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.

tIn the first quarter of the year, Warren Buffett and his company Berkshire Hathaway (NYSE: BRK-B) initiated a small stake in the digital consumer bank Ally Financial (NYSE: ALLY), which is also a big auto lender. In the second quarter of the year, Berkshire more than tripled its position in the stock, purchasing more than 21 million shares in the quarter. Now, Berkshire’s position in Ally amounts to 30 million shares valued at more than $1 billion, representing nearly 9% of the company. With Buffett and Berkshire buying heavily now, is Ally a buy? Let’s take a look.

Wall Street has grown bearish

Interestingly, Buffett is piling into Ally as the Street is growing more bearish. After a strong second-quarter earnings report, a number of analysts downgraded the stock on concerns regarding funding and credit quality.

Ally has been bolstered in recent years by a shortage of car inventory and elevated car pricing and interest rates, which have boosted financial results. Ally’s retail auto loan portfolio at the end of the second quarter reached more than $82 billion, up 8.4% on a year-over-year basis. As the Federal Reserve has hiked interest rates, margins have also expanded significantly.

This has helped Ally generate a core return on tangible common equity (ROTCE) of more than 23% in the second quarter, which is superb. Furthermore, management said on Ally’s second-quarter earnings call that they have been originating auto loans at an 8% yield in the third quarter while still maintaining their underwriting standards.

But analysts are worried about what will happen when car prices normalize, and how consumers will fare now that stimulus programs have winded down and economic conditions are more difficult. In the second quarter, Ally saw 30-day delinquencies in its retail auto portfolio jump by 0.50%. Also in the quarter, Ally started to see its deposit costs climb, which will keep climbing this year along with interest rates and could begin to cut into the bank’s margins.

Why is Buffett buying?

Let’s remember a few things when we talk about Buffett and Berkshire’s investing philosophy: They both like to invest on a long-term basis and they both know the car business quite well.

Berkshire first invested in General Motors (NYSE: GM) in 2012, although it actually trimmed its position in the company in the second quarter. Ally was a financing division of GM called the General Motors Acceptance Corporation up until 2006, when GM sold a controlling interest in the company. Eventually, General Motors Acceptance Corporation would apply for a bank charter and rebrand into Ally. 

Ally’s management team does seem prepared for the normalization of auto prices and said they have assumed that used car prices, which are up 60% since 2019, will come down by 30% from the end of 2021 and 2023. The bank is also reserving for future losses prudently when you consider it is still not seeing huge cracks in credit quality just yet.

In addition, Ally has also done a much better job of improving its funding base and relationship with customers. In 2018, only 64% of its funding base came from deposits. Now, more than 85% of its funding comes from deposits. Also, Ally now offers mortgages, credit cards, point-of-sale lending, and wealth management, all of which can help create better relationships with consumers and hopefully lead to more primary banking relationships and a higher-quality deposit base. Ally’s deposit costs are still fairly high compared to other large banks, but it seems like the company has really improved this aspect of the business and can continue to do so.

Finally, Ally believes its returns are going to continue to be higher post-pandemic. Prior to the pandemic, the company would at best generate a 12% ROTCE. Now, management has guided for a 16% to 18% ROTCE in 2022 and on a medium-term time horizon.

A value play for Buffett

Buffett and Berkshire have long been value investors, and Ally gives them the opportunity to purchase an asset that they believe is trading for less than its fair value. Ally currently trades at about 105% to its tangible book value or net worth, and at about five times forward earnings.

Companies generating and guiding for the kind of returns that Ally is would normally trade at a much higher valuation, so the market is clearly skeptical of how sustainable the returns are. But Buffett and Berkshire clearly like the risk-reward setup here, which I think is favorable considering Ally’s low valuation. Ally also pays an annual dividend yield in excess of 3% and buys back a lot of stock, two other things Berkshire and Buffett find attractive. Overall, I agree with Buffett and Berkshire and do think Ally is a buy at these levels.

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

The post Warren Buffett more than tripled his position in this stock. Is it a buy? appeared first on The Motley Fool Australia.

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Ally is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz 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 Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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A number of ASX shares are exposed to the work-from-home phenomenon.

For businesses that own the offices and toll roads, it’s a tricky proposition.

Does a company need to rent an office space if everyone works from home? If employees are coming to an office, will every employee get their own desk, or will it be a shared working environment?

There are interesting ramifications to consider. Let’s look at what might happen next.

A permanent shift?

According to reporting news.com.au, a survey of around 1,200 companies, conducted by the Australian HR Institute in July, found that just 4% of companies required employees to work in the office full-time.

The survey also revealed that 7% of organisations allowed employees to completely work from home while 34% didn’t have a set number of days required in the office but did encourage it. On average, 18% of employees work continuously from home.

However, a substantial portion of organisations have a hybrid model, with 46% of companies requiring employees to come into the office for at least two or three days a week. Some companies are reportedly trying to tempt people back into the office with enticements like free meals.

With such a large mindset change about working from home, it may not be surprising to learn that an office real estate investment trust (REIT) like Centuria Office REIT (ASX: COF) has been heavily hit. In fact, the ASX share is down 31% in 2022. However, rising interest rates could also be a factor here.

While each REIT’s office portfolio is made up of different assets, it could be worthwhile to consider what was said in the Centuria Office REIT’s FY22 result.

It said it’s expecting its funds from operations (FFO) – the net rental profit – to drop 13%. Its portfolio occupancy increased to 94.7% and the weighted average lease expiry (WALE) was maintained at 4.2 years. However, management said it was optimistic about the future.

Fund manager and Centuria’s head of office Grant Nichols said:

During FY22, we witnessed a continuous shift in tenant preferences towards better quality accommodation that is close to key transport nodes, providing better commutability and subsequently improved work-life flexibility. Centuria Office Fund’s young office portfolio lends itself to these leasing preferences, with its modern and sustainable office buildings providing better access to wellbeing amenity, retail and hospitality while offering affordable rents. Australia’s strong employment rate and rising return to corporate policies, provide encouraging tailwinds for tenant demand in FY23.

The REIT pointed to its tenant base of predominately government and major tenants.

There are plenty of other ASX shares that have exposure to office buildings either through ownership or management of them, including Cromwell Property Group (ASX: CMW), Dexus Industria REIT (ASX: DXI), DEXUS Property Group (ASX: DXS), and Centuria Capital Group (ASX: CNI). Collectively, they have seen large falls in 2022.

It’s not all negative

However, as mentioned, many businesses still want their employees to come into the office some of the time.

JLL’s global Future of Work Survey found that 72% of decision-makers believe the office is “critical to doing business”. But it was also recognised that flexible working spaces could be key to attracting and retaining talent. Offices can still be that place, just in a different format.

‘Culture’ could be another substantial factor. According to Gartner vice president of research and advisory Aaron McEwan, leaders want to “keep a tight grip in culture in a hybrid environment”. He said:

Leaders aren’t asking me about productivity, interestingly enough, because every measure we get is showing us that productivity and performance have been [steady] – it’s starting to decline a little bit now, but there are different reasons for that. But everyone is petrified they’re going to lose their culture.

It’s this panic, particularly from our CEOs and board of directors, which is forcing a whole bunch of people to come back into the office, when they don’t want to.

McEwan suggested that culture could simply evolve.

Roads are already back to full volume?

One of the other ASX shares that generate substantial earnings from people commuting is Transurban Group (ASX: TCL).

It said in the fourth quarter of FY22, traffic reached a new high and exceeded pre-pandemic levels, driven by new asset capacity and increased mobility and travel. The company also said it was benefiting from inflation-linked toll escalations.

While office workers going into the office is one factor, Transurban pointed out that more people are using private transport to get around cities. As well, people are increasingly using roads to get to airports again.

According to an external survey by Transurban, at the end of FY22, “most people travelled at least three days a week on average to their workplace or place of study”.

The post Work from home appears here to stay. Which ASX shares could be impacted? appeared first on The Motley Fool Australia.

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• Unemployment falls, oil rises, and we’re back on the roads. Scott Phillips on Nine’s Late News
• Everything you need to know about the latest Transurban dividend
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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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If you’re interested in adding some ASX 200 shares to your portfolio this week, then the three listed below could be worth considering.

These ASX 200 shares have all been named as buys recently. Here’s what you need to know about them:

Cochlear Limited (ASX: COH)

The first ASX 200 share to look at is Cochlear. It is one of the world’s leading hearing solutions companies with a portfolio of industry-leading cochlear implant devices.

Goldman Sachs is a fan of Cochlear. In response to its recent full year results, the broker reiterated its buy rating with an improved price target of $247.00. Goldman believes that Cochlear will grow its net profit by “a +10% CAGR from FY22-25E.”

Goodman Group (ASX: GMG)

Another ASX 200 share that could be a top option for investors is Goodman Group. It is one of the world’s leading integrated commercial and industrial property companies.

Goodman has been growing at a strong rate for years thanks to its expertly constructed portfolio that gives it exposure to key growth markets such as ecommerce and logistics.

The team at Citi is bullish on Goodman and expects its strong growth to continue. The broker recently commented: “We revise medium-term earnings higher and see upside to FY23 guidance of 90.3c (11% EPS growth) driven by (1) another strong year of development earnings growth, (2) continued rise in management and investment income driven by high asset values and recent development completions.”

Citi has a buy rating and $23.50 price target on the company’s shares.

ResMed Inc. (ASX: RMD)

A final ASX 200 share to look at is ResMed. It is another industry leader, this time in the sleep treatment market.

Like the others, the company has been growing at a strong rate for years and has been tipped to continue doing so for the foreseeable future.

Morgans is a fan of ResMed. It believes there is “a multi-year opportunity for RMD to growth at or above market and solidify its market leadership position.” The broker has an add rating and $37.08 price target on its shares.

The post 3 buy-rated ASX 200 shares that analysts love appeared first on The Motley Fool Australia.

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

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The Pilbara Minerals Ltd (ASX: PLS) share price has gained 21.5% over the last month, and tomorrow could bring more significant movement.

The S&P/ASX 200 Index (ASX: XJO) lithium company is gearing up to drop its full-year results on Tuesday.

Does that mean now is a good time to snap up the company’s stock prior to its annual release? Let’s take a look at what experts are tipping for the stock’s future.

Pilbara Minerals shares last traded at $3.05 each.

What does the future hold for the Pilbara Minerals share price?

Tomorrow is set to be a particularly exciting day for ASX 200 lithium fans as one of the market’s favourite miners is expected to issue its full-year results.

While the Pilbara Minerals share price fell nearly 4% on the release of its financial year 2021 earnings, it has gained 37% since.

And TMS Capital’s Henry Jennings believes it could be in prime position to keep growing.

The fundie told Livewire he believes the Pilbara Minerals share price will soar if recession risks fade.

Jennings believes that, if current uncertainty dissipates, the push towards electric vehicles will light a fire under lithium stocks in general and Pilbara Minerals in particular.

And the fundie isn’t alone in the bull’s corner. Citi is also expecting big things from the ASX 200 lithium giant.

The broker has a ‘buy’ rating and a $3.60 price target on Pilbara Minerals’ shares, my Fool colleague James reports. That represents a potential 18% upside.

And while Citi’s financial year 2022 earnings expectations recently faltered, it’s still tipping big things for the future.

Indeed, it forecasts the company to pay its maiden dividend in financial year 2023. The broker expects the company to pay out 29 cents per share in dividends this fiscal year and 21 cents per share in financial year 2024.

The post Is the Pilbara Minerals share price a buy prior to the miner’s earnings release tomorrow? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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Over the past two months, the Xero Limited (ASX: XRO) share price has gone up by approximately 20%. That’s a quick rise considering the S&P/ASX 200 Index (ASX: XJO) has only gone up by 9%.

But, after this strong rise, is this ASX tech share an opportunity or has it gone too high to be worth buying?

Xero isn’t the only one that has been going up in recent weeks. The Altium Limited (ASX: ALU) share price has also gone up by around 20%. While the WiseTech Global Ltd (ASX: WTC) share price has soared 55% over the last two months.

There is plenty of attention on ASX growth shares, with investors watching how inflation and rising interest rates may affect their bottom lines and valuations.

Xero is one of the biggest ASX growth shares with a market capitalisation of $13.6 billion, according to the ASX. So, is it a big opportunity?

What’s the latest on the Xero share price?

The last price-sensitive bit of news out of the company came in May, it was the FY22 result.

But, last week, the company held its annual general meeting (AGM).

At that meeting, the company re-iterated its global aspirations and it sees “substantial opportunities for Xero’s growth in the US, Canada and the UK, as well as further growth” in its more established markets of Australia and New Zealand.

The optimistic outlook

Management is “optimistic” about Xero’s market opportunities with its pipeline. Xero said that cloud-based accounting is “fundamental to the success of small business”. There is also a trend for governments wanting businesses to go digital, partly so that they can “collect revenues faster”.

In FY22, Xero saw “continued top line momentum, double-digit subscriber growth and a further reduction of churn rates”.

Xero reported that in FY22, operating revenue increased 29% to $1.1 billion and total subscribers grew by 19% to 3.3 million. In FY22, its churn was around 0.9%, meaning it kept more than 99% of its subscribers. This was an improvement compared to FY21 when the churn rate was just over 1%.

One of the main things that I’ve noted about Xero in recent months is that it is increasing prices for subscribers in Australia, New Zealand and the United Kingdom. This should help average revenue per user (ARPU), annualised monthly recurring revenue (AMRR), and hopefully the gross profit margin as well.

Is the Xero share price a buy?

While Xero shares have risen, they are still down by almost 40% for 2022.

I think it looks much better value now than last year.

The company has plenty to like about it in my opinion, with numerous pleasing financial measures that I’ve already mentioned. The gross profit margin of 87.3% is very high and allows Xero to reinvest a lot of the new revenue it receives into more growth.

Even now, it’s certainly not cheap. However, it could easily make a lot of profit if it wanted to. The company is just choosing to reinvest its cash flow generated into more opportunities.

Xero chair David Thodey said to shareholders:

We are conscious that the market’s view of high growth companies has changed over the last six months. This revaluation has impacted us in a similar way to our peers. I trust that you can see from our results, the fundamentals for your company remain strong and we remain positive about the opportunities ahead.

I think the company has plenty of global growth ahead of it. And this is why I think the Xero share price is a long-term buy today.

The post Up 20% in 2 months, is the Xero share price a buy today? appeared first on The Motley Fool Australia.

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• ASX reporting season weekly wrap: Winners and losers

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. 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 S&P/ASX All Ordinaries Index (ASX: XAO), or All Ords, shares in this article are expected to pay large dividend yields in the medium term.

A business that is able to generate good profit and cash flow is able to fund dividends for shareholders — if it chooses to. If a business has a relatively high dividend payout ratio and a fairly low price/earnings (p/e) ratio, it could mean the dividend yield is high.

I like the idea of receiving a good amount of the annual return in the form of dividends. Getting cash in the bank is satisfying, particularly when one has to do so little work for it after the initial investment.

With that in mind, these are two All Ords ASX dividend shares that could pay large dividend yields in 2023:

GQG Partners Inc (ASX: GQG)

GQG Partners is one of the largest fund managers on the ASX with a market capitalisation of $4.7 billion.

It offers investors a number of different investment strategies including US shares, global shares, dividend shares, and so on.

The company recently announced its FY22 half-year result which showed that its average funds under management (FUM) increased 23%, net revenue increased 21.3% US$222.7 million, and net operating income went up 18.3% to US$174.2 million.

It aims to pay dividends that amount to 90% of its distributable earnings. In the first half of FY22, it generated US$133.3 million of distributable earnings.

GQG boasts that less than 3% of its revenue in the first half came from performance fees. It believes asset-based fees will be more stable in periods of market volatility.

The All Ords ASX dividend share had positive net inflows of US$6.3 billion over the half, despite a challenging market environment and continued industry outflows and overall negative market returns.

Looking at the expected dividend yield, according to CMC Markets, GQG is expected to pay an annual dividend of 12.5 cents per share. That translates into a potential forward dividend yield of 7.8% in FY23.

BHP Group Ltd (ASX: BHP)

BHP is one of the world’s biggest dividend payers and it’s also one of the largest global resource businesses.

It generates significant profit from its iron ore division, but there are other commodities in the portfolio that enable BHP to generate revenue including nickel, copper, and metallurgical coal (for making steel). The resources giant is also working on a potash (fertiliser) project in Canada called Jansen which is expected to have a long life and generate strong margins.

The All Ords ASX dividend share just unveiled its FY22 result which included a large final dividend payment. But, FY23 could be another bountiful year for dividends.

But how big could the dividend be? Let’s have a look at a couple of the estimates.

On CMC Markets, BHP is expected to pay an annual dividend of $3.18 per share. That translates into a grossed-up dividend yield of 10.9%. The broker Morgans is expecting a much larger dividend, translating into a possible FY23 grossed-up dividend yield of 13.6%.

The post Here are 2 All Ords ASX dividend shares with yields above 6% appeared first on The Motley Fool Australia.

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More reading

• ASX reporting season weekly wrap: Winners and losers
• Worried about the iron ore price? Why the need for it ‘ain’t going anywhere’: broker
• 3 ASX All Ordinaries shares cracking new highs on Friday
• Guess which ASX copper share has exploded 182% this week?
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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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August can be a really interesting month because it’s reporting season. It gives us the opportunity to look into how businesses have been performing over the last six or twelve months.

After seeing some numbers, it could mean that a few S&P/ASX 300 Index (ASX: XKO) shares are worth looking at.

Just because a business reports growth in its result doesn’t mean that investors will push the share price higher. Generally, it’s only when the result is a surprise that share prices move substantially (either higher or lower).

There is more to a result announcement than what has already happened. Businesses usually give comments about the new financial period as well. Having looked at their results, I’m feeling positive about the outlook for these two ASX 300 shares:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is a retailer with large format stores that sell lots of things that a baby or toddler might need such as clothes, furniture, prams, car seats, and so on.

I thought the company’s FY22 result was solid, with sales growth of 8.3% to $507.3 million and statutory net profit after tax (NPAT) growth of 14.6% to $19.5 million. It also grew the full-year dividend by 10.6% to 15.6 cents per share.

During the year, the company opened four new stores. It’s now planning to open 110 stores in Australia (previously the plan was 100 stores), as well as more than 10 stores in New Zealand.

The ASX 300 share is also working on establishing a Baby Bunting marketplace that will facilitate ‘first party’ drop ship sales and the sale of third-party products. The marketplace is expected to launch in the second half of FY23.

A growing store network, rising sales, and rising profit margins offer an attractive outlook in my opinion. The company is expecting to open at least six new stores in Australia in FY23 as well as a second store in New Zealand. Although comparing against a lockdown period, the company was able to say that total sales had grown by 19.3% in FY23 to date to 10 August 2022.

According to the broker Macquarie, the Baby Bunting share price is valued at 20 times FY23’s estimated earnings after an 18% fall in 2022.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is a leading online retailer of furniture and homewares. It also recently launched ‘The Build’, an onlin site specifically for renovation projects. The plan here is for it to be a leading seller of home improvement products to Aussies.

The company has seen an enormous uplift in sales since the start of the COVID-19 pandemic. FY22 revenue was $426.3 million – up 31% compared to FY21 and up 142% compared to FY20. It managed to achieve an earnings before interest, tax, depreciation, and amortisation (EBITDA) margin of 3.8% despite a $1.7 million investment in The Build.

An increase in profitability looks like a good development to me. Management expects the FY23 EBITDA margin to be between 3% to 5%. Inventory levels in FY23 are “strong” and all metrics are in line, or better than, internal targets.

While August trading showed sales were down 17% year on year, they were ahead of internal estimates.  As well, “month-to-month seasonality suggests a return to double-digit growth during FY23” once sales have finished being compared against lockdown figures from the year before.

I like the bullish and optimistic sentiment of the company when it said:

We remain committed to our profitable growth strategy. We’re confident we have the people, platforms, brand and business model to achieve our goal of becoming Australia’s largest retailer of furniture and homewares.

The Temple & Webster share price has zoomed higher over the past month. But, since the beginning of 2022, it has plunged over 50%, so I think it looks much better value.

The post After seeing their reports, I think these 2 ASX 300 shares are buys appeared first on The Motley Fool Australia.

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• ASX reporting season weekly wrap: Winners and losers
• Could these devastated ASX shares make a roaring comeback?
• Are the stores themselves on sale?
• Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years
• Adore Beauty share price slips 12% following ASX speeding ticket

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 positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Baby Bunting and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Using exchange-traded funds (ETFs) can be a really good way to build wealth if investors aren’t sure about which companies to buy into.

How they can help

Investing in an ETF can allow investors to buy a wide range of businesses in one go. That’s useful for diversification.

Some allow investors to get exposure to a whole index like the S&P/ASX 300 Index (ASX: XKO), whereas others might be able to give investors access to a specific sector like Betashares Global Cybersecurity ETF (ASX: HACK) and VanEck Video Gaming and Esports ETF (ASX: ESPO).

There are two ETFs I’m going to write about in this article: one focused on ASX shares and one focused on quality US shares. I think they can work well together.

Vanguard Australian Shares Index ETF (ASX: VAS)

I think this is one of the easiest ways to invest in ASX shares because it gives investors the ability to invest in the ASX 300, which is 300 of the biggest businesses on the ASX.

It can be tricky to know which particular ASX shares to invest in, but the VAS ETF means you can buy a small piece of them all.

However, it’s worth pointing out that the biggest businesses have the most significant allocations in the VAS portfolio. Thus, the bigger the position in the portfolio, the more influence it has on the ETF’s returns.

That means names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), Woodside Energy Group Ltd (ASX: WDS), Wesfarmers Ltd (ASX: WES), and Woolworths Group Ltd (ASX: WOW) have a significant influence on the VAS ETF.

It also owns names like Australian Finance Group Ltd (ASX: AFG), Adairs Ltd (ASX: ADH), and Temple & Webster Group Ltd (ASX: TPW). However, these are some of the portfolio’s smallest positions.

While it offers some diversification, it is quite focused on financials and materials. In fact, those two sectors make up just over half of the entire portfolio.

The VAS ETF has an annual management fee of just 0.10%.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This ETF is quite different. It’s put together by a team of analysts at the research house Morningstar.

VanEck says the idea behind this ETF is that it “gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages”. This can also be called an economic moat. It’s one way of measuring the quality of the business.

Business strengths can come in different forms including brand power, intellectual property, cost advantages, and so on.

The Morningstar team have judged the businesses in the portfolio as having competitive advantages that are very likely to endure for at least a decade and, perhaps, for two decades. Names are only added to the portfolio if they are at “attractive prices relative to Morningstar’s estimate of fair value”.

On 17 August 2022, the biggest positions (out of 50) were: Kellogg, Veeva Systems, Polaris, Gilead Sciences, Blackrock, Ecolab, Etsy, Biogen, Boeing, Amazon.com, Microsoft, and MercadoLibre.

While past performance is not a guarantee of future results, over the past five years the MOAT ETF has produced an average return per annum of 16.4%, outperforming the S&P 500’s return of an average of 15.3% per annum.

The post 2 ETFs I think would make good additions to most portfolios appeared first on The Motley Fool Australia.

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More reading

• Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years
• 3 top ETFs for ASX investors to buy next week
• Top ASX dividend shares to buy in August 2022
• Is the VAS ETF providing a bigger dividend yield than other ASX 200 index funds?
• 3 ETFs for smart ASX investors in August

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended ADAIRS FPO, Amazon, BETA CYBER ETF UNITS, CSL Ltd., Etsy, Gilead Sciences, MercadoLibre, Microsoft, and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, BETA CYBER ETF UNITS, and Wesfarmers Limited. The Motley Fool Australia has recommended Amazon, Macquarie Group Limited, Temple & Webster Group Ltd, VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF, VanEck Vectors Morningstar Wide Moat ETF, and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One broker has had some optimistic words to say about one particular sector. The brokerage outfit Saxo has suggested that S&P/ASX 200 Index (ASX: XJO) energy shares may have many years of strong profit generation to go. There are some non-ASX 200 shares that are also benefiting.

One of the main global impacts of Russia’s invasion of Ukraine has been the significant increase in energy prices. Before 2022, Russia was one of the main global exporters of commodities like coal, gas, and oil.

With Western nations avoiding Russian commodities where possible, it has pushed up the demand and price for non-Russian resources.

Australian coal producers are seeing coal prices jump. However, some investors may be wondering whether the strength for energy prices will have a short life.

Energy prices could stay stronger for longer

Saxo Bank’s head of direct sales David Harvie said:

Thematically and systemically, the greenification of our globe has a long way to go. It’s probably got decades to go. Or at least the foreseeable future, until our energy requirements are satisfied in what you could argue is an ESG way, and or greener way, and or a lack of fossil fuel inputs way. And we’ve been saying that as a house pre-Ukraine. We’ve been saying that as a house, pre-inflation.

We don’t think it’s going anywhere. It’s only been exacerbated by Ukraine. It will only be exacerbated by a very cold winter in Deutschland and all the other places up there. So, I think if I were an investor, it would be an area I’d be looking at.

There have been some big gains with ASX 200 energy shares, including coal producers.

For example, since the beginning of 2022, the New Hope Corporation Limited (ASX: NHC) share price has gone up 112%. The Whitehaven Coal Ltd (ASX: WHC) share price has risen by 167%.

As reported by my colleague Aaron Teboneras, another factor helping coal could be the recent International Energy Agency report which anticipates that “global coal demand will return to its all-time high this year. This is being driven by higher natural gas prices, which have intensified gas-to-coal switching in many countries”.

Whitehaven expects big profit

Whitehaven recently pointed out that coal prices set a new record during the quarter for the three months to June 2022 and “continue to be well supported”. Whitehaven is expecting to report FY22 earnings before interest, tax, depreciation, and amortisation (EBITDA) of $3 billion, up from $0.2 billion in FY21.

The broker Macquarie cautions that the strength of the coal price will determine how well (or not) Whitehaven can do. It’s expecting Whitehaven’s dividend yield to be 6.8% in FY22 and 11.5% in FY23. That’s despite the huge gain of the Whitehaven share price.

The post Why ASX 200 energy shares could still have decades of prosperity ahead: broker appeared first on The Motley Fool Australia.

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• Earnings preview: Here are 3 ASX 200 shares reporting this week
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• 2 years on, how close is the Flight Centre share price to its pre-COVID levels?
• ASX reporting season weekly wrap: Winners and losers
• 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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The Pro Medicus Limited (ASX: PME) share price was a positive performer last week.

In response to the health imaging technology company’s full year results, it shares recorded a weekly gain of 4.2%.

Can the Pro Medicus share price keep climbing?

One leading broker still sees value in the Pro Medicus share price at the current level.

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on the company’s shares to $58.18.

Based on the current Pro Medicus share price of $54.17, this suggests potential upside of 7.4% for investors over the next 12 months.

What did the broker say?

Morgans was impressed with Pro Medicus’ full year results and particularly its margins. Thanks to further operating leverage, the latter came in well-ahead of expectations. It commented:

PME recorded another year of strong growth across all metrics with the key highlight being further EBIT margin expansion to 67% (+400 bps on the pcp) well above expectations, highlighting the operating leverage of the business.

The broker also highlights that the company’s outlook remains as bright as ever. It said:

Outlook remains as strong as ever, highlighted by an increasing number of requests for tender proposals and more renewals from existing customers. The five-year forward contract value is up 31% to A$420m.

And while Morgans acknowledges that the Pro Medicus share price is not cheap at current levels, it believes the company’s quality and outlook justifies this.

It’s an impressive story, and one which we view with longevity. While currently fairly priced, we continue to view this as a strong long-term growth story which will continue to grow into its high multiple. Buyers on any weakness – it’s typically shortlived.

The post Pro Medicus share price tipped to rise amid ‘strong long-term growth story’ appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy today
• Pro Medicus share price fails to fly on 44% profit leap
• 5 things to watch on the ASX 200 on Thursday

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

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