Consumers and businesses are bracing themselves for an unprecedented situation in Australia’s energy markets. A dark cloud has been floating over ASX energy shares in the last week as fossil fuels reach mind-blowing prices.

Initially, one might think this would be a boon for energy retailers. If prices rise, profits should rise too, right? Well, because keeping the lights on is an absolute necessity for modern society, the energy market is heavily regulated. Additionally, with wholesale gas prices reaching 80 times their normal level, the majority of consumers would be unable to afford the inflated cost.

So, how exactly is this playing out for the energy sector and ASX shares?

State of play in energy

The sobering reality is Russia had accounted for around 17% of the world’s natural gas supply. Meanwhile, Europe’s reliance on Russia is far greater than the rest of the world. At 40% of its gas imports, Russia has a firm grip on the European Union (EU).

Due to the sizeable shortfall in supply as the world banishes the importing of Russian products, the demand has spread globally. In turn, the going rate for energy-rich commodities has exploded, putting pressure on energy retailers.

Last week, news hit the headlines of Weston Energy ceasing operations. The gas retailer responsible for 7% of Australia’s east coast commercial and industrial supply shut up shop. A more than 180% increase in gas prices was cited as the culprit.

The damage is also being witnessed in public markets. ASX-listed small-cap energy share, Locality Planning Energy Holdings Ltd (ASX: LPE) entered voluntary suspension after suggesting to its 20,000 retail customers to seek out a new supplier. The company planned on increasing its electricity prices by over 100% on 1 June.

Showing that the pain is not exclusive to the small end of town, Origin Energy Ltd (ASX: ORG) was dealt a blow yesterday after revealing a toll on its expected earnings. The ASX energy giant now expects its underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) to be between $310 million to $460 million for its energy markets division.

Aren’t higher prices good for ASX energy shares?

There’s an important variable in this equation for energy retailers. One that morphs high prices from a potential tailwind into a likely headwind. In the finance world, it’s called a price ceiling — but it is commonly referred to as a price ‘cap’.

To try and maintain an orderly energy market, regulators have stepped in and introduced price caps. For instance, the Australian Energy Market Operator (AEMO) applied a $40 per gigajoule to the Victorian gas supply on Tuesday. Meanwhile, the ‘real’ price reached $800 per gigajoule.

In essence, this means that ASX energy shares such as Origin and AGL Energy Ltd (ASX: AGL) won’t be able to take full advantage of this ‘perfect storm’.

The post In the dark: ASX energy shares facing a perfect storm appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 market may be dropping on Thursday but that hasn’t stopped a couple of ASX mining shares from surging higher.

Here’s what is causing these shares to rocket:

Anax Metals Ltd (ASX: ANX)

The Anax Metals share price is up 19% to 10 cents. This follows the release of assay results from recent diamond drilling from the Evelyn deposit at the Whim Creek project.

According to the release, the company intersected near-surface massive sulphides comprising chalcopyrite, sphalerite, galena, pyrite and pyrrhotite with true widths of up to 15 metres encountered.

Management believes these results bode well for Whim Creek project outcomes. Anax’s Managing Director, Geoff Laing, commented:

These assay results are very pleasing and confirm that the Evelyn deposit will provide considerable upside to Whim Creek project outcomes. Metallurgical test work is well advanced and initial indications suggest that Evelyn ore will be highly compatible with the processing flow sheet currently being finalised for both the Mons Cupri and Whim Creek ore deposits. It is envisaged that Evelyn ore will feed directly into the Whim Creek development scenario.

Superior Resources Limited (ASX: SPQ)

The Superior Resources share price has rocketed 43% higher to 5 cents. Investors have also been buying this copper explorer’s shares following the release of assay results from the Greenvale project.

Those assay results confirm extensive strong copper mineralisation in the BTDD004 drill hole with significant zones of high grade copper from a distal part of interpreted porphyry system. Copper mineralised over almost the entire length of a 658.9m hole.

Superior’s Managing Director, Peter Hwang, was pleased with the results. He commented:

The better-than-expected results returned from BTDD004 are impressive, particularly considering the mineralisation is thought to be some distance away from the interpreted porphyry core where higher grades are expected. To have intersected such a large interval of significant grade copper at this distal part of the interpreted system, provides us with further confidence that we are dealing with a very large-scale copper-gold system.

The post 2 ASX mining shares skyrocketing on new discoveries appeared first on The Motley Fool Australia.

More reading

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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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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has struggled over the past 12 months, but one top broker is tipping a return to glory.

Broker Morgans is bullish on the pizza juggernaut following its recent drawn-out sell-off.

At the time of writing, the Domino’s share price is $68.25, 2.14% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is also down 1.08% today.

Let’s take a closer look at what might have spurred Morgans’ excitement over Domino’s.

What’s got this broker bullish on Domino’s stock?

The next year could be a good one for the Domino’s share price and those invested in the pizza franchising giant.

Morgans was recently quoted by my Fool colleague James Mickleboro as saying:

[A]lthough inflationary pressures have worsened since [the company’s earnings release], we continue to believe there is meaningful upside to the current share price over the next 12 months.

The last time the ASX heard news from Domino’s was back in February when the company dropped its half-year earnings.

The stock tumbled 14% on the back of the results. The company’s profits slumped 5% over the six months to 31 December.

However, the company’s long-term goals might have caught the broker’s eye.

The company expects to more than double its store network by the financial year 2033 – reaching about 6,650 stores. For context, it had 3,227 at the end of the first half.

Additionally, management is focused on identifying acquisition opportunities to grow the company.

Morgans has slapped a $100 price target on Domino’s shares, along with an add rating.

Domino’s share price snapshot

As previously mentioned, the Domino’s share price has had a rough trot lately.

It has slipped 44% since the start of 2022 and is currently trading 40% lower than it was this time last year.

However, if this tip from Morgans pays off, the stock could boast a 46% upside.

The post Top broker says beaten-up Domino’s share price has 46% upside 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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 Wesfarmers Ltd (ASX: WES) share price is slipping in early trade, down 0.6%. This comes as the S&P/ASX 200 Index (ASX: XJO) also sliding into the red, down 1.0%.

Wesfarmers shares closed yesterday at $47.58 and are currently trading for $47.29.

The ASX 200  conglomerate – whose portfolio includes household names like Kmart, Target, Officeworks and Bunnings Warehouse – is holding a strategy briefing day in Sydney today.

Here are some of the highlights.

Wesfarmers share price dips amid strategy briefing

The Wesfarmers share price is dipping into the red alongside the broader benchmark in the midst of today’s corporate presentation.

With ecommerce is continuing to grow across Australia, the retail conglomerate, with more than 1,500 physical stores, said it’s continuing to expand its digital offerings. It established Wesfarmers OneDigital in the second half of the 2022 financial year and is now offering its OnePass membership program to Kmart and Target customers.

Wesfarmers reported its online sales are up three times compared to levels in the first half of 2019, with more than 150 million online interactions per month.

On the growth front, Wesfarmers will continue to focus on developing Bunnings, its biggest revenue generator, as well as investing in growing and improving the performance of API and its new Health division.

The company is also expanding WesCEF through its Mt Holland lithium project, located in Western Australia. Its increasing spending to approximately $320 million on development of the Mt Holland lithium project.

Focusing on the environment, WesCEF – a portfolio of businesses supplying products to critical industries – has a new sustainability focus including a commitment to achieving net zero emissions.

With both the waning pandemic and waxing inflation in mind, Wesfarmers reported it “is well positioned for the post-COVID environment, having strengthened the capabilities of existing divisions and with new platforms for future growth”.

“Wesfarmers’ retail divisions are well equipped to manage inflationary pressures and view this as an opportunity to profitably grow share while extending value credentials.”

Inventories and capex higher

Wesfarmers reported “abnormally high” inventory levels in the first half for the 2022 financial year. This was due to its decision to temporarily hold more stock, domestic supply chain disruptions, and higher commodity prices.

Looking ahead, the company expects inventory levels to normalise in time, but these are likely to remain elevated in 2H FY22 due to “API, inflation and commodity price impacts, and ongoing prioritisation of stock availability”.

Capital expenditure is increasing with more money flowing into the Mt Holland lithium project, alongside increased digital and network investments. Net capex is forecast to come in the range of $900 million to $1.0 billion.

Wesfarmers maintains a strong credit rating, with Moody’s rating it A3 (a stable outlook) and Standard & Poor’s rating it A- (also a stable outlook).

Wesfarmers share price snapshot

The Wesfarmers share price has struggled this year, down 22% since the opening bell on 4 January.

By comparison, the ASX 200 is down 6% year-to-date.

The post Why is the Wesfarmers share price slipping today? appeared first on The Motley Fool Australia.

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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 Wesfarmers 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 Bubs Australia Ltd (ASX: BUB) share price is up 7.7% after the infant formula business announced its first deliveries to the United States.

There is currently an infant formula shortage in the US, so the government is taking action to reduce the problem.

Bubs joins US ‘Operation Fly Formula‘

In an announcement today, Bubs revealed the US government has sourced the first two flights to transport six different Bubs infant formula products to the US.

The US Department of Agriculture and the Department of Health and Human Services is authorised to use Department of Defense contracted commercial aircraft to deliver infant formula that meets US health and safety standards.

Since the initial announcement by the US Food and Drug Administration (FDA), Bubs has been working closely with the US government and key stakeholders to get their products to US families as quickly as possible.

Bubs will be distributing 1.25 million tins of Bubs infant formula products to leading US retailers. A series of shipments will go to the US in the coming weeks.

The first flights are scheduled to depart Melbourne Tullamarine Airport on 9 June and 11 June.

Bubs expects its products to be on the shelves of major retailers soon after arrival. Bubs will work with its retail partners to ensure products are sent to states with the greatest shortages.

CEO comments

The Bubs CEO Kristy Carr said:

We would like to express our deepest gratitude to the Biden Administration for extending Operation Fly Formula to enable Bubs to assist American families as quickly as possible. Our team members are working around the clock in conjunction with the White House to resolve logistical challenges so that we can have Bubs Infant Formula products on shelf in major American retailers as quickly as possible.

Carr also participated in a ‘roundtable’ discussion convened by President Biden and senior officials. Bubs was the only manufacturer from the Asia Pacific region present.

What comes next?

Bubs is finalising subsequent flights and logistics now. The Biden Administration will announce details of additional deliveries in the coming days.

The products will be distributed widely throughout the US across a large number of major retailers.

Bubs share price snapshot

The Bubs share price shot to a 52-week high of 84 cents after the announcement of Operation Fly Formula on Monday. It has since drifted back to 64 cents today. Even so, it’s still up 38% this week.

The post Bubs share price jumps on first US shipments 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Could the Qantas Airways Limited (ASX: QAN) share price soon return to pre-COVID levels? Analysts at UBS reportedly think so.

They’re said to have tipped Qantas’ stock to lift to its highest point since late 2019 as the airline’s cost-saving and growth activities start to take effect.

At the time of writing, the Qantas share price is trading at $5.43, down 1.8%.

Let’s take a look at what’s got the top broker excited about Qantas.

Qantas’ earnings tipped to reach pre-COVID levels by FY24

The Qantas share price has lifted around 135% from its lowest point of the pandemic and, according to UBS, it could have another 22% left in it.

The broker believes Qantas’ earnings could recover to pre-COVID levels by financial year 2024 and its stock will follow suit, reports The Australian.

UBS equity analyst Andre Fromyhr was quoted by the publication as telling clients:

Buying into Qantas’ growth initiatives post-recovery is a different proposition to investing in [Qantas] for the recovery itself – however we think there’s enough valuation support without assuming much from such initiatives.

The [free cash flow] outlook is also positive but less clear, partly due to use of latent COVID credits, but also because Qantas is already investing in growth.

Qantas has reinstated its capital expenditure guidance for financial year 2023. The airline predicts it will come in at between $2.3 billion and $2.4 billion.

The airline is also working on ‘Project Sunrise’ which should see it launching 12 new Airbus A350s from financial year 2025.

Finally, Qantas has placed a $4.75 per share all scrip bid for Alliance Aviation Services Ltd (ASX: AQZ). The deal is yet to receive shareholder or regulatory approval.

Meanwhile, the airline has taken on a 51% holding in online travel business TripADeal for an undisclosed sum.

On the back of Qantas’ busy period, UBS has upped its price target for the company’s shares. It now expects the stock to trade at $6.75 – representing a 22% premium on its previous close.

Qantas share price snapshot

The Qantas share price has been outperforming the S&P/ASX 200 Index (ASX: XJO) lately.

It has gained 7% since the start of 2022 while the index has slumped nearly 5%.

The airline’s shares are also trading 15% higher than they were this time last year. Meanwhile, the ASX 200 has traded flat over the last 12 months.

Though, the stock is still around 15% lower than it was before the pandemic took hold.

The post Top broker tips 20% upside for Qantas share price appeared first on The Motley Fool Australia.

More reading

• What’s happening to the Qantas share price this week?
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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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Alliance Aviation Services 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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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.

What happened

Shares of electric-vehicle (EV) maker Tesla (NASDAQ: TSLA) tumbled for a second straight day on Wednesday, falling as much as 2.4% through 10:35 a.m. ET before recovering some of their losses later in the morning. 

Elon Musk’s comments have a lot to do with that.

So what

On the one hand, as The Fly reports, Goldman Sachs lowered its target on Tesla shares from $1,200 to $1,000. But $1,000 is about 33% higher than where Tesla stock trades today, and Goldman wasn’t specifically targeting Tesla when it made this cut. Rather, the lowered price target was part of a broad reduction in Goldman’s estimates across the U.S. auto and industrial technology space, to account for continuing supply chain snarls and expected lower production.  

But the bigger Tesla story today comes straight from the CEO himself. There was a leak of an internal email from Musk to his executive staff (i.e., office workers, not factory employees) advising them that the company is ending work-from-home permission and requiring its employees to either return to the office or “pretend to work somewhere else.”

They should pretend to work somewhere else

— Elon Musk (@elonmusk) June 1, 2022

https://platform.twitter.com/widgets.js

Now what

The result was predictable, but there are actually two ways of looking at this new Tesla policy. From one perspective (the one that investors seem to be taking today), the company is risking a brain drain by telling some of its most skilled staff to either resume commuting to work or else hit the road. In a seller’s market like the present labor market in the U.S., this ultimatum is probably not going to be popular with work-from-home staff who have gotten used to not having to commute to the office over the past two pandemic years. 

If remote work is no longer acceptable to Musk, then working for Tesla might no longer be acceptable to many key Tesla employees. They could instead defect to Rivian, Ford, Apple, or any of a number of other Tesla competitors, to the detriment of its business.

But here’s the contrary theory: It’s not fair that within a single company, one class of employees (factory workers) is required to come into work while another (the executive staff) isn’t.

In the short term, Musk’s ultimatum could cause unrest — maybe even revolt — among his white collar staff. But by eliminating de facto favoritism, Tesla may actually end up increasing esprit de corps and strengthening the entire company as a result. One can hope, at least. 

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

The post Why Tesla stock is still falling today appeared first on The Motley Fool Australia.

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• Why the Tesla share price stalled on Tuesday
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Rich Smith 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 Apple, Goldman Sachs, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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Yesterday was one of the worst days on record for Australian lithium shares.

The likes of Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS) made double-digit declines, with the latter falling over 20%.

Why were lithium shares sold off?

While there were a number of catalysts for these declines, news that Goldman Sachs was bearish on lithium prices was suggested to be the main reason for the weakness.

However, this didn’t make a lot of sense. As I’ve mentioned before, Goldman’s belief that lithium prices have peaked and will fall materially in the coming years is not new.

At the start of last month, I outlined Goldman’s forecasts for lithium prices through to 2025. These forecasts can be found here.

In addition, the most recent note from Goldman Sachs in relation to battery materials was actually released on Monday. Which means the selloff should really have occurred on Monday or Tuesday, not on Wednesday.

So what was the real cause?

The real reason for the weakness in lithium shares such as Liontown Resources Limited (ASX: LTR) and Sayona Mining Ltd (ASX: SYA) appears to be news out of China.

According to Chinese media organisations, Warren Buffett-backed electric vehicle company BYD is planning to buy six lithium mines in Africa.

In total, BYD is understood to be expecting these mines to produce approximately 1 million tonnes of lithium carbonate each year. That would be enough to build at least 27.78 million electric vehicles, which covers the automaker’s expected demand for the next decade.

So, as well as increasing supply, it would also take a major buyer of lithium out of the chain. This could have a big impact on the demand side and therefore lithium prices in the coming years. It may also make Goldman’s bearish view more accurate than some investors would like to believe.

The post Is this the real reason ASX lithium shares cratered on Wednesday? appeared first on The Motley Fool Australia.

More reading

• Pilbara Minerals share price higher on CEO appointment
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Motley Fool contributor James Mickleboro 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Wednesday night to discuss Australia’s strong GDP numbers, the crash in ASX lithium stocks, and a big price fall for Origin Energy.

The post A crash for ASX lithium stocks, and GDP keeps growing. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 Pro Medicus Limited (ASX: PME) share price is falling on Thursday.

In morning trade, the health imaging technology company’s shares are down over 1% to $40.78.

This appears to have been driven by broad weakness in the tech sector, which has offset some positive news.

Pro Medicus share price falls despite contract win

The Pro Medicus share price is falling today despite the announcement of another major contract win.

According to the release, Pro Medicus has signed a $28 million, seven-year contract with Allina Health.

Allina Health is a not-for-profit health care system based in Minneapolis, Minnesota. It has 28,000 employees and 6,000 associated and employed physicians and operates 11 hospitals and more than 90 clinics.

The release explains that the contract is based on a transactional licensing model and will see the company’s Visage 7 Enterprise Imaging Platform and Visage 7 Workflow module implemented throughout Allina Health. This will provide it with a unified diagnostic imaging platform across the network.

Pro Medicus will now commence with the planning of the rollout, with an initial go-live date targeted for the second half of the calendar year.

‘Strong momentum’

Pro Medicus’ CEO, Dr Sam Hupert, was pleased with the news and notes that its strong momentum is continuing to build in the integrated delivery network space. He said:

This is our fifth major contract in the North American integrated delivery network (IDN) space in 18 months, underpinning the strong momentum we continue to build in this important segment of the market.

IDN’s are growing because of the trend towards value-based medicine coupled with industry consolidation. Our Visage 7 platform is ideally suited to meet their needs with its unparalleled speed, scalability, and proven cloud capability.

The good news for shareholders is that this may not be the last contract win. Dr Hupert commented:

Our pipeline remains strong and spans a growing number of market segments, including academic institutions, the IDN space, independent radiology groups, and the for-profit sector. Our proven cloud-engineered technology provides us with a very significant strategic advantage with the last six of our major contracts being cloud-based — a trend we think will continue.

The post Pro Medicus share price falls despite major contract win appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus 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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