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Brokers name 3 ASX shares to buy today
It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

AGL Energy Limited (ASX: AGL)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this energy company’s shares to $8.81. This follows news that the company will exit coal 10 years ahead of previous plans. Morgans is positive on the move, particularly given its belief that inflexible brown coal plants will struggle as more variable renewables enter the grid. Outside this, the broker has lifted its earnings estimates for FY 2024 onwards due to the continued strength of futures prices. The AGL share price is trading at $6.81 on Friday.

APM Human Services International Ltd (ASX: APM)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $4.20 price target on this health and human services provider’s shares. Goldman notes that APM has signed an agreement to acquire Equus Workforce Solutions for US$153 million. The broker highlights that the deal will increase its North American footprint. In addition, Goldman reiterates its belief that the market is under appreciating APM’s ability to generate durable earnings growth. The APM share price is fetching $3.33 this afternoon.

Telstra Corporation Ltd (ASX: TLS)

Analysts at Morgan Stanley have retained their overweight rating and $4.62 price target on this telco giant’s shares. According to the note, the broker believes that Telstra could be a big winner from the Optus hack. It suspects that mobile customers could switch to Telstra in the coming years because of the scandal. The Telstra share price is trading at $3.86 on Friday afternoon.

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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 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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30 September 2022
ASX 200 dividend shares suffer September sell-off
There were plenty of S&P/ASX 200 Index (ASX: XJO) dividend shares that had a painful month in September.

The ASX 200 as a whole dropped around 7%.

Share markets have been suffering in 2022 as investors get to grips with higher inflation and how central banks are going to handle the situation.

The latest move by the US Federal Reserve was to increase the interest rate by another 0.75%. Considering the US dollar has a global influence, the rapid changes in the US interest rate can have major ramifications.

In Australia, the last move by the Reserve Bank of Australia (RBA) was an increase of 50 basis points. The next move (which is announced next Tuesday) could be another 50 basis point rise.

Higher interest rates are meant to lower asset valuations, in theory. That’s because they act like gravity, pulling down on the asset price.

Some ASX 200 dividend share investors may have been hoping that central banks would start to slow down the increases. But that hasn’t happened.

US Fed commits to bringing down inflation

As reported by my colleague Bernd Struben, US Fed chair Jerome Powell said:

We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t. Higher interest rates, slower growth and a softening labour market are all painful for the public that we serve. But they’re not as painful as failing to restore price stability and having to come back and do it down the road again.

That suggests that US interest rates will keep increasing until inflation has been brought under control.

How have ASX 200 dividend shares reacted in September?

ASX 200 bank shares certainly saw their share of red during the month. The Commonwealth Bank of Australia (ASX: CBA) share price fell around 6%, the Westpac Banking Corp (ASX: WBC) share price dropped 3.5% and the National Australia Bank Ltd (ASX: NAB) share price declined 5%. Interestingly, the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price managed a rise of around 1%.

Some of the big-yielding resource shares also saw a drop. The BHP Group Ltd (ASX: BHP) share price fell around 4% and the Fortescue Metals Group Limited (ASX: FMG) share price dropped 8%. However, the Rio Tinto Limited (ASX: RIO) share price only dropped 0.2%.

Telecommunications giant Telstra Corporation Ltd (ASX: TLS) saw its share price fall by around 2.5%.

Looking at some other names, the Wesfarmers Ltd (ASX: WES) share price dropped 8%, the Woodside Energy Group Ltd (ASX: WDS) share price fell 7%, the Macquarie Group Ltd (ASX: MQG) share price fell 13% and the Transurban Group (ASX: TCL) share price fell by 8%.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. 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 and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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30 September 2022
Stock market bottom: are we there yet?
Australian markets continue their descent in today’s session, with all but the materials sector in the red this afternoon.

The benchmark S&P/ASX 200 Index (ASX: XJO) is down 72 basis points on the day at 6,507, whereas the high-flying S&P/ASX 200 Energy Index (ASX: XEJ) is flat.

Meanwhile, Australian inflation data this week showed the consumer price index increased 6.8% from July–August, as Brent Crude oil declines 8% over the month to date.

Where are we now?

Let’s step back a bit. As seen in the chart below, all of the ASX sectors, except utilities, have shown an overall uptrend since March 2020 – the onset of COVID-19.

It’s a busy chart, granted, but the benchmark index is seen with the black line. As of today’s trade, we are now trading below pre-pandemic highs.

Essentially all of the stock market gains brought on by the speculative mania over the past two-and-half years have been erased.

Fast forward to today and things are very different.

The market peaked in August 2021, and has been on a descent into chaos ever since. As seen in the chart below, the ASX 200 index has a mountain to climb to its former highs.

This year to date, energy remains the only sector in the green, with technology – the former darling child of the ASX – booking substantial losses from its former highs.

“We are in deep trouble”

It’s not often you hear a legendary investor speak with such a negative tone about the markets. However, that’s the posture Stanley Druckenmiller held recently at the CNBC Delivering Alpha Summit this week.

The fund manager, who has an impeccable track record, said his firm sees a sharp downturn, leading to a hard economic landing in 2023.

“Our central case is a hard landing by the end of [FY23]…I will be stunned if we don’t have a recession by FY23,” he said, cited by CNBC.

Speculative mania has driven much of the wild upswings in global share markets over the past two years, creating a bubble in financial assets, Druckenmiller says.

But times are changing.

“All those factors that cause a bull market, they’re not only stopping, they’re reversing – every one of them,” he added.

“We are in deep trouble.”

David Rubenstein, co-founder of Carlyle Group, was a little more upbeat at the summit. He said that investors “shouldn’t be afraid” of buying into the stock market weakness.

However, Rubenstein also warned that investors should avoid trying to find a market bottom.

“It’s a fool’s errand to find the bottom in the market or the top in the market…trying to wait to the absolute bottom is probably a mistake, in my view.”

In reality, there’s too many moving parts to even try and predict a market bottom right now. In the meantime, the downward spiral continues for the benchmark index, as seen below.

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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 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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30 September 2022
NAB share price best of the ASX 200 banks on Friday
The National Australia Bank Ltd (ASX: NAB) share price is outperforming all its S&P/ASX 200 Index (ASX: XJO) peers on Friday despite trading in the red.

Stock in the big four bank has slipped 0.72% at the time of writing to trade at $29.06.

That leaves it in a better position than both the ASX 200 and the S&P/ASX 200 Financials Index (ASX: XFJ). They’ve fallen 0.79% and 1.48% respectively at the time of writing.

Let’s take a closer look at how the NAB share price is performing compared to other ASX 200 bank stocks today.

NAB share price leads the pack on Friday

The NAB share price is down just 0.7% on Friday afternoon, making it the best performing ASX 200 bank.

Coming in second best is the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price, with a 1.16% fall that sees it trading at $23.10.

Meanwhile, stock in Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have dumped 1.74% and 1.23% respectively.

The CBA share price is $91.50 right now while that of Westpac is $20.86.

Looking to the ASX 200’s smaller banks, the Bank of Queensland Limited (ASX: BOQ) share price is down 1.13% at $6.555 right now. Finally, that of Bendigo and Adelaide Bank Ltd (ASX: BEN) has slipped 1.82% to $7.815.

As can be seen, the CBA share price is coming in worst dressed on Friday. That’s despite the bank announcing the Australian Prudential Regulation Authority (APRA) has removed a $500 million capital add-on.

The sector might also be suffering amid expectations the Reserve Bank of Australia could hike interest rates by 0.5% next week.

Westpac chief economist Bill Evans confirmed the forecasted hike, which would bring the benchmark cash rate to 2.85%, earlier this week.

Rising rates can be both a burden and a relief for banks, allowing them to increase net interest margins (NIM) while also increasing risks facing their loan books.

The NAB share price has outperformed the market over the last month, falling 5% to the ASX 200’s 7% tumble.

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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 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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30 September 2022
Here are the big ASX lithium share winners and losers on Friday
ASX lithium shares are putting in a mixed performance today.

While a few lithium stocks are smashing the 1.2% loss posted by the All Ordinaries Index (ASX: XAO) on Friday afternoon, others are significantly trailing the benchmark index.

This comes as lithium prices remain near record highs amid strong global demand for electric vehicle and grid storage batteries.

We’ll kick off with today’s two worst-performing ASX lithium shares.

ASX lithium shares in the red

The leading loss maker today is Nova Minerals Ltd (ASX: NVA). The small-cap explorer is focused on both gold and lithium, with a 37% stake in the Snow Lake Lithium Project in Manitoba, Canada. The Nova Minerals share price is down 8.7% today and down 47% in 2022.

Also losing ground today is Global Lithium Resources Ltd (ASX: GL1). The emerging lithium exploration company is primarily focused on the Marble Bar Lithium Project, located in Western Australia. The Global Lithium share price is down 7% today but remains up 87% year-to-date.

With the two leading loss makers covered, here are the top two ASX lithium shares today.

Charging higher

The broader selling pressure hitting the market today hasn’t impacted investor appetite for today’s second-best performer, Prospect Resources Ltd (ASX: PSC). The battery minerals explorer share price is up 4.8% at the time of writing.

And the best performing ASX lithium share today is Aurora Energy Metals Ltd (ASX: 1AE). The United States-focused uranium and lithium explorer commenced trading on the ASX on 18 May this year with a focus on its Aurora Energy Metals Project in Oregon. The Aurora Energy share price is up 9.3% today.

As for the top name ASX lithium shares?

Rounding off the list with some of the biggest lithium stocks, the Core Lithium Ltd (ASX: CXO) share price is frozen today after the company requested a trading halt pending an announcement regarding the launch of its $100 million capital raise.

Meanwhile, the Pilbara Minerals Ltd (ASX: PLS) share price is down 2.4% and Allkem Ltd (ASX: AKE) shares are down 2.8%.

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

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30 September 2022
Could Westpac shares be in for another massive buyback?
The past two years have produced tremendous growth in company earnings, leaving many names with surplus capital on the balance sheet.

As a result, there’s been a significant number of share buybacks announced by ASX-listed companies in 2022.

Whereas dividends typically steal the show, buybacks are making the rounds again as an alternative means of returning capital to shareholders.

Banks to increase pace of buybacks

Analysts at investment bank Citi reckon that ASX-listed banks are set to increase the pace of buybacks over the coming 12–24 months.

The broker said that banks would take some time to respond to the newly-implemented Basel III reforms that govern capital management in the banking sector.

As a result, banks are on the “cusp of the cycle” where the regulatory body APRA “thought we were two years ago”.

“[C]onsensus is forecasting large bad debts, risk weight-intensive business credit is on a tear, and rates continue to drive [risk],” the broker said, adding:

We think that some of this capital ‘disappearance’ reverts, and there is a possibility of further buybacks in 2024 once some of the noise diminishes.

Where does Westpac sit?

With that, Citi said that Westpac was positioned best amongst the ASX banks to complete a buyback, and noted CBA’s soon-to-be-completed $1.5 billion share repurchase program.

Meanwhile, Refinitiv Eikon data shows five out of 14 analysts recommend Westpac as a buy right now, with seven rating it a hold and another two analysts urging clients to sell.

The consensus price target is $24.35 from this list, indicating a deal of upside to be recognised if the number proves correct.

In its last financial report, Westpac had a dividend coverage ratio of 153%, whereas debt made up 70% of the bank’s total capital base. It has more than sufficient cash flow from operations and cash on the balance sheet to meet the demands of a share buyback.

Westpac also trades on a price-to-earnings (P/E) ratio of 15.3x and a trailing dividend yield of 5.75%. This is on earnings per share (EPS) of $1.37 and a trailing earnings yield of 6.51%.

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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 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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30 September 2022
Why AGL, Northern Star, Qualitas, and Rio Tinto shares are pushing higher today
The S&P/ASX 200 Index (ASX: XJO) is out of form on Friday and on course to end the week deep in the red. In afternoon trade, the benchmark index is down 1.2% to 6,476.9 points.

Four ASX shares that have not let that stop them from pushing higher today are listed below. Here’s why they are rising:

AGL Energy Limited (ASX: AGL)

The AGL share price is up 3% to $6.80. This appears to have been driven partly by a broker note out of Credit Suisse this morning. According to the note, the broker has upgraded the energy company’s shares to an outperform rating with an $8.20 price target. This follows news that AGL plans to exit from coal 10 years ahead of its previous target.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price is up over 3% to $7.74. Investors have been buying gold miners today despite the gold price only rising very modestly during Asian trade. This has led to the S&P/ASX All Ordinaries Gold index rising 2.5% today. Demand for safe haven assets could be boosting Northern Star and its peers.

Qualitas Ltd (ASX: QAL)

The Qualitas share price is up 6.5% to $2.30. This morning this alternative real estate investment manager revealed that it has secured a new capital commitment from a global institutional investor to invest $440 million in the Qualitas Construction Debt Fund II. Including the recent Abu Dhabi Investment Authority investment, Qualitas has now raised a total of $1.19 billion in new capital in the first three months of FY 2023.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price is up 2.5% to $93.25. This could have been driven by news that the mining giant has started producing spodumene concentrate at a demonstration plant in its Rio Tinto Iron and Titanium facility in Quebec. Spodumene is a mineral used in the production of lithium for batteries.

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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 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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30 September 2022
Why Block, Nick Scali, Piedmont Lithium, and Premier Investments are sinking today
In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week deep in the red. At the time of writing, the benchmark index is down 1% to 6,487.5 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Block Inc (ASX: SQ2)

The Block share price is down 4% to $85.15. This follows a very poor night of trade for the payments company’s NYSE-listed shares. Investors were selling Block’s shares amid another major tech selloff. This has rubbed off on the local tech sector and sent the S&P/ASX All Technology Index down 2.5% this afternoon.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price is down over 6% to $9.25. A good portion of this decline is attributable to the furniture retailer’s shares trading ex-dividend for its latest dividend payment this morning. Eligible shareholders can now look forward to receiving Nick Scali’s fully franked final dividend of 35 cents per share on 24 October.

Piedmont Lithium Inc (ASX: PLL)

The Piedmont Lithium share price is down 5.5% to 84 cents. This follows broad market weakness which is being felt hardest among riskier assets such as lithium shares. This has led to the Global X Battery Tech & Lithium ETF falling a sizeable 3.5% this afternoon.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is down 4% to $22.75. This morning analysts at Citi downgraded the retail conglomerate’s shares to a neutral rating with a $25.30 price target. While Citi was pleased with Premier Investments’ full year results, it downgraded its shares on valuation grounds following some strong gains.

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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 Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has recommended Premier Investments 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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30 September 2022
Bumpy times ahead, but with retail investors throwing in the towel, history says this is a good time to buy shares
1) Overnight on Wall Street, US stocks fell to their lowest level in 22 months, hit by a quadruple whammy of high inflation, rising interest rates, turmoil in bond markets and earnings downgrades.

Quoted on Bloomberg, Shawn Snyder, head of investment strategy at Citi US Wealth Management said “the market is now coming to terms with the idea that a recession is almost a given at this point and it’s really making adjustments for that.”

A recession would inevitably lead to earnings downgrades, seen by some as being the cause of the next leg down in global stock markets. Others might think the risks are already priced into many stocks, given the S&P 500 Index (SP: .INX) has fallen 24% so far this year, with the NASDAQ-100 Index (NASDAQ: NDX) down 32% year to date.

2) Speaking of earnings downgrades, Apple (Nasdaq: AAPL) shares fell almost 5% after an analyst downgrade from Bank of America warning of weaker consumer demand for its popular devices.

According to Bloomberg, “people familiar with the matter” said Apple has told suppliers to pull back from efforts to increase assembly of the iPhone 14 product family by as many as 6 million units in the second half of this year.

The Apple share price has now fallen almost 22% so far in 2022.

Apple shares trade on a forecast price-to-earnings ratio (P/E) of 22 times, according to data from S&P Capital IQ, the equivalent of an earnings yield of 4.5%. When interest rates were effectively zero, such an earnings yield looked attractive; much less so today with the 5-year US treasury yield now at 4%.

Whilst retirees and other income-chasing investors might finally be able to earn some sort of return on their cash, they are paying for the privilege with falling stock prices.

3) Unlike the US, here in Australia we have stocks that trade on attractive dividend yields, even more so for those paying fully franked dividends.

Just like the US, however, the earnings risk for Australian stocks is elevated as we too deal with rising inflation and RBA interest rate hikes.

The retirees favourite – Australian bank stocks – are facing headwinds including higher deposit costs, more expensive wholesale funding, a weaker housing market and slowing economy.

Those risks are probably not yet reflected in the Commonwealth Bank of Australia (ASX: CBA) share price, trading on a P/E ratio of 17 times and a fully franked dividend yield of 4.2%. CBA shares have fallen 7% since reporting results in August. They looked downright expensive then, and still look pricey today.

4) So where is the value in Australian shares today? I’d suggest not obviously amongst the S&P/ASX 200 (ASX: XJO) blue chips.

BHP Group Ltd (ASX: BHP) shares look incredibly cheap, both from a yield and P/E perspective, but you’d be buying them at the top of the cycle.

Telstra Corporation Ltd (ASX: TLS) shares trade on a decent 4.7% fully franked dividend yield, but they are expensive on a P/E basis at 27 times earnings.

Wesfarmers Ltd (ASX: WES) are closer to fair value, trading on a 4.2% fully franked dividend yield and 21 times earnings.

Looking at companies further down the ASX 200 market cap brings us to JB Hi-Fi Limited (ASX: JBH) shares, trading on a trailing fully franked dividend yield of 8.3% and a trailing P/E of just 9 times earnings.

JB Hi-Fi shares look cheap as chips, not withstanding it too faces headwinds in terms of a slowing economy as higher interest rates start to bite on discretionary spending.

5) All eyes will be on the RBA next Tuesday, with markets pricing in a 76% chance of a 50 basis point increase in interest rates, taking the RBA cash rate to 2.85%.

Morgan Stanley recently increased its peak cash rate prediction from 3.1% to 3.6%, saying “domestic inflation pressures will require a larger demand contraction to come under control,” according to the AFR.

The good news is that, after Tuesday, most of the RBA’s heavy lifting will already be done, having moved the cash rate up from just 0.1% in April in some of the fastest tightening on record.

The bad news is still ahead as low fixed rate mortgages start to roll off, replaced by standard variable home loans at around 6.5%, and increasing, no doubt putting the brakes on consumer spending. No wonder many retail stocks, like JB Hi-Fi and Super Retail Group Ltd (ASX: SUL) are trading on cheap multiples.

6) Somewhat stating the obvious, former US Treasury secretary Lawrence Summers said in an interview quoted in the AFR, “we’re living through a period of elevated risk.”

Still, with reports of retail investors now finally throwing in the towel, buying stocks in uncertain times like these has historically been a good move, when viewed through a holding period of three to five years. Just be prepared for some bumpy times along the journey.

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Motley Fool contributor Bruce Jackson 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 Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited, Telstra Corporation Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended JB Hi-Fi 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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30 September 2022
Why is the Zip share price trailing the ASX 300 on Friday?
The Zip Co Ltd (ASX: ZIP) share price is down 3.57% today to 67.5 cents amid a sea of red for ASX fintech shares across the market.

This also means that Zip is trailing the S&P/ASX 300 Index (INDEXASX: XKO), which is down just 0.73% in afternoon trade. Zip is also underperforming the S&P/ASX 200 Financials Index (ASX: XFJ), which is falling 1.41%.

Some notable mentions of other fintech shares feeling the pain today include:
- Hub24 Ltd (ASX: HUB), down 2.61%
- Block Inc (ASX: SQ2), down 4.11%
- Sezzle Inc (ASX: SZL), down 5.05%
- Money3 Corporation Limited (ASX: MNY), down 3.35%
My Fool colleagues in the US also reported that fintech shares took a beating in their part of the world yesterday afternoon.

An explanation was also provided for why this might be happening, which applies equally as much to ASX BNPL shares such as Zip. Let’s cover the highlights.

What’s going on?

The main culprit for the decline in fintech shares in US trading yesterday was speculated to be the spectre of further interest rate hikes and recession fears, followed by hedge funds liquidating their positions in fintech companies, the article said.

US jobless claims came in lower than expected on 29 September, which reflects a “very tight job market” and contributes to “sticky” inflation. This has stoked concerns that the Fed will continue with its course of action of getting inflation under control by raising interest rates further, the article said.

These headwinds make ‘risk-free’ investments such as US treasury notes more attractive, considerably helped by the fact that the 10-year treasury yield reached 4% in US trade on Wednesday.

The valuations for tech stocks such as Zip are also battered by higher interest rates from another angle, as they compress the companies’ present value of future cash flows, which is typically forecasted years into the future.

Zip, which reported a $1 billion loss for FY22, could therefore be seen as a risky investment in a highly uncertain environment, which adds selling pressure to its share price.

Zip share price snapshot

The Zip share price is down 84% year to date and 90% over the past 12 months. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down almost 13% and 11% over the same time periods.

The company has a market capitalisation of around $488.93 million.

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Motley Fool contributor Matthew Farley 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, Inc., Hub24 Ltd, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. and Hub24 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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30 September 2022