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  • The market has had a great day, but these ASX 200 tech shares smashed it

    A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.

    The S&P/ASX 200 Index (ASX: XJO) had a good trading day today, closing a healthy 1.44% higher. But multiple ASX 200 tech shares outperformed the index.

    The Block Inc (ASX: SQ2), Wisetech Global Ltd (ASX: WTC) and Megaport Ltd (ASX: MP1) share prices all finished well in the green today.

    Block shares leapt 4.96%, while shares in Wisetech were 2.65% higher at the end of trade today. Megaport shares joined the green run, jumping 4.66%, and the NextDC Ltd (ASX: NXT) share price closed 1.8% higher.

    The S&P/ASX All Technology Index (ASX: XTX) finished the day up 1.31%.

    NASDAQ leads the lift

    ASX 200 technology shares followed in the footsteps of the tech-heavy NASDAQ in the United States on Wednesday.

    Stronger investor sentiment appeared to drive these strong gains, as my Foolish colleague James reported earlier.

    The NASDAQ Composite Index jumped 2%. Meta Platforms Inc (NASDAQ: META) soared 5.36%, while Affirm Holdings Inc (NASDAQ: AFRM) leapt 6.55%.

    Block’s New York Stock Exchange listing, Block Inc (NYSE: SQ), rose 7%.

    However, some analysts are concerned investors have not fully priced in rate rikes and the impact on earnings, CNBC reported.

    Duquesne Capital founder and billionaire investor Stanley Druckenmiller, quoted by the publication on Wednesday, warned a recession could be looming. He said:

    I will be stunned if we don’t have recession in ’23. I don’t know the timing but certainly by the end of ’23. I will not be surprised if it’s not larger than the so-called average garden variety.

    The post The market has had a great day, but these ASX 200 tech shares smashed it appeared first on The Motley Fool Australia.

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    Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Monica O’Shea 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 Affirm Holdings, Inc., Block, Inc., MEGAPORT FPO, Meta Platforms, Inc., and WiseTech Global. The Motley Fool Australia has positions in and has recommended Block, Inc. and WiseTech Global. The Motley Fool Australia has recommended MEGAPORT FPO and Meta Platforms, Inc. 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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  • Boss Energy share price jumps 8% on bullish broker note

    A woman jumps for joy with a rocket drawn on the wall behind her.

    A woman jumps for joy with a rocket drawn on the wall behind her.The Boss Energy Ltd (ASX: BOE) share price was a star performer on Thursday.

    The uranium explorer’s shares rose 8% to $2.53.

    Why did the Boss Energy share price surge higher?

    There were a couple of catalysts for the rise by the Boss Energy share price today.

    The first was a major rebound by ASX shares on Thursday following a very strong night of trade on Wall Street.

    This saw the S&P/ASX 200 Index (ASX: XJO) end the day with a gain of 1.45% to 6,555 points.

    What else?

    Also giving the Boss Energy share price a boost was a broker note out of Bell Potter.

    According to the note, the broker has retained its speculative buy rating with an improved price target of $3.51.

    This implies potential upside of 44% for investors over the next 12 months even after today’s strong gain.

    It commented:

    We maintain our Speculative Buy recommendation and increase our valuation to $3.51/sh (previously $3.32/sh). We have rolled our model forward, which contributed the modest 6% increase in our valuation. We make no changes to forward earnings in this note. Uranium markets are recovering from a cyclical low with limited near-term supply capacity and further demand upside driven by decarbonisation efforts.

    BOE represents an opportunity to gain exposure to a fully permitted project, currently on care and maintenance, in a tier 1 jurisdiction, with a comparatively short lead time to first production. In addition to this, we believe there is resource expansion upside in the current portfolio, with drilling currently underway.

    The post Boss Energy share price jumps 8% on bullish broker note 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 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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  • Looking to buy Telstra shares but worried about an Optus-style hack? Read this

    a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.

    Investors could be rightfully concerned about what the recent Optus hack could mean for ASX 200 telco shares such as Telstra Corporation Ltd (ASX: TLS) moving forward.

    Cyber attacks are costly to amend. A successful attack costs the company and allows affected users to be up for further liabilities.

    The problem is that once one website is hacked and its user database is leaked online, anyone can use these credentials to try to guess the username and password of other accounts the affected users might have. This puts social media, banking, email, and other accounts in danger of also being breached on a broad scale from a single successful attack on a prominent website.

    Ex-Telstra boss responds to Optus breach

    It may come as reassuring news that the former Telstra boss David Thodey has underlined the importance of good cyber security practices in an article published by the Australian Financial Review on Wednesday evening.

    It may be hoped that Telstra will take Thodey’s warning that “it could happen to anyone” seriously and perhaps assuage investors’ fears by making an announcement of its own.

    Thodey said:

    It is the reality of the world in which we live. You’ve got to be incredibly vigilant. I feel for Optus, it’s a difficult situation and I think they’re responding as best they can. Because it’s going to happen to all of us at some point, and then it’s what you do with it or how you respond.

    Cybersecurity for all of us, it doesn’t matter if you’re a small or big business, it is enormously high risk and we all need to be very vigilant about it because it could happen to any of us.

    How did telco shares perform on Thursday?

    The Telstra share price ended Thursday’s session 1.57% higher at $3.88.

    Meanwhile, the TPG Telecom Ltd (ASX: TPG) share price also ended the day in the green, up 3.15% to $4.89.

    With these telco shares up, it might be unsurprising that the S&P/ASX 200 Telecommunication Services Index (ASX: XTJ) closed 1.83% higher today.

    Broader still, the S&P/ASX 200 Index (ASX: XJO) finished up 1.44%.

    Telstra share price snapshot

    The Telstra share price is down 8% this year to date and 2.5% over the past month. Meanwhile, the ASX 200 is down 14% and 6% over the same timeframes.

    Telstra has a market capitalisation of around $44.13 billion.

    The post Looking to buy Telstra shares but worried about an Optus-style hack? Read this appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom 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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  • Here are the top 10 ASX 200 shares today

    Three excited business people cheer around a laptop in the officeThree excited business people cheer around a laptop in the office

    The S&P/ASX 200 Index (ASX: XJO) posted its best day in weeks on Thursday, with all 11 sectors closing in the green. The index was 1.44% higher at 6,555 points as of market close.

    It followed a strong session on Wall Street overnight. The Dow Jones Industrial Average Index (DJX: .DJI), S&P 500 Index (SP: .INX), and Nasdaq Composite Index (NASDAQ: .IXIC) lifted 1.9%, 2%, and 2.05% respectively on Wednesday amid news the United Kingdom’s central bank has stepped in to help stabilise the nation’s economy, as the Guardian reports.

    Back home, the S&P/ASX 200 Energy Index (ASX: XEJ) led the way, gaining 2.8% today following a good night for oil prices.

    The Brent crude oil price lifted 3.5% to US$89.32 a barrel, while the US Nymex crude oil price gained 4.6% to US$82.15 a barrel.

    The S&P/ASX 200 Materials Index (ASX: XMJ) also performed well, rising 2.2% despite lower iron ore prices.

    Iron ore futures slipped 0.2% to US$98.52 a tonne overnight, while gold futures lifted 2.1% to US$1,670 an ounce.

    The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) and the S&P/ASX 200 Utilities Index (ASX: XUJ) brought up the rear, gaining just 0.04% and 0.02%, respectively, despite AGL Energy Limited (ASX: AGL)’s pledge to ditch coal by 2035.

    So, which ASX 200 share outperformed amid a sea of green on Thursday? Keep reading to find out.

    Top 10 ASX 200 shares countdown

    Today’s top-performing stock on the index was Premier Investments Limited (ASX: PMV).

    The operator of fashion chains posted its full-year earnings this morning, revealing record profits despite many of its businesses having faced COVID-19 closures.

    Today’s biggest gains were made by these shares:

    ASX-listed company Share price Price change
    Premier Investments Limited (ASX: PMV) $23.69 14.61%
    Coronado Global Resources Inc (ASX: CRN) $1.74 8.07%
    De Grey Mining Limited (ASX: DEG) $1.045 7.18%
    Sayona Mining Ltd (ASX: SYA) $0.24 6.67%
    New Hope Corporation Limited (ASX: NHC) $6.28 6.44%
    Paladin Energy Ltd (ASX: PDN) $0.775 5.44%
    Ramelius Resources Limited (ASX: RMS) $0.68 5.43%
    Domain Holdings Australia Ltd (ASX: DHG) $3.16 5.33%
    Evolution Mining Ltd (ASX: EVN) $1.985 5.03%
    Block Inc (ASX: SQ2) $88.80 4.96%

    Our top 10 ASX 200 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

    The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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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 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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  • Why did the Zip share price jump 4% today?

    A man reacts with surprise when her see a bargain price on his phone.A man reacts with surprise when her see a bargain price on his phone.

    The Zip Co Ltd (ASX: ZIP) share price enjoyed a rare day in the green today.

    After hitting a two-month low of 66 cents yesterday, the buy-now, pay-later (BNPL) provider’s shares made a comeback today.

    This is despite the company not releasing any announcements to the market today.

    At the close of trading, Zip shares were up 4.48% to 70 cents apiece — closing higher for just the second time in the past two weeks.

    Let’s take a look at what could be driving these gains.

    What’s powering Zip’s stock?

    Investors bid up the Zip share price following an uplift across the S&P/ASX 200 Financials Index (ASX: XFJ).

    In a sea of green, the financials sector ended the day up 0.99%.

    This comes after Wall Street posted strong gains overnight, with the Dow Jones lifting 1.88%.

    News emerged that the US Federal Reserve could back off its aggressive rate hikes to avoid a potential recession.

    This represents a change of events from when the central bank indicated it would raise interest rates despite the recession risk.

    Nonetheless, the financial industry is rebounding from the heavy beating it took this week, having declined 4%.

    Shares in fellow BNPL company Block Inc CDI (ASX: SQ2) also closed higher today, up 4.96%, while Sezzle Inc (ASX: SZL) retreated after early gains to finish flat at 49.5 cents.

    However, you might want to keep an eye out next week when the Reserve Bank of Australia (RBA) meets again.

    Last month, the RBA lifted the official cash rate to 2.35%.

    While this is the highest level it has been since early 2015, the RBA is using its toolkit to fight against the above-target inflation.

    Zip share price summary

    Over the past 12 months, the Zip share price has plummeted 90%. Year to date, it is down 84%.

    A challenging external environment mixed with the company’s widening credit losses and ballooning net losses appear to have scared investors off.

    Zip presides a market capitalisation of around $467.98 million.

    The post Why did the Zip share price jump 4% today? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Aaron Teboneras 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. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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  • CSL share price jumps despite JP Morgan’s latest caution

    A group of people in a corporate setting do a collective high five.A group of people in a corporate setting do a collective high five.

    The CSL Limited (ASX: CSL) share price closed Thursday’s session up 2.1% trading at $288.28.

    This is in line with the performance of ASX healthcare shares in general today. The S&P/ASX 200 Health Care (ASX: XHJ) finished up 2.1%. The S&P/ASX 200 Index (ASX: XJO) was up 1.93% at the close.

    The boost to the CSL share price today comes despite some predictions from top broker JP Morgan regarding CSL’s newly-acquired Vifor business.

    In a recent note to clients, analyst David Low said the broker had cut its expectations for Vifor’s contribution to CSL.

    According to The Australian, JP Morgan downgraded Vifor’s contribution by 8% for FY23 and 3% for FY24.

    After reviewing Vifor’s June half accounts, Low said:

    We attribute the weaker contribution to the drop in dialysis patients due to ‘excess COVID-19 mortality’ as reported by Fresenius Medical Care and its key competitor.

    While it will take time for patient numbers to recover, we believe this is a short-term issue which was understood by CSL when it bid for Vifor in December 2021.

    According to the article, a forecasted boost to CSL’s Behring sales and margins in FY24 may offset this. The boost is anticipated due to Mexican plasma donations recommencing after a recent court decision.

    So, while the broker expects lower earnings per share (EPS), it retains an overweight rating on CSL stock.

    Its 12-month share price target for CSL is $330. That’s a potential 14.5% upside on today’s closing price.

    That’s on par with the price target from the team at Macquarie. They’re tipping the CSL share price to reach $329.50 this time next year, my Fool mate Brendon Lau reports.

    Citigroup is more bullish with a price target of $340 on CSL shares. That would take CSL beyond its pre-pandemic record high of $336.40 per share recorded in February 2020.

    According to the AFR article, the biotech will provide an investor briefing on 17 October.

    CSL will hold its annual general meeting on 12 October.

    The post CSL share price jumps despite JP Morgan’s latest caution appeared first on The Motley Fool Australia.

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    JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in CSL Ltd. and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and JPMorgan Chase. The Motley Fool Australia has recommended Macquarie Group 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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  • Has the Bitcoin price found a floor?

    a close up of a woman's face looks skywards as she is showered in a sea of graphic symbols of gold and silver coins bearing the bitcoin logo.

    a close up of a woman's face looks skywards as she is showered in a sea of graphic symbols of gold and silver coins bearing the bitcoin logo.

    The Bitcoin (CRYPTO: BTC) price is up 4% over the past 24 hours.

    One bitcoin token is currently trading for US$19,555 (AU$30,132).

    While that’s still below the psychologically important US$20,000 level, something rather remarkable has been happening with the world’s original crypto over the past week.

    Namely, the Bitcoin price appears to be breaking away from the strongly correlated moves it’s had with risk assets, like tech stocks, this year.

    Has the Bitcoin price found a floor?

    Cryptos are notoriously volatile.

    And Bitcoin is no exception.

    So far in 2022, the token has almost always mirrored the moves on the tech-heavy NASDAQ, only amplified. When the NASDAQ has gained 5% on dovish noises from the US Federal Reserve, Bitcoin has often gained 10%, or more.

    The same pattern can be observed, with significant consistency, in reverse. Meaning any 5% loss posted by the NASDAQ has tended to see the Bitcoin price fall by a good bit more this year.

    But this pattern has broken over the past week, potentially signalling the token has found a supportive floor.

    You see, since last Wednesday’s closing bell (Thursday morning Aussie time), the NASDAQ has dropped 1.5%.

    But the Bitcoin price hasn’t followed suit. Instead, it’s up 5%.

    What are the experts saying?

    Stephane Ouellette, chief executive of FRNT Financial Inc, said the Bitcoin price could be decoupling from other risk assets as speculator influence appears to be waning.

    According to Ouellette (quoted by Bloomberg), “Followers of the ecosystem have been excited to see correlations with risk assets begin to break, meaning the ‘fast-money’ speculative crowd may be losing their influence on the space.”

    Billionaire Mike Novogratz, founder of Galaxy Digital Holdings, believes that fewer forced sellers in the crypto space has led to renewed resilience.

    According to Novogratz:

    We’re in this weird equilibrium where there are a few buyers, there are a few sellers, and there’s not that energy in the market like you’re seeing in the equity market or the bond market where you have to sell, right?

    With the Bitcoin price bucking the wider tech selling pressure over the past full week, we’ll be watching to see if this ‘weird equilibrium’ is a flash in the pan or a new longer-term trend.

    The post Has the Bitcoin price found a floor? appeared first on The Motley Fool Australia.

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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 positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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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  • Adairs share price jumps 12%: Time to snap up shares?

    a woman sits amid a stylish home setting on a sofa with plush cushions with a coffee table and plant in the foreground while she peruses a tablet device.

    a woman sits amid a stylish home setting on a sofa with plush cushions with a coffee table and plant in the foreground while she peruses a tablet device.

    The Adairs Ltd (ASX: ADH) share price has been a very strong performer on Thursday.

    In afternoon trade, the homewares retailer’s shares are up 12% to $1.91.

    Why is the Adairs share price surging higher?

    The Adairs share price is taking off today despite there being no news out of the company.

    However, it is worth noting that a number of beaten down shares are rebounding strongly on Thursday after investor sentiment improved greatly.

    This follows a particularly positive night of trade on Wall Street which saw the three major indices rise approximately 2%.

    Can Adairs’ shares keep rising?

    Despite today’s gain, the Adairs share price remains down over 50% since the start of the year.

    One leading broker that appears to believe that this leaves it trading at very attractive levels is Goldman Sachs.

    Earlier this month, the broker retained its buy rating and $3.05 price target on the company’s shares. Based on the current Adairs share price, this implies potential upside of 60% for investors.

    What did the broker say?

    Goldman believes that Adairs’ shares have been oversold and are trading on unnecessarily low multiples. Particularly given the company’s loyal customer base. It said:

    ADH has de-rated 27% vs. its long-term average P/E discount to the market vs. other discretionary retailers de-rating an average of c.10%. There has been a valuation disconnect between consensus revisions and the P/E multiple that ADH trades on, as we believe the market has priced in a more cautious view on near-term earnings vs. what is reflected in consensus estimates and company guidance, reflecting caution on a reversion in housing-related discretionary spend.

    We do not believe the relative discount to other discretionary retailers implied for the core Adairs business is justified: it has a highly loyal customer base with >1mn Linen Lover members who account for >80% of sales. These customers are very engaged, according to management, and allow ADH to take a data-driven approach to marketing by providing a personalised experience for the ‘Linen Lovers’.

    The post Adairs share price jumps 12%: Time to snap up shares? 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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS 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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  • Why is this key investor selling down its Core Lithium shares?

    A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

    The Core Lithium Ltd (ASX: CXO) share price is edging higher this afternoon after the company announced a sell-down by a key investor.

    At the time of writing, the ASX lithium producer’s shares are swapping hands at $1.11, up 0.91% at the time of writing.

    In contrast, the All Ordinaries Index (ASX: XAO) is roaring 1.79% higher following strong gains on Wall Street overnight.

    Let’s take a closer look at the details Core Lithium released to the ASX.

    Key stakeholder reduces Core Lithium holding

    In today’s release, Core Lithium advised that its key shareholder Ganfeng has offloaded a portion of Core Lithium shares.

    While Core Lithium did not disclose the number of shares disposed of, the sell-down now means that Ganfeng is no longer a substantial shareholder.

    Prior to the market update, Ganfeng held more than 6% or roughly 100.6 million shares in Core Lithium.

    In August 2021, Ganfeng subscribed for Core Lithium shares in a placement at a price of 33.8 cents apiece. The Chinese company is also an existing offtake partner.

    Ganfeng noted the reason for reducing its holding was because of “portfolio weighting considerations and the opportunity to monetise a portion of the investment”.

    Core Lithium is building Australia’s most advanced lithium project, with the first production of lithium spodumene concentrate scheduled in the first half of 2023.

    Once online, the company’s Finniss Lithium Project will be the first Australian lithium-producing mine outside of Western Australia.

    Ganfeng’s vice chair Wang Xiaoshen reaffirmed the position in Core Lithium, saying:

    We remain a supportive partner of Core by virtue of our existing shareholding and binding offtake arrangement and look forward to seeing Finniss progress towards first commercial production.

    About the Core Lithium share price

    Shares in Core Lithium have surged 182% over the past 12 months and are up 86.4% year to date.

    The company’s share price reached an all-time high of $1.688 earlier this month.

    Core Lithium has a market capitalisation of $1.91 billion.

    The post Why is this key investor selling down its Core Lithium shares? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Aaron Teboneras 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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  • Is the sell-off in Wesfarmers shares unwarranted?

    Sad shopper sitting on a sofa with shopping bags.Sad shopper sitting on a sofa with shopping bags.

    The Wesfarmers Ltd (ASX: WES) share price is down 6% over September and down 26% in the year to date.

    This is interesting because a huge part of the conglomerate’s business is retail — where spending continues to increase despite dire predictions — and agriculture, which is a buoyant sector. It even owns an Aussie lithium project, and every investor on this planet knows that lithium is hot, hot, hot right now.

    So, why aren’t investors feeling the love for Wesfarmers?

    Macquarie says sell Wesfarmers shares

    According to an article on Livewire, Macquarie analyst Ross Curran has a 12-month share price target of $43.80 on Wesfarmers. Right now, Wesfarmers is trading above that at $44.25 at the time of writing.

    According to the article, “Wesfarmers revenues are skewed to ‘mortgage belt’ Australia, leaving it exposed to reduced consumer spending in the event of an economic slowdown”.

    Retail spending still okay despite high inflation

    The Australian Bureau of Statistics (ABS) reported a 0.6% monthly increase in seasonally-adjusted retail trade figures yesterday.

    That’s good news for ASX retail shares, as everyone has been expecting high inflation to result in consumers cutting back on their spending, especially on discretionary items.

    So far in 2022, retail spending has actually increased every single month, according to ABS data. Perhaps all that money saved during lockdowns is keeping spending rates steady for now?

    Wesfarmers owns a bunch of retailers, including Bunnings, Kmart, Target, Officeworks, and Priceline.

    The Australian Financial Review reported last week that even discretionary retail spending remains strong. According to Mastercard data, spending is up more than 25% on pre-pandemic levels.

    While spending might be okay right now, we all know that inflation will start to bite eventually. And the first thing people will do is cut back on consumer spending — well before they think about selling assets.

    And Wesfarmers CEO Rob Scott sees this as an opportunity.

    Inflation an advantage for Wesfarmers, says CEO

    In an article published in the AFR in February, Scott explained that consumers being more value-conscious was positive for Wesfarmers. This is because many of its retail outfits are known as discount shopping destinations, such as Kmart, Target, and Priceline.

    Scott said:

    Often when inflationary pressure hits, companies ask themselves the question: ‘How much can they pass on to customers?’ And on some occasions they do get greedy and try to pass on even more and capture more margin.

    We take the opposite approach. We say: ‘How can we further differentiate on price?’

    We do operate in a competitive market and in times when customers are more focused on price and working harder to balance their budgets, we want to be there to help them. And our scale and unique merchandising capabilities gives us the opportunity to mitigate costs in ways that others may find more difficult.

    Wesfarmers director buys more shares

    One investor taking advantage of the lower Wesfarmers share price is non-executive director Sir Bill English.

    On 2 September, English bought an additional 1,130 shares on-market for an average price of $47.05 per share.

    This is always a good sign. No one knows a business better than its insiders. You wouldn’t think they’d be tipping their own money into the company if they weren’t confident about its prospects.

    What do other market watchers think?

    Top broker Morgans says Wesfarmers has a retail portfolio that is “one of the highest quality … in Australia”. It has an add rating and a $55.60 price target on Wesfarmers shares, as my Fool friend James reported last week.

    Seneca Financial Solutions investment advisor Arthur Garipoli seems to be on the same page.

    He recently told The Bull that Wesfarmers’ “strong retail brands” should allow it to “ride out pressures on household budgets”.

    So, is the Wesfarmers sell-off unwarranted?

    Well, if Scott turns out to be right, then it might be a case of investors throwing the baby out with the bathwater. Wesfarmers the baby. Retail shares the bathwater.

    The post Is the sell-off in Wesfarmers shares unwarranted? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited and Wesfarmers Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Mastercard. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Mastercard. 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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