The Appen Ltd (ASX: APX) share price is well and truly in the green on Wednesday despite no news having been released by the company. It’s joined in the green by its technology-focused peers.

At the time of writing, the Appen share price is $6.27, 6.45% higher than its previous close.

For context, the broader market is also gaining today. The S&P/ASX 200 Index (ASX: XJO) is currently up 1.8% while the All Ordinaries Index (ASX: XAO) has lifted 1.9%.

Let’s take a closer look at what’s going right for the artificial intelligence data provider.

Appen share price climbs 6% as tech outperforms

The Appen share price is leaping higher today alongside the broader ASX tech sector.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) has surged 3.9% right now, with none of its constituents having slipped into the red.

It’s a similar case for the S&P/ASX All Technology Index (ASX: XTX). The index has gained 3.7% at the time of writing.

ASX tech stocks’ day in the sun follows an almost equally strong session on Wall Street overnight. The tech-heavy NASDAQ Composite rose 3.11% in Tuesday’s session overseas – its best single-session performance in nearly four weeks.

Meanwhile, the ASX 200 tech sector is being bolstered by news of Megaport Ltd (ASX: MP1)’s 10% revenue jump. The ASX 200 tech giant’s stock is currently up nearly 21%.

Though, the market isn’t expecting to hear news of Appen’s earnings until 25 August. No doubt all eyes will be on the stock that day to see if it can correct some of its recent losses.

The Appen share price has plummeted 43% since the start of 2022. It has also dropped half its value over the last 12 months.

The post Why is the Appen share price leaping 6% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Arizona Lithium, Australian Stategic Materials, and Nuix shares are dropping
• Why the upcoming first-half result could be pivotal for Appen shares
• Tech tumble: How this ASX share plunged 59% last financial year
• Why did the Appen share price sink 13% in June?
• What on earth happened to ASX 200 tech shares in June?

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

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S&P/ASX 200 Index (ASX: XJO) banks broadly benefited from the Reserve Bank of Australia’s first interest rate hike earlier this year.

That 0.25% increase on 3 May brought Australia’s official cash rate up from the all-time low 0.1% to a still historic low 0.35%.

Small, gradual increases in the benchmark interest rate can benefit the ASX 200 banks by enabling them to increase their own lending margins.

Faster and bigger increases from the RBA can hinder the ASX 200 banks’ loan books by decreasing demand for new mortgages and other loans, and increasing the number of bad debts they hold.

Hence, mortgage holders and investors alike took note of the RBA’s 0.5% increase on 7 June followed by another 0.5% increase earlier this month on 5 July, bringing the official cash rate to 1.35%.

The more aggressive tightening has seen the ASX 200 bank shares come under pressure along with much of the broader market.

How high will the RBA hike rates?

The most recent rate hike almost certainly won’t be the last one we see.

In the RBA’s minutes, released yesterday, the central bank said “inflation was expected to increase in year-ended terms through the remainder of 2022″.

As for its expected response, the RBA stated:

The current level of the cash rate is well below the lower range of estimates for the nominal neutral rate. This suggests that further increases in interest rate will be needed to return inflation to the target over time.

Of the ASX 200 banks, Australia and New Zealand Banking Group Ltd (ASX: ANZ) is forecasting the most aggressive tightening from the RBA. ANZ believes the central bank will boost the cash rate by 0.5% in each of the next four months. That would put the benchmark interest rate at 3.35% in November.

Commenting on ANZ’s outlook and the impact on borrowers, RateCity research director Sally Tindall said (quoted by 9 News):

ANZ now believes the cash rate could hit 3.35% by November – that would be a rise of 3.25 percentage points in the space of seven months. With central banks hiking official rates around the world, it’s difficult to see the RBA doing anything less than a double hike in August.

Many families are already under the pump with skyrocketing grocery and petrol costs. Hefty increases to mortgage repayments, on top of this, could tip some into the red.

As for the other ASX 200 banks, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) are all aligned in the belief the RBA will reach a 2.6% cash rate by November.

How have the ASX 200 banks performed since the rate rises?

May’s rate increase was the first hike by the RBA since November 2010.

So how have the ASX 200 banks performed compared to the benchmark since rates have started rising?

Well, the ASX 200 has lost 7.5% since the opening bell on 3 May.

Over that same time, the CBA share price is down 6.1%; the NAB share price is down 7.5%; the ANZ share price has tumbled 20.6%; and Westpac shares have dropped 14.1%.

The post How high will the RBA hike rates in 2022? Here’s what the ASX 200 banks are forecasting appeared first on The Motley Fool Australia.

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More reading

• ANZ to buy Suncorp’s banking business, and real wages going backwards. Scott Phillips on Sky News First Edition
• Is the NAB share price in danger from a resurgent ANZ?
• Top broker gives its verdict on ANZ’s Suncorp Bank acquisition
• What might ANZ’s Suncorp deal mean for competition among ASX 200 banks?
• This is what analysts are forecasting for the Westpac dividend through to FY24

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 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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The Goodman Group (ASX: GMG) share price is rebounding with the market on Wednesday.

In afternoon trade, the integrated industrial property company’s shares are up 3% to $19.14.

However, despite this gain, the Goodman share price remains down 28% since the start of the year.

Is the Goodman share price ready to take off?

According to a recent note out of Goldman Sachs, its analysts believe that now could be the time to pick up shares.

Goldman currently has a buy rating and $25.40 price target on the company’s shares.

Based on the current Goodman share price, this implies potential upside of ~33% for investors over the next 12 months.

Why is Goldman bullish?

In its initiation report, Goldman spoke very positively about Goodman’s outlook. This is due to long term demand for industrial property, its $12.7 billion development pipeline, and its ability to capture market rental growth.

The broker believes this will allow Goodman to deliver asset under management (AUM) growth of 19% through to FY 2024 even as interest rates rise.

Goldman commented:

Our view of GMG is supported by a solid outlook for the Industrial sector more broadly, with a number of favourable fundamentals underpinning future long-term demand for industrial space (e.g., increasing e-commerce penetration and supply chain modernisation).

Given GMG’s preference to own, develop and manage high-quality industrial assets in key infill markets globally, we believe it is well-positioned to capture market rental growth, which when coupled with elevated investment demand for industrial assets will assist in contributing to AUM growth through increasing valuations (against a backdrop of rising rates).

And while the Goodman share price is not conventionally cheap, the broker believes it is trading at an attractive level when factoring in the company’s growth potential.

Its analysts conclude:

Year to date, GMG shares are down ~27%, underperforming the ASX200 by ~22% and the ASX200 REIT index by ~9%. Our EPS estimates sit in line with Visible Alpha consensus in FY22, -0.2% lower in FY23 and -1.1% in FY24. We estimate that GMG currently trades on a P/E to growth ratio of ~1.9x (vs. 5-yr historical average of ~2.7x), noting the current market implied growth rate of ~9% pa, compares to our FY22-24e EPS CAGR of ~13%.

The post Down 28% so far this year, could the Goodman share price be ready to take off? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares in a sector ready for a massive comeback
• Why experts are tipping these ASX 200 shares as buys
• $264 million! The 10 highest-paid CEOs on the ASX
• The Goodman share price went through a big rollercoaster in FY22
• 2 bargain ASX shares with good times ahead: expert

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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The Magellan Financial Group Ltd (ASX: MFG) share price has spiked 8.69% to $13.63 per share in lunchtime trading on Wednesday.

While there has been no news released by the company today, many investors may still be digesting Magellan’s annual market review, released yesterday.

Meantime, the broader market is also up today, with the benchmark S&P/ASX 200 Index (ASX: XJO) rising 1.72% so far.

What’s news at Magellan?

Yesterday, Magellan released its Magellan InReview 2022, providing insights and commentary on the global investment landscape today.

Magellan Global portfolio managers Nikki Thomas and Arvid Streimann described why and how inflation, income inequality, geopolitics, and climate change will dominate global economies and markets in the next year.

They point out that the efforts underway to resolve these challenges will favour quality companies.

In terms of how to navigate today’s “uncertain and unbalanced world to protect capital”, the pair said they remained focused “on investing in only high-quality companies that can cope with the challenges the world faces”.

They wrote:

We are seeking companies that we expect to be resilient during the tightening of financial conditions and those that can benefit from such conditions. This means companies that are protected from rising and high inflation or indeed can benefit from high prices.

In terms of the portfolio, a world of rising interest rates has prompted us to scale back our holdings of energy utilities that had risen on their bond-proxy allure when rates were low.

We avoid growth (but not cash-generating) companies that are susceptible as valuations are deflated by higher discount rates and we exited those similarly vulnerable due to low cash generation now.

Our concerns about China prompted us to exit Chinese-domiciled stocks.

We added banks that are likely to enjoy higher margins as interest rates return to more normal levels.

We have added high-quality defensive companies with pricing power and minimal commodity and labour-related cost pressures.

A pushback against inequality has driven many policy changes of late in countries from China to the US that act against investment returns.

The risk for equity investors is that any lowering of the corporate profit share of national income will weigh on overall equity returns. Rising social-licence risks contributed to our decision to reduce our holding in Meta Platforms Inc (NASDAQ: META).

The top five holdings in the Magellan Global Fund (ASX: MGOC) as of 30 June are Microsoft Corporation (NASDAQ: MSFT) 7.8%, Visa Inc (NYSE: V) 6%, Alphabet Inc (NASDAQ: GOOGL), (NASDAQ: GOOG) 5.6%, Mastercard Inc (NYSE: MA) 5.1%, and McDonald’s Corp (NYSE: MCD) 4.5%.

Switching focus from rising rates to earnings resilience

Thomas and Streimann comment:

Assuming no more shocks, the dominant driver of equity market returns is likely shifting from interest rates to earnings; in particular, downgrades to earnings expectations. This is a natural sequence when higher rates slow economies.

As a result, the Magellan Global Fund is “holding a cash level moderately higher than usual”.

They add:

We will seek to use this money to buy high-quality companies at great prices as we navigate the volatility induced by the uncertain backdrop.

We remain confident that the portfolio is positioned to benefit from longer-term investment thematics and secular growth tailwinds to above-GDP growth in many segments of industry.

These include digitalisation trends across our lives – in payments, in enterprise processes, in advertising, entertaining and retail spending – as well as the energy transition and electrification and rising usage of data analytics via increased computation speeds.

How are quality companies performing in the bear market?

The pair say earnings estimates for S&P 500 (INDEXSP: .INX) companies have shown resilience in 2022, especially due to the booming energy sector and commodity prices.

But they add:

European earnings could be susceptible to downgrades; Chinese earnings expectations have already been downgraded. We expect more downward pressure on earnings outlooks through the balance of this year as companies review guidance. Broad capitulation of negative earnings revisions is normally a prerequisite for a bottoming in equity markets.

As Streimann explains in the accompanying Q & A: “Quality companies tend to be defensive, which means they provide reliable earning streams. They have low leverage and high returns on capital.”

He added:

Growth-focused quality companies tend to have profits further into the future than most other companies. That means their valuations are more sensitive to higher interest rates, which have gone up significantly this year. While we still consider these quality companies, this mechanical link between interest rate hikes and valuation has dragged down the overall quality index.

What else is happening at Magellan?

Yesterday, Magellan announced the official appointment to the board of its new CEO and managing director David George.

George is replacing Magellan co-founder Hamish Douglass, who will now work as a consultant to provide valuable investment insights, including geopolitical and macroeconomic views.

Douglass is expected to begin in his new role on 1 October after an extended period of personal leave.

The post What market prediction sent the Magellan share price spiking 9% today? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Megaport rockets, Allkem’s update, tech shares rally
• Why is the Novonix share price launching 5% higher today?
• The only certainty in uncertain times: expert
• ‘Unusually cheap’: ASX experts call out massive buying opportunity
• 5 things to watch on the ASX 200 on Wednesday

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Mastercard, Microsoft, and Visa. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), 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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The Zip Co Ltd (ASX: ZIP) share price is having much-needed positive day.

In afternoon trade, the buy now pay later (BNPL) provider’s shares are up a massive 14% to 67.5 cents.

What’s going on with the Zip share price?

The catalyst for the rise in the Zip share price has been a rebound in the tech sector.

This rebound has been particularly strong among beaten down loss-making tech shares like Zip.

For example, the Life360 Inc (ASX: 360) share price is currently up 6%, the PointsBet Holdings Ltd (ASX: PBH) share price is up 9%, and the BrainChip Holdings Ltd (ASX: BRN) share price is up 12% at the time of writing.

This has driven the S&P ASX All Technology index 4% higher today.

What’s driving tech shares higher?

Investors have been piling into the tech sector on Wednesday following a very strong night of trade on the tech-focused NASDAQ index.

This was driven by optimism that markets have now bottomed and it is onwards and upwards from here.

Among the best performers on the NASDAQ index was the Affirm share price with a 9% gain. Investors appear to believe this BNPL share has been oversold and created a buying opportunity.

The same seems to be happening on the Australian share market with the Zip share price.

Quarterly update

The Zip share price will be in focus again on Thursday when the company releases its quarterly and full year update.

In respect to its full year performance, according to note out of Macquarie, its analysts are expecting Zip to report a 59.9% increase in revenue to $644.24 million in FY 2022.

And while it is unlikely to release an update on its earnings until next month, the broker has pencilled in an EBITDA loss of $201.8 million for the year.

The post Zip share price jumps 14% ahead of tomorrow’s update appeared first on The Motley Fool Australia.

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More reading

• How to beat the market with ‘boring’ ASX shares: fundie
• Has the Zip share price finally hit rock bottom?
• Is the Zip share price going to take off?
• What’s the outlook for ASX BNPL shares in FY23?
• Sezzle shares plunge another 16%, now down 60% in a week

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc., Pointsbet Holdings Ltd, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Pointsbet Holdings 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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S&P/ASX 200 Index (ASX: XJO) lithium shares are flying out the door on Wednesday amid a dire warning from the chair of Tesla and the Tech Council of Australia.

Robyn Denholm has reportedly urged Australia to increase production of lithium-ion battery materials, telling the Clean Energy Summit a shortfall could put the brakes on action against climate change.

And the market may have heard the message loud and clear. ASX 200 lithium shares are among the most traded on the index on Wednesday.

Leading the charge is Lake Resources N.L. (ASX: LKE). More than 42 million of the company’s shares have swapped hands so far today. Pilbara Minerals Ltd (ASX: PLS) and Core Lithium Ltd (ASX: CXO) are also up there, with a combined 28 million shares in the pair traded.

Let’s take a closer look at the battery and technology insider’s warning of a lithium supply shortage.

ASX 200 lithium shares prove popular amid supply concerns

Denholm has reportedly put out a warning, saying the uptake of Tesla vehicles and batteries could soon outstrip the pace at which the company can source battery materials, the Australian Financial Review reports.

Of course, that could be good news for ASX 200 lithium shares – more demand for the mineral generally means greater profits for producers. However, it might be a major weight on the speed at which the world can face climate change.

“I can’t think of a technology that is more important than lithium-ion batteries right now,” Denholm said, courtesy of the AFR. “The world cannot build battery cells fast enough. It may be the rate-limiting actor for tackling climate change.

“To meet the challenge of climate change, this entire industry needs to scale at sprinting pace.”

That might mean more lithium mines, particularly for Australia. The nation is home to a large portion of the globe’s lithium mineral resources.

ASX 200 lithium giant Pilbara Minerals, mines one of the world’s largest hard rock lithium ore bodies in Western Australia. Meanwhile, Core Lithium is developing the Finniss Lithium Project in the Northern Territory.

But there’s likely more that could be done.

Denholm has reportedly called on state and federal governments to grant more lithium projects the tick of approval and noted opportunities for partnerships between public and private capital.

The post ASX 200 lithium shares get busy amid dire supply call appeared first on The Motley Fool Australia.

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More reading

• Up 4% in FY23, what’s next for the Pilbara Minerals share price?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why is the Lake Resources share price rallying 11%?
• ASX 200 midday update: BHP’s Q4 update, JB Hi-Fi delivers record result
• Here are the top 10 ASX shares today

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 Tesla. 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 Netflix Inc (NASDAQ: NFLX) share price soared in the US after the company released quarterly results showing net income of more than $1.4 billion.

Netflix shares jumped 7.85% to $217.46 on the NASDAQ during after-hours trade. In Tuesday’s trading, Netflix shares climbed 5.61%. For perspective, the NASDAQ leapt 2.93% on Tuesday.

Let’s take a look at what Netflix reported today.

Netflix reports quarterly results

Highlights of the Netflix Q2, 22 results include:

• Total revenue of $7.97 billion
• Revenue jumped 1.3% on the previous quarter and 8.55% compared to Q2, 21
• Loss of 970,000 global streaming paid memberships
• Total of 220.67 million global streaming paid memberships
• Operating margin of 19.8%
• Net income of $1.441 billion, up 6.5% compared to Q2,21
• Diluted earnings per share (EPS) of $3.20, up from $2.97 per share in Q2,21

What else did Netflix report

Despite the loss of subscribers, Netflix said membership was “better than expected”. The company said it is in a position of strength.

Average revenue per membership (ARM) increased 7% year on year, excluding the impact of foreign exchange.

Revenue in the Asia Pacific region jumped 23% compared to the previous year, excluding foreign exchange, and is now almost as big as the company’s Latin America business.

Europe, the Middle East, and Africa revenue also climbed 13% year on year, while Latin America revenue rose 19% and US Canada revenue gained 10%.

Netflix added 1.1 million subscribers in the Asia Pacific region in the quarter, up from one million in the previous corresponding year.

The best Netflix movie in quarter two was Hustle, featuring Adam Sandler. This attracted 186 million hours of viewing. This was followed by Senior Year, starring Rebel Wilson, with 161 million viewing hours.

Netflix is also investing in animated features and building on non-English programming. Netflix said:

While we always have room to improve, we’re very pleased with how far we’ve come in providing so much satisfaction and enjoyment to our members.

What’s ahead?

Netflix wants to accelerate revenue growth and improve monetisation. The company is planning to add a new lower-priced plan with advertising in early 2023. This will be in addition to existing plans that are free of ads.

Netflix plans to roll this plan out in markets where advertising spend is high. Commenting on this initiative, the company said:

Our global ARM [average revenue per membership] has grown at a 5% compound annual rate from 2013 to 2021, so it makes sense now to give consumers a choice for a lower priced option with advertisements, if they desire it.

Netflix is also working on plans to monetise up to 100 million homes that are not paying for Netflix, despite using the services. Netflix added:

We know this will be a change for our members. As such, we have launched two different approaches in Latin America to learn more.

Our goal is to find an easy-to-use paid sharing offering that we believe works for our members and our business that we can roll out in 2023.

Share price snapshot

The Netflix share price has dived 62% in the past year, while it has lost 66% year to date.

However, in the past month, Netflix shares have soared nearly 18%. For perspective, the NASDAQ has dropped nearly 12% in the past year.

The post Why did the Netflix share price lift despite losing 970,000 subscribers? appeared first on The Motley Fool Australia.

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More reading

• The end of ‘Stranger Things’ might actually be a boost for Netflix
• Betting against Netflix now could be a big mistake
• Should you invest in stocks right now? These 2 charts say yes
• Better bear market buy: Netflix vs Amazon
• 3 reasons Netflix should bounce back in July

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 Netflix. The Motley Fool Australia has recommended Netflix. 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 Leo Lithium Ltd (ASX: LLL) share price is racing higher on Wednesday.

This comes after the lithium developer announced a debt facility update to the market.

At the time of writing, Leo Lithium shares are swapping hands at 44.5 cents, up 4.71%.

Leo Lithium completes debt funding package

Investors are rallying up the Leo Lithium share price following the company’s financing efforts.

According to its release, Leo Lithium advised it has secured an expandable US$40 million debt facility with Joint Venture partner Ganfeng Lithium Co.

The facility agreement puts Leo Lithium in a strong financial position to cover its share of the costs in developing the Goulamina Project. The first-stage development costs are estimated to be around US$255 million.

The Goulamina JV now has a debt and equity package of US$170 million.

By securing the funds, this completes Leo Lithium’s initial offtake marketing efforts and locks in all of spodumene product offtake from the first stage of the project.

Based in Mali, Goulamina is regarded as one of the world’s largest spodumene projects and the first of its kind in West Africa.

It’s forecasted that the mine will produce 506,000 tonnes of spodumene concentrate per annum, increasing up to 831,000 tonnes thereafter.

Early-stage development is underway and the first production is being targeted for the first half of 2024.

Leo Lithium managing director, Simon Hay commented:

Leo Lithium and Ganfeng are jointly developing Goulamina with plans to become one of the world’s largest spodumene concentrate producers.

The finalisation of the debt funding package from Ganfeng significantly de-risks development and means we are now able to fully focus on accelerating development work on the Goulamina Project as we jointly bring the Goulamina into production.

The accordion facility provides Leo Lithium with a further funding option, an important feature as the globe experiences broad inflationary pressures.

Leo Lithium share price snapshot

Since listing on the ASX board last month, Leo Lithium shares declined by around 35%.

This follows the demerger from Firefinch Ltd (ASX: FFX) back in April this year.

Based on today’s price, Leo Lithium has a market capitalisation of approximately $424.26 million.

The post Why is the Leo Lithium share price launching 5% today? appeared first on The Motley Fool Australia.

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• Leo Lithium share price fails to roar and sinks 26% following demerger

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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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. The benchmark index is currently up 1.75% to 6,765.5 points.

Here’s what is happening on the ASX 200 today:

Megaport shares jump

The Megaport Ltd (ASX: MP1) share price is rocketing higher on Wednesday. As well as getting a boost from a rebound in the tech sector, the release of a strong quarterly update has got investors excited. Megaport reported a 13% increase in monthly recurring revenue (MRR) to $10.7 million and its first quarterly operating profit of $1 million.

Allkem’s quarterly update

The Allkem Ltd (ASX: AKE) share price is underperforming today after the lithium miner’s quarterly update disappointed. Although Allkem reported record quarters for its Mt Cattlin and Olaroz operations, its guidance for FY 2023 appears to have underwhelmed. Management is forecast a sizeable production decline from its Mt Cattlin operation next year.

Tech shares storm higher

The tech sector has been the place to be on the Australian share market on Wednesday. Investors have been piling into the sector following a very strong night of trade on the tech-focused NASDAQ index. Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO) shares have been among the best performers and are helping to drive the S&P ASX All Technology index 4.4% higher at the time of writing.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Megaport share price with a 19% gain. This follows the release of the network as a service provider’s quarterly update. Going the other way, there are only a handful of shares in the red. One of those is the Pendal Group Ltd (ASX: PDL) share price, which is down 2.5%. This may be due to profit taking after a solid gain yesterday amid takeover speculation.

The post ASX 200 midday update: Megaport rockets, Allkem’s update, tech shares rally appeared first on The Motley Fool Australia.

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More reading

• Xero share price rises 8%: Can it keep climbing?
• Why is the Novonix share price launching 5% higher today?
• Pendal share price slides amid ‘potential transaction’
• Megaport share price explodes 38% on June quarter profit
• Allkem share price falls despite record quarter

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., MEGAPORT FPO, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Wilson Asset Management (WAM) is a fund manager that manages billions of dollars across various listed investment companies (LICs). It often likes to go hunting for ASX All Ordinaries (ASX: XAO), or All Ords, shares.

The company manages one of the largest LICs on the ASX, WAM Capital Limited (ASX: WAM). Another is WAM Leaders Ltd (ASX: WLE), which looks at the bigger ASX shares.

Each month, the fund manager likes to tell investors what’s going on in its portfolio.

Sometimes it outlines an investment that has gone well (and could keep going well), whereas other examples may be something that has seen a decline but could still be an opportunity.

With that in mind, let’s look at two of the latest All Ords ASX shares that WAM thinks are opportunities.

Smartgroup Corporation Ltd (ASX: SIQ)

WAM described Smartgroup as a business that provides salary packaging, fleet management, and a range of other employee benefit services for organisations across Australia.

The fund manager noted the Smartgroup share price suffered in June after the company announced the Department of Education and Training Victoria would not be renewing its contract.

WAM noted this was a rare occasion where the company was unsuccessful against its competitors. The contract is expected to end in the coming months with an estimated earnings impact of “less than 5%” in the 2023 calendar year.

While this announcement hurts short-term earnings and market sentiment, WAM pointed to a number of reasons to remain positive. Those factors were: a recovery in new vehicle supply, a robust pipeline of novated leases, and a cost-out targeted under the company’s smart future program. All are expected to underpin Smartgroup’s earnings growth over the medium term, WAM said.

Carsales.Com Ltd (ASX: CAR)

The fund manager describes Carsales as a business that operates the largest online automotive, motorcycle, and marine classified advertising business in Australia. It also operates Trader Interactive (TI), a US-based marketplace business that has a leading position in the recreational vehicle, powersports, commercial truck, and equipment markets.

WAM noted that, in June, the All Ords ASX share announced it would exercise its call option to acquire the remaining 51% interest in TI that it doesn’t already own for $1.2 billion. This will be funded by a capital raising.

The transaction is expected to be completed in the first quarter of FY23, with the acquisition providing “immediate low double-digit earnings per share (EPS) accretion”, including tax and interest benefits.

WAM likes the deal because owning all of the TI business is expected to unlock a “range of additional growth options” for the business.

The company also provided a trading update during June 2022, with FY22 earnings guidance in line with analyst expectations.

Despite uncertainty in the wider economic environment, Carsales noted “strong momentum” across all markets going into FY23. WAM thinks the All Ords ASX share’s earnings will be more resilient than the market is expecting.

The post 2 All Ords ASX shares this fund manager thinks are compelling appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ordinaries shares leaping 10% or more today
• Fundie reveals 2 indicators the bear market may be coming to an end
• Why this expert tips a ‘range of additional growth opportunities’ for Carsales shares
• 3 ASX All Ords shares tumbling into the weekend
• Sezzle shares plunge another 16%, now down 60% in a week

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended SMARTGROUP DEF SET. The Motley Fool Australia has recommended carsales.com 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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