
• Here are the top 10 ASX 200 shares today
• Why Ampol, Block, JB Hi-Fi, and Telix shares are racing higher

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 positions in and has recommended Block and Zip Co. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/rOwtNoz

It’s a good day so far for some ASX buy now, pay later (BNPL) shares. Many are charging well ahead of the 0.1% morning gains posted by the All Ordinaries Index (ASX: XAO) today.

But one ASX BNPL company is leading the pack, with its shares opening a whopping 24% higher and currently up 17% in morning trade.

Any guesses which one?

If you said Sezzle Inc (ASX: SZL), go to the front of the class.

What did the ASX BNPL share report?

The Sezzle share price is rocketing following the release of the company’s December business update.

The company reported that revenue grew strongly over the month, which helped it deliver its second consecutive month of profitability. That will certainly come as welcome news to investors after Sezzle struggled with hefty losses for most of 2022.

Sezzle reported a 15.7% year-on-year boost (and a 1.7% month-on-month lift) in revenue, which reached $19.9 million in December.

With two months of profitability, net income in 4Q 2022 was positive, at US$500,000. That compares to a net loss of US$25.9 million in 4Q 2021.

As for the balance sheet, the ASX BNPL share reported capital and liquidity of US$69.7 million cash on hand and US$65 million drawn on its US$100 million credit facility. Management stated it did not foresee any near-term capital needs.

Sezzle will report its fourth-quarter results on 27 February.

What did management say?

Commenting on the December results driving the ASX BNPL share sharply higher today, Sezzle CEO Charlie Youakim said:

In 2022, we set out on a mission to become profitable by year end… We are excited, as we have shown investors that we are clearly on the path to profitability with a well-capitalised balance sheet that does not require additional capital.

Looking ahead, Youakim added:

We are now working on additional initiatives to build upon what we have started and achieve positive Net Income and Adjusted EBTDA for 2023. We look forward to updating investors and the market on our initiatives as part of our fourth quarter conference call in late February.

How has the ASX BNPL share been tracking?

2023 is shaping up to be a different year for the embattled buy now, pay later stock.

With today’s big leap factored in, the Sezzle share price is up 59% since the opening bell on 3 January.

But as you can see in the chart below, the company still has a way to go to recoup last year’s losses. Over the past 12 months, the Sezzle share price remains down 70%.

The post Guess which ASX BNPL share just rocketed 24% on return to profitability appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX 200 share is projected to pay the biggest dividend yield in FY24?
• Can income investors bank on a 6% dividend yield from NAB shares?
• South32 share price higher on quarterly update
• Will the ASX 200 hit new all-time highs this week? Here’s what to watch
• Buy ANZ and this ASX dividend share: analysts

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

from The Motley Fool Australia https://ift.tt/4NnUPve

Analysts across Australia regularly release research notes that provide estimates for the future sales, earnings, and dividends of ASX 200 shares.

While analysts rarely agree with each other, by combining their estimates we have a consensus that can be used by investors to get an idea of what the market is expecting from a particular company.

If we then bring all these consensus estimates together, we can compare and rank them to find out things such as which companies are predicted to grow their earnings the most or provide the biggest dividend yield.

On this occasion, let’s focus on the latter and take a look at which ASX 200 share is forecast to offer the biggest yield in FY 2024.

Which ASX 200 share will offer the biggest dividend yield in 2024?

According to consensus estimates, New Hope Corporation Limited (ASX: NHC) shares are expected to provide the biggest dividend yield in FY 2024.

Current consensus estimates point to the coal miner paying its shareholders a fully franked $1.32 per share dividend that year.  While this will be down from an estimated $1.73 per share in FY 2023, it still equates to a whopping yield of 19.5%.

As mentioned above, the consensus estimate brings together lots of different estimates. This means that some analysts expect lower dividends being paid and others expect higher dividends to be paid by New Hope.

For example, the team at Morgans expects an 80 cents per share dividend in FY 2024, whereas Citi expects an even larger dividend of $1.93 per share. These estimates equate to fully franked dividend yields of 11.8% and 28.6%, respectively, for that financial year.

Time will tell which analysts have made the right call. But, either way, a hefty dividend yield looks likely in FY 2024 from this ASX 200 share.

The post Guess which ASX 200 share is projected to pay the biggest dividend yield in FY24? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Can ASX 200 coal shares really deliver dividend yields of over 10% in FY24?
• ASX 200 to yield 4.4% in 2023. These 2 dividend shares pay more than twice that
• Here are the top 10 ASX 200 shares today
• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24

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.

from The Motley Fool Australia https://ift.tt/3gbjAow

Investors seeking passive income have likely cast their eye over National Australia Bank Ltd (ASX: NAB) shares. The S&P/ASX 200 Index (ASX: XJO) big four bank currently offers a respectable 4.78% dividend yield.

However, some income investors might be looking for a bit more oomph.

Fortunately, one top broker has tipped NAB to grow its dividends by 21% in the coming years, potentially leaving the share offering a near-6% yield.

Let’s take a look at what the future could hold for the dividend-paying banking giant.

Could NAB shares soon boast a near-6% dividend yield?

The NAB share price has outperformed over the last 12 months, gaining 12% to trade at $31.60 compared to the ASX 200’s 4% rise.

And now, the bank could be a passive income winner, according to top broker Goldman Sachs.

The broker has a buy rating and a $35.60 price target on the stock – representing a potential 12.6% upside.

But that’s not the only improvement the broker is tipping. It also expects NAB to up its dividends over the coming years.

NAB paid out $1.51 per share of dividends in the financial year 2022. That was made up of a 73-cent interim offering and a 78-cent final payout.

The broker expects the bank’s dividends to rise to a total of $1.73 per share in financial year 2023.

It also forecasts ASX 200 banks’ net interest margins (NIMs) to begin plateauing this year as housing volumes trough and business volumes slow. However, it’s hopeful asset quality will remain strong.

Looking further ahead, Goldman Sachs tips NAB’s payouts to jump to $1.78 per share in the 2024 financial year and to a whopping $1.83 per share in FY2025.

At its current share price, $1.83 of dividends would see NAB shares boasting a near-6% dividend yield, coming in at 5.79%.

However, if both the broker’s price target and dividend expectations were to come to fruition in financial year 2025, the stock could be trading with a decent 5.14% yield.

The post Can income investors bank on a 6% dividend yield from NAB shares? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• The ASX 200 share that could thrive in a recession: Scott Phillips
• 5 things to watch on the ASX 200 on Monday
• How to find undervalued ASX shares to buy now and hold in 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 positions in and has recommended Goldman Sachs 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.

from The Motley Fool Australia https://ift.tt/lJaO8Iv

The South32 Ltd (ASX: S32) share price is on the rise on Monday.

In morning trade, the mining giant’s shares are up 0.5% to $4.60.

This follows the release of its second quarter and first half update.

South32 share price rises on update

For the three months ended 31 December, South32 reported quarter on quarter production growth across most commodities.

Among the highlights were a 17% increase in metallurgical coal production to 1,483kt, a 13% increase in nickel production to 10.8kt, and a 17% lift in zinc production to 16.4kt.

And while South32’s copper production fell 1% quarter on quarter, this couldn’t stop the miner from recording a first half copper equivalent production increase of 12%. This reflects recent investments in copper and capacity.

Aluminium production increased by 15% during the first half, with a 50% uplift in low-carbon aluminium, following the acquisition of an additional shareholding in Mozal Aluminium and restart of the Brazil Aluminium smelter.

Finally, South32’s Illawarra Metallurgical Coal operation finished the half strongly thanks to improved volumes and labour productivity. This almost offset a very poor first quarter, with first half production ultimately falling 1% over the same period last year to 2,753kt.

Management commentary

South32’s CEO, Graham Kerr, was pleased with the quarter. He said:

Group copper equivalent production increased by 12 per cent in the December half year, as we benefitted from transactions that have repositioned our portfolio toward metals critical for a low-carbon future. Australia Manganese also achieved record half year production, while Cerro Matoso successfully commissioned the Ore Sorting and Mechanical Ore Concentration project, underpinning a 15 year extension to the mining contract.

Mr Kerr also revealed that the miner has managed to deliver on its operating cost guidance despite inflationary pressures. He added:

Despite industry wide inflationary pressures, we expect Operating unit costs for the first half to be in-line with or below guidance for the 2023 financial year at the majority of our operations. We remain focused on delivering safe and stable operational performance, and efficiencies to mitigate cost pressures and capture higher margins as markets improve.

Outlook

Management revealed that it is well positioned to capture the benefit of improved market conditions, with further expected production growth in the second half and its ongoing focus on cost management to mitigate inflationary pressures.

One slight negative, though, is that FY 2023 production guidance at Cannington has been revised lower by 11% and at Brazil Aluminium by 25kt or 25%. This is due to lower mill throughput and labour availability impacting mining rates at Cannington, and a slower ramp-up to nameplate capacity at Brazil Aluminium.

The South32 share price is now up over 16% since this time last year.

The post South32 share price higher on quarterly update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• My top predictions for ASX 200 mining shares in 2023
• Buy South32 and this ASX dividend share: experts
• Why Baby Bunting, Origin, Rio Tinto, and South32 shares are dropping today
• Here are the 3 most heavily traded ASX 200 shares on Monday

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.

from The Motley Fool Australia https://ift.tt/b0hAJgc

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, such as WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There’s also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation of 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.

Qualitas Ltd (ASX: QAL)

WAM described Qualitas as one of Australia’s leading alternative real estate investment managers.

It has $5.5 billion of capital committed across real estate private credit, opportunistic real estate private equity, income-producing commercial real estate, and build-to-rent residential.

WAM noted that Qualitas announced the establishment of a $50 million warehouse facility for its listed Qualitas Real Estate Income Fund (ASX: QRI). The WAM investment team believes it will be “immediately earnings accretive” for Qualitas and allow the listed income fund to deploy its capital more effectively.

The business released a “strong trading update” at its AGM and WAM noted that capital deployed in FY23 to date was more than $1 billion. That’s more than 50% of the total capital deployed in FY22 in just four months.

WAM also pointed out that Qualitas reaffirmed its FY23 earnings guidance of $30 million to $33 million of net profit before tax.

It pointed out that the small-cap ASX share is “significantly exposed” to the senior commercial real estate loan business, with the funds structured in a way that provides “positive earnings leverage” to a higher interest rate environment.

The fund manager concluded:

Coupled with the company’s stronger rate of capital deployment to date, Qualitas appears well positioned to upgrade its earnings guidance at the upcoming 2023 first half result in February. Its balance sheet is also strong with a significant net cash position, providing optionality to deploy further capital into existing and new strategies or undertake earnings-accretive acquisitions. Overall, we view Qualitas as attractively valued given the positive growth outlook on offer.

MMA Offshore Ltd (ASX: MRM)

The other small-cap ASX share that WAM mentioned was MMA Offshore which provides supply vessels and a comprehensive suite of marine and subsea services to the offshore energy sector as well as government, defence, and wider maritime industries.

The fund manager said that last month, MMA Offshore announced that it expects to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) in the range of $30 million to $32 million in the first half of FY23. This would represent growth of 70% compared to the second half of FY22.

WAM explained that the good earnings guidance happened because of stronger-than-expected market conditions during the first half of FY23, driven by “increased activity” in the company’s traditional oil and gas markets and offshore wind developments in Southeast Asia.

Here are WAM’s final thoughts on the small ASX share:

We continue to believe that the recovery in oil and gas activity following disruptions caused by the coronavirus lockdowns, combined with the growth in offshore wind developments, presents a unique opportunity for MMA Offshore to secure meaningful contracts moving forward.

The post 2 exciting undervalued small ASX shares to buy: fund manager appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ASX income stocks: A once-in-a-decade chance to get rich?
• Should I buy Pilbara Minerals shares following the lithium miner’s latest update?
• Bought $5,000 of ANZ shares 5 years ago? Here’s how much passive income you’ve received
• The ASX 200 share that could thrive in a recession: Scott Phillips
• I’d aim for $1 million buying just a few ASX shares

Motley Fool contributor Tristan Harrison has positions in Wam Microcap. 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.

from The Motley Fool Australia https://ift.tt/OnWC9fs

The share market can be a treasure trove of opportunities when there’s negativity among investors. Lower prices mean better value opportunities, but it also pushes up the dividend yield on offer from ASX income stocks.

Let me show you what I mean.

If a company has a dividend yield of 5%, but then its share price drops by 10%, the yield becomes 5.5%. If the share price falls 20% then the yield becomes 6%.

What we’ve seen over the past year is inflation and interest rates pummelling various asset classes. Some areas of the share market haven’t escaped that pain.

But, large share market declines don’t happen very often, so I’d say this is a rare opportunity for investors to grab some businesses with much higher yields than they normally offer.

Here are some of the areas where I’m seeing ASX income stock opportunities.

ASX retail shares

In theory, higher interest rates are meant to push down the value of most assets.

But, many retailers have been particularly hit with the prospect of the economic situation hurting their sales and earnings.

However, while the short-term may be difficult, I think the valuation of some retailers means the yields could be very high, such as Adairs Ltd (ASX: ADH), Accent Group Ltd (ASX: AX1), Universal Store Holdings Ltd (ASX: UNI) and Nick Scali Limited (ASX: NCK).

Quality property stocks

It’s understandable that some ASX property shares have been hit hard as interest rates jumped higher.

Real estate investment trusts (REITs) are suffering from the double whammy of pressure on property valuations and debt being more expensive.

But, the higher rate of inflation is also boosting their rental income, which is supportive for valuations and distributions to investors.

However, the higher interest rates could cause pain to riskier and highly leveraged players in the property space. So, I’d be careful about which names to choose.

If I had to pick a few names, it would largely be due to their quality tenants and the length of the leases on the contracts. They would be: Charter Hall Long WALE REIT (ASX: CLW), Centuria Industrial REIT (ASX: CIP), Rural Funds Group (ASX: RFF) and Brickworks Limited (ASX: BKW). Brickworks has an impressive asset base, it doesn’t rely on its building products earnings to fund the dividend.

Fund managers

With the big hit to various asset classes over the last twelve or so months, funds under management (FUM) have taken a significant hit.

However, I think that once the interest rates stop rising, investor confidence could start returning. That could lead to generally-rising asset prices and a return of good FUM inflows as well. That could make fund managers good ASX income stocks at this level.

Active fund managers do face the headwind of competition from low-cost exchange-traded funds (ETFs). But, the good performing ones could do well, particularly from the lower valuations we’re seeing.

With pretty high dividend payout ratios, I think some fund managers could pay very good dividend income in the next few years, including Pinnacle Investment Management Group Ltd (ASX: PNI), GQG Partners Inc (ASX: GQG) and Pacific Current Group Ltd (ASX: PAC).

The post ASX income stocks: A once-in-a-decade chance to get rich? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• My top predictions for ASX All Ords shares in 2023
• 2 low risk, high quality ASX shares to buy for a retirement portfolio: analysts
• 2 of the best ASX dividend shares to buy right now: analysts
• One oversold ASX 300 dividend share (with a 6% yield) to buy now
• How to invest $10,000 this year to create ‘safe’ passive income

Motley Fool contributor Tristan Harrison has positions in Brickworks and Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, Brickworks, and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Adairs, Brickworks, Pinnacle Investment Management Group, and Rural Funds Group. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/kgG3m1X

The Pilbara Minerals Ltd (ASX: PLS) share price has gone on a great run since the start of 2023. It has already risen by 25% and continues to impress investors.

The ASX lithium share just released its quarterly update for the three months to 31 December 2022. It was able to tell investors about its production, sales price, huge cash pile, and more. The company jumped 13% on the day the update was released.

Let’s have a look at the highlights.

Quarterly update

Pilbara Minerals revealed that spodumene concentrate production was 162,151 dry metric tonnes (dmt), an increase of 10% quarter over quarter. Shipments were up 8% quarter over quarter to 148,627 dmt.

The average realised sales price for the spodumene concentrate was US$5,668 per dmt, up 33% quarter over quarter.

But the unit operating costs declined 5% quarter on quarter to A$579 per dmt.

The ASX lithium share also reported a substantial increase in its cash balance. It rose $851.1 million to $2.23 billion.

Pilbara Minerals pointed to a number of other highlights during the quarter which may have impacted the company’s shares.

It saw improved pricing outcomes after negotiating price reviews with major customers.

The board approved pre-FID (final investment decision) expansion project funding of $38.3 million to maintain the company’s project schedule, with the final investment decision scheduled within the three months to March 2023.

It also announced a formal joint venture with Calix Ltd (ASX: CXL) to support the future development of a mid-stream demonstration project.

A $250 million Australian government debt facility was approved to support the company’s P680 expansion project. This involves processing improvements at the Pilgan plant in Western Australia.

Finally, the ASX lithium share announced a capital management framework, including its first dividend policy.

Are Pilbara Minerals shares a buy?

I think the business has a very promising future. But buying at the right Pilbara Minerals share price could be key to giving investors a margin of safety.

It’s certainly not cheap at the moment. But the average realised selling price in FY23 to date is almost US$5,000 per dmt. Time will tell if the lithium price falls back, but the long-term demand for electric vehicles looks very promising.

At the current lithium price, Pilbara Minerals is making an enormous amount of cash flow, as we can see from how rapidly its cash balance is building.

Looking at the Pilbara Minerals share price of $4.55, it’s valued at nine times FY24’s estimated earnings according to Commsec.

I think it can still be a good long-term buy at this level, particularly with its plans to increase its production and also get more involved with the lithium value chain.

However, after the recent run, it’s a bit more expensive. The ASX lithium share could go both higher or lower, so I think it’s worthwhile expecting volatility. Taking that mentality may make the ride seem less scary.

The post Should I buy Pilbara Minerals shares following the lithium miner’s latest update? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• My top predictions for ASX lithium shares in 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Brokers name 3 ASX shares to buy now
• Why Fisher & Paykel, Pilbara Minerals, Resolute, and Whitehaven Coal are storming higher

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.

from The Motley Fool Australia https://ift.tt/aCkcyv5