At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues its long run as the most shorted share on the Australian share market after its short interest rose to 15.1%. Short sellers seem to believe that the market is too bullish on the travel market recovery due to rising living costs.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 14.5%. This betting technology company’s shares are down 60% in 2022 but short sellers appear to believe they can keep falling. In other news, last week it was revealed that major shareholder, Tom Waterhouse, sold $11 million worth of shares in recent weeks
• Block Inc (ASX: SQ2) has seen its short interest rise to 11.8%. Investors continue to target this payments company amid concerns that a global recession could slow its growth.
• Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest jump to 10.7%. There are fears that cost inflation could be weighing on this pizza chain operator’s performance.
• Megaport Ltd (ASX: MP1) has seen its short interest rise to 10.6%. Short sellers will have been pleased to see this tech share crash lower last week after the release of a soft quarterly update.
• Perpetual Limited (ASX: PPT) has seen its short interest jump to 10%. A number of fund managers have been under pressure this year amid tough trading conditions.
• Lake Resources N.L. (ASX: LKE) has short interest of 9.8%, which is down slightly week on week. Short sellers have major doubts over this lithium developer’s unproven DLE technology.
• Nanosonics Ltd (ASX: NAN) has short interest of 8.3%, which is down week on week. This infection prevention company’s disruptive business model change in the key US market is causing concerns.
• Breville Group Ltd (ASX: BRG) has seen its short interest rise to 8.1%. Investors may be concerned that the uncertain economic backdrop could impact consumer spending on kitchen goods.
• Zip Co Ltd (ASX: ZIP) has returned to the top ten with short interest of 7.8%. Doubts over this buy now pay later provider’s profitability targets continue to weigh on its shares.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Brokers say these exciting ASX growth shares are buys
• Are Flight Centre shares worth buying in October?
• A certain ex-bookie has sold off $11m worth of this ASX 300 share in a month
• Why is ASX 200 tech share Block dropping like a stone today?
• Why is the Megaport share price receiving a 9% spanking 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 Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, Nanosonics Limited, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Dominos Pizza Enterprises Limited, Flight Centre Travel Group Limited, and MEGAPORT FPO. 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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Looking for some dividend shares to add to your income portfolio? If you are, you may want to look at the two listed below.

Both have been rated as buys by analysts and tipped to provide investors with big dividends. Here’s what you need to know about these ASX dividend shares:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share to look at is the HomeCo Daily Needs REIT.

HomeCo Daily Needs is a growing property company that invests in convenience-based assets across the neighbourhood retail, large format retail, and health and services sub-sectors.

Goldman Sachs is a fan of the company and believes its shares are “undervalued at its current valuation given its diversified tenant base.” The broker also sees HomeCo Daily Needs’ portfolio as “well positioned to benefit from secular trends toward last-mile fulfilment offerings.”

In respect to dividends, the broker is forecasting dividends per share of 8.3 cents in FY 2023 and 8.5 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.16, this will mean dividend yields of 7.1% and 7.3%, respectively.

Goldman has a buy rating and $1.57 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share that has been tipped to provide income investors with a generous dividend yield is telco giant Telstra.

After battling through a difficult time over the last decade, at long last there is light at the end of the tunnel for the company and its shareholders. In fact, that light is shining very brightly after a return to growth in FY 2022.

The good news is that the company’s new T25 strategy is expected to underpin further solid growth in the coming years, which could be good news for its dividend payments.

For now, though, Morgans is expecting Telstra to continue to pay fully franked 16.5 cents per share dividends in FY 2023 and FY 2024. Based on the current Telstra share price of $3.85, this equates to yields of 4.3%.

Morgans has an add rating and $4.60 price target on the company’s shares.

The post Analysts say these top ASX dividend shares are buys right now appeared first on The Motley Fool Australia.

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More reading

• Is there something strange going on with Telstra shares today?
• Is Telstra only worth considering for dividends, not share price growth?
• Broker says these ASX dividend shares are buys this month
• The Telstra share price is still trading at less than half its record highs. Time to pounce?
• Morgans names 2 ASX dividend shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation 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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When the COVID-19 pandemic first hit a couple of years ago, public transport instantly fell out of favour.

Private transport — like cars, motorbikes and scooters — saw sales surge as people around the world sought to get around without close contact with other commuters.

Businesses that supplied, manufactured and sold such vehicles did pretty well and enjoyed a tidy rise in their valuations.

But now that much of the developed world is moving into the post-pandemic era, how will they fare?

The analysts at Auscap Asset Management think that at least two automotive ASX shares have strong futures ahead of them:

‘Considerable earnings tailwind’

Eagers Automotive Ltd (ASX: APE) owns and operates a network of car dealerships in Australia and New Zealand.

The share price enjoyed a spectacular 466% rise from March 2020 to April 2021 on the back of incredible demand for private transport.

Since then the stock has cooled off, with AP Eagers shares now going for about 20% less than at the start of this year.

For the Auscap team, the market is too focused on external drivers rather than the actual business performance.

“Eagers delivered another strong half-year result in August 2022,” its memo to clients read.

“The market continues to focus on the potential for a slowdown in new vehicle orders, given the widespread expectation of a softening consumer environment, although Eagers said they had yet to see a slowdown in demand as of August.”

Pandemic-induced supply constraints have meant Eagers now has a huge backorder of vehicles yet to be delivered. And revenue is not counted until the customer is behind the wheel of their new car.

“Eagers has delivered fewer cars than it has sold in every single month since the onset of the COVID-19 pandemic,” read the memo.

“This record order bank provides Eagers with a considerable earnings tailwind for the rest of this calendar year and into 2023.”

In addition, the company has improved its business throughout the pandemic.

“Eagers has taken advantage of COVID-19 uncertainty and current earnings visibility to improve its dealership footprint with a number of acquisitions and divestments, invest in future growth initiatives such as the AutoMall concept and omni-channel used car offering known as EasyAuto123, and aggressively right-size its cost base.”

Eagers shares currently pay out a dividend yield of 5.8%.

Auscap already holds Eagers shares and has watched in glee as insiders bought up the stock in recent weeks.

“Nick Politis, the company’s 28% shareholder and a major automotive player in his own right, has purchased over $4 million worth of shares on-market since July. Chairman Timothy Crommelin and board member David Blackhall have also bought shares in recent months.”

‘Consistently grown’ market share

The Auscap team also loves the fund’s holding in MotorCycle Holdings Ltd (ASX: MTO), which operates Australia’s largest motorcycle dealership network.

The company is responsible for 12% of all new motorbike sales in the country and sells all 10 of the top-selling brands.

“While the motorcycle industry does experience cyclical swings, Motorcycle Holdings has consistently grown share through both organic and inorganic means since listing in 2016,” read the Auscap memo.

“In addition to growth, MotorCycle Holdings has been focused on diversification, which we think is underappreciated.”

This refers to the recent acquisition of “large” parts and accessories business MOJO, a “consistently profitable” finance joint venture and geographic expansion.

“MOJO is a specialist in scooters, all-terrain vehicles (ATVs) and electric motorcycles. These are categories experiencing structural market share growth where MTO has been underweight,” read the memo.

“While businesses focused purely on distribution can tend to have key supplier risk, we think MOJO has the potential to fit in well and grow strongly within a diversified MotorCycle Holdings.”

The MotorCycle Holdings share price has dipped 19.7% year to date, and currently pays a 8% dividend yield.

The $153 million company, Ausbil analysts believe, is flying “under the radar”.

“[The stock] is currently trading on just 5.6x pro-forma FY22 net profit after tax pre-synergies.

“It has net Debt/EBITDA of just 0.6x and management expects MOJO to experience strong earnings growth in FY2023.”

There is also a connection to the other auto stock, with former Eagers chief Martin Ward set to join the MotorCycle Holdings board.

Ward was at the helm of Eagers over a 15-year period when its profit before tax multiplied more than eight times.

“It is not surprising to us that the MOJO vendors took as much of their acquisition consideration as possible — 50% — in MTO stock.”

The post Vroom vroom: Fund names 2 ASX shares it loves right now appeared first on The Motley Fool Australia.

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More reading

• Is this why a certain ASX 200 director keeps buying up big on their company’s shares?
• Brokers name 3 ASX shares to buy today
• 4 ASX 200 directors who raised the stakes in their company shares in September

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

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There are some ASX shares that used to be staples in investor portfolios and superannuation accounts but in recent years have become stinkers.

That could be their own fault for mismanaging their business, or be caused by external factors.

One could name AMP Ltd (ASX: AMP) as an example of the former and Treasury Wine Estates Ltd (ASX: TWE) to demonstrate the latter category.

The AMP share price has lost a painful 80% over the past 4.5 years after a series of financial, governance and staffing scandals of its own making.

Meanwhile, Treasury Wine is about 33% down from its pre-COVID highs after it lost its largest export market, China. In 2020, Beijing imposed stiff tariffs on wine imports in retaliation to Canberra’s call for an independent review into the origins of the pandemic.

However, this week Montgomery Investment Management founder Roger Montgomery stunningly revealed his funds have recently bought both these stocks:

Don’t let this ASX share’s past fool you about the future

Montgomery, in his role as guest lecturer at the University of Sydney, has presented AMP to students as the prototypical example of a company that doesn’t meet the definition of “quality”.

So why did his funds buy into it just now?

“AMP is an example of a so-called ‘improving quality’ company with a strong valuation case because the potential upside is not appreciated, nor factored-in, by the market,” he said on the Montgomery blog.

“To disregard it, or write it off, on the basis of its historical performance, would be to potentially miss the future value being created under investors’ noses.”

Montgomery pointed out the “significant progress” the ASX share has made under new management since the disastrous finance industry Royal Commission.

“Management is completing the divestment of Collimate Capital (formerly AMP Capital) which will result in a strong surplus capital position,” he said.

“The advice division’s losses are less than half of those from a year ago, and it remains on target to break even by 2024.”

The speed of fund outflows from the wealth management business has also slowed. The AMP North platform is attracting new investor capital despite the tarnished AMP brand.

“AMP Bank also remains a steady contributor to group earnings with recent growth outpacing the rest of the industry,” Montgomery said.

“Elsewhere, the bank’s digital-only offering is gaining traction with new and existing customers.”

With the AMP share price tanking so much in recent years, Montgomery believes stock buyers now receive many of these businesses effectively for nothing:

With surplus capital of $2 billion, after the sale of assets, and a valuation of over $1.5 billion for the AMP Bank – based on book value – AMP’s market capitalisation of about $3.5 billion suggests shareholders are receiving the +$100 billion multi-platform AMP North business, the Australian and New Zealand advice business and a share of a Chinese asset management and pension company, for free. 

This is a different business from what it was in 2020

The tragedy of Treasury Wine Estates is so ingrained in investors’ minds that it’s now considered “a barometer for Australian-Sino relations”, according to Montgomery.

But for him, the business now has a completely different investment thesis from two years ago.

“This year, they have embarked on an expansion into the premium luxury sector with acquisitions of other premium wine labels,” said Montgomery.

“The quality of the American division’s earnings has also improved with the divestment of commoditised commercial wines, resulting in lower volume but much higher operating margins operations.”

But the catalyst for his team’s decision to buy into this ASX share recently was its Asian expansion outside of China.

“This occurred despite a virtual ban on the export of the company’s prized Penfolds brand wines, reflecting management’s distribution expertise and providing confidence in their multi-country expansion of the Penfolds brand. 

“The strategy simultaneously expands the company’s total addressable market and reduces geopolitical risk.”

He believes the reduced reliance on China has actually improved the quality of the business and provides better downside protection for investors.

“Growth options concurrent with margin expansion have the potential to grow earnings for many years above current analyst projections.”

The post Why we just bought 2 ASX 200 shares that everyone abandoned: expert appeared first on The Motley Fool Australia.

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More reading

• Why is the AMP share price beating the ASX 200 today?
• Treasury Wine share price climbs on strong Q1 performance
• This is what will get ASX shares rising again early 2023: economist
• 5 things to watch on the ASX 200 on Tuesday
• Is the company’s buyback helping boost the AMP share price?

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

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Ask A Fund Manager

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, Alphinity Investment Management portfolio manager Elfreda Jonker shows us her strategy for buying three devastated ASX shares.

Cut or keep?

The Motley Fool: We’ll now examine three ASX shares that have plunged recently, to get your thoughts on whether they’re a bargain or if you’d stay well away.

The first one is Goodman Group (ASX: GMG), which has fallen about 40% year to date. What do you reckon?

Elfreda Jonker: Well, it’s a stock that we currently own. We do still have an overweight position in it currently, but it is a stock that we’ve also owned for 10 years. So it’s probably one of those that, in our view, is a stock that is going to be a long-term winner. 

Modern logistics is a theme of the future — fantastic business, fantastic management team, and it’s a very strong capital position. But there are certain times in the cycle — and we’re currently in one of them — when yields continue to rise, any real estate company will, generally speaking, be under pressure because they’re seen as bond proxies. So what you’ve seen in this 40% [fall in share price] that you’re referring to is really very much driven by the fact that yields have continued to increase. For example, in the US, the bond yield that’s gone from 1.5% at the start of the year when it reached the peak to almost 4% currently.

So that has really been the key issue with Goodmans. Underlying business fundamentals are still very, very strong in our view. We think there’s been a lot of fear around [major customer] Amazon.com Inc (NASDAQ: AMZN) slowing and that’s going to spill over into Goodman. Amazon has only really given up [a] marginal amount of space and the demand from other customers has still remained really strong. We still see good earnings growth coming through and a strong balance sheet… We think this is a business that you can hold for the long term.

That being said, we do think that it’s a bit early to add more at this point in time until you get to the point where you feel that the interest rate hikes have run their course. The market’s priced in that higher yield, the market’s always forward-looking, but we think there are more interest rate hikes coming. The Fed’s been very obvious about it and here at the RBA probably as well, just to a lesser extent. In that environment, you need to be careful to really bolster your real estate’s exposure too much. So we’ll wait, but we definitely will be adding once we’re in a better interest rate cycle.

MF: The next one is semi-related as it plays in the housing sector. James Hardie Industries plc (ASX: JHX) has also fallen about 40% this year?

EJ: James Hardie is a company that we used to own, but we actually sold out on the back of all the pressures that are currently happening in the US housing markets. 

As you know, they manufacture building products for new home construction as well as remodelling of existing homes, and that’s a 35/65 split. Currently what we’ve seen is that we still see ongoing pressure in that space. 

The stock is quite cheap, but we are concerned around what’s going to happen to the earnings into 2023, 2024. So at the moment, if you look at it, the US housing starts — the new builds — that’s continuing to reduce, mortgage rates are still going up. It’s now 7.2% versus 3% a year ago. And there’s still a lot of evidence in the leading indicators that that market continues to soften. 

The recent update in the US — our portfolio manager was actually there just after their results — was in August. They talked a pretty good story from a medium-term target’s perspective, but shorter term they continued to downgrade revenue targets as well as margins on the back of increased costs. Then, also obviously, the overall demand has continued to decline. 

So for us, we think it’s too early to buy. We think it’s good to just wait a little bit longer until you see some indicators on the mortgage rates or the housing starts need to improve — and we need to see signs of that staying there and improving for a while before we would be willing to get in. 

As I’ve mentioned at the start, we invest in companies in an earnings upgrade cycle and currently James Hardie is still in an earnings downgrade cycle. So a bit too early for us, but overall another fantastic business that we wouldn’t mind owning again in the future.

MF: The last ASX share pays a pretty decent 7.4% dividend yield, but it’s in the retail space with some clouds over the economy. What are your thoughts on Super Retail Group Ltd (ASX: SUL), down about a quarter year to date?

EJ: Super Retail, we currently do have a small overweight position. Our view at the moment is that Super Retail is probably a little bit more shielded to a very big consumer meltdown. 

We don’t expect that, but we certainly are in an environment where the economy is softening and consumer spend has remained strong despite rates going up. You haven’t really seen the impact of higher mortgages and high inflation really hitting the consumer massively in Australia just yet. So we are definitely a bit concerned that you can still see that coming through. 

That being said, we think a business, particularly Supercheap Auto on the auto side, Macpac, Rebel, BCF, these are all businesses where we think from an inventory point of view, it’s easier to manage these inventories that you can buy and hold in a warehouse, it’s not necessarily super high fashion that you have to churn consistently.

In the past, one of the things that really stood out for us in Super Retail Group is the fact that they manage their inventory incredibly well. Even at the last update we had from them is that they have increased their inventory, but they’re not too concerned. They wanted to do that given the supply chain constraints. 

At this point in time for us, we would probably hold our position currently and wait to see how the consumer really plays out. From our perspective, we’d rather hold Super Retail Group and many of its peers just given that we think it’s definitely on the more defensive side of the consumer space. But we think it’s also a bit early to add too much at this point in time until we see what the real impact is. 

We’ll keep an eye on it, happy to hold it and could potentially add later on when we get more clarity.

The post 3 ASX 200 shares I’d pounce on when the clouds clear: expert appeared first on The Motley Fool Australia.

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• Analysts say these beaten down blue chip ASX 200 shares can rise 50%
• Goodman share price hits two-year low: Time to buy?
• 3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys
• 2 high quality blue chip ASX 200 shares that experts rate as buys
• Here are the top 10 ASX 200 shares today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Amazon. 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week deep in the red. The benchmark index fell 0.8% to 6,676.8points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to rebound strongly on Monday after a very positive end to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 95 points or 1.4% higher this morning. On Wall Street, the Dow Jones was up 2.5%, the S&P 500 rose 2.4%, and the NASDAQ stormed 2.3% higher.

Oil prices rise

Energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good start to the week after oil prices pushed higher on Friday night. According to Bloomberg, the WTI crude oil price was up 0.65% to US$85.05 a barrel and the Brent crude oil price rose 1.2% to US$93.50 a barrel. Optimism over Chinese demand offset recession fears.

South32 update

The South32 Ltd (ASX: S32) share price will be one to watch on Monday when the mining giant releases its quarterly update. According to a note out of Goldman Sachs, its analysts are expecting the miner to report alumina production of 1,345kt, aluminium production of 271kt, and met coal production of 1,650kt.

New Hope goes ex-dividend

The New Hope Corporation Limited (ASX: NHC) share price is likely to drop deep into the red on Monday. That’s because the coal miner’s shares are due to trade ex-dividend for its latest dividend. Thanks to sky high coal prices, last month New Hope was able to declare a mammoth fully franked final dividend of 56 cents per share. This will be paid to eligible shareholders on 8 November.

Gold price rebounds

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a good start to the week after the gold price rebounded on Friday. According to CNBC, the spot gold price was up 1.2% to US$1,656.3 an ounce during the session. This was driven by hopes that rate hikes will happen at a slower pace in the US.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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• Expert reveals why these ASX All Ords shares are drumming up a ‘growing international appetite’ right now
• Demolished ASX 200 materials shares: Why this fundie is buying the 30% dip
• Why did ASX 200 coal shares have such a cracking Friday?
• Here are the top 10 ASX 200 shares today
• Why did the IAG share price get smashed 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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Are you interested in adding some ASX growth shares to your portfolio? If you are, you may want to look at the two listed below.

Here’s what you need to know about these growth shares:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX growth share that has been tipped as a buy is this pizza chain operator.

While the company has been facing a number of challenges this year and its performance is likely to underwhelm compared to previous years, its longer term outlook remains as positive as ever.

This is thanks to its strong brand, investment in technology, and bold expansion plans. The latter includes the company aiming to more than double its network by 2033 excluding acquisitions.

Morgans remains very positive on the company’s future and sees recent weakness as a buying opportunity. The broker currently has an add rating and $90.00 price target on its shares. 

Life360 Inc (ASX: 360)

A second ASX growth share for investors to look at next week when the market reopens is Life360.

This rapidly growing location technology company is responsible for the Life360 mobile app. This freemium app is hugely popular and currently boasts over 40 million active users.

The company also added to its arsenal with recent acquisitions of wearables company Jiobit and items tracking company Tile, which are opening the door to cross and upselling opportunities.

In addition, Life360 has the potential to leverage its large and growing user base to enter new markets and disrupt legacy incumbents. It has already done this with roadside assistance through its Driver Protect product.

Bell Potter is a big fan of Life360. At the end of last week, the broker reiterated its buy rating and lifted its price by a dollar to $9.25.

The post Brokers say these exciting ASX growth shares are buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price finished flat on Friday at $8.66 apiece.

After a tremendously volatile year on the charts, share price distribution has whipsawed to highs of $10.78 and lows of $7.79 just last month.

As seen in the chart below, the Bendigo Bank share price is down almost 5% this year to date.

Bendigo Bank share price versus peers

Comparatively, Bendigo has performed on par with the other ASX banking majors over the 12 months to date.

As seen in the chart below, there’s been a gradual decline in the entire basket, resulting in heavy losses in all but National Australia Bank Ltd (ASX: NAB).

In terms of financials, the bank has some interesting points to comment on. For example, its net income margin is below the banking major’s median score, as seen below. The same is true for return on equity (ROE), which is also below the median score for its peers.

However, it is valued at a discount to peers in trading at a price-to-earnings (P/E) ratio of 11.6 times, and a price-to-book (P/Book) ratio of 0.73 times (compared to 14.5 and 1.18 times respectively).

As such, Bendigo’s performance with respect to financials is balanced.

Company Name	P/E	ROE %	Debt to Equity	P/Book	Net income margin
Bendigo and Adelaide Bank Ltd (ASX: BEN)	11.16	7.5%	196.9%	0.73	30.0%
Bank of Queensland Limited (ASX: BOQ)	13.21	6.6%	274.3%	0.74	25.9%
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	11.59	10.9%	207.9%	1.18	35.2%
Commonwealth Bank of Australia (ASX: CBA)	18.61	12.8%	250.8%	2.35	41.5%
National Australia Bank Ltd (ASX: NAB)	15.93	11.1%	310.2%	1.68	40.2%
Westpac Banking Corp (ASX: WBC)	17.46	7.4%	279.8%	1.19	26.1%
Median	14.57	0.09	2.63	1.18	0.33

What about in terms of analyst coverage? According to Refinitiv Eikon data, a total of 4 out of 14 analysts rate it a buy right now.

The amount of buy calls is actually up from just 1 back in August. Whereas the consensus Bendigo Bank price target from this list is $9.50, a small portion of upside from the current market price.

There are certain headwinds that are unavoidable for all of the banking majors on a forward-looking basis.

Chief to these remains surging interest rates and the pull-through effect from these onto a bank’s net interest income and net interest margin.

All the banks are set to feel the pinch. This is due to the concentrated state of the Australian mortgage market, and fierce competition between lenders keeping a clamp on borrowing rates.

This has been reflected in the shares of the banking majors for 2022. For Bendigo, despite an early rally from January–May, its share price is still in deep drawdown and has ways to go before reaching its previous high.

Over the past 12 months, the Bendigo Bank share price is down 8%.

The post How does the Bendigo Bank share price stack up against its ASX 200 peers? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I own a few ASX exchange-traded funds (ETFs). But, like a guilty parent, I confess to having one clear favourite. I have written about it before, and probably will again. It is none other than the VanEck Vectors Wide Moat ETF (ASX: MOAT).

The VanEck Wide Moat ETF is an actively managed fund. This means that, unlike a passive index fund, it follows an active share selection methodology.

In this case, the ETF, according to its provider, intends to offer exposure to “attractively priced companies with sustainable competitive advantages”. These are selected and periodically reviewed and rebalanced by Morningstar’s equity research team.

An economic moat is a term coined by the legendary investor Warren Buffett. It refers to a company’s intrinsic competitive advantage. An example would be the undisputed brand power of companies like Apple or Coca-Cola. Or the unavoidability of one of Transurban Group (ASX: TCL)’s toll roads.

So the Wide Moat ETF aims to select US shares with these kinds of characteristics. As of the fund’s most recent update, some of its top holdings included Microsoft, Disney, Amazon and Adobe. All companies that I think most investors would agree with are high-quality shares.

Why the Wide Moat ETF is a winner

I like this idea in theory. But a fund also has to display some compelling performance figures to persuade me to part with my cash.

The Wide Moat ETF does indeed have some impressive numbers on the board. It was first launched back in June 2015 on the ASX. Since that day, it has delivered an average performance of 13.55% per annum.

By contrast, the US S&P 500 Index (SP: .INX) has delivered 11.75% per annum over that same period. The Wide Moat ETF has also outperformed the S&P 500 over the past five years as well, not an easy task. It’s delivered an average of 14.05% per annum against the index’s 13.16%.

So it’s for this reason that the VanEck Vectors Wide Moat ETF is my favourite ETF investment, as well as being one of my favourite investments in my entire share portfolio. It’s been a winner for me, and I don’t see any reason why it won’t keep on winning.

The post Of all my ASX ETFs, this is my favourite. Here’s why appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Adobe Inc., Amazon, Apple, Coca-Cola, Microsoft, VanEck Vectors Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Amazon, Apple, Microsoft, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $420 calls on Adobe Inc., long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe Inc., Amazon, Apple, VanEck Vectors Morningstar Wide Moat ETF, and Walt Disney. 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 cost of building a home is rising at its fastest pace since the GST was introduced in 2000. Interest rates are going up and housing values are going down. Construction companies are going bust due to labour shortages, lack of access to building materials, and the rising cost of these materials. And fewer people are choosing to build new houses, with approvals down 14.4% over the past 12 months.

Yet fund manager Allan Gray says it’s a great time to buy this ASX 200 share in the construction game. That share is Fletcher Building Limited (ASX: FBU).

Allan Gray managing director and chief investment officer, Simon Mawhinney says Fletcher Building is trading “at a discount to fair value”:

Most investors shy away from buying companies that are likely to exhibit a decline in earnings in the short term, regardless of the price at which the company trades. This creates the opportunity for us to
invest in companies at a discount to fair value. Fletcher Building Limited is one such company.

Why is this ASX 200 share falling?

The Fletcher Building share price is down 0.7% to $4.38 in late afternoon trading on Friday. The ASX 200 share has fallen 37.4% in 2022 so far and 36.5% over the past 12 months.

Allan Gray analyst Sudhir Kissun says:

While we can’t be sure exactly why Fletcher Building’s share price has been falling for the past year, the prospect of a downturn in building activity is a likely explanation.

Even though it might be tempting to sit on the sidelines and wait for the cycle to hit rock bottom, it is important to remember that sharemarkets are forward looking.

Share prices usually hit the bottom well before the cycle is at its lowest. In the case of Fletcher Building, its share price may already factor in the impact of a modest economic downturn.

A ‘compelling opportunity’

Allan Gray outlines the case to buy this ASX 200 share in its September 2022 quarterly commentary.

Firstly, Kissun reckons the business metrics look good. By the way, these numbers are in New Zealand currency because Fletcher is headquartered in New Zealand.

Kissun explains:

With a share price at the time of writing in late-September of NZ$5.16 per share, Fletcher Building has a market value of NZ$4.0b. Added to its very manageable net debt of NZ$0.9b, its enterprise value is NZ$4.9b.

… we estimate that its lowest EBIT in the past 15 years was around NZ$420m (this is after adjusting for businesses that Fletcher Building has disposed of and therefore will not contribute to earnings in the future). The market is valuing the company at a little less than 12 times this depressed level of EBIT.

Not only is this meaningfully below the broader sharemarket multiple today, but it is also likely that earnings from this depressed level would grow significantly faster than the market (and therefore
warrant a higher multiple than the market).

In our experience, this type of situation, in which the market is offering us a company at a lower-than-market multiple of depressed earnings, has the makings of a compelling investment opportunity.

Is the Fletcher Building share price a buy?

Kissun says:

When we value cyclical companies, we try to gauge what the company might earn on average through the cycle, across good times and bad. We believe a sustainable mid-cycle EBIT for Fletcher Building should be in the region of NZ$600m, which is almost 30% below management’s guided EBIT for FY23 of NZ$820m.

Mid-cycle EBIT of NZ$600m would result in net earnings after interest and tax of approximately NZ$400m. It might not be unreasonable to ascribe a price-to-earnings (P/E) multiple of 16 times to these mid-cycle earnings, which would equate to a market value of NZ$6.4b or approximately NZ$8.15 per share. Compared to the share price of NZ$5.16, this represents potential upside of over 50%.

The Allan Gray Australia Equity Fund holds $61.7 million worth of Fletcher Building shares.

The ASX 200 share represents 3% of the fund’s value as at 30 September.

The post Too cheap to ignore this ASX 200 share with a ‘compelling’ valuation: fundie appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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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