It’s a good day on the market for the Beach Energy Ltd (ASX: BPT) share price despite no word having been released by the company.

The energy company’s stock might be gaining due to higher oil prices. The black liquid’s value lifted overnight, reportedly on the back of supply concerns.

At the time of writing, the Beach Energy share price is $1.6125, 4.03% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has lifted 1.51% at the time of writing with the S&P/ASX 200 Energy Index (ASX: XEJ) outperforming all other ASX 200 sectors.

Let’s take a closer look at what might be going on with the oil and gas company on Tuesday.

Beach Energy share price gains alongside oil prices

Beach Energy’s stock is lifting today, tracking upwards with both global oil prices and its home sector.

The Brent crude oil price lifted 0.9% to US$114.13 a barrel overnight, according to CommSec. Meanwhile, the West Texas Intermediate crude price rose 0.6% to reach US$110.27 a barrel.

The rise was likely due to concerns oil supply will remain tight amid continued sanctions on Russian oil and despite worries of a recession in the US, according to Reuters.  

The news is probably helping the energy sector outperform on Tuesday. It’s currently 3.33% higher, coming in as today’s best-performing ASX 200 sector.  

Meanwhile, the Beach Energy share price is the sector’s third-best performer, behind Paladin Energy Ltd (ASX: PDN) and Whitehaven Coal Ltd (ASX: WHC). They’ve lifted 9.2% and 7.05% respectively at the time of writing.

Beach’s share price is also likely recovering from yesterday’s 8% tumble. That drop followed news the company is prioritising a new opportunity over the development of an existing reserve.

Today’s gain included, the Beach Energy share price is around 28% higher than it was at the start of 2022. It has also gained approximately 26% since this time last year.

The post Here’s why the Beach Energy share price is leaping 4% today appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday
• Why is the Beach Energy share price tumbling 7% on Monday?
• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Despite recent volatility, the Beach Energy share price has still gained over the past 3 weeks. Here’s why
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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.

The recent bear market has left many investors scared and reluctant to invest. Many one-time high-flyers in technology, both inside and outside the Nasdaq Composite, now trade at a fraction of their highs. The Composite itself is down about 31% year to date. 

However, that bear market means that $1,000 buys a lot more stock than it did a year ago. To that end, the market has priced Amazon (NASDAQ: AMZN) and The Trade Desk (NASDAQ: TTD) well within the range of such investors.

Amazon stock is trading at a substantial discount

Until recently, Amazon shareholders with only $1,000 to invest would have had to settle for a partial share. But now that Amazon just split its stock 20-for-1, small-scale investors have an easier time buying whole shares of this e-commerce and cloud giant.

Even with an extensive online retail footprint, consumers have bought less online, which has hurt Amazon stock. Investors have sold off as its North America and International divisions reported negative operating income.

Still, Amazon Web Services, which pioneered the cloud computing industry, continues to fire on all cylinders. It made up only 16% of Amazon’s revenue in the first quarter of 2022, but that revenue grew by 36% year over year.

This far exceeded the 7% revenue growth for the company over the same period in Q1. That revenue, which amounted to over $116 billion, still led to an overall net loss of $3.8 billion, down from an $8.1 billion profit in the year-ago quarter. This slower revenue growth has likely contributed to a 45% drop in Amazon’s stock price from its 52-week high. 

Nonetheless, analysts believe it can recover to 12% revenue growth for 2022. Moreover, the lower stock price has taken the price-to-earnings ratio to 50, a substantial discount for a stock that has often sold for over 100 times earnings in recent years. Given cloud resilience and a likely retail recovery, such a price point could make today a good time to start adding Amazon positions. 

The Trade Desk’s stock sells at a 60% discount at the moment

Investors who don’t know this company may assume it has something to do with trading stock. While it most certainly operates a market, this particular trade desk buys available advertising inventories.

Additionally, to foster a competitive advantage, it helps clients tailor media campaigns and set spending parameters to ensure they buy ad spaces that would enhance the marketing goals of clients. And it utilizes further advantages through software. Thanks to a new platform called Solimar, it can work around privacy updates from Apple and Alphabet. Also, with its Unified ID 2.0 solution, clients no longer need access to third-party cookies, a concern that has hurt some media stocks in recent months.

In the first three months of 2022, its revenue of $315 million surged by 43% year over year. This means revenue growth had remained consistent with 2021, when revenue also grew by 43%. Though the company reported a $15 million GAAP loss, non-GAAP income rose 50% to $105 million when excluding stock-based compensation and an income tax adjustment.

Still, The Trade Desk also predicts modest slowing as it forecast $364 million in second-quarter revenue, which would mean a 30% surge year over year if that figure holds.

Investors have turned on the company amid the more modest increases, and it sells at a nearly 60% discount to the 52-week high. However, the price-to-sales ratio of 18 is a two-year low and has fallen from 50 in November. This discount and its growth potential could make it a great time for a starter investment. 

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

The post Nasdaq bear market: Where to invest $1,000 right now appeared first on The Motley Fool Australia.

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Will Healy has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and The Trade Desk. 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and The Trade Desk. 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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We seem to have turned a corner with ASX bank shares. The ASX 200 banks have endured some of the worst selling pressure of recent weeks. Nowhere is that more clear than the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price.

ANZ shares are up a healthy 2.29% so far today at $21.88 a share. That’s a very pleasing step up from the lows under $21 that we saw on Friday last week. But ANZ shares are still down by 14% over the past month alone. They also remain down by more than 20% in 2022 thus far.

ASX bank shares have a rough start to 2022

Indeed, since we saw this bank hit a 2022 high of around $28.75 a share back in January, ANZ shares have given up around 24% of their value.

So with these kinds of losses under the belt, could it be time to pounce on ANZ shares?

Well, one investor who thinks so is Hugh Dive of Atlas Funds Management. In a recent piece for Livewire, Dive argued that ASX bank shares like ANZ are well placed to weather any inflationary pressures that might come our way. Here’s some of what he said:

Rising interest rates have historically seen expanding bank profit margins, as interest rates paid on loans increased immediately… Rising interest rates increase the benefits banks get from the billions of dollars held in zero or near-zero interest transaction accounts that can be lent out profitably.

The May reporting season showed that Australia’s banks are in good shape and face a better outlook than many sectors of the Australian market…

After the shock of last week’s rate rise has been digested, we expect the banks to outperform in the near future, enjoying a tailwind of a rising interest rate environment and high employment levels, which will see customers make the new higher loan repayments.

So is it time to buy the ANZ share price?

But Dive isn’t the only one bullish on ASX banks right now. As my Fool colleague James covered last week, analysts at Macquarie also see some potential in ANZ shares. Macquarie currently has an overweight rating on ANZ with a share price target of $34. That implies a potential upside of almost 60% on the current pricing.

This broker reckons the ASX banks like ANZ will benefit enormously from rising interest rates. It predicts that many savers won’t bother to chase higher interest rates for their term deposits and, thus, ANZ will enjoy a tailwind as it raises interest rates on its own loans.

So that’s two ASX experts who see good things ahead for the ANZ share price. But we shall have to wait and see if these predictions prove accurate.

In the meantime, the current ANZ share price gives this ASX 200 bank a market capitalisation of $61 billion, with a dividend yield of 6.61%.

The post The ANZ share price has tumbled 24% from its 2022 high. Is it time to pounce? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Novonix Ltd (ASX: NVX) share price has been a strong performer on Tuesday.

In afternoon trade, the battery technology company’s shares are up 7% to $2.51.

This makes the Novonix share price one of the best performers on the ASX 200 index today.

Why is the Novonix share price shooting higher?

Investors have been bidding the company’s shares higher today despite there being no news out of it.

However, it is worth noting that a number of beaten down shares are climbing particularly strongly today amid a broad share market recovery.

Beaten down battery metals and lithium shares such as Argosy Minerals Limited (ASX: AGY), Chalice Mining Ltd (ASX: CHN), and Sayona Mining Ltd (ASX: SYA) are also charging notably higher today.

Though, despite today’s gains, this group of shares is still down materially in recent weeks. For example, the Novonix share price remains down 37% over the space of the month, with Chalice and Sayona recording similarly severe declines.

In light of this, it’s possible that today’s buying could be from investors that believe these shares have been oversold.

Time will tell if they hold onto these gains or give them back if/when the market volatility returns.

The post Why is the Novonix share price charging 7% higher today? appeared first on The Motley Fool Australia.

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• These were the worst performing ASX 200 shares last week
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• The Novonix share price is the worst of the ASX 200 losers today. What’s going on?
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink
• Novonix share price tumbles 10% amid Tuesday’s carnage

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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Stock splits are all the rage in 2022. Amazon just completed its first split in more than a decade; Tesla plans a 3-for-1 split later this year. And Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) will execute a 20-for-1 split on July 1.

Although stock splits don’t affect a company’s fundamentals or overall market cap, they can impact how investors feel about a stock. For many people, paying $2,000 for a single share seems outrageous. So Alphabet plans to fix this problem.

With its shares currently trading near $2,150, the company’s 20-for-1 split will bring the price down to a more manageable figure of around $100. And by lowering the price that much, Alphabet shares might attract more interest from retail investors. 

Why stock splits can spark retail investors’ interest

For the average investor, high stock prices are a problem for several reasons. There’s the obvious aforementioned sticker shock. But there’s also a technical concern: portfolio diversification. 

To understand why diversification is an issue, consider how much money the average retail investors have in their brokerage accounts. Wealth management company Personal Capital produced a study showing that the median balance for investors in their 20s is $10,701. And this gets to the heart of the problem: Many people, particularly young people, can’t invest $2,000 in a single stock without skewing their portfolio.

Most financial professionals advise capping any single stock at 5% of the portfolio’s total value. This supports portfolio diversification, and it provides protection should a single stock experience a catastrophic one-off event. But in the case of Alphabet’s $2,150 stock price, your portfolio would need to have a total value of at least $43,000 to satisfy the 5% rule. And that’s if you wanted to own only one share. If you owned two shares, you’d need a portfolio worth $86,000 to stay diversified. Many investors simply do not have the capital to meet this 5% threshold. So they either pass on Alphabet shares or disregard the rule and blow past the 5% cap.

One way around this problem is through fractional share trading. Many brokerages now offer investors the ability to buy these smaller ‘slices’ of stock. In theory, this solves the problem of high-dollar stock prices. Yet, while this process can help, it’s not without a few drawbacks. For one, not all brokerages offer it. Moreover, fractional share trading can come with additional fees or commissions, and fractional shares can be more difficult to sell than whole shares.

However, if a company initiates a stock split, these fractional share concerns are alleviated. As noted before, a lack of portfolio diversification can be an issue for younger investors, who have limited amounts of capital to invest. And once you consider that many of Alphabet’s own employees are in their 20s and 30s, it provides another reason the company would want to split its shares: employee compensation. 

Once again, cutting the price of the shares helps both the company and investors. Alphabet will be able to dole out bite-size stock compensation; employees will be able to balance their portfolios more effectively.

Alphabet’s fundamentals remain excellent

As for the company’s fundamentals, Alphabet remains a leader in the digital advertising market. It has roughly 27% market share of all digital advertising. Whether it’s through YouTube, Gmail, or its ubiquitous Google Search, the chances are high that you’ll get shown an ad on one of Alphabet’s apps or services today. And when that happens, Alphabet gets paid. 

That’s a big reason why Alphabet’s revenue for the last 12 months is $270 billion. That puts Alphabet No. 8 on the list of the largest American companies by revenue. To put that figure in perspective, Alphabet’s revenue is a few billion dollars more than the combined total sales of Ford and General Motors. And, Alphabet’s not done growing: the company is increasing revenue by 23% year over year.

Yet despite these rock-solid fundamentals, the stock is down 27% year to date. Investors who want to own the company for the long term would be wise to use the stock split to build a position. And now, they’ll be able to do so without putting all their eggs in the Alphabet basket.

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

The post Alphabet’s Stock Split: The Real Reason It Matters appeared first on The Motley Fool Australia.

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• 4 reasons to buy Alphabet before its stock split

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet (C shares), Amazon, Ford, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Tesla. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. 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 Cochlear Limited (ASX: COH) share price has fallen around 22% over the last year. While that’s not one of the biggest drops on the ASX in recent times, some experts think that the share has upside.

Cochlear is one of the ASX’s largest healthcare businesses. But is it a big opportunity? Some experts have had their say on the hearing device company.

But, first, let’s see how the business has been growing in recent times.

Latest profit update from Cochlear

The cochlear implant business reported in its FY22 half-year result that its 12% growth of sales revenue (in constant currency) to $815 million was driven by strong demand for sound processor upgrades and new acoustic implant products.

In HY22, cochlear implant units increased by 7% to 18,598. While services revenue increased 19% to $256.5 million and acoustics revenue jumped 38% to $100.9 million, cochlear implant revenue only went up 1% to $457.9 million.

The company’s underlying net profit after tax (NPAT) rose 26% to $159 million thanks to the combination of sales growth and an improved gross profit margin. It also experienced lower-than-expected operating expenses.

The business paid an interim dividend of $1.55 per share, representing a 35% increase.

The company said that its FY22 underlying net profit guidance is between $265 million to $285 million, equating to an increase of between 13% to 22% year on year.

Acquisition

A couple of months ago, Cochlear announced it was buying Oticon Medical, Demant’s hearing implant business, for approximately AU$170 million.

As part of the transaction, Cochlear has committed to providing ongoing support for Oticon Medical’s base of over 75,000 hearing implant recipients.

The attraction of the deal was that it would provide greater scale and enable increased investment in research and development, as well as market growth activities.

Oticon Medical is expected to add between A$75 million to A$80 million to annual revenue, though it’s currently loss-making.

Cochlear noted that while it’s a market leader in implantable hearing, it’s a small player in the hearing loss segment where hearing aids remain the primary treatment option.

Is the Cochlear share price an opportunity?

The broker Morgans certainly thinks so with a price target of $244.50. That implies a possible rise of more than 20%. Morgans likes the acquisition of Demant Oticon as it increases market share.

Based on Morgans’ estimates, the Cochlear share price is valued at 49 times FY22’s estimated earnings and 44 times FY23’s estimated earnings. Morgans also thinks that surgery delays caused by COVID-19 will help the outlook.

However, the broker Morgan Stanley only rates the business as ‘equal-weight’, which is like a ‘hold’ rating. It thinks margins could be challenged, though it notes the revenue growth of services and upgrades can help.

Morgan Stanley’s price target on the business is $208, which suggests a high single-digit rise in the share price.

Morgan Stanley thinks the Cochlear share price is valued at 45 times FY22’s estimated earnings and 40 times FY23’s estimated earnings.

The post Down 20% in a year, is the Cochlear share price a bargain buy? 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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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The Fortescue Metals Group Ltd (ASX: FMG) share price is tracking higher in early trade on Tuesday, now up 2.94% at $17.50 apiece.

But, longer-term, the Fortescue share price has tumbled to six-month lows after falling off the cliff’s edge on 10 June.

Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) and S&P/ASX 200 Resources Index (ASX: XJR) have each sunk 10% in the past month of trade. The S&P/ASX 200 Index (ASX: XJO) is also down 6%.

“I don’t know a better industry”

Fortescue’s chairman Andrew ‘Twiggy’ Forrest has warned investors that markets could remain “choppy and uncertain” for the coming years.

Despite this, he said there’s “not a snowflake’s chance in hell” of a global recession, adding that Fortescue is well positioned to weather any global downturn, The Australian Financial Review reports.

Fortescue is also set to benefit from its pivot into renewables, Forrest says. He noted the rapid uptick in commodity prices adds further upside to his case.

“I don’t know a better industry to be pivoting towards when fuel prices are going through the roof than an industry where you can make all your own fuel,” he told the AFR.

“We smoke $3.5 billion worth of fossil fuel into the atmosphere every year,” he added. “That is one hell of a pool of capital annually to invest into your own fuel production and green iron systems.”

Global recession unlikely

Forrest also said that amid surging input costs and a rising cost of capital, commodity prices are also spiking, feeding Fortescue the income it needs to push ahead with its plans.

Even if some countries will see a slowdown in growth, on a global scale, demand is set to remain strong, Forrest said.

Especially given there’s pent-up demand from COVID-19 that’s been increased by the conflict in Europe, according to Forrest.

Demand for iron ore “has remained strong too”, he said.

“And, if global demand for iron ore goes down, the last man standing will be the lowest cost producer. And that is Fortescue.”

In the last 12 months, the Fortescue share price has slipped 20% into the red and is down 9% this year to date.

The post Fortescue’s Twiggy adamant there’s ‘not a snowflake’s chance in hell’ of recession appeared first on The Motley Fool Australia.

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• Why Bega, Fortescue, Santos, and Silver Lake shares are tumbling lower
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• Why Block, Fortescue, GUD, and Humm shares are sinking today

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

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This year has seen the Zip Co Ltd (ASX: ZIP) share price nosedive, tumbling 88% year to date.

Amid the carnage, the company is rumoured to have brought in a consultant to “consider options” for its UK business.

Experts argue Zip should retreat from both the UK and the US, as well as abandon its takeover of Sezzle Inc (ASX: SZL), according to reporting by The Australian.

At the time of writing, the Zip share price is 52 cents, down 2.83% on its previous close.

For context, the broader market is gaining today. The S&P/ASX 200 Index (ASX: XJO) is currently up 1.32% while the All Ordinaries Index (ASX: XAO) has lifted 1.35%.

Let’s take a closer look at what might be on the table for Zip’s future.

Zip share price down as company ponders future in UK

The Australian claims the company is pondering the future of its British business, as market experts voice encouragement for Zip to scale back and focus on its profitable operations, such as its Australian arm.

The article says:

Market experts believe that the road to recovery for Zip Co involves staging an exit from the US and Britain and focusing on its Australian operation, which is profitable.

This would be tough medicine for Zip, reducing its four operating platforms to one.

Zip first broke into the United Kingdom back in 2019 upon the acquisition of New Zealand-based PartPay. However, the company recently noted that, broadly outside of Australia and New Zealand, it’s not turning a profit.

Staying overseas, the same market experts have reportedly also branded Zip’s US business another dead weight. The company acquired US BNPL business QuadPay in 2020, rebranding it to Zip last year.

Zip has been operating in the US for around four years now. It has previously said its US arm was expected to follow the “glidepath” to profitability that occurred in Australia and New Zealand, which took around five years.

Furthermore, the article said:

[Another] possibility thrown around is a sale of Zip’s Australian operation, but most believe that this is the part of the operation that must be retained in a quest to return to profitability and that it needs to exit other markets.

What about the Sezzle acquisition?

The experts also think Zip should abandon its planned acquisition of Sezzle Inc (ASX: SZL), The Australian reported.

This comes as Zip faces increasing competition and regulatory oversight, as well as rising bad debts and the apparent economic slowdown.

According to its FY22 half-year results, Zip had around $2.37 billion in borrowings and just $1.61 billion in assets.

Based on today’s Zip share price, the company has a market capitalisation of just $364.6 million.

The post Zip share price falling again as market experts argue for UK and US exit 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 ZIPCOLTD FPO. 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 Northern Star Resources Ltd (ASX: NST) share price has been having a tough time in 2022.

Since the start of the year, the gold mining giant’s shares have lost 14% of their value.

Where next for the Northern Star share price?

The good news for investors is that one leading broker believes the Northern Star share price could be heading a lot higher from current levels.

According to a recent note out of Citi, the broker has retained its buy rating with a trimmed price target of $12.10.

Based on the current Northern Star share price of $8.10, this implies potential upside of almost 50% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividend yields of 2.8% in FY 2022 and 3.5% in FY 2023.

What did the broker say?

Although Citi has reduced its gold price forecasts, it still sees the price of the precious metal remaining elevated for some time to come. In light of this, the broker appears to see recent weakness in the Northern Star share price as a golden opportunity for investors.

It commented:

We’ve trimmed our gold price in FY22/23e. “Push and Pull” frictions can keep average prices elevated, but with upward momentum lagging. On a 6-12m view we now see gold trading at US$1775/oz vs spot US$1853/oz.

We also update for the May reserve and resource update. Key changes are a lower grade at the Thunderbox underground and reduced open cut material at Jundee from Orelia vs prior Echo numbers. EBITDA reduces by 1/8/6% in FY22/23/24e. Our NAV is now A$10.35sh. Our TP reduces to A$12.10/sh on the lower earnings. Next catalyst is the KCGM mill expansion mid-year. We remain at Buy.

The post Broker says the Northern Star share price weakness could be a golden opportunity appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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• ‘The bar has been set low’: Why this top broker just upgraded the Evolution Mining share price
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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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S&P/ASX 200 Index (ASX: XJO) shares lifted following some encouraging words on Australia’s economic outlook from Reserve Bank of Australia (RBA) governor Philip Lowe this morning.

At the time of writing, ASX 200 shares are up 1.17%.

Though Lowe was clear the road ahead was not without difficulties.

Addressing the American Chamber of Commerce in Australia (AMCHAM), Lowe acknowledged that the global economy was facing challenging times. He added that most nations, Australia and the United States included, are witnessing their highest inflation rates in “many years”.

This, he said, is seeing interest rates “rising around the world from the record lows during the pandemic”, adding that officials find themselves in “a complex policy environment”.

ASX 200 shares will need to prepare for higher rates

ASX 200 shares have struggled this year as inflation in Australia, and indeed much of the world, has come in higher than most economists had forecast. And it’s still heating up.

Australian headline inflation came in at 5.1% for the March quarter, well above the RBA’s 2% to 3% target range. Underlying inflation of 3.7% is also the highest level in many years.

“In both headline and underlying terms, inflation is much higher than we had earlier expected,” Lowe said.

The central bank had earlier expected inflation would top out at 6%, but that’s been revised upwards. “We are now expecting inflation to peak at around 7% in the December quarter. Following this, by early next year, we expect that inflation will begin to decline,” Lowe said.

And it’s not just ASX 200 shares that need to be ready for higher rates.

According to Lowe:

As we chart our way back to 2% to 3% inflation, Australians should be prepared for more interest rate increases. The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation.

I want to emphasise though that we are not on a pre-set path. How fast we increase interest rates, and how far we need to go, will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.

Australia’s economic outlook remains strong

Lowe highlighted that the Aussie economy is heading into this period of high inflation and rising interest rates on a strong footing.

While ASX 200 shares are down 14% year-to-date, household spending remains strong, “with spending bouncing back following the Omicron setback,” Lowe said.

Lowe continued:

Household balance sheets are generally in good shape, with households overall having accumulated more than $200 billion in additional savings during the pandemic. Furthermore, the current rate of saving out of income remains materially higher than it was before the pandemic, so there is a degree of flexibility in many household budgets.

It is also relevant that strong employment growth is continuing and that there are many job opportunities at the moment.

The RBA anticipates the recovery in spending on discretionary services, including travel, to continue. This should be good news for beaten-down ASX 200 travel shares.

As for an imminent recession, that doesn’t appear to be on the cards.

“Although GDP growth had slowed in the March quarter, household consumption had been resilient and timely indicators pointed to solid growth in the June quarter,” Lowe said.

“I don’t see a recession on the horizon here,” Lowe added during question time following his speech.

The post ASX 200 shares lift as RBA says recession not on the horizon 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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