The Pilbara Minerals Ltd (ASX: PLS) share price has been pushing higher this month.

Since the start of July, the lithium miner’s shares have risen 12% to $2.58.

Can the Pilbara Minerals share price keep rising?

If one leading broker is on the money with its recommendation, there could still be plenty of room for the Pilbara Minerals share price to climb even higher from here.

According to a recent note out of Citi, its analysts have retained their buy rating and $3.20 price target on the company’s shares.

Based on the current Pilbara Minerals share price, this implies potential upside of 24% for investors over the next 12 months.

What is the broker saying about this lithium share?

Overall, Citi was pleased with the company’s recent quarterly update. While costs were higher than expected, the company’s production was strong.

And with lithium prices remaining strong, the broker believes Pilbara Minerals is well-placed to generate significant free cash flow.

The broker commented:

Preliminary JunQ production was better than we’d expected albeit at a higher cost. Including letters of credit, PLS expects to end June with A$850m on the balance sheet. With spodumene prices remaining strong at +US$6000/t, investors can look through higher C1 costs of ~US$380-460/t.

The fact that management can get cost guidance ~30% out of the money in the space of 2 months shows just how hard cost inflation is biting.

FID for the P680 project was expected; new news is the bring-forward of crushing capacity for the P1000. We’ve pushed back our expansion timeline six months & moved total P1000 capex to the upper end. We stay at Buy. TP now A$3.20/sh. There’s a growth story here supported by expectations of +13% FCF in FY23.

The post Broker gives its verdict on the Pilbara Minerals share price appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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.

from The Motley Fool Australia https://ift.tt/US7KcjI

Earnings season is nearly on us, and rising inflation and hiked interest rates may prove a major weight for many S&P/ASX 200 Index (ASX: XJO) constituents.

Data released yesterday found Australian inflation hit its highest point in two decades last quarter, with the nation’s annual CPI surging to 6.1%.

A plethora of inflationary causes and effects, alongside other happenings, have seen the ASX 200 dump 10% since the start of 2022.  

And fund manager Fidelity International isn’t sitting on its hands. Its Fidelity Future Leaders Fund snapped up shares in three ASX 200 companies it believes have “defensive earnings stream[s]” and are in prime position for a post-pandemic recovery.

3 ASX 200 shares with defensive earnings: fundie

Ampol Ltd (ASX: ALD)

Shares in ASX 200 fuel and convince retailer Ampol have been performing well this year. Fidelity is expecting Ampol to deliver decent earnings in the future.

The company released an update last week announcing “unprecedented” refiner margins in the June quarter, coming in at US$32.96 per barrel.

Ampol was added as a new holding in the fund last quarter, taking up a 4.1% position.

Viva Energy Group Ltd (ASX: VEA)

2022 has also been a great year so far for the Viva share price. It has lifted 11% year to date.

The company also benefited from higher refinery margins last quarter, as well as rising sales. Its earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to have more than doubled in the first half.

Viva shares made up 2.8% of the fund’s holdings as of the end of June.  

Atlas Ateria Group (ASX: ALX)

Finally, ASX 200 toll road operator Atlas Ateria has seen its share price spike nearly 18% this year.

The company is benefiting from fewer COVID-19 restrictions, posting a 19% increase in revenue for the June quarter.

It has also been a takeover target in the eyes of private equity in recent weeks. Atlas Arteria has had two meetings with IFM after the fund noted it was considering posting an acquisition offer earlier this month. IFM announced it’s not currently interested in putting forward a bid this morning.

Atlas Arteria was added as a new position in the Fidelity Future Leaders Fund last quarter. It takes up a 2.8% spot.

The post 3 ASX 200 shares wielding a shield for returns: fundie appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Thursday
• Do Woodside shares really have a 6% dividend yield right now?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why I think Coles shares are a compelling buy 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 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.

from The Motley Fool Australia https://ift.tt/CiXgRlm

If you’re looking for dividends shares to buy with attractive yields, then you may want to look at the two listed below.

Here’s why analysts rate these dividend shares highly:

Charter Hall Long WALE REIT (ASX: CLW)

Charter Hall Long Wale REIT could be an ASX dividend share to buy. It is a property company with a focus on office, industrial, and retail sectors.

Its portfolio includes 78 hotel properties leased to ALH Group that were acquired from ALE Property with Hostplus for ~$1.7 billion earlier this year. Staying true to its name, this brought the company’s lengthy weighted average lease expiry (WALE) to 12.2 years.

One broker that is particularly positive on Charter Hall Long Wale REIT is Ord Minnett. It currently has an accumulate rating and $5.46 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 30 cents in FY 2022 and 29 cents in FY 2023. Based on the current Charter Hall Long Wale REIT share price of $4.39, this will mean yields of 6.8% and 6.6%, respectively.

Telstra Corporation Ltd (ASX: TLS)

This telco giant could be a top option for income investors now that the tide is finally turning for its earnings.

After years of battling lost earnings from the NBN rollout, the company now has growth in its sights at long last.

In fact, after resetting the business with the transformational T22 strategy, the impending T25 is aiming to drive solid and sustainable growth. This could bode well for dividends in the coming years and could even mean the first dividend increase in almost a decade isn’t too far away.

But for now, the team at Morgans continues to forecast fully franked dividends per share of 16 cents in both FY 2022 and FY 2023. Based on the current Telstra share price of $3.98, this will mean yields of 4.1%.

Morgans also sees a lot of value in Telstra share price with its add rating and $4.56 price target on its shares.

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

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Own Telstra shares? Here’s the latest on the telco’s new Microsoft deal
• 2 ‘good value’ ASX 200 shares offering what investors want right now: expert
• The Telstra share price has lost 4% over the past 5 years. Have the dividends been worth it?
• Analysts name 2 top ASX 200 dividend shares to buy
• Are Telstra shares still worth holding for dividend income 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 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.

from The Motley Fool Australia https://ift.tt/rT8SjnH

Inflation has jumped in Australia. What does this mean for S&P/ASX 300 Index (ASX: XKO) shares and the Vanguard Australian Shares Index ETF (ASX: VAS)?

For readers unfamiliar with the VAS ETF, it’s an exchange-traded fund (ETF) that tracks the ASX 300. It’s an index fund.

The share price movements of names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL) affect the movement of the unit price of the Vanguard Australian Shares Index ETF.

What’s happening with inflation?

The Australian Bureau of Statistics (ABS) just released the quarterly inflation numbers for the three months to June 2022. They showed CPI inflation of 1.8%. The 12 months to June 2022 showed annual inflation of 6.1%.

New dwelling costs rose 5.6% due to “high levels of building construction activity combined with ongoing shortages of materials and labour”, vehicle fuel prices rose 4.2%, and furniture prices increased 7%.

Inflation can have wide-reaching effects. It can lead to rising costs for different businesses in mining, retail, construction and so on. Wages are also increasing.

But there’s also the inflation impact on interest rates.

Central banks respond

Economists and central bankers believe it’s important to get inflation under control. They hope that by reducing economic demand for goods and services, inflation will slow to a more normal level. The Reserve Bank of Australia has an ongoing target range of 2% to 3%.

The US Federal Reserve just increased its interest rate by another 75 basis points or 0.75%. That’s the second increase of that size in a row.

Warren Buffett has previously explained why interest rates can be so influential for assets (such as the VAS ETF):

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature … its intrinsic valuation is 100% sensitive to interest rates.

How are things going for the VAS ETF?

Since the start of 2022, the Vanguard Australian Shares Index ETF has dropped by more than 10%. It hasn’t fallen as much as other ETFs, such as the BetaShares Nasdaq 100 ETF (ASX: NDQ), which has dropped by 25%.

The big four ASX banks haven’t fallen much in 2022. For example, the CBA share price is only down by 3.5%. Analysts think that bank lending profitability can increase with stronger net interest margins (NIMs) as banks pass on the interest rate hikes to borrowers. However, brokers such as Morgan Stanley warn that higher interest rates could lead to more bad debts.

While the share prices of some resource businesses like Rio Tinto Limited (ASX: RIO) have dropped in recent weeks on weaker commodity prices, they started the year at a lower level. At the time of writing, the Rio Tinto share price is only down 2.7% for the year.

Tech and retail have been two of the hardest-hit sectors in this year’s sell-off. Tech is suffering from a hit to valuations, and investors are worried that retail could be affected by households having less money to spend.

As examples, the Wesfarmers Ltd (ASX: WES) share price is down 23% while the Xero Limited (ASX: XRO) share price is down 39%. But these aren’t major positions in the ASX 300 compared to banks and miners.

There is uncertainty in the ASX share market today. Investors will just have to see how long it takes to get inflation under control, and by extension, how high interest rates will have to go.

The post Inflation is soaring in Australia. Is that bad news for the Vanguard VAS ETF? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• After a horror year, will FY23 see the VAS ETF bounce back?
• How to successfully invest using only ASX ETFs: expert
• The Vanguard Australian Shares Index ETF hit an all-time high in FY22 … and finished down more than 10%
• How did the Vanguard Australian Shares Index ETF perform in June?

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 BETANASDAQ ETF UNITS, CSL Ltd., and Xero. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS, Wesfarmers Limited, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/smN6kMW

The listed investment company (LIC) Argo Investments Limited (ASX: ARG) is one of the biggest investment funds in Australia. But what ASX shares does it own?

Argo has a market capitalisation of around $7 billion according to the ASX. It has been operating since 1946.

It aims to provide a portfolio of diversified ASX shares, with low operating costs because of its internal management structure. Its management expense ratio is 0.14%.

The LIC looks to “maximise long-term shareholder returns through reliable fully franked dividend income and capital growth.”

So, how does that translate into investments?

Argo’s portfolio holdings

Argo’s portfolio is focused on ASX blue-chip shares. Every month, the LIC tells investors what its portfolio looks like and what its biggest holdings are. From the latest monthly update, the LIC revealed these were the main positions:

Macquarie Group Ltd (ASX: MQG) – This is a global investment bank that offers various services like asset management, banking, investment banking and so on. It was 6.6% of the portfolio.

BHP Group Ltd (ASX: BHP) – BHP is a resources business that produces commodities like iron ore, copper and nickel. It was 5.8% of the portfolio.

CSL Limited (ASX: CSL) – CSL is a major ASX healthcare share that makes therapies and vaccines for people globally. It was 5% of the portfolio.

Commonwealth Bank of Australia (ASX: CBA) – CBA is Australia’s biggest bank.

Rio Tinto Limited (ASX: RIO) – This business is a major commodity player, which is exposed to iron ore, copper, aluminium and others.

Wesfarmers Ltd (ASX: WES) – It has various operations including major brand names like Bunnings, Kmart, Officeworks and Priceline. Wesfarmers was 3.3% of the portfolio.

Telstra Corporation Ltd (ASX: TLS) – Telstra is Australia’s biggest telco. It was 2.9% of the portfolio.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) – ANZ is another of Australia’s big four ASX banks. It was 2.8% of the portfolio.

Other positions in the top 20 holdings included: Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Santos Ltd (ASX: STO), Ramsay Health Care Limited (ASX: RHC), Aristocrat Leisure Limited (ASX: ALL), Computershare Limited (ASX: CPU), APA Group (ASX: APA), Transurban Group (ASX: TCL), Woolworths Group Ltd (ASX: WOW), Sonic Healthcare Limited (ASX: SHL), QBE Insurance Group Ltd (ASX: QBE) and Australian United Investment Company Ltd (ASX: AUI).

Sector diversification

Argo Investments’ industry allocation is fairly spread between various segments.

The LIC also lists out every month how much of the portfolio is invested in each sector. At 30 June 2022, this was the breakdown:

• Materials 15.1%
• Other financials 12.2%
• Banks 12.1%
• Healthcare 11.2%
• Consumer staples 9.1%
• Telcos and IT 8.6%
• Industrials 7.4%
• Energy 7.3%
• Consumer discretionary 6.4%
• Property 3.3%
• LICs 2.7%
• Cash 2.5%
• Utilities 2.1%

Foolish takeaway

As one of the biggest LICs, Argo shares get a lot of investor intention, particularly for its dividend. The last 12 months of dividends amount to a grossed-up dividend yield of 4.6%. The types of ASX shares it’s invested in largely have a reputation for paying dividends to shareholders.

The post Own Argo shares? Here’s what you’re invested in appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Mineral Resources share price on watch following Q4 update
• Bitcoin or Cardano: which crypto is most widely held among Aussies in 2022?
• The NAB share price is up 20% from its YTD low. Is now the time to buy?
• Macquarie share price on watch following strong Q1 update
• $250m to $9 billion: The phone call that revealed what makes multi-bagger ASX shares

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 CSL Ltd. The Motley Fool Australia has positions in and has recommended APA Group, Telstra Corporation Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited, Ramsay Health Care Limited, Sonic Healthcare Limited, and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/e6YM3kB

The Mineral Resources Limited (ASX: MIN) share price will be in focus on Thursday.

This morning the mining and mining services company released its fourth quarter and full year update.

Mineral Resources share price on watch after record 12 months

• FY 2022 iron ore shipments of 19.2M wet metric tonnes (wmt)
• Full year spodumene concentrate shipments of 442kt
• Mining Services production volumes hit a record 274Mt for FY 2022

What happened during the quarter and full year?

During the three months ended 30 June, Mineral Resources reported iron ore shipments of 4.7M wmt. This took its FY 2022 iron ore shipments to 19.2M wmt, which was at the upper end of FY 2022 guidance range of 18.5-19.5M wmt.

Things weren’t quite as positive for the company’s Mt Marion operation, which fell a touch short of guidance in FY 2022. After shipping 141k dmt of spodumene concentrate during the quarter, its full year shipments came to 442k dmt. This was marginally below its guidance of 450-475k dmt.

Though, two positives were its costs and the realised spodumene concentrate price it received.

Mt Marion costs are expected to be with its guidance of A$570-A615/dmt and the price it received for its spodumene continues to increase. During the fourth quarter, Mineral Resources reported a realised spodumene concentrate price of US$2,645 per dmt, which was 35% higher quarter on quarter.

In addition, the company revealed that its maiden share of offtake for Mt Marion spodumene concentrate was converted into 6,722t of lithium hydroxide in China under the tolling agreement with Ganfeng.

The structure of this agreement means that Mt Marion lithium hydroxide EBITDA for FY 2022 is now expected to be US$150 to US$160 million and revenue for the sale of this product is now expected to be US$510 million to US$520 million.

The post Mineral Resources share price on watch following Q4 update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How much has Mineral Resources paid in dividends over the last 5 years?
• Here are the top 10 ASX 200 shares today
• How I’m preparing for brighter days in the stock market
• What’s the outlook for the Mineral Resources share price in FY23?
• Here are the top 10 ASX shares 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.

from The Motley Fool Australia https://ift.tt/P0Vgthp

Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Cardano (CRYPTO: ADA).

Australian and international crypto investors have shaken up their holdings of these top tokens over the past quarter.

Below, we look at how the positions of the most held cryptos on multi-asset investing platform eToro changed at the end of the second quarter compared to the end of Q1.

Aussies’ return to the biggest crypto names favours Bitcoin

Bitcoin, the world’s top token by market cap, reclaimed its number one spot as the most widely held crypto by Aussie investors on the eToro platform.

Bitcoin came in at number two among Australian investors at the end of the first quarter, with XRP (CRYPTO: XRP) being the most widely held crypto on the platform at the time. XRP slipped to number five in Q2.

e-Toro reported that despite the market turmoil in 2022, the number of users on its platform holding Bitcoin increased 9% globally and 16% in Australia.

Meanwhile, Ethereum – the second biggest token by market valuation – climbed into the number two spot, up from third place in Q1.

And Cardano, the number eight crypto by market cap, made a big move from fifth place up to third place among Australian crypto investors on the eToro platform.

Resilience in a ‘difficult spell’

Commenting on the last quarterly results, market analyst at eToro Josh Gilbert said:

There’s no hiding to the fact that the crypto market has had a difficult spell in the last quarter. However, the eToro community is showing resilience, whilst keeping faith with the cryptos with the biggest heritage and market cap.

Noting that Bitcoin and most all crypto prices have fallen sharply this year, mirroring the selling trend in equities, Gilbert added:

Many investors see the long-term potential of crypto assets and those same investors have the time horizon to allow these investments to flourish. Retail investors are using the current price weakness to build their allocation to the crypto space whilst diversifying across assets.

The post Bitcoin or Cardano: which crypto is most widely held among Aussies in 2022? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is the Solana price sinking today?
• Why top cryptocurrencies Bitcoin, Ethereum, and Dogecoin are slumping today
• 2 things need to happen for a sustained Bitcoin price rally: experts
• Why Bitcoin, Ethereum, and Shiba Inu are falling today
• Can Ethereum reach $10,000?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. 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.

from The Motley Fool Australia https://ift.tt/Wx6SsbE

After a volatile past month, the National Australia Bank Ltd (ASX: NAB) share price has continued to travel upwards.

At yesterday’s market close, the banking giant’s shares finished 1.38% higher to $30.13. This represents a 20% rebound from its year-to-date low of $25.43 on 17 June.

There’s been a general recovery in the S&P/ASX 200 Financials (ASX: XFJ) sector as investors become more tolerant of negative news.

For context, the benchmark financial index is up around 12% over the same time frame.

What happened to NAB shares?

Despite the company not releasing any price-sensitive news since the launch of its capital notes offer, the NAB share price has made a spectacular comeback.

Another aggressive rate hike by the Reserve Bank of Australia (RBA) to cool down inflation spooked investors last month. This caused negative sentiment in the market, dragging down ASX shares for weeks.

However, after being heavily sold-off throughout early to mid-June, it appears investors started to see NAB shares as too cheap to pass up.

NAB’s relative strength index (RSI) has fallen to a low of 16. The last time that happened was during COVID-19.

The RSI is a momentum oscillator that is used to assess the strength or weakness of a share price. Normal levels range between 30 and 70. Anything outside that range is an indication that the share price is an attractive buy or too expensive.

Subsequently, the NAB share price has recovered lost ground despite many economists tipping another 0.5% hike in the official cash rate to 1.85%, according to Bloomberg.

It seems investors have already priced in this possibility ahead of the RBA’s next meeting on 2 August.

Data released by the Australian Bureau of Statistics yesterday shows the consumer price index (CPI) rose by 1.8% in the June quarter. Inflation is now running at 6.1% per annum, which is the fastest pace in 20 years.

Is now the time to buy?

Last month my Foolish colleague James reported that Macquarie was retaining its outperform rating on NAB with a share price target of $34.

Its analysts believe there is still more upside in NAB shares regardless of rising interest rates. Based on the current share price, this implies an upside of about 13% for NAB investors.

Last month Goldman Sachs also maintained its buy rating on NAB with an improved price target of $34.26.

The team is confident that NAB’s balance sheet mix provides the best exposure to domestic system growth over the next 12 to 18 months.

NAB share price review

While the NAB share price has moved in circles over the past 12 months, investors are sitting on a modest return of 15%.

The share price touched a multi-year high of $33.75 on 21 April and is not far off from achieving that feat again.

The ASX bank share has a price-to-earnings (P/E) ratio of 14.93. It commands a market capitalisation of roughly $94.53 billion.

The post The NAB share price is up 20% from its YTD low. Is now the time to buy? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why this ASX investment company dumped NAB for Westpac shares
• Should investors buy NAB shares for the dividends? Here’s what I think
• Why did the ANZ share price smash the other ASX 200 banks today?
• How high will the RBA hike rates in 2022? Here’s what the ASX 200 banks are forecasting
• Is the NAB share price in danger from a resurgent ANZ?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. 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.

from The Motley Fool Australia https://ift.tt/2hwrmok

The Macquarie Group Ltd (ASX: MQG) share price will be one to watch on Thursday.

This follows the release of the investment bank’s quarterly update this morning ahead of its annual general meeting.

Macquarie share price on watch following strong Q1 update

All eyes will be on the Macquarie share price this morning after the investment bank revealed that it started FY 2023 in fine form.

According to the release, favourable trading conditions saw Macquarie’s operating groups deliver net profit contributions that were up on the first quarter of FY 2022.

And while no actual figures were provided, management advised that its annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), delivered a combined first quarter net profit contribution that was “significantly” up on the prior corresponding period.

This was due largely to income from Green Investment Group (GIG) asset realisations in MAM, which was partially offset by the Macquarie Infrastructure Corporation disposition fee from last year.

The contribution from the BFS business was broadly in line with the prior corresponding period.

What about its other businesses?

Elsewhere, Macquarie’s markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital, delivered a combined first quarter net profit contribution that was “slightly up” on the prior corresponding period.

This was due to strong results across the Commodities platform in CGM including the impact of timing of income recognition on gas transport and storage contracts and higher investment–related income in Macquarie Capital. Partially offsetting this was the sale of the CGM UK commercial and industrial smart meters portfolio a year earlier.

Finally, Macquarie advised that its financial position continues to comfortably exceed the Australian Prudential Regulation Authority’s (APRA) Basel III regulatory requirements. At the end of June, the company had a group capital surplus of $10.1 billion and Common Equity Tier 1 capital ratio of 12.3%.

Outlook

In the near term, management advised that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that it believes positions the company well to respond to the current environment.

The company sounds much more positive with its medium term outlook. It concluded:

Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture.

The post Macquarie share price on watch following strong Q1 update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Experts name 2 ASX dividend shares to buy right now
• Own Macquarie shares? Here’s what to expect from its Q1 update
• 5 ASX 300 shares this fundie has been buying at bargain prices
• What’s the outlook for the Macquarie share price in FY23?
• Here’s what brokers are saying about the Rio Tinto share price

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 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.

from The Motley Fool Australia https://ift.tt/ZtzdWmu

Airlie Funds Management portfolio manager Matt Williams remembers early in his career, a quarter of a century ago, being ordered to analyse a particular ASX-listed company.

“My bosses allocated me a ‘small-cap’ company to cut my teeth on as an analyst. Read: limit any potential damage to portfolios,” he wrote on the Airlie blog.

“The trading liquidity of the company was low, and it did not get a lot of airtime among the bigger, sexier companies.”

He diligently read all the annual reports and studied the business to get “a sense for the underlying quality”.

That “pretty boring” company, with a market capitalisation of $250 million at the time, was plumbing and bathroom supplier Reece Ltd (ASX: REH).

“[It] was majority-owned by the Wilson family — a family that had no interest in spruiking the stock to pump up the share price,” he said.

“This put them at odds with 90% of other companies on the bourse, and pretty much all my experience of management teams thus far.”

Reece now has a market cap of more than $9.2 billion.

How did it multiply its valuation 37 times over without even marketing itself to investors?

The phone call with a CEO that changed a fundie forever

After watching an impressive record of profits over a couple of years, a young Williams convinced his superiors to build up a holding in Reece.

But then his heart sank. 

One of Reece’s financial updates still showed strong growth in sales revenue — but net profit was significantly down.

The share price then absolutely tanked.

“I frantically looked at this profit result from Reece with a growing sense of sickness in my stomach – costs were way higher than the previous period, in my mind destroying a beautiful sales result,” said Williams.

“The ‘market’ in its short-term wisdom declared this a poor result and reacted accordingly.”

The Wilson family, who held 70% of the shares, were notoriously secretive. They rarely put out statements to the market and they certainly didn’t care about what financial analysts thought about them.

But a fired-up Williams was determined to put some questions to chief executive Alan Wilson.

After much persistence he managed to grab Wilson on the telephone.

“Wilson heard me out and further explained the strategy that was already laid out briefly in the result commentary,” he recalled.

“Where I saw a cost blow-out, he saw great opportunities for investment to grow – simply, rolling out the Reece store network in more locations around Australia, taking market share, and becoming ubiquitous within plumbing and bathroom.”

That phone conversation would leave a lasting impression on a young Williams.

“I hung up the call having learnt a valuable lesson,” he said.

“In the cut and thrust of everyday markets, I too had absorbed the focus on the short term. The penny dropped that Wilson was investing now for future growth, and that the opportunity could be massive.”

The power of owner-managed companies

At the time of that fateful phone call 23 years ago, Reece was half the size of the dominant force in the plumbing market, Tradelink.

Since then the Wilson family’s strategy has “played out perfectly”.

“Sales in Australia/New Zealand up 8x and profits up 22x,” said Williams.

“Amazing results and all without raising any equity (until its expansion into the US in 2018) or meaningful debt. In fact, the company acquired property sites for a lot of its best-located stores along the way.”

With this growth, Reece’s market capitalisation multiplied a stunning 37 times.

Meanwhile, Tradelink has been completely beaten into submission.

“Twenty-three lost years where sales went nowhere, and profits backwards – overseen by numerous management teams and a new corporate owner, Fletcher Building.”

Williams believes Reece is the perfect example of how owner-managed businesses can execute a long-term vision.

Owners who have control of the steering wheel can show patience that perhaps independent executives can’t manage in a publicly-listed environment. They can cop some short-term heat to make a long-term dream come true.

Other such examples currently held in the Airlie fund are ARB Corporation Limited (ASX: ARB), Premier Investments Limited (ASX: PMV), PWR Holdings Ltd (ASX: PWH) and Nick Scali Limited (ASX: NCK).

Williams describes his favouritism towards such companies as his lifelong “love affair”.

“The owner-managed model is immensely powerful in a small company, where the success factors of owner-managers can be leveraged into truly remarkable results.”

The post $250m to $9 billion: The phone call that revealed what makes multi-bagger ASX shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why cheap hamburgers could give beginner ASX share investors food for thought
• 2 All Ords ASX shares I think are underrated buys right now

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 PWR Holdings Limited. The Motley Fool Australia has recommended ARB Corporation Limited, PWR Holdings Limited, and Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8ifqnkb