Stock Pick

  • Could this prevent Santos shares from cashing in on gas demand?

    Oil miner holding a laptop and mobile phone looks at his phone and sees the falling oil price and falling Woodside share price

    Oil miner holding a laptop and mobile phone looks at his phone and sees the falling oil price and falling Woodside share price

    Santos Ltd (ASX: STO) shares have received some healthy tailwinds over the past year amid the sharpening global energy crisis.

    Energy supplies were already tight heading into 2022 as nations re-opened from their pandemic shutdowns, following years of underinvestment in exploration and development of new energy projects.

    Russia’s invasion of Ukraine exacerbated the budding crisis, underlined by this week’s likely sabotage of the Nord Stream gas pipeline.

    As European nations scrambled to secure alternative energy sources, Santos shares marched 11% higher since the closing bell on 31 December. That’s atop paying out 22.7 cents in partially franked dividends this calendar year.

    Santos shareholders were hoping the company’s $4.7 billion Barossa gas project would help Santos cash in on the strong global gas demand for years to come.

    But those plans are now in jeopardy.

    Legal setback post FID

    Santos, along with its Japanese and Korean joint venture partners, made its final investment decision (FID) for Barossa, located in the Timor Sea north of Darwin, in March 2021.

    And the project was greenlighted by the National Offshore Petroleum and Safety Environmental Management Authority (NOPSEMA).

    But a federal court threw cold water on that call yesterday, ruling in favour of Tiwi Islands’ traditional owners, who claim they had not been properly consulted before the project won approval.

    As ABC News reported, the Environment Defenders Office said the NOPSEMA approval was unlawful, adding that traditional owners are concerned about environmental impacts and potential damage to culturally significant sites.

    Santos halted work on the project when the court challenge was filed. That pause will now continue. Santos is appealing the decision.

    Commenting on the court’s ruling, Santos stated:

    As a result of the decision, the drilling activities will be suspended pending a favourable appeal outcome or the approval of a fresh Environment Plan. Given the significance of this decision to us, our international joint venture partners and customers, and the industry more broadly, we consider that it should be reviewed by the Full Federal Court on appeal.

    Investors don’t appear overly concerned with the legal setback at this stage, with Santos shares up 3.06% in Thursday morning trade.

    How have Santos shares been tracking longer-term?

    Though still down from their pre-pandemic levels, Santos shares have notched a 75% gain (exclusive of dividends) over the past five years. That far outpaces the 16% gains posted by the S&P/ASX 200 Index (ASX: XJO) over that same period.

    The post Could this prevent Santos shares from cashing in on gas demand? 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 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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  • Iress share price freefalls 15% on profit downgrade

    A man in a business suit plunges down a big square hole lit up in blue.A man in a business suit plunges down a big square hole lit up in blue.

    The Iress Ltd (ASX: IRE) share price is plummeting this morning after the company announced a profit downgrade.

    At the time of writing, the financial software company’s shares are down a mammoth 15.21% to $8.92, having earlier been as low as $8.43.

    This makes it by far the worst performer on the ASX, with Bell Financial Group Ltd (ASX: BFG) shares coming in second place at a 6.54% drop.

    Let’s take a look and see what Iress provided in today’s market release.

    Iress suffers setback amid ‘challenging macro conditions’

    Investors are heading for the hills, sending the Iress share price lower following the company’s dismal outlook.

    According to its release, Iress is experiencing some timing delays in the conversion of new sales opportunities due to challenging market conditions.

    While it didn’t say exactly what those factors were, Iress said the setback is “expected to impact FY 2022 guidance”.

    Furthermore, unfavourable currency exchange movements and US dollar pricing have led to higher than anticipated supplier costs.

    Consequently, Iress is projecting full-year segment profit for 2022 to be in the range of $166 million and $170 million on a constant currency basis.

    This compares to the company’s previous guidance in August, in which it forecasted segment profit to be at the bottom of the range of $177 million and $183 million.

    As a result, net profit after tax (NPAT) is estimated to be between $54 million and $58 million, down from $63 million to $72 million.

    Iress CEO Andrew Walsh commented on the company’s performance, saying:

    Profit expectations for the second-half of this year have been impacted primarily by delays in the timing of new client opportunities. In addition, some costs are higher than we previously expected, including US dollar priced technology and software. While external macro conditions are volatile, we are making good progress in executing on our long-term strategies to build a more profitable and efficient Iress.

    Iress share price summary

    Adding in today’s losses, the Iress share price has fallen 32% in 2022.

    When looking at the last 12 months, its shares are down 23%.

    Based on today’s price, Iress presides a market capitalisation of approximately $1.96 billion.

    The post Iress share price freefalls 15% on profit downgrade 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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  • The Cogstate share price is rocketing again, up another 27% on Thursday

    A man sees some good news on his phone and gives a little cheer.

    A man sees some good news on his phone and gives a little cheer.

    The Cogstate Limited (ASX: CGS) share price has continued its ascent on Thursday.

    In morning trade, the neuroscience technology company’s shares are up a further 17% to $2.24.

    Though, it is worth noting that the Cogstate share price was up as much as 27% to $2.42 at one stage. The latter brought its two-day gain to an incredible 73%.

    Why is the Cogstate share price surging higher?

    As we covered here yesterday, investors were scrambling to buy the company’s shares yesterday despite there being no news out of it.

    However, as we pointed out, the gain was likely due to its partner and shareholder, Japan’s Eisai, revealing that its experimental drug for Alzheimer’s disease has helped slow cognitive decline in patients in the early stages of the illness.

    A phase 3 clinical trial of lecanemab revealed cognitive decline was slowed by 27% after 18 months based on 1,795 patients, who were randomly assigned to receive either the drug or a placebo every two weeks over the months.

    Cogstate’s response

    Yesterday afternoon, Cogstate responded to a request from the Australian stock exchange to explain the recent trading in its securities.

    While the company advised that it will not benefit directly from Eisai’s news because its partnership excludes clinical trials, it does see potential for it to benefit indirectly.

    The company explained:

    In respect of Cogstate’s business in Clinical Trials, when commenting on its FY23 outlook on 30 August 2022, the Company noted that the release of positive phase 3 clinical trial data from Eisai (and others) may be expected to lead to a general increase in research and development expenditure in respect of Alzheimer’s disease, which may provide additional sales opportunities for Cogstate in its Clinical Trials business and may also impact Cogstate’s Healthcare business.

    Cogstate has also consistently stated that the upside revenue opportunity for the Healthcare business, beyond the contracted minimum payments from Eisai, is expected to be dependent upon the release, reimbursement, and availability of proven Alzheimer’s therapeutics.

    In addition, the company sees these developments as a potential positive for its Cognigram offering. It said:

    Since executing the agreement in October 2020, Eisai (which is also a substantial holder in the Company) and Cogstate have progressed commercial plans for launching digital brain health assessment solutions using Cogstate technologies, including both a direct-to-consumer self-check as well as a medical device, Cognigram, to aid healthcare professionals in clinical diagnosis decisions. It may be expected that such digital cognitive assessments could play an important role in supporting the type of large-scale cognitive assessment that will be necessary in the launch of disease modifying therapies for Alzheimer’s disease.

    All in all, these are exciting times for Cogstate and its technology.

    The post The Cogstate share price is rocketing again, up another 27% on Thursday 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 CogState Limited. The Motley Fool Australia has positions in and has recommended CogState 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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  • Own CBA shares? Dividends are coming your way today

    A woman looks excited as she fans out a wad of Aussie $100 notes.A woman looks excited as she fans out a wad of Aussie $100 notes.

    The day has finally come where Commonwealth Bank of Australia (ASX: CBA) shareholders will become a little richer.

    After the bank’s shares tumbled more than 5% in the past month, the company is paying out its latest dividend.

    At the time of writing, the CBA share price is 1.34% higher to $93.78.

    For context, the S&P/ASX 200 Index (ASX: XJO) is also rising by 1.7% following strong gains on Wall Street overnight.

    Let’s take a look below at the details regarding the company’s dividend.

    What are the details of the CBA dividend?

    During mid-August, CBA reported growth across key metrics in its full-year results of the 2022 financial year.

    In summary, revenue improved by 3% to $25,143 million over the prior corresponding period. The robust performance was underpinned by an increase in lending and deposits in both home and business portfolios.

    This led to the bank achieving an 11% boost in cash earnings to $9,595 million.

    Subsequently, the board elected to increase its final dividend by 5% to $2.10 per share. This brings the full-year dividend to $3.85 per share, up from the $3.50 declared in FY 2021.

    The dividend is fully franked which means those who receive it, will get some form of tax credits.

    Based on today’s price, CBA has a dividend yield of 4.11% which is slightly lower than the rest of the big four.

    CBA share price snapshot

    Over the past 12 months, the CBA share price has moved in circles to register a loss of around 10%.

    Its shares hit a 52-week low of $86.98 on 17 June before climbing on in the following months.

    CBA has a price-to-earnings (P/E) ratio of 17.24 and commands a market capitalisation of approximately $157.27 billion.

    The post Own CBA shares? Dividends are coming your way 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 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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  • This US growth stock could double, according to Wall Street

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

    woman looking at her clothing package

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

    It’s been a painful year for Shopify Inc. (NYSE: SHOP) and its shareholders. The company’s coronavirus tailwind came to a screeching halt, leading to financial results that haven’t been up to par. The e-commerce specialist’s 10-for-1 stock split did little to improve its stock market performance; as things stand, Shopify is currently hovering near its 52-week low.

    However, Wall Street has faith in the tech giant, and analysts’ average price target of $79.45 is close to triple its $27.85 share price as of this writing. Is the Street right about Shopify?

    What’s wrong with Shopify?

    Shopify has been the victim of various market-wide headwinds. Among these are interest rate increases that can impact the value of corporations. In an environment with higher interest rates, borrowing — one of the main ways companies raise money — becomes more expensive, and businesses tend to do less of it, leading to reduced investments and lower future earnings. 

    Knowing this, investors are less likely to invest in stocks, especially those speculative growth stocks with high valuation metrics that aren’t consistently profitable. That description fits Shopify to a T. Its net loss in the second quarter came in at $1.20 billion, compared to the net income of $0.88 billion reported during the year-ago period.

    The company’s current forward price-to-earnings (P/E) ratio is 220.5. Even given the premium growth stocks often enjoy, that seems too high. The S&P 500‘s forward P/E is just under 17. In that context, Shopify’s performance on the market over the past year isn’t too surprising, especially when you factor in company-specific issues. Notably, Shopify’s revenue growth rates have slowed as well.

    SHOP Revenue (Quarterly YoY Growth) Chart

    Data by YCharts.

    Perhaps that isn’t a “problem” — at least not in a vacuum. Shopify benefited from the accelerated switch to e-commerce in the early days of the pandemic, and year-over-year comparisons were always going to be difficult as those tailwinds subsided. Still, when added to the overall challenging macroeconomic environment, that’s not what investors want to see. 

    Moreover, Shopify will likely continue to struggle, at least for a little while. There will probably be more interest rate increases in the near future. Shopify’s stock performed exceptionally well between its initial public offering in May 2015 and the end of last year — an environment marked by historically low interest rates. Moving forward, it will be harder for the tech giant. 

    Are there any reasons to be optimistic?

    Solid long-term prospects

    There is more context to Shopify’s relatively disappointing second-quarter financial results. As already mentioned, the slower top-line growth was partly a product of the company’s abnormally strong performance in 2020 and 2021, when people were stuck at home and practically forced to shop online. This activity decreased somewhat once pandemic restrictions eased.

    There is also more color to Shopify’s red ink on the bottom line. For instance, in the second quarter, much of the tech company’s net loss was due to unrealized losses in various equity investments. That includes Shopify’s holdings in Affirm Holdings, Inc.(NASDAQ: AFRM) and Global-e Online Ltd. (NASDAQ: GLBE). That’s not ideal, but at the very least, it reflects less poorly on Shopify’s day-to-day operations.

    The company’s adjusted net loss during the second quarter — which ignores the impact of unrealized losses and other items — came in at $38.5 million, down from an adjusted net profit of $284.6 million in the year-ago period.

    Importantly, Shopify’s long-term prospects remain strong. There is still plenty of room for e-commerce to grow; as long as it does, merchants will look to open online storefronts. Some analysts see the industry expanding at a compound annual growth rate of 14.7% through 2027. It won’t stop there. E-commerce penetration in many developing countries lags what it is in the U.S.

    In my view, online shopping will continue growing for decades. Shopify’s strength is that it gives merchants all the essential tools they need to run an online store. As a result, the company benefits from high switching costs. Building and customizing an online storefront is hard enough, and attracting loyal customers to it is even more challenging.

    But having to restart the entire process from scratch is not something anyone wants to do unless necessary. That’s why Shopify’s merchants won’t want to jump ship. As of last year, Shopify was No. 2 among companies with the highest retail e-commerce market share in the U.S. That, coupled with an estimated $160 billion addressable market and its solid competitive advantages, strongly suggests Shopify can turn things around.

    Don’t lose perspective 

    Will Shopify meet Wall Street’s expectations within the next 12 months? Probably not. But more importantly, the company still has solid prospects, especially when you put its recent struggles in context. For those focused on the long game, Shopify is worth holding onto. The company will likely deliver solid returns in the next decade and beyond.

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

    The post This US growth stock could double, according to Wall Street appeared first on The Motley Fool Australia.

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    Prosper Junior Bakiny has positions in Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Affirm Holdings, Inc., Global-e Online Ltd., and Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. 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.

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



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  • ASX cannabis share Cronos has soared 80% in a month. What’s going on?

    Back view of a man lifting hish hands high in front of hemp plants grown for cannabis.

    Back view of a man lifting hish hands high in front of hemp plants grown for cannabis.

    It has been a stunning few weeks for the Cronos Australia Ltd (ASX: CAU) share price.

    Since this time last month, the medicinal cannabis company’s shares have risen over 80%.

    This led to the Cronos Australia share price reaching a record high of 75 cents earlier today.

    Why is the Cronos Australia share price on fire this month?

    While the company released a positive update last week which boosted its shares, the majority of the gains were made earlier in the month.

    The catalyst for that appears to have been a bullish broker note out of Bell Potter.

    According to the note from 5 September, the broker initiated coverage on the company’s shares with a buy rating and 60 cents price target.

    At the time, the Cronos Australia share price was fetching 46 cents, so this implied potential upside of 30% for investors.

    Why is Bell Potter bullish?

    Bell Potter explained that its bullish view was based largely on the company’s leadership position in medicinal cannabis distribution. It commented:

    Cronos Australia is a medicinal cannabis company that is the market leader in distribution to pharmacies and provides patient consulting services through its clinic business. The key driver for the impressive growth in the past 24 months has been the CanView platform which provides the widest range of medicinal cannabis products compared to competitors (Anspec, Health House).

    In addition, Bell Potter points out that Cronos Australia is profitable and even pays a dividend. That makes it the only one of its kind in the Australian cannabis industry. It explained:

    We initiate coverage on Cronos with a Buy recommendation. We expect the momentum observed in FY22 to continue into FY23 and translate into strong revenue and earnings growth. Cronos is currently the only profitable dividend paying medicinal cannabis company on the ASX and the valuation does not appear demanding relative to the expected growth.

    Though, with the Cronos Australia share price now trading higher than Bell Potter’s valuation, it’s worth considering that it could have peaked for the time being.

    The post ASX cannabis share Cronos has soared 80% in a month. What’s going on? 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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  • Is this ASX 200 share a better buy than Fortescue right now?

    A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.

    Brokers are currently sceptical of shares in S&P/ASX 200 Index (ASX: XJO) iron ore favourite Fortescue Metals Group Limited (ASX: FMG). But the iconic index houses another, potentially more promising, iron ore share.

    Champion Iron Ltd (ASX: CIA) has been tipped as one to watch by a major fundie despite expectations the price of iron ore could fall.

    The ASX 200 company is developing mining operations in Canada and currently trades at a share price of $4.82.

    So, why might the far smaller ASX 200 share be a better buy than Fortescue? Let’s take a look.

    Could this ASX 200 share be a better buy than Fortescue?

    Janus Henderson Group (ASX: JHG) portfolio manager Tim Gerrard is reportedly bullish on metals and mining, and sustainability.

    It’s for those reasons he is also hopeful of ASX 200 mining share Champion Iron, Livewire reports. The fundie was quoted as saying the stock offers “plenty of catalysts and deep value”, continuing:

    [Champion Iron is] producing iron ore in Canada … That iron ore is low carbon, it has a low carbon footprint. There’s a lot of hydropower in Canada.

    That business is [also] being built off the back of a low capital base … and it can be expanded two or three times and so, even though I know [iron ore] prices might come off, it can be expanded.

    But that’s not all the fundie likes about the stock.

    Gerrard told the masthead the key to his bullishness is the company’s work to increase the grade of its iron ore, which could allow it to be used in steel recycling operations in the US. That could then lower the company’s carbon footprint further.

    Of course, Fortescue has plenty of green plans of its own. The company operates its renewable energy leg, Fortescue Future Industries, and recently committed to a massive decarbonisation push at its Pilbara operations.

    While the latest move likely saw climate-conscious investors celebrating, it also raised eyebrows as some brokers queried how the company would fund the $9 billion plan.

    Many assume the iron ore giant will reduce its dividends as it works to cut its scope one and two emissions from the region by 2030.

    Indeed, most brokers are bearish on the future of the Fortescue share price, with Goldman Sachs tipping a 29% downside.

    Shares in the ASX 200 giant are currently trading at $16.73, while the broker expects them to fall to $12.10.

    Champion Iron share price snapshot

    Shares in Champion Iron and Fortescue have performed similarly so far this year.

    Both ASX 200 stocks have slumped around 15% year to date.

    Looking longer-term, however, the Fortescue share price has outperformed, gaining 13% over the last 12 months. Meanwhile, that of Champion Iron has risen just 2%.

    For context, the ASX 200 has fallen 14% since the start of 2022 and 9% since this time last year.

    The post Is this ASX 200 share a better buy than Fortescue right now? 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 positions in and has recommended Goldman Sachs. 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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  • Woolworths shares: Buy, hold, or fold?

    A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recentlyA female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently

    The share price of S&P/ASX 200 Index (ASX: XJO) supermarket giant Woolworths Group Ltd (ASX: WOW) hasn’t managed to dodge 2022’s carnage.

    The stock has dumped 9% since the start of the year to currently trade at $34.62.

    Meanwhile, the ASX 200 has fallen 12% and the company’s home sector, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ), has slipped 7%.

    Have recent struggles put Woolworths shares squarely in the buy zone? Well, that depends on who you ask.

    Here’s what brokers are expecting from the ASX 200 supermarket operator.

    What might the future hold for Woolworths shares?

    Various brokers have vastly differing outlooks for Woolworths shares, with one tipping an upside of 28% and another expecting a 9% tumble. Let’s start with the bears.

    Credit Suisse believes the supermarket’s stock is expensive compared to its peers right now, while its future growth may come at a high cost, my Fool colleague Tristan reports.

    The broker has slapped Woolworths shares with an underperform rating and a $31.37 price target – 9% lower than its current level.

    Alto Capital’s Tony Locantro is also wary of the stock, reportedly slapping it with a sell rating. Locantro said, courtesy of The Bull:

    While cost pressures have eased, we’re concerned about the impact from broad cost of living increases on its customers moving forward.

    Indeed, Woolworths’ CEO Brad Banducci admitted financial year 2023 could remain “volatile and challenging” for the company amid COVID-19 disruptions, supply chain issues, rising costs, and customers’ cost of living pressures.

    The company posted around $61 billion of sales and a $1.5 billion after-tax profit for financial year 2022. That’s despite it having battled against supply chain disruptions, product shortages, high absenteeism, and major flood events.

    But not all experts are pessimistic on the supermarket giant.

    In fact, Goldman Sachs is incredibly bullish, dubbing Woolworths shares a conviction buy and slapping them with a $44.10 price target. That represents a potential 28% upside.

    The broker was pleased with the company’s full-year earnings and optimistic for its future.

    It said it expects that the company’s digital and omnichannel advantage will continue to drive market share and margin gains.

    The post Woolworths shares: Buy, hold, or fold? 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 positions in and has recommended Goldman Sachs. 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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  • AGL share price dips as $20b price tag flagged for coal exit

    The AGL Energy Limited (ASX: AGL) share price is trading lower on Thursday.

    In morning trade, the energy company’s shares are down 0.6% to $6.56.

    This compares to a stunning gain of 1.9% by the S&P/ASX 200 Index (ASX: XJO).

    Why is the AGL share price underperforming?

    The AGL share price is underperforming on Thursday after investors gave a lukewarm response to the company’s strategic review update.

    That update revealed that AGL is aiming for an accelerated exit from all coal fired generation.

    This will see the company look to close the Loy Yang A Power Station up to 10 years earlier than previously announced.

    Management expects this and others actions to reduce its greenhouse gas emissions from 40 million tonnes to net zero.

    However, this will come at significant cost, which appears to have spooked investors today.

    To achieve its goals, AGL advised that it will progressively decarbonise its asset portfolio with new renewable and firming capacity. This will require a total investment of up to $20 billion by 2036. This is expected to be funded from a combination of assets on AGL’s balance sheet, offtakes, and partnerships.

    Are AGL’s shares a buy?

    One broker that sees a lot of value in the AGL share price at present is Morgans.

    Its analysts currently have an add rating and $8.63 price target on the company’s shares. This implies potential upside of 30% over the next 12 months.

    However, it is worth noting that the broker has not yet responded to today’s update and will no doubt be busy assessing how these plans impact its earnings estimates and valuation.

    So, investors may want to sit tight and keep their powder dry until Morgans has reassessed the company.

    The post AGL share price dips as $20b price tag flagged for coal exit 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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  • Lost faith in ASX growth shares? Here’s why I still rate these 2 as buys right now

    Smiling man sits in front of a graph on computer while using his mobile phone.Smiling man sits in front of a graph on computer while using his mobile phone.

    I believe that the lower prices we’re seeing on the share market are presenting us with a good opportunity to invest in ASX growth shares.

    Businesses that grow at a quick pace over the long term can benefit from a good rate of compounding over time.

    Not every single business is going to achieve revenue growth every single year. But, if the long-term trend is upwards then it could be a promising one to consider. Amid all of the concerns about inflation and rising interest rates, investors have punished the valuations of companies, particularly ones that were predicted to grow strongly.

    I’m looking at these two ASX growth shares as two of the opportunities on the market right now:

    Universal Store Holdings Ltd (ASX: UNI)

    Universal Store describes itself as a specialty retailer of youth casual apparel that operates around 80 physical stores across Australia and two online stores. Those stores operate under the brands Universal Store and Perfect Stranger.

    It aims to provide a frequently changing and “carefully curated” selection of on-trend apparel products to a target 16-to-35-year-old fashion-focused customer.

    The business opened 11 new stores in FY22. Its “full potential” target is for at least 100 Universal Store sites across Australia and New Zealand. In the first half of FY23, five new stores are expected to open along with two store resizes.

    In the first half of FY23, it’s cycling against lockdowns and store closures in the prior year. During the first eight weeks of FY23, total sales were up 54.7% and group like-for-like (LFL) sales grew 5.4%.

    The ASX growth share also recently announced it’s going to buy Cheap THRILLS Cycles for an enterprise value of $50 million, representing 6.8x FY22’s underlying earnings before interest and tax (EBIT). This business offers “vintage and coastal inspired youth fashion apparel with broad appeal”. If it were part of the Universal Store business in FY22, it would have added 18% to the earnings per share (EPS).

    I think the business has plenty of growth avenues, with new stores, more brands, online sales and operating leverage. It’s also paying a dividend, which can boost shareholder returns.

    At the time of writing, the Universal Store share price is down 0.6% at $4.97.

    Temple & Webster Group Ltd (ASX: TPW)

    Temple & Webster is one of the largest retailers of furniture and homewares in Australia. It’s already the largest pure-play retailer in this space. It sells a mixture of products from third parties, as well as private brand products. Items sold by third parties are shipped straight to customers from those suppliers.

    I believe that more Aussies are going to buy more things online over time, which should be a natural tailwind for this e-commerce business.

    But, I think Temple & Webster is running a good strategy to capture market share of the furniture and homeware sector. As it grows revenue, it’s able to invest more into marketing, efficiencies, technology and so on. It’s working hard on tools such as artificial intelligence and augmented reality so that customers can get recommendations and see products in their living room (or whichever room they are looking at).

    I like that the ASX growth share is trying to grow into new areas such as home improvement (painting, tools and so on) as well as the commercial market. This increases its total addressable market.

    In my opinion, the business has a good chance of being able to keep growing its number of customers and its revenue per customer, which will be useful for its long-term revenue growth. Returning customers can help reduce its required spending on marketing.

    In early trading on Thursday, the Temple & Webster share price is up 5.89% to $5.03.

    The post Lost faith in ASX growth shares? Here’s why I still rate these 2 as buys right now appeared first on The Motley Fool Australia.

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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 positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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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