The amount of cash a company has is a critical consideration no matter the circumstances.

As Warren Buffett once said, “Cash is to a business as oxygen is to an individual…” But where can an investor find cash-heavy companies inside the S&P/ASX 200 Index (ASX: XJO) outside of the typical major banks and miners?

Firstly, there is nothing wrong with investing in banks and mining giants. Some of those companies have even outperformed the benchmark index over the last five years. However, being concentrated in these sectors can come with risks, as is with any form of concentration.

At the end of the day, strong balance sheets are what matters. So, what are a few options for investors seeking cash behemoths beyond the two dominant sectors of the ASX?

Here are a few ASX 200 shares with billions to boot.

ASX 200 shares with bank accounts burst at the seams

CSL Limited (ASX: CSL)

Starting from the top, Australia’s largest healthcare company — CSL — claims the largest stash of cash apart from the banks and miners. Sitting atop A$8.73 billion in cash and cash equivalents, the biotechnology giant has a fortified balance sheet.

Although, it is important to note this amount is likely to change as CSL moves toward the acquisition of Vifor Pharma. In December 2021, the ASX-listed company designated A$8.4 billion of new debt and existing cash to partly fund the A$17.2 billion acquisition.

Block Inc (ASX: SQ2)

Another ASX 200 share with billions to its name is US-based fintech company, Block (formerly Square). At the end of March 2022, the Afterpay and Cash App owner counted A$6.6 billion on its balance sheet. This is despite operations becoming unprofitable for the trailing 12-month period.

In addition, it is worth highlighting that Block has a chunk of debt that is almost equivalent to its cash levels. Based on this, the company’s net cash level is approximately A$142 million.

ASX Ltd (ASX: ASX)

The final company to stand out among a spattering of banks and mining companies is Australian stock exchange operator, the ASX. With profit margins consistently above 40%, it’s no wonder this ASX 200 company has accumulated billions.

At the end of December 2021, the ASX had reached a bountiful $7.344 billion in cash and cash equivalents. That amount of money ensures plenty of cushioning during a down.

Recently, Catapult Wealth portfolio manager Tim Haselum named this company as its pick to hold if the market was closed for four years.

The post 3 ASX 200 shares swimming in billions, besides banks and miners appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 tech shares having such a cracking Friday?
• ASX share price slips following first female CEO appointment
• Why is the Block share price tumbling 4% on Thursday?
• What’s in store for the CSL share price in June?
• Analysts name 3 ASX 200 shares that could generate strong returns

Motley Fool contributor Mitchell Lawler has positions in Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and CSL Ltd. The Motley Fool Australia has positions in and has recommended Block, Inc. 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 own Santos Ltd (ASX: STO) shares you own part of a company doing everything it can do to address the energy crisis.

That’s according to Santos CEO, Kevin Gallagher, speaking at the Melbourne Mining Club yesterday.

The early impacts of rocketing energy prices

While Santos shares have received a tailwind from fast rising energy prices, the higher costs are already taking a bite out of household and company budgets.

From petrol to electricity to plane tickets, rocketing coal, oil and gas prices are seeing consumers shell out more of their hard-earned savings.

And that’s quickly seeping into the broader economy, fuelling inflation.

Take fresh food, for example.

With energy prices soaring, it costs a lot more to run the farm equipment, processing machinery and transport vehicles to get your food to market. Not to mention the stores are paying more to keep the lights on and the food chilled.

And with gas shortages now looming, the situation is unlikely to resolve itself any time soon.

What can ASX energy companies do?

Unfortunately, Santos and other Aussie energy companies can’t do much to bring extra gas online in the short term.

According to Gallagher (quoted by The Australian), “The industry can’t do any more than it’s doing now, because that pipeline is at capacity. No more gas can come in from Queensland than is coming today – the industry is doing all it can from Queensland to support the east coast market.”

The problem, Gallagher pointed out, lies in 10 years of underinvestment in new gas supplies, often hamstrung by lack of government approval and long-term clarity on the future of fossil fuel projects.

“The scarcity of new developments today is frightening with forecasts of tight supply over coming years,” Gallagher said. “Customers are crying out for this gas with more demand than we can meet when it comes to market around 2026. And I am trying to bring Narrabri to market earlier if that is possible.”

But mammoth projects like this take time. And even if Santos were to receive the green light from regulators to proceed immediately, Narrabri is still some three years from producing its first gas.

“It’s not going to be in three months’ time, or this year. We can start drilling wells, but we’ve got to build pipelines and plants,” Gallagher said.

The coal-seam gas project in New South Wales has been delayed for years, facing opposition from environmental groups concerned about the project’s impact on the local environment and global greenhouse gas emissions.

The finger of blame

When it comes to the energy crisis, don’t blame Santos or Australia’s other gas companies.

According to Gallagher (quoted by The Australian):

Shortages in the domestic market and the price shocks we have seen in recent weeks have nothing to do with the behaviour of gas producers or exporters, who are doing everything they can to support the market right now.

This is the consequence of more than a decade of energy policy failure that has stopped the industry developing more gas supply in a timely manner.

If you want more gas, you’ve got to produce more gas and develop more gas. You can’t just conjure it up magically when coal fired power stations turn off and renewables underperform.

As for the Australian Domestic Gas Security Mechanism, Gallagher said that could alleviate some of the problems, but only as a short-term fix.

“I don’t think that’s a bad thing. I think the government has got to do something in the short term, but that’s not a long-term solution,” he said. “It’s not a long-term solution to start threatening the LNG projects where our overseas customers have invested billions of dollars for their own energy security.”

How have Santos shares been tracking?

Santos shares have widely outperformed the benchmark, benefiting from the historically high gas prices.

Year-to-date the Santos share price is up 27%. That compares to a 5% loss posted by the S&P/ASX 200 Index (ASX: XJO).

The post Own Santos shares? Here’s the company’s response to the energy crisis appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why did the Santos share price beat the ASX 200 in May?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 midday update: Beach, Santos rise but EML, Zip tumble
• Want to invest in energy? This is ‘our most preferred’ ASX share: Wilsons

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) remains on course to end the week on a high. At the time of writing, the benchmark index is up 0.75% to 7,230.6 points.

A key driver of this has been gains by ASX 200 iron ore shares.

For example, here is a summary of how they are performing today:

• The BHP Group Ltd (ASX: BHP) share price is up 2.5% to $46.72
• The Champion Iron Ltd (ASX: CIA) share price is up 7% to $7.78
• The Fortescue Metals Group Limited (ASX: FMG) share price is up 4% to $21.43
• The Rio Tinto Limited (ASX: RIO) share price is up 2.5% to $115.78

What’s driving ASX 200 iron ore shares higher?

As you might have guessed, Australia’s leading iron ore shares are gaining today because of a rise in the price of the steel-making ingredient.

According to CommSec, the benchmark 62% fines iron ore price rose by US$6.86 or 5.1% overnight to US$142.20 a tonne.

This is materially higher than the cash costs per tonne of these miners, which means they are likely to be generating significant free cash flow right now. This bodes well for their earnings and ultimately their dividends.

Why is the iron ore price rising?

The catalyst for the rise in the iron ore price this week has been news that China is finally coming out of lockdowns. This has sparked hopes that demand for the metal will increase as China attempts to boost its struggling economy.

Though, it is worth noting that not everyone is positive on the metal. As we mentioned here earlier this week, the commodities team at Commonwealth Bank of Australia (ASX: CBA) is forecasting a sharp pullback in prices in the coming months.

The post Why are the ASX 200 iron ore giants outperforming on Friday? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher
• What is the BHP share price forecast for June?
• 2 top ASX dividend shares to buy according to analysts
• Top broker names 2 of the best ASX shares to buy in June
• Why is the ‘new’ Woodside share price leaping 6% 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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S&P/ASX 200 Index (ASX: XJO) tech shares are leading the market on Friday following a strong session on Wall Street overnight.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) rose 2.69% as most Australians slept. At the same time, the S&P 500 Index (SP: .INX) gained 1.84% and the Dow Jones Industrial Average lifted 1.33%.

At the time of writing, the ASX 200 Information Technology Index (ASX: XIJ) is 2.56% higher. It’s being driven by some of the market’s most well-known names. For comparison, the ASX 200 is currently up 0.79%.

Let’s take a look at what’s helping to boost ASX 200 tech shares today.

ASX 200 tech shares lead the market on Friday

ASX 200 tech shares are taking off on Friday after their international counterparts recorded strong gains.

Among Thursday’s Nasdaq-listed winners were tech giants Tesla Inc (NASDAQ: TSLA) and Meta Platforms Inc (NASDAQ: FB). They gained 4.68% and 5.42% respectively.

Meanwhile, Amazon.com Inc (NASDAQ: AMZN) leapt 3.15% higher.

ASX 200 tech giants such as WiseTech Global Ltd (ASX: WTC) and Block Inc (ASX: SQ2) have followed suit and are outperforming on Friday.

Right now, shares in WiseTech are trading 5% higher at $42.96, while Block shares are also among the sector’s best performers, gaining 4.67% to reach $119.93.

 Meanwhile, market favourites Novonix Ltd (ASX: NVX) and Xero Limited (ASX: XRO) are lifting 4.5% and 2.8% respectively.

Today’s gains are likely to be particularly welcome for ASX 200 tech fans as the sector has been severely underperforming in 2022.  

It has tumbled more than 32% since the start of this year. For context, the ASX 200 is down nearly 5% year to date.

The post Why are ASX 200 tech shares having such a cracking Friday? appeared first on The Motley Fool Australia.

More reading

• Xero share price has 19% upside potential, top brokers say
• Why is the Block share price tumbling 4% on Thursday?
• Why did the Novonix share price tumble 22% in May?
• Why did the Xero share price go backwards in May?
• These were the worst performing ASX 200 shares in May

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Amazon, Block, Inc., Meta Platforms, Inc., Tesla, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia has recommended Amazon and Meta Platforms, Inc. 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 Core Lithium Ltd (ASX: CXO) share price is continuing to recover from its disastrous Wednesday performance today.

At the time of writing, the Core Lithium share price is trading $1.23, 7.89% higher than its previous close.

For context, the broader market is also in the green today. The S&P/ASX 200 Index (ASX: XJO) is up 0.72% right now. Meanwhile, the All Ordinaries Index (ASX: XAO) is boasting a 0.81% gain.

 Let’s take a closer look at what might be going on with the ASX lithium share on Friday.

Is this driving the Core Lithium share price today?

Core Lithium stock is rebounding alongside many of its ASX lithium peers today after the sector suffered a major tumble earlier this week.

The company’s stock slumped 20.43% on Wednesday after a bearish outlook from Goldman Sachs and reports Chinese electric vehicle manufacturer BYD is aiming to produce its own lithium.

Today’s (and yesterday’s) gains might, therefore, be a simple market correction following the sell-off event.

Indeed, fellow ASX lithium shares such as Pilbara Minerals Ltd (ASX: PLS), Liontown Resources Limited (ASX: LIO), and Lake Resources NL (ASX: LKE) are rebounding today. They’re currently up 5.04%, 5.8%, and 10.5% respectively.

Additionally, shares in lithium giant Mineral Resources Limited (ASX: MIN) is among the leaders of the ASX 200 today, having gained 4.1%.

Despite Wednesday’s downfall, the Core Lithium share price is still 95% higher than it was at the start of 2022. It has also gained more than 370% since this time last year.

The post Why is the Core Lithium share price leaping 8% on Friday? appeared first on The Motley Fool Australia.

More reading

• Which ASX lithium shares are rebounding on Thursday, and which are not?
• Core Lithium share price tumbles 8% as Goldman forecasts ‘sharp correction in lithium ‘
• Why is the Pilbara Minerals share price cratering 17% today?
• Why did the Core Lithium share price go backwards in May?
• Why has the Core Lithium share price surged 6% 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.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. The benchmark index is currently up 0.75% to 7,230.3 points.

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

Healius tumbles on trading update

The Healius Ltd (ASX: HLS) share price is tumbling lower today. This follows the release of an update which revealed that trading conditions have been tough in the second half. As a result, during the first five months of the half, the healthcare company has generated just under $100 million of EBIT. This compares to first half EBIT of $376 million.

Iron ore miners rise

Iron ore miners such as BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) are ending the week strongly. This follows a solid rise in the iron ore price overnight amid optimism that demand will strengthen now China is coming out of lockdowns. According to CommSec, iron ore futures rose by US$6.86 or 5.1% to US$142.20 a tonne.

Lithium shares rebound

It has been a much-needed positive day of trade for Australian lithium shares. The likes of Liontown Resources Limited (ASX: LTR) and Pilbara Minerals Ltd (ASX: PLS) are rebounding on Friday following strong gains by lithium stocks on Wall Street. Investors may believe that the selling this week has been overdone and created a buying opportunity.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the Champion Iron Ltd (ASX: CIA) share price with a 7% gain. This follows a rise in the iron ore price overnight. Going the other way, the worst performer has been the Healius share price with a 6.5% decline following the healthcare company’s trading update.

The post ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher appeared first on The Motley Fool Australia.

More reading

• Could the Pilbara share price take off in June?
• It was an eventful month for Liontown shares in May. Here’s what went down
• Why is the Healius share price sinking to a 52-week low today?
• Was May a good month for the Pilbara Minerals share price?
• What is the BHP share price forecast for 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 WAM Capital Limited (ASX: WAM) dividend is nearing an important milestone today.

However, this is not having a positive effect on the investment company’s shares as they slip 0.72% to $2.085 during late-morning trade.

Let’s take a look what’s the latest with WAM shares.

WAM shares set to go ex-dividend

The WAM board declared an interim dividend of 7.75 cents to eligible shareholders following the company’s half-year results in February.

However, to lock in the dividend, investors need to buy WAM shares before the market close today. The ex-dividend date is on Monday 6 June.

It’s worth noting though that historically when a company reaches its ex-dividend day, its shares tend to backtrack on the day. This is because the company’s value is often worth a tad less after paying out a portion of its profits to shareholders.

When can WAM shareholders expect payment?

For those who are eligible for the WAM interim dividend, shareholders will receive a payment on 17 June.

The dividend is also fully franked. Franking credits, or imputation credits, are highly regarded in the investing world. This is a type of tax credit that is passed onto shareholders when dividend payments are made by a company.

Essentially, the company is paying the tax on the dividends received by the shareholders.

In addition, investors can elect for the dividend reinvestment plan (DRP) which will add a portion of shares to their portfolio instead.

There is a 2.5% DRP discount rate, and the price will be determined by a daily volume-weighted average (VWAP).

The last election date for shareholders to opt-in to the DRP is on 9 June.

WAM share price snapshot

Since the beginning of 2022, the WAM share price has lost 6% and is down 5% in the last 12 months.

The company’s shares reached a 52-week low of $2.00 last month, before recovering some ground in the following weeks.

WAM commands a market capitalisation of roughly $2.26 billion and has a trailing dividend yield of 7.67%.

The post Hoping to secure the next WAM Capital dividend? Read this appeared first on The Motley Fool Australia.

More reading

• Is AFIC the best LIC on the ASX?
• 2 compelling All Ordinaries ASX shares this fund manager likes
• WAM Capital’s ASX founder has been buying shares. Here’s what we know

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

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ASX lithium shares could make a rebound as some experts have come out to defend their bullish outlook for the sector.

These views stand in sharp contrast to the boom-to-gloom prediction from Goldman Sachs for lithium.

The broker’s forecast of a sharp retracement in the price of the battery-making ingredient is one of the key reasons ASX lithium shares were flogged on Wednesday.

Pilbara share price and peers getting a recharge

But bargain hunters could be returning already. The Pilbara Minerals Ltd (ASX: PLS) share price surged 6.1% to $2.42, Allkem Ltd (ASX: AKE) share price jumped 3.3% to $11.82 and Core Lithium Ltd (ASX: CXO) share price rocketed 7% to $1.22 in early trade.

Their redemption comes as Macquarie said it sees material valuation upside for lithium miners under its coverage. The broker commented:

Battery grade lithium carbonate prices are the key driver to our valuation outlook for lithium miners. We note that PLS is currently pricing in realised prices around US$13,000/t (China Lithium Carbonate 99.5%, US$/t, Ex VAT).

This is ~80% below current spot lithium carbonate prices in China and is equivalent to a flat spodumene price of ~US$950/t, 85% below the last BMX spot sale.

Pilbara share price is the top pick for Macquarie

Further, news that Chinese electric vehicle (EV) maker BYD bought six African lithium mines isn’t as bearish as it sounds. Lithium bears took the news to mean that the large EV maker will no longer add to demand pressure for the commodity.

That certainly sounds credible given that the mines are said to hold one million tonnes of lithium carbonate equivalent (LCE).

But Macquarie believes logistical challenges are likely to limit the pace of mine development and production.

The broker’s top pick among ASX lithium shares is the Pilbara share price.

Supply-side response slower than you’d might think

Meanwhile, Shaw and Partners have also expressed doubts about how readily new supplies of lithium can be brought to the market.

While the earth’s crust has an abundance of lithium, the broker noted that commercial lithium deposits are scarce.

No substitute for ASX lithium shares

Shaw doesn’t think now is the time to be bearish on ASX lithium shares. Its positive view is also driven by its belief that there is little threat from substitutes for lithium when it comes to batteries.

This is unlike cobalt and nickel with some battery manufacturers developing new technologies to replace these metals.

Shaw said:

Lithium ties into the electrification thematic that is taking over the globe. The reason for the hype is lithium has unique characteristics that are difficult to replicate. It is a light metal but is able to store large amounts of energy and is an excellent conductor of electricity.

The post Could the Pilbara share price take off in June? appeared first on The Motley Fool Australia.

More reading

• Was May a good month for the Pilbara Minerals share price?
• Aside from Goldman Sachs, what are other brokers saying about ASX lithium shares?
• Which ASX lithium shares are rebounding on Thursday, and which are not?
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update
• Is this the real reason ASX lithium shares cratered on Wednesday?

Motley Fool contributor Brendon Lau has positions in Allkem Limited. 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 is edging lower, down 0.06% in late morning trade.

Woodside shares closed yesterday at $31.75 and are currently trading for $31.73.

This comes after the S&P/ASX 200 Index (ASX: XJO) energy share kicked off its first day of trading on the New York Stock Exchange yesterday (overnight Aussie time).

Why did the company dual list on the US exchange?

If you’re looking to see how the Woodside share price is tracking on the NYSE, it still trades under the same name but with the ticker (NYSE: WDS).

The shares are listed in the form of American Depositary Shares.

What are those?

The company explained:

ADSs are US dollar denominated negotiable instruments represented by American Depositary Receipts (ADRs) issued by a depositary bank that facilitate US trading and investment in shares of non-US companies. The ADRs will be issued under Woodside’s existing ADR program, which is administered by Citibank, N.A.

Each Woodside ADS represents one ordinary Woodside share.

The dual listing comes the day after the merger transaction between Woodside and BHP Group Ltd’s (ASX: BHP) petroleum business was officially completed.

Woodside share price drops on NYSE listing debut

Woodside fluctuated between modest gains and losses for most of its initial day of trading in the US markets. But in the final 30 minutes of trade, selling took over and the stock closed down 1.5% for the day at US$23.15 per share (AU$31.71).

In after hours trading, the Woodside share price has lifted on the NYSE to US$23.35.

Woodside shares gained 6.1% on the ASX yesterday, likely supported by a $1.1 billion block trade the previous night, prior to the release of 900 million new shares related to the merger with BHP.

Woodside share price snapshot

Woodside has been a strong performer in 2022, buoyed by soaring energy prices.

Year-to-date the Woodside share price is up 45%. That compares to a 3% loss posted by the ASX 200 over that same period.

The post Woodside share price edges lower following NYSE debut appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why Bubs, IGO, Strike Energy, and Woodside shares are pushing higher
• Why is the ‘new’ Woodside share price leaping 6% today?
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update
• 5 things to watch on the ASX 200 on Thursday

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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Shares of Xero Ltd (ASX: XRO) have jumped from the open today and now rest at $87.18 apiece.

The Xero share price has struggled in 2022 and having booked extensive losses since trading resumed in January.

Brokers are bullish on Xero

Despite the ASX tech stock’s lacklustre performance this year to date, analyst sentiment appears to be tilted towards the upside for Xero.

JP Morgan identified its reasoning for Xero in a recent note, stating the company “has proven its credentials in the ANZ market and is now looking to replicate its model in its international markets”.

The JP Morgan team added:

In addition, the company is embarking on a ‘platform’ strategy that is expected to lead to higher ARPU [average revenue per user] and growth in LTV [loan-to-value].

We rate Xero overweight with the stock trading below our price target [$97/share].

Meanwhile, around 59% of brokers covering Xero have it rated as a buy right now, whereas around 18% have it rated as a hold, according to Bloomberg data. The remaining coverage urges clients to sell Xero shares.

Within this group, the consensus price target is $100.97 per share, offering around 19% upside potential should the Xero share price surge to that mark.

But the company needs “big customer growth” to first get there, in the opinion of Bloomberg Intelligence senior equity analyst Matt Ingram. He wrote:

Xero needs to sustain its 20% plus 2019-22 customer growth and lift ARPU, while controlling costs to reach a decent level of profit.

ARPU is the key driver; International’s NZ$358, well below QuickBook’s NZ$783 outside the US, needs to improve outside Australia.

Xero also needs to sustain strong subscriber growth outside the US. Operating leverage may boost operating income, but investment will curb profit.

In the last year of trade, the Xero share price has clipped a 34% loss, after heading south a further 6% this past single month.

The post Xero share price has 19% upside potential, top brokers say appeared first on The Motley Fool Australia.

More reading

• Why did the Xero share price go backwards in May?
• Best ASX shares to buy in June 2022
• 3 ASX shares I’m telling my clients to buy: advisor
• Xero share price charges higher: Can this tech share keep rising?
• 5 things to watch on the ASX 200 on Monday

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 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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