The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is missing out on the good times on Thursday.

That’s because this morning, the pizza chain operator requested that its shares be placed in a trading halt until Monday.

Why is the Domino’s share price paused?

Domino’s requested a trading halt this morning so it could launch a capital raising that aims to raise up to $165 million. This comprises a fully underwritten $150 million institutional placement and a $15 million share purchase plan.

The company is raising the funds at a floor price of $65.05 per new share, which represents a modest discount of 2% to where the Domino’s share price last traded.

Why is it raising funds?

According to the release, the proceeds will be used to fund the acquisition of the remainder of the German joint venture and any surplus will be applied towards debt retirement.

This comes after the company received an option exercise notice last month requiring the purchase of Domino’s Pizza Group plc’s shares in the joint venture.

But the acquisitions don’t stop there. The company has also revealed it has now completed the acquisitions of Domino’s Malaysia and Domino’s Singapore. The proposed acquisition of Domino’s Cambodia remains subject to regulatory approvals but is expected to complete in the first quarter of 2023.

Trading update

Finally, Domino’s also provided the market with an update on its guidance for the full year.

It has reaffirmed the guidance for FY 2023 provided to the market at its annual general meeting at the start of November, with the business continuing to track to plan.

This is for the company “to deliver NPAT growth in FY23.”

Positively, the Malaysia, Singapore and Cambodia markets have also seen trading in line with expectations.

The post Domino’s share price halted amid $165 million cap raise appeared first on The Motley Fool Australia.

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• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200
• Markets are nervous. Why waiting to buy these ASX 200 shares could prove expensive

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. 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 Domino’s Pizza Enterprises. 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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It’s been a big few months for S&P/ASX 200 Index (ASX: XJO) goliath BHP Group Ltd (ASX: BHP) and its $9 billion takeover target, copper miner Oz Minerals Limited (ASX: OZL).

The iron ore giant recently posted an improved acquisition bid that appeared too good for Oz Minerals to refuse. BHP now looks set to snap up the copper miner for $28.25 per share – nearly 50% higher than Oz Minerals’ last undisturbed share price.

But one expert believes the ASX 200 takeover target theoretically could have fielded bids as high as $40. So, has BHP scored a bargain? Let’s take a look.

Is BHP getting an ASX 200 copper bargain?

A takeover bid for Oz Minerals has been a long time coming, according to Shaw and Partners senior resource analyst Peter O’Connor. Speaking with Market Matters’ James Gerrish, O’Conner said the copper miner looked like a takeover target two years ago, continuing:

BHP are late-ish to the table in the short-term. In a long-term view, they’re probably still early. But I would have loved them to do this at some $20 per share.

Still, BHP could be getting an ASX 200 copper bargain. That’s when you compare the acquisition currently on the table to a similar takeover being conducted by Rio Tinto Limited (ASX: RIO).

Rio Tinto is in the throes of snapping up the entirety of Canadian-listed Turquoise Hill. It seems set to fork out $43 Canadian (around $47.17) per share for the company. O’Connor commented:

It’s like real estate James, when you’ve got your house in your street and you see a house sell down the road… you get a print on value… It’s the same with copper.

Copper [mergers and acquisitions] tells you what’s happening out there. So, the Turquoise Hill bid… implies a flow through value for Oz Minerals which is closer to $40 per share.

Fortunately for BHP, there is one factor keeping its takeover cheap. The expert said:

But what this particular deal lacks is contestability… they’ve leveraged up the best price they can get from one bidder.  

But that might not be the case for long. The transaction still has some notable hoops to jump through.

First, BHP will conduct due diligence on the ASX 200 copper miner. If its interest continues after it flips through the books, another party might wonder why. That could spur a competing bid from an interloper, O’Connor said.

Beyond the bid, the ASX 200 copper share was tipped to boast “the best management team in the copper market globally,” in O’Connor’s opinion. “I think what they’re buying is expertise,” the expert said.

The post BHP’s bargain? Expert thinks its ASX 200 takeover target could be worth 40% more appeared first on The Motley Fool Australia.

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More reading

• BHP beat you to Oz Minerals? Buy this ASX 200 copper share instead: fundie
• 5 things to watch on the ASX 200 on Thursday
• Why is the BHP share price smashing the market with a 22% gain in November?
• Is a stock market crash coming for us in 2023?
• The 10 ASX 200 shares responsible for 60% of all Aussie dividends last quarter

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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The Block Inc (ASX: SQ2) share price is rocketing in morning trade on Thursday.

The global buy now, pay later (BNPL) stock closed yesterday trading for $93.09 per share and is currently trading for $99 per share, up 6.4%.

Here’s what’s piquing ASX investor interest today.

Why is the ASX BNPL share soaring higher?

The Block share price is flying higher today following a 4.4% overnight surge on the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC).

Block, which acquired Afterpay in January this year, is dual-listed in Australia and the United States. And Block’s shares rocketed 9% on the NYSE yesterday.

The big move higher for tech stocks and the Block share price comes with due thanks to US Federal Reserve chair Jerome Powell.

Tech stocks have been amongst the hardest hit in the latter half of 2022 amid fast-rising interest rates, with the Fed leading the global charge higher.

As most Aussie were sleeping last night, Powell indicated the world’s most influential central bank is likely to slow the pace of interest rate increases as it gauges the impact on its battle against inflation.

According to Powell (courtesy of Bloomberg):

The time for moderating the pace of rate increases may come as soon as the December meeting. Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.

On the heels of his speech, the Block share price on the NYSE galloped higher.

As for the medium-term outlook, investors should still be prepared for more rate hikes in 2023, just at a potentially slower pace.

“It will take substantially more evidence to give comfort that inflation is actually declining. The truth is that the path ahead for inflation remains highly uncertain,” Powell said.

Commenting on the broader market rally, Dan Eye, a money manager at Fort Pitt Capital Group said (quoted by Bloomberg):

As the market moves into the first quarter of next year, inflation won’t be the same problem as it has been in 2022. We’re likely much closer to the end of this hiking cycle and that should be a tailwind for stocks.

Block share price snapshot

While still down 44% since its first day of trade on 20 January, the Block share price is up 5% over the past month as investors eye the beginning of the end of a series of rapid rate hikes.

The post Why is the Block share price skyrocketing today? appeared first on The Motley Fool Australia.

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• Here are the 10 most shorted ASX shares

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 positions in and has recommended Block. 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.

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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.

From not-so-transitory inflation to geopolitical strife and supply chain disruptions, anxious investors have had plenty of excuses to push the Nasdaq Composite (NASDAQINDEX: ^IXIC) lower in 2022. Indeed, as the tech-heavy index sags 30% year to date, financial traders may wonder whether this, too, shall pass.

While it’s never 100% safe to invest in anything, true contrarians should view the current tech wreck as a prime buying opportunity. A post-Thanksgiving attitude of gratitude, fortified with an understanding of what’s rattling the markets in the first place, could provide the emotional wherewithal to stock up when stocks are down.

COVID-19 concerns return

When Chinese President Xi Jinping secured an unprecedented third term, the Nasdaq buckled as traders collectively winced at the thought of restrictive policies that would linger longer. Those fears may have been vindicated recently as Beijing enacted a fresh wave of lockdowns amid reports of new COVID-19 cases.

This isn’t the place to debate whether Xi’s latest restrictions are justified, as China faces nearly 40,000 new cases in a single day. What’s known for certain, though, is that the populace is getting restless, with protests erupting in Beijing and surrounding cities.

There’s already been collateral damage in the form of disruptions at the production facility at Apple components supplier Foxconn in the Chinese city of Zhengzhou. The upshot is a potential current-quarter iPhone production shortfall of 5% to 10%. This development prompted a single-day sell-off in Apple stock, which led the Nasdaq lower. Yet, panic need not be your knee-jerk reaction as this certainly hasn’t been China’s first coronavirus lockdown and it won’t be the last — and every restriction in the past has been lifted sooner or later, leading to a relief rally in well-known technology names.

Bullard’s bully pulpit

The only thing that may be as reliable as China’s on-again, off-again zero-COVID policy is the hawkish stance of Federal Reserve Bank of St. Louis President James Bullard. He’s among the most vocal proponents of aggressive interest rate hikes, and he’s never loath to put a damper on dovish market sentiment with a handful of choice words.

That’s the power of a high central-bank position — yet, you as an investor have the power to choose your response. As you may recall, Bullard sent shock waves though the financial markets with the pronouncement that the Fed may need to hike its benchmark interest rate all the way up to 7% to keep inflation under control.

Now, Bullard’s turning up the heat again with statements like, “We’ve got a ways to go to get restrictive.” Before you pull out your “Don’t fight the Fed” banner, however, bear in mind that one hawk doesn’t represent the central bank as a whole.

The most recently released meeting notes from the Fed’s Federal Open Market Committee did, in fact, indicate that Fed officials collectively expect smaller interest rate increases to “soon be appropriate.” Moreover, while the Federal Reserve “is clearly not finished yet,” a 50-basis-point rate hike in December “sounds very reasonable” in the committee’s estimation.

Safety in numbers

Besides, if China’s zero-COVID policy and Bullard’s statements contributed to more reasonable valuations for Nasdaq components, contrarians should celebrate, not hesitate. Ask yourself: Could I have imagined in mid-2021 that tech-sector highfliers such as these would in 2022 gift me with price-to-earnings ratios at their current levels?

• Alphabet: 19.1
• Meta Platforms: 10.46
• Intel: 8.88
• Netflix: 25.26
• Cisco Systems: 17.36
• Micron Technology: 7.19
• Qualcomm: 10.48

If you’re obsessed with income as much as value, feel free to investigate Intel and Qualcomm for their generous dividend yields. While you’re doing your due diligence, remember that these relatively low tech-market valuations are brought to you courtesy of scary headlines and extrinsic shocks. Without them, after all, there can be no “buy low” piece of the “buy low, sell high” puzzle. 

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

The post Down 30%, is it safe to invest in the Nasdaq right now? appeared first on The Motley Fool Australia.

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• Why did the NAB share price underperform the ASX 200 in November?
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• Down 10% in November, why did the Pilbara Minerals share price power down?

David Moadel has positions in Intel. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Cisco Systems, Intel, Meta Platforms, Netflix, and Qualcomm. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short January 2025 $45 puts on Intel. The Motley Fool Australia has recommended Alphabet, Meta Platforms, and Netflix. 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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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.

One of the best ways to find success in the stock market is by investing within trends. Long-term megatrends in technology and other sectors have the ability to reshape the economy and create big market winners.

For example, trending sectors like e-commerce, cloud computing, and video streaming led to massive returns in several stocks over the last decade, even with the challenges in the tech sector in the last year. 

While 2023 is potentially shaping up to be a tough year for stocks as most economists expect a recession, that doesn’t mean that there won’t be any winners.

To find great investments, it’s a smart idea to see what’s trending right now. Here are two of the biggest megatrends for 2023 and beyond.

1. Platforms vs. point solutions

Behind the scenes, one of the biggest trends in technology is that enterprises are replacing multiple “point solutions” with a single cloud platform.

A point solution is an application that solves a single problem, like accepting payments, authenticating users, or monitoring outages. A platform, on the other hand, gives IT managers a single interface to manage multiple functions, including those provided by individual point solutions.

According to tech research firm Gartner, by 2024, 60% of organizations will have switched from using point solutions to platforms, up from 20% today. As a result, many of the fastest-growing software companies today have positioned themselves as platforms. 

Take GitLab (NASDAQ: GTLB), for example. The company provides a single software platform used to manage DevOps, or the systems through which companies develop and deploy software.

GitLab is growing rapidly, in part because it’s grabbing market share from point solutions. Its revenue jumped 74% in the second quarter to $101 million, and it has a large growth opportunity ahead of it from this megatrend, as 85% of its customers are still using two to 10 DevOps point solutions.

Another example is Okta (NASDAQ: OKTA), a leader in cloud identity software. Okta’s cloud identity platform integrates with more than 7,000 applications and provides a suite of identity tools including single sign-on and multifactor authentication, so businesses can ensure their customers and employees can log on seamlessly and securely. FedEx is one of many companies that have used Okta’s Identity Cloud to replace ad hoc legacy point solutions. In its second quarter, Okta’s revenue jumped 43% to $452 million.

Finally, Bill.com (NYSE: BILL) has established itself as an automated end-to-end payments platform for small and medium-sized businesses. It’s grown both organically and through acquisitions and helps businesses automate payables, credit card expenses, receivables, and more. Bill.com integrates with accounting software tools and in some cases replaces manual bookkeeping or data entry for its customers. Top-line growth has been strong, with revenue up 94% to $229.9 million.

2. Connected TV

In-home entertainment, the transition from traditional pay TV to video streaming defined the 2010s. This decade, the trend that’s shaping up to define it is connected TV, or ad-driven streaming.

With video streaming rapidly replacing linear TV, advertisers are starting to shift ad budgets, and some of the biggest streaming platforms, like Netflix and Disney+, are responding by launching their own ad-based streaming tiers.

Commenting on the decision to launch the ad tier and the audience shift to video streaming, Netflix co-CEO Reed Hastings said on the company’s recent earnings call:

What I underappreciated was just the impact on advertisers. They’re just being able to reach fewer people. And then the 18-to-49 demographic is even faster than the decline in pay TV. So, this is what is really fueling the cycle is that really collapsed linear TV as an advertising vehicle outside of a few properties like sports.

As eyeballs have shifted to streaming, advertisers naturally want to follow, and that will get easier for them with the Disney+ and Netflix ad tiers. Advertisers also love the connected TV model because it offers both the large-screen, engrossing medium of video with the targeting and tracking of digital channels like social. 

Connected TV is already a fast-growing business for a number of adtech companies, and it could explode next year as Netflix and Disney join the fray.

One such winner of this switch looks to be Roku (NASDAQ: ROKU), the leading streaming platform in the U.S. Though Roku may best be known for its branded dongles that enable streaming, the company makes most of its money through an ad revenue share arrangement with streaming services on its platform. Typically, Roku retains 30% of the ad inventory from its streaming partners and keeps all the revenue it makes from those ads.

Though Roku’s revenue growth slowed because of a cyclical decline in ad spending, the growth of the connected TV ecosystem bodes well for it over the long term.

Another company that looks poised to capitalize on the growth of CTV is Magnite (NASDAQ: MGNI), a supply-side adtech platform that rearranged its business to prioritize CTV. In its most recent quarter, CTV revenue rose 29% year over year and now makes up 44% of its revenue, excluding traffic acquisition costs.

The leading demand-side ad tech platform, The Trade Desk (NASDAQ: TTD), also seems well positioned to take advantage of the growth in CTV. Though it doesn’t break out CTV revenue, CEO Jeff Green said in the third-quarter results that the CTV market is rapidly growing and is one reason why the company delivered 31% year-over-year revenue growth to $395 million.

Megatrends are worth keeping an eye on

With the rise of these megatrends, there are plenty of ways to profit, and both the transition from point solutions to platforms and the evolution of connected TV look poised to transform their respective industries over the coming years. Companies riding these trends, such as the companies mentioned, are worth keeping an eye on, as they look well-positioned to outperform the market.

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

The post 2 megatrends to get behind in 2023 appeared first on The Motley Fool Australia.

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Jeremy Bowman has positions in Bill.com Holdings, Inc., Magnite, Inc, Netflix, Okta, Roku, The Trade Desk, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bill.com, FedEx, Magnite, Netflix, Okta, Roku, Trade Desk, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Gartner and has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Netflix, Okta, Trade Desk, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Rio Tinto Ltd (ASX: RIO) share price is on the move on Thursday morning.

At the time of writing, the mining giant’s shares are up 2% to $111.73.

Why is the Rio Tinto share price rising?

Investors have been buying the miner’s shares this morning after responding positively to its strategy update.

This includes an update on the progress it is making against its long-term strategy to strengthen the business, grow in a decarbonising world, and continue to deliver attractive shareholder returns.

In respect to growing in a decarbonising world, Rio Tinto believes it is well-positioned to benefit from the megatrend. In fact, it estimates that the energy transition could add as much as 25% in new demand above traditional sources on a copper equivalent basis across the miner’s key products by 2035.

In order to meet this demand, the company is targeting an investment of up to US$3 billion per year in growth. This includes investments in the Oyu Tolgoi copper, Rincon lithium, and Simandou iron ore projects.

Rio Tinto will also be working hard to decarbonise its own operations. It has outlined projects that are underway to meet challenging decarbonisation targets to halve Scope 1 & 2 emissions by 2030, before reaching net zero by 2050.

Six large emissions abatement programmes are focused on renewable power, process heat, diesel and the Elysis zero carbon aluminium smelting technology to drive the transition to net zero.

Investments of around US$7.5 billion are expected between 2022 and 2030, including around $1.5 billion over the next three years which will be back-end dated. Management advised that these investments are being prioritised and phased in the most logical way, with consideration for near-term work around energy inputs and attractive economics.

‘A stronger Rio Tinto’

Rio Tinto’s chief executive, Jakob Stausholm, believes the company will be stronger in the coming years thanks to its strategy. He commented:

We are now creating real momentum, to build a stronger Rio Tinto that is a platform for delivering long-term value. From evolving our culture, to operational improvements, a different approach on cultural heritage, and technology breakthroughs to address climate change and a changing customer environment, we are seeing early results that give us conviction we have the right objectives, the right team, and the right strategy. This is all captured in our newly defined purpose: finding better ways to provide the materials the world needs.

Meeting the incremental demand of the energy transition and ensuring local supplies of critical minerals globally deepens our relevance in the world and provides new opportunities. We are working hard to decarbonise our assets and products, as we invest to grow in materials needed for the energy transition. “The quality of our assets, resilience of cashflows and strength of our balance sheet ensure we are well positioned to continue to invest with discipline for the long term and deliver attractive returns to our shareholders throughout the cycle.

Production guidance for FY 2023

Rio Tinto has also provided the market with its production guidance for FY 2023.

It revealed that it is targeting Pilbara iron ore shipments (100% basis) of 320Mt to 335Mt. This is in line with what the company guided to originally for FY 2022 before wet weather hampered its performance and led to a slight amendment. It now expects to achieve the low end of this guidance range in 2022.

Other highlights for FY 2023 include a small increase in alumina production to 7.7Mt to 8Mt (from 7.6Mt to 7.8Mt) and aluminium production of 3.1Mt to 3.3Mt (from 3Mt to 3.1Mt).

The post Rio Tinto share price lifts despite lukewarm iron ore outlook appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Why is the Rio Tinto share price marching higher again today?
• Here are the top 10 ASX 200 shares today
• The 10 ASX 200 shares responsible for 60% of all Aussie dividends last quarter
• Here’s what’s boosting these ASX 200 mining giants 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 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 National Australia Bank Ltd (ASX: NAB) share price declined by 2.7% in November 2022. This compares to the S&P/ASX 200 Index (ASX: XJO) which climbed by 6.1%.

That means that NAB underperformed the market by 8.8%. That’s a lot in just one month.

For NAB, the main piece of news during the month was the bank’s 2022 financial year report.

Let’s recap the financial highlights.

FY22 result

The ASX bank share said that cash earnings were 8.3% higher at $7.1 billion. Revenue increased by 8.9%, and excluding the impact of the Citi consumer business, revenue rose by 7.8%. This mainly reflected higher volumes and slightly higher margins excluding markets and treasury.

Expenses increased 5.8%. Excluding the impact of the Citi consumer business, expenses rose 3.9%. Key drivers included higher remuneration and volume-related costs, higher technology and investment costs and increased financial crime and remediation spending, partly offset by productivity benefits.

The net interest margin (NIM) decreased 6 basis points to 1.65%. Excluding a 1 basis point increase from the Citi consumer business and 8 basis points reduction from markets and treasury (which includes the impact of holding higher liquid assets), NIM rose 1 basis point. NAB explained that this “primarily reflected higher earnings on deposits and capital as a result of the rising interest rate environment, mostly offset by home lending competition”.

The ASX bank share’s final dividend increased by 16% to 78 cents per share. That took the full-year dividend up by 19% to $1.51 per share. Bigger dividends could be a boost for the NAB share price if investors are getting larger cash returns.

Outlook for profitability

In the bank’s NIM commentary, it said that the FY22 fourth quarter NIM was 1.72%.

The change in this number is important because it measures what the lending profitability is for the bank. It compares the lending rate to the rate of the funding (such as savings).

However, NAB said that housing lending competitive pressures are “likely to intensify”. The deposit mix headwind is accelerating, leading to a further increase in funding costs.

The NIM impact of the RBA cash rate increases on unhedged deposits is expected to peak in the first half of FY23. The estimated benefit of cash rate increases from October 2022 is expected to be lower.

Economic expectations

NAB also said that, in Australia, consumption and overall growth are expected to soften from September 2022 as the impact of higher interest rates and inflation impacts household budgets more heavily.

The ASX bank share wrote in its earnings release:

While there are a number of uncertainties in the outlook, the most likely scenario has forecast inflation peaking in the December 2022 quarter before easing through 2023. This would see the cash rate peak at 3.6% in March 2023, but a more inflationary outcome would likely mean greater monetary policy tightening and a more pronounced economic correction.

2022 NAB share price snapshot

Despite the bank’s short-term problems, or lessened outlook, the bank’s shares have still risen by 7% over the year. That compares to a 5% rise for the Commonwealth Bank of Australia (ASX: CBA) share price in 2022 and a 4% drop for the ASX 200 in 2022.

The post Why did the NAB share price underperform the ASX 200 in November? appeared first on The Motley Fool Australia.

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More reading

• Down 10% in November, why did the Pilbara Minerals share price power down?
• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• The 3 best-performing ASX 200 bank shares in November revealed

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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Copper has been in the spotlight in 2022, alongside other future-facing commodities like lithium and nickel. Particularly, following BHP Group Ltd (ASX: BHP)’s takeover bid for S&P/ASX 200 Index (ASX: XJO) copper share Oz Minerals Limited (ASX: OZL).

The iron ore giant put forward a $28.25 per share “best and final” offer for its copper counterpart earlier this week. Oz Minerals has accepted the bid.

While that might be great news for those invested in the takeover target – the offer represents a 49% premium to its last undisturbed share price – it’s likely disappointing for those looking to snap up long-term copper investments. Right now, the Oz Minerals share price is just 3% lower than BHP’s bid.

Indeed, Shaw and Partners senior resource analyst Peter O’Connor, speaking with Market Matters’ James Gerrish, recently commented:

Everyone wants to be in copper but there’s so few copper equities.

Fortunately, the expert has another copper miner in their sights. Let’s take a look at the other ASX 200 copper share O’Connor believes is trading at around half of its fair value.

ASX 200 copper share tipped a winner

O’Connor has dubbed Oz Minerals a “dead duck”, continuing:

For all intents and purposes, Oz is no longer trading … if you want to see a 3% return, fine, but if you want to get a return better you need to look elsewhere.

Instead, he is bullish on “international, large-scale, long-life target” Sandfire Resources Ltd (ASX: SFR).

The $2 billion copper miner has been on a journey over the last few years. It’s been working on its Motheo project in Botswana and recently snapped up Spain’s MATSA mining complex.

And just in time. Mining activities ceased at its Western Australian DeGrussa copper mine last month.

Beyond that, the ASX 200 copper miner’s share price recently soared on news of a new CEO, set to take the reins in April. Additionally, Sandfire upgraded its financial year 2023 guidance in September.

Beyond Sandfire, there might be excitement among the market’s smaller copper stocks in the near future. O’Connor tipped consolidation among emerging copper miners in the coming years.  

Sandfire Resources share price snapshot

The Sandfire share price is down 25% this year to date. However, it soared 44% in November.

The post BHP beat you to Oz Minerals? Buy this ASX 200 copper share instead: fundie appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Why is the BHP share price smashing the market with a 22% gain in November?
• Is a stock market crash coming for us in 2023?
• Here are the top 10 ASX 200 shares today

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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When it comes to analysing ASX shares, there are countless fundamental factors and characteristics to look at.

Last week, I zeroed in on management, profiling some ASX 200 shares with founders steering the ship and others with enormous insider ownership.

Today, it’s all about gross profit margins. 

Put simply, gross profit is the money that a company has left after paying for the stuff it sold. 

These selling costs are typically listed as ‘cost of sales’ or ‘cost of goods sold’. You’d find this towards the top of a company’s income statement. 

But in some cases, companies bypass this line item altogether and don’t break out cost of sales from the rest of their operating expenses.

The gross profit margin simply represents gross profit as a proportion of revenue. The higher, the better, because it means the company is holding onto a greater portion of every sales dollar.

With that in mind, let’s take a look at five ASX 200 shares with deliciously-high gross margins.

Pro Medicus Limited (ASX: PME)

Topping this list is ASX 200 healthcare share Pro Medicus, a global leader in radiology imaging software. 

In FY22, Pro Medicus generated $93.5 million in revenue against cost of sales of just $465,000. This translates to a staggeringly-high gross margin of 99.5%.

Crucially, Pro Medicus is a software-only business, so there are minimal costs involved in rolling out new contracts. The outcome is an incredibly capital-light, scalable business.

But while there are varying interpretations of what goes into cost of sales from company to company, Pro Medicus backs this up with extremely wide profit margins.

In fact, Pro Medicus turns two-thirds of every sales dollar into profit before tax. These margins have only been heading higher over time, demonstrating tremendous operating leverage.

Carsales.com Ltd (ASX: CAR)

Next up is the ASX 200 tech share behind Australia’s leading automotive classifieds business.

In FY22, Carsales incurred cost of sales of $50 million on the way to generating revenue of $509 million. This spins up a stunning gross margin of 90%.

Carsales operates an extensive network of classifieds websites, covering everything from motorbikes and boats to caravans, trucks, construction equipment, and tyres.

In a similar vein to REA Group Limited (ASX: REA), it also lays claim to a range of different automotive classified portals around the world through a mix of full and partial ownership stakes.

Importantly, Carsales’ juicy gross margin isn’t lost further down the income statement. It boasts an earnings margin of 53%, achieving earnings before interest, tax, depreciation, and amortisation (EBITDA) of $270 million in FY22.

Xero Limited (ASX: XRO)

I’m sure it’s no surprise to see Xero on this list, a software-as-a-service (SaaS) business leading the shift to cloud accounting.

As a Kiwi company, Xero handed in its first-half FY23 results last month. Across this period, the ASX 200 tech share drummed up revenue of NZ$658.5 million while cost of revenue came in at NZ$85.6 million.

So, all up, Xero held its gross margin steady over the prior year at an impressive 87%.

Unlike Pro Medicus and Carsales, Xero makes it easy for investors by specifying what goes into cost of revenue.

As detailed in its interim report, Xero’s cost of revenue comprises expenses directly associated with hosting its services, sourcing relevant data from financial institutions, and providing support to subscribers.

Breaking this down even further, the company noted that this includes hosting costs, bank feed costs, employee-related expenses directly associated with cloud infrastructure and subscriber support, and related depreciation and amortisation.

Despite its strong gross margins, Xero continues to operate at a loss. This is because the ASX 200 tech share is prioritising future growth, ploughing droves of money into product development and marketing efforts at attractive rates of return.

WiseTech Global Ltd (ASX: WTC)

Continuing the tech theme, WiseTech is another ASX 200 share with terrific margins.

In FY22, WiseTech posted revenue of $632.2 million against cost of revenues of $92.5 million. This spits out an eye-catching gross margin of 85%, up from 83% in the prior year.

The ASX 200 tech share attributed this margin expansion to the impact of revenue growth and continuing efficiencies from its cost reduction initiatives.

WiseTech notes that its cost of revenues consists of expenses directly associated with hosting its services and providing support to customers.

Similarly to Xero, this includes data centre costs, employee-related expenses directly associated with cloud infrastructure and customer support, contracted third-party costs, and related depreciation and amortisation. 

WiseTech is another ASX 200 share boasting a strong duo of gross margins and earnings margins. In FY22, the logistics software provider delivered an EBITDA margin of 50%.

Lovisa Holdings Ltd (ASX: LOV)

The common thread from the four ASX 200 shares I’ve profiled so far is that they’re all software-only businesses.

So while its gross margin isn’t quite as high as the others on this list, I wanted to give a nod to an ASX 200 share with enviable margins for a retailer.

Retailing is traditionally known as a low-margin business. But as I’ve covered previously, Lovisa flips the script with its vertically-integrated business model and low-cost products.

Surveying the ASX retail landscape, Accent Group Ltd (ASX: AX1) has gross margins of 55%, Temple & Webster Group Ltd (ASX: TPW) has gross margins of 45%, and JB Hi-Fi Limited (ASX: JBH) has gross margins of 23%, to pick out just a few.

But one of the things that set Lovisa apart is that all of the products it sells are designed and manufactured in-house. In contrast, many ASX retailers sell a mix of own-brand and third-party products.

This boosts Lovisa’s gross margins, which came in at a whopping 79% in FY22. Put another way, for every pair of $10 earrings flying off the shelves, it paid suppliers on average just $2.10.

The ASX 200 retailer’s small-store footprint also bodes well for earnings margins, with Lovisa achieving an EBITDA margin of 31% in FY22.

The post 5 ASX 200 shares with juicy gross profit margins appeared first on The Motley Fool Australia.

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Motley Fool contributor Cathryn Goh has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa Holdings Ltd, Pro Medicus Ltd., Temple & Webster Group Ltd, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has recommended Accent Group, JB Hi-Fi Limited, Lovisa Holdings Ltd, REA Group Limited, Temple & Webster Group Ltd, and carsales.com 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 Pilbara Minerals Ltd (ASX: PLS) share price went backwards in November, falling by over 8% in the month.

There was a large underperformance compared to the S&P/ASX 200 Index (ASX: XJO) which rose by 6.1% in November. That means that the index did better by 14%.

Of course, over longer-term time periods, Pilbara Minerals shares have done much better. In 2022 alone, the ASX lithium share has risen 32%. So, the decline may just have been some investors taking profit off the table.

It was a busy month for the business.

A few weeks ago it announced a long-term $250 million Australian government debt facility to support the P680 project expansion. The facility will provide flexibility to pursue further growth and diversification opportunities at Pilgangoora.

But that was just one of a number of other announcements.

Dividends to start

In the middle of the month, the company revealed its capital management framework and dividend policy on the back of a “strong” operating performance and cash flow.

It’s going to balance available capital between investment into the existing business, sustainability commitments, strategic growth opportunities, as well as the start of sustainable returns to shareholders.

Pilbara Minerals is targeting a dividend payout ratio of 20% to 30% of free cash flow. Dividends are expected to start in FY23.

Commsec numbers suggest it could pay an annual dividend per share of 15 cents in the 2023 financial year.

Latest BMX auction

The business also revealed the result of its latest Battery Material Exchange (BMX) platform.

A cargo of 5,000 dry metric tonnes (dmt), at a target grade of around 5.5% lithia, presented for sale on the digital platform. It accepted a bid of US$7,805 per dmt, or US$8,575 on a pro rata basis for lithia content and inclusive of freight costs.

Remember, despite achieving an even higher price for its production, the Pilbara Minerals share price went backwards.

Joint venture

Near the end of the month, Pilbara Minerals announced that it was entering into a joint venture with Calix Ltd (ASX: CXL).

They are going to develop a demonstration plant at the Pilgangoora project. The aim is to produce lithium salts through an “innovative midstream ‘value added’ refining process utilising Calix’s patented calcination technology”. There could also be a commercialisation of the process.

Pilbara Minerals explained that the objective of the mid-stream demonstration plant project is to “deliver a superior value-added lithium product enabling lower product cost, reduced carbon energy intensity, and reduction of waste product logistics”.

The post Down 10% in November, why did the Pilbara Minerals share price power down? appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Getting cold feet on ASX 200 lithium shares? Here’s why UBS ‘remains positive’
• 2 ASX lithium shares to buy, and 3 to sell: brokers
• Here are the top 10 ASX 200 shares today

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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