The Evolution Mining Ltd (ASX: EVN) share price was among the worst performers on the ASX 200 during the 2022 financial year.

The gold miner’s shares lost 47% of their value during the 12 months.

Why did the Evolution share price get crushed?

Interestingly, the majority of this decline came in the final month of the financial year following the release of an abject update.

Investors were selling down the Evolution share price in June after the company revealed that it expects to record a decline in production in FY 2022 with higher than expected costs.

Evolution is forecasting total production of 640,000 ounces with an all-in sustaining cost (AISC) of approximately $1,250 an ounce.

This compares to 680,788 ounces and an AISC of $1,215 an ounce a year earlier.

What are brokers saying?

This update didn’t go down well with analysts at Credit Suisse. In response, the broker reiterated its underperform rating and slashed its price target by 28% to $2.70.

Elsewhere, analysts at Citi responded by retaining their neutral recommendation (now with a high risk rating) and cutting their price target by 28% to $3.30.

Citi appears to believe the company’s outlook is extremely cloudy and isn’t expecting any cash generation for a few years.

Citi explained:

There’s a lot to unpack after today’s higher-cost, lower ounce outlook including read-through to the rest of our coverage. In Nov’21, EVN had expected to do +900koz in FY24 @ A$1050/oz vs today’s 800koz @ $1240/oz. We’ve cut our TP from $4.60/sh to $3.30/sh trimming EBITDA by almost 20% next year.

After today’s +21% sell off vs XGD -7%, EVN is now trading on ~0.90x P/NAV. EVN’s usually hefty valuation premium is gone. On our gold deck and including debt repayments, we’re not expecting EVN to make any cash until FY25, and that hinges on Red Lake. We thus assign a High Risk rating; without conviction on the Red Lake turnaround, Mungari plus our sideways tracking gold price it’s hard to be more positive here.

All in all, it looks set to be a tough few years for the company. In light of this, it isn’t overly surprising to have seen the Evolution share price fall so hard over the last 12 months.

The post Why did the Evolution share price crash 47% in FY22? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
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• 2 ASX 200 gold mining shares getting plastered with new multi-year lows
• Is now the time to be buying beaten down ASX 200 mining shares?
• Losing their shine: 3 ASX 200 gold shares hitting new 52-week lows today

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

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

One of the more dramatic stories of 2022 is closing — Elon Musk is terminating his deal to buy Twitter (NYSE: TWTR). News of this sent Twitter’s stock about 6% higher after hours to $34, still well short of the $54.20 per share Musk was offering.

While Musk may be through, is this an opportunity for investors to take a position in Twitter? After all, Twitter is one of the most popular social media companies.

Shaky user data

First, it may be good to understand why Musk terminated the deal. The biggest sticking point for the deal was Twitter’s refusal to provide complete data on fake or spam bots. This data is critical, as it determines how many of its users can be monetized. Most of Twitter’s revenue is derived from advertising (93% during the first quarter). If Twitter can’t guarantee that most ad viewers are humans, then the price companies are willing to spend on ads is substantially reduced.

Twitter has long claimed the number of bots is less than 5% of total users, but Musk wanted to confirm those numbers for himself.

In the first quarter, Twitter reported monetizable daily active users (mDAU) of 229 million. However, they also had to revise previously stated mDAUs for the last five quarters due to an error in how they were calculated. This mistake instils less confidence in management’s ability to report mDAUs accurately. 

Throw in their refusal to provide Musk with the data he wants, and it makes investors wonder what they can trust.

Twitter fires back

Twitter’s management isn’t just going to let a $54.20 per share offer walk away (especially when there’s a $1 billion breakup fee Musk is claiming he wouldn’t need to pay). It responded by issuing a letter that claimed Twitter had not violated any of the obligations under its agreement. It also stated that Musk and his party “knowingly” and “willingly” breached the terms of the initial contract.

This breakup will get ugly and will likely end up in court.

While not legally required to do so, the letter did not disclose if Twitter had actually given Musk the user data he was requesting. Whether this was intentionally left off or not, it does leave outsiders wondering what is really going on.

What’s next?

As mentioned above, this acquisition will likely end up in court. This battle would incur significant legal fees and consumer time from Musk and Twitter executives. A few ways it could shake out:

• Musk (or Twitter) pays the $1 billion breakup fee, and each entity goes its separate ways without the long, drawn-out court battle.
• The courts force Twitter to disclose the data Musk wants, which still leaves the question open if management was truthful or not, leaving Musk a door to still back away.
• The courts side with Twitter, and Musk would need to decide if he wants to continue his acquisition.

None of these options are ideal, and with the growing animosity between the two parties, each may want to prove that they are right.

However, with the stock now trading well below its buyout price, is this a prime opportunity to make an even larger arbitrage gain?

Should you use this opportunity to buy Twitter stock?

Unlike user data, financials are much easier to audit. However, they also aren’t much better.

In Q1, revenue rose 16% YOY (year-over-year) to $1.2 billion. But, expenses rose faster at a 35% clip. This increase was primarily driven by an astounding 60% increase in stock-based compensation, diluting shareholders.

Twitter was profitable in the quarter, but only because it sold MoPub (a mobile ad publishing platform) for $1.05 billion. Without that, it would have lost about $128 million in the quarter.

However, many companies are likely reading the termination letter sent by Musk and noting Twitter’s refusal to provide relevant user data. This refusal will likely have long-term damaging effects on Twitter’s advertising brand. If management can’t provide a suitor the data he needs to close a deal, what makes prospective customers believe the 5% spam account figure is accurate?

As an investor, I don’t have a lot of faith in management. This sentiment was echoed by Musk and former CEO and co-founder Jack Dorsey. So if these two have no confidence, why would I?

There are plenty of better investments available in the market, and I think investors should appreciate the entertainment value of this acquisition more than the potential investment value.

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

The post What’s next in the Elon Musk and Twitter saga? appeared first on The Motley Fool Australia.

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More reading

• 2 reasons Elon Musk’s Twitter break-up is destined to lose in court
• Elon Musk doesn’t want to buy Twitter anymore, and neither should you

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

What happened 

Apple (NASDAQ: AAPL)‘s stock, like most other technology stocks, has taken investors on a rollercoaster ride this year. While the company’s share price was volatile in the first few months of 2022, a significant downward trend began after the company reported second-quarter results in late April. 

The stock hasn’t recovered since. Year to date, Apple is down 17%, according to data provided by S&P Global Market Intelligence. This is mostly because investors are concerned that Apple won’t escape the effects of supply chain shortages and a potentially slowing economy. 

So what 

Investors fell into a pessimistic mode in late April after Apple released its second-quarter financial results. Apple beat analysts’ consensus estimates for both top and bottom lines, but investors latched on to comments made by the company’s management.

On the company’s earnings call, CEO Tim Cook said that Apple was “not immune” to supply chain problems caused by COVID-19, chip shortages, and the war in Ukraine. 

Apple’s chief financial officer, Luca Maestri, spoke more specifically about the company’s supply chain problems and said they could hurt Apple’s sales in the third quarter by as much as $8 billion. 

“Supply constraints caused by COVID-related disruptions and industrywide silicon shortages are impacting our ability to meet customer demand for our products. We expect these constraints to be in the range of $4 billion to $8 billion, which is substantially larger than what we experienced during the March quarter,” Maestri said. 

Clearly, investors didn’t want to hear that Apple’s sales could be affected to this degree and sent the stock on a downward path. 

Now what 

Apple investors will want to keep a close eye on the company’s third-quarter results, which will be released on July 28. The results should shed some light on how bad supply chain difficulties have become for Apple and if the company has experienced any pullback in consumer demand. 

With inflation still at its highest level in nearly 40 years and the Federal Reserve focused on hiking the federal funds rate in order to bring it back down, it’s likely that Apple investors could experience some more short-term volatility from the stock as the market reacts to a potential economic slowdown. 

But long-term investors should also consider that while temporary supply constraints could affect the company, Apple still has the potential to be a great investment. First off, the company still generates tons of cash — $28 billion in operating cash flow in the recent quarter — which will help it weather any potential economic slowdown better than other companies. 

And while Apple’s stock isn’t necessarily cheap right now, its shares trading at 23 times the company’s forward earnings, the recent stock sell-off does give investors an opportunity to add some shares of this immensely profitable company at a relative discount. 

Lastly, Apple continues to both add value to shareholders through buybacks and invest in new products. The company added $90 billion to its share repurchase program in the most recent quarter and could enter a new product segment within the next year. 

With Apple’s shares down this year — and the company still in a very strong financial position — investors may want to consider snatching up some shares of Apple right now.

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

The post Why Apple stock is down 17% so far this year appeared first on The Motley Fool Australia.

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Chris Neiger has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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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The Xero Limited (ASX: XRO) share price has had a rough time over 2022, falling by over 40%. However, according to experts, the ASX tech share could be a leading opportunity for the next year.

Xero is one of the biggest technology businesses on the ASX, with a market capitalisation of $12.6 billion.

Like many other businesses, the Xero share price has sunk amid rising interest rates and strong inflation.

While a lower price doesn’t automatically make a business a better investment, it can certainly give a bigger margin of safety.

Broker ratings

Citi currently has a buy rating on Xero, with a price target of $108. This implies a potential rise of around 28% over the next year. A key reason for that optimism is the company’s plans to increase prices for subscribers in New Zealand, Australian and United Kingdom markets.

As I reported in June, these increases are for high-single-digit to mid-teen increases in percentage terms.

With these increases, Citi believes the average revenue per user (ARPU) will increase by high single digits, which will help grow operating revenue. The broker notes that Xero is increasing prices more regularly, which could suggest Xero believes it has a strong market position.

Morgans is another broker with a positive outlook. The broker has an add rating on Xero and a price target of $90.25. Ongoing growth of subscribers and ARPU could help things.

Latest growth numbers

The latest that investors have heard is Xero’s FY22 result. Many of its numbers went the right way.

Operating revenue rose by 29% to NZ$1.1 billion. Total subscribers rose by 19% to 3.3 million. And annualised monthly recurring revenue (AMRR) rose 28% to NZ$1.2 billion. The ARPU increased 7% to NZ$31.36. Xero’s gross profit margin went up 1.3 percentage points to 87.3%. It also said that the total lifetime value of subscribers jumped 43% to NZ$10.9 billion. Further growth of these statistics could be supportive for the Xero share price.

Xero CEO Steve Vamos spoke of why the company is seeing growth and what it’s planning to do:

The value Xero brings to our small business customers and the trust they place in us is illustrated by this result. Our strong revenue and subscriber growth gives us confidence to continue to invest for growth consistent with our long-term strategy.

Our performance reflects the quality of our customer and partner relationships as more people realise the benefits that cloud accounting and digital tools provide.

We are committed to delivering the world’s most insightful and trusted business platform by focusing on driving cloud accounting adoption, growing the small business platform and building for global scale and innovation. We continue to prioritise investment in building products and growing partnerships by investing cash generated to help deliver our strategy, drive long-term growth and meet customer needs.

Xero share price snapshot

Over the past month (since market close on 14 June), the Xero share price has risen by nearly 3%.

The post This broker sees 30% upside for the Xero share price over the next year appeared first on The Motley Fool Australia.

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More reading

• Here’s why Goldman Sachs sees lots of value in the Xero share price
• Down 40% in 2022: Is the Xero share price a buy today?
• Here are the top 10 ASX shares today
• Why are ASX 200 tech shares sprinting higher today?
• How did Xero shares do in the 2022 financial year?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The last 12 months have been reasonably positive for ASX uranium shares.

As we recently covered here, many uranium shares outperformed the market during the 2022 financial year. This includes Boss Energy Ltd (ASX: BOE) and Paladin Energy Ltd (ASX: PDN), which recorded strong gains over the period despite broad sector weakness in April.

But that was then. What about the future? Let’s take a look and see what may lie ahead for ASX uranium shares in FY 2023.

What is the outlook for ASX uranium shares?

The team at Bell Potter has been looking at the uranium sector and believes that weakness since April has created “selective opportunities.”

It commented:

ASX Uranium equities are on average down 44%, vs the ASX300 Resources Index of 19%. The sell-off, in our opinion, has been indiscriminate in the case of BOE and PDN and completely irrespective of 1) broader uranium market fundamentals and 2) company specific situations. The April sell-off has created an interesting opportunity to build/establish positions in either of these two companies.

Valuations for BOE and PDN 40% off from April highs – BOE and PDN are now trading at ~40% discounts to their April high, on a Market Value/ Resource pound metric. In addition to this, we believe there is further upside for both businesses as per our stated valuations.

However, the broker does acknowledge that “shorts continue to build,” with both companies experiencing rising short interest despite the selloff.

Nevertheless, Bell Potter has reiterated its speculative buy ratings on both companies. It has a $3.32 price target on Boss Energy’s shares and a $1.06 price target on Paladin Energy’s shares.

Overall, the broker remains positive on uranium due to its belief that reach net zero ambitions would be difficult with nuclear power.

The post Will ASX uranium shares be market-beaters in FY23? appeared first on The Motley Fool Australia.

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More reading

• The ups and downs for ASX uranium shares in the 2022 financial year
• Here are the top 10 ASX shares today
• Lake Resources shares are the most traded today. What’s going on?
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• Why the Paladin share price fell 25% in June

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 Woodside Energy Group Ltd (ASX: WDS) share price was a strong performer during the first six months of 2022. So, can the company do it again in the next six months?

A lot has happened over the last 12 months for the oil and gas giant. It may not be a surprise that Woodside shares have gone up by around 30% over the past year.

As Australia’s biggest ASX oil and gas share, changes in commodity prices can have sizeable impacts on what happens to a company’s profit and investor sentiment. Energy prices jumped after the Russian invasion of Ukraine.

However, a business can achieve things operationally that can also help.

Let’s look at one of the biggest changes that has happened to the business recently, which will have a significant impact on the following months (and years).

Merger with BHP business

As a result of the merger between Woodside and BHP’s oil and gas business, Woodside is now a top 10 global energy company by hydrocarbon production and the largest listed energy company on the ASX.

Woodside expects the larger, more diversified portfolio to deliver “significant cash flow to help fund committed projects, Woodside’s participation in the energy transition and shareholder returns”.

The ASX oil and gas business has started activities to integrate the two organisations.

Woodside’s CEO Meg O’Neill said that completing this merger was one of the most significant events in the company’s 67-year history:

The merger delivers a diverse portfolio of quality operating assets, plus a suite of growth opportunities across oil, gas and new energy that promises ongoing value for our shareholders.

We believe the completion of the merger will enable Woodside to play a more significant role in the energy transition that is imperative as we respond to climate change while ensuring reliable and affordable supplies of energy to a growing and aspirational global population.

We are focused on unlocking pre-tax annual synergies of more than $400 million as we merge the two businesses.

Those synergies alone could be quite beneficial for the Woodside share price.

Projects

Woodside continues to make progress on projects that can help grow profit in the future.

For example, it said that in the first three months of FY22 work on the Scarborough and Pluto Train 2 projects began to ramp up, with Bechtel (the engineering, procurement, construction and commissioning contractor for Pluto Train 2) beginning major civil works.

Manufacture of the Scarborough pipeline has also commenced.

Progressing and completing these projects could be helpful for the Woodside share price over the rest of 2022 and beyond.

Broker ratings on the Woodside share price

A price target is where a broker has estimated a share price will be in 12 months from that date.

UBS recently upgraded its rating on Woodside to a buy, with a price target of $34.25. That implies a possible upside of around 10%.

However, Macquarie is neutral on Woodside with a price target of just $29.25, implying a mid-single-digit decline.

Citi is also neutral on the business, though the price target is $33.40. That suggests a possible mid-single-digit rise.

The post Can the second half of 2022 be even better for the Woodside share price? appeared first on The Motley Fool Australia.

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• How does the Woodside dividend compare to Santos over the last 5 years?
• What’s the outlook for ASX 200 energy shares in FY23?
• 5 things to watch on the ASX 200 on Monday
• How did Beach Energy shares pull off a 40% return in FY 2022?
• Why are ASX 200 energy shares making a comeback on Friday?

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 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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The IDP Education Ltd (ASX: IEL) share price has fallen hard in 2022.

Since the start of the year, the language testing and student placement company’s shares are down 30%.

Is the IDP Education share price in the buy zone?

While the pullback in the IDP Education share price this year is disappointing for shareholders, it could be a buying opportunity for non-shareholders.

That’s the view of the team at Goldman Sachs, which believe the company’s shares could rise materially from current levels.

According to a note, the broker has reiterated its buy rating and $35.50 price target on its shares.

Based on the current IDP Education share price of $24.35, this implies potential upside of 46% for investors over the next 12 months.

Why is Goldman bullish?

Goldman notes that the latest student visa data out of Australia reveals that international student arrivals have now reached 74% of pre-pandemic levels. Goldman is expecting this momentum to continue and for pre-pandemic levels to be achieved in FY 2023. This bodes well for IDP Education’s student placement business.

Outside this, the broker has named four reasons for its positive view. It explained:

We see a compelling long-term growth opportunity with a number of drivers:

1. Structural growth in multi-destination student placement markets; supplemented by ongoing recovery in the Australian market;
2. Ability to grow market share in highly fragmented Canadian and UK SP markets;
3. Reinvestment in digital capabilities to increase competitive advantage and strengthen relationships with tertiary institutions and;
4. Consolidation of IELTs business and ability to supplement organic growth with bolt-on acquisitions.

All in all, in light of this positive growth outlook, the broker appears to believe the IDP Education share price is trading at a very attractive level today.

The post Why this broker says the IDP Education share price can rise almost 50% 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 Idp Education Pty Ltd. 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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Small-cap ASX shares have been brutalised in 2022, with some funds specialising in that area shrinking by 38% over the last financial year.

The month of June was especially horrifying, with the S&P/ASX Small Ordinaries Industrials (ASX: XSI) taking a whopping 10.4% fall.

However, small-cap investor Celeste Funds Management told its clients in a memo that three of its holdings actually increased in value last month.

And what’s more, it is looking forward to further gains in the future:

All smiles as Australians get their teeth checked again

Dental centre operator Pacific Smiles Group Ltd (ASX: PSQ) saw its share price skyrocket 15.8% in June after the company indicated patients are returning and staff absence due to COVID-19 has started to slow.

“Pacific Smiles’ same centre patient fees for May 2022 were up 2.8% on pcp [prior corresponding period] while total patient fees were up 7.4%.”

But the best indicator was that in an environment of rising rates the business is already well funded.

“Pacific Smiles also extended its $40 million CBA loan facility for a further 3 years,” read the memo.

“Pleasingly, the board confirmed that due to the headroom in the facility and the improving operating outlook, the company is adequately funded and has no need or desire to raise capital.”

The team at Celeste isn’t the only one bullish about Pacific Smiles shares.

According to CMC Markets, all three surveyed analysts recommend it as a buy.

A tech stock that’s also defensive

Financial services software provider Iress Ltd (ASX: IRE) enjoyed a nice rise in its stock price last month despite making no price-sensitive announcements.

“Iress rose 9.9% over the month of June, outperforming the broader ASX 200 technology sector which fell 11.0%,” stated Celeste analysts.

“We remain positively disposed to management’s renewed focus to its capital base and delivery on FY25 targets.”

For a tech company, Celeste reckons it boasts defensive characteristics in the face of possible recession or an economic downturn.

“Looking ahead, we believe the nature of Iress’ recurring revenues, its cash flow generation and defensive qualities will provide ballast in a macro environment where earnings predictability has become increasingly difficult.”

The wider analyst community is polarised on Iress.

Five out of the nine surveyed on CMC Markets are neutral, rating the stock as a hold. Three recommend it as a strong buy and one labels it a strong sell.

‘A string of positive announcements’

Omni Bridgeway Ltd (ASX: OBL) operates funds that pay for litigation cases.

Celeste analysts attributed the 5.3% rise in the share price last month to “a string of positive announcements”.

“Firstly, they announced the successful completion of a US law firm portfolio that resulted in US$23 million of income into Fund 4, with the same law firm entering into a second $30 million portfolio funding also from Fund 4,” read the memo.

“Omni Bridgeway has also launched its new Fund 8 which is a EUR300 million insured, leveraged special purpose vehicle with materially higher expected returns to Omni Bridgeway than previous funds.”

The company also sold a 20% stake, worth $7.5 million, in a Commonwealth Bank of Australia (ASX: CBA) shareholder class action.

“Omni Bridgeway expects to be an active participant in the secondary market due to the improved liquidity it provides,” stated Celeste analysts.

“We see significant upside in OBL as the transition to legal fund manager continues.”

The post 3 small-cap ASX shares to buy that are actually rising: fund appeared first on The Motley Fool Australia.

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

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If you’re looking to bolster your income portfolio with some ASX dividend shares, then you may want to check out the ones listed below.

Here’s why analysts rate these dividend shares as buys:

Dexus Industria REIT (ASX: DXI)

The first ASX dividend share that could be in the buy zone is Dexus Industria.

The company, which was previously known as APN Industria, has a focus on industrial and office  properties that provide functional and affordable workspaces for businesses.

One broker that is very positive on the company is Morgans. Its analysts appear confident that Dexus Industria is well-placed to deliver sustainable income and capital growth prospects for shareholders over the long term.

Its analysts are forecasting attractive dividends per share of 17.3 cents in FY 2022 and 17.6 cents in FY 2023. Based on the current Dexus Industria share price of $2.71, this will mean yields of 6.4% and 6.5%, respectively.

Morgans has an add rating and $3.65 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share that could be in the buy zone is Telstra.

After a long period of earnings declines and dividend cuts, the telco giant is back on form and now targeting solid and sustainable growth. This is being driven by the success of its transformative T22 strategy and the upcoming growth-focused T25 strategy.

The team at Morgans is also very positive on Telstra. It was pleased with the telco giant’s first half results in February, noting that its “performance is tracking in the right direction” again.

As for dividends, it expects fully franked dividends per share of 16 cents in FY 2022 and FY 2023. Based on the current Telstra share price of $3.86, this will mean yields of 4.15%.

Morgans has an add rating and $4.56 price target on its shares.

The post Here are 2 quality ASX dividend shares to buy according to experts appeared first on The Motley Fool Australia.

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More reading

• Own Telstra shares? Here are details on the telco’s 2,000 new Australian call centre workers
• How big will the Telstra dividend yield be in FY23?
• Here’s why brokers rate these ASX dividend shares as buys
• Experts name 2 ASX dividend shares to buy with big yields
• Telstra share price in the red despite taking out green crown

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

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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Redpoint Australian Equity Income Fund portfolio manager Max Cappetta names three ASX shares he’d buy right now, which all pay out dividends.

Hottest ASX shares

The Motley Fool: What are the three best stock buys right now?

Max Cappetta: First one is Orora Ltd (ASX: ORA) — a packaging company. 

They operate in about 70 countries. Key markets are, obviously Australia, but also North America. Now, for people that may not know the company name, there’s every chance that you interact with Orora many times every day, because they provide bottling and caps, aluminium beverage cans, soft packaging boxes, and cartons. They’re really the dominant player in Australia. 

They’re less dominant in North America. And I think this is the interesting part of their business because being able to grow their market share in North America really gives them an interesting growth runway over the next couple of years.

Now the company has a stated payout ratio of around 60% to 80% of their net profit after tax (NPAT). So at the moment, with the share price having fallen down recently, it’s at a pretty attractive yield of 4.5%. That’s unfranked, so you do get that cash dividend yield and look, it’s about 30% below its pre-COVID price of $4. We think that this looks pretty attractive for a globally diversified business that is quite defensively positioned overall, in providing all of this packaging across a range of markets and products.

MF: It’s fallen about 8% just in the last couple of trading days. No concerns there?

MC: It really wasn’t about the company. It was more that really one of the brokers downgraded their view to hold. I actually think … there’s probably a little bit of an overreaction, and that this probably presents a really good buying opportunity for a business of this quality, given their cash flow and their profitability.

MF: And the second one?

MC: The other one is sort of related, Endeavour Group Ltd (ASX: EDV). 

Again, people may not recognise the company name — but you’ve probably done business with them many times, particularly if you’ve been to a Dan Murphy’s, or to a BWS, or if you’ve actually gone into one of their 340-odd hotels that they own around the country. 

Endeavour was spun out of Woolworths Group Ltd (ASX: WOW) last year, and, at the moment they have 75% of their revenues derived from beverage distribution and 25% comes from their hotel portfolio. We think that it has this real interesting balance of operating within public venues, as well as beverage supply to venues and retailers.

It’s not as strong [as Orora] in terms of its gross yield. So again, for income-focused investors, as we are in our Equity Income Fund, the gross yield is 3.2%. That does include franking credits. 

The other thing is it has been a standout performer so far in 2022. While the market has gone backwards, it has actually risen to $7.80 from around $6.80 at the start of the year. We still find it attractive. We think that the benefits of it now being a standalone entity enables management to clearly focus on converting really what is their absolute market-leading position into profit margin improvement in the years ahead.

MF: Does the market like it because it expects the hotel side of the business to grow now that people are more out and about in the post-lockdown era?

MC: Yeah, absolutely. And I think this was one of the real interesting standouts for this business over the last couple of years, whereby when public venues were obviously constrained through COVID, they actually picked up more in terms of their retail and distribution of beverages through the retailers of those beverages. 

So what we see is that there is this nice diversity, and as we’re starting to see people obviously get back out and about in hopefully a post-COVID world, then they do actually pick up that incremental uplift through having that portfolio of around 350 venues around the country.

MF: Your third pick?

MC: The next one is WiseTech Global Ltd (ASX: WTC). This is one in the IT sector. Yes, it has actually fallen along with the broader IT sector over the last few months. But, for those that don’t know WiseTech, it is a global logistics software business. 

I think one of the real things that we like is their very impressive history of being able to grow revenue and to actually improve their profit margins year on year. 

Even today, it’s not the kind of company that you would call a valuation pick — it trades at around 80 times next year’s earnings or FY22, which will be reported shortly. But it does have a global dominant position. 

The thing that we like is that it has been able to grow its profits faster than the growth in its revenue, and that’s a really nice metric that you want to have behind some of these growth stocks, because that’s what the market really wants.

Now, in terms of the fallback in its price, it is now probably back in line with its pre-COVID highs. However, its profit expectations for financial year 2022 is actually about three times what it earned in the financial year ended 2019.

MF: Wow.

MC: It has had this really great profit expansion, but as I said, even today it does trade at a forward PE of 80 times. There obviously still [are] massive growth expectations for the company. But if you think about it, if they can triple earnings again, over the next three to five years, we don’t actually expect that it’ll be trading at 25 times earnings in three years’ time because just those profits have multiplied. 

So, yes, there is risk in terms of interest rates in the broader IT sector, continuing to weigh on that valuation. But obviously the one thing that we like is that it is a profitable business. We see that there’s profit growth through a market-leading position. As I said, their ability to grow profit faster than revenue, if they can maintain that, then for people that are looking for that IT growth thematic within their portfolio. 

It also pays a dividend, albeit very low yield.

We think it could be one to keep an eye on, given how far it’s fallen back to date.

MF: For these tech businesses, once they get to that maturity stage where they do make a profit, it’s much easier going than earlier stages, isn’t it? Because they’ve got their product already made and it’s just scalable at the press of a button?

MC: Absolutely. That’s exactly right. And that’s one of the key things that we do like about the business, that software is very scalable. And if we do start to see supply chains, cargo movements, et cetera, returning back to normal, I know we’re still talking about higher inflation, which means higher interest rates and maybe lower global growth, but if you are taking a longer-term view, then it’s a stock that you’d say in that industry would be worthwhile having exposure to.

The post ‘Pretty attractive’: Expert reveals 3 ASX shares to buy right now appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Tony Yoo 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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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