Treasury Wine Estates Ltd (ASX: TWE) shares have suffered against Chinese tariffs in recent years. The company has even decided to produce its famous Penfolds wine in the nation to avoid them.

But could Chinese sanctions change alongside Australia’s government?

Newly elected Prime Minister Anthony Albanese apparently won’t be letting such trade bans slide, slamming Chinese tariffs on Australian goods at this week’s Quad meeting.

At the time of writing, the Treasury Wine share price is 0.87% higher than its previous close.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is boasting a 0.78% gain.

Let’s take a closer look at what Albanese’s latest comments might mean for Treasury Wine shares.

Albanese slams Chinese tariffs

Treasury Wine shares could be in for a good run if Albanese sticks to his staunch stance against Chinese trade bans.

The Chinese Ministry of Commerce slapped Treasury Wine’s products with a massive duty rate back in 2020.

Prior to the hike, China accounted for around 30% of all Treasury Wine’s earnings. Their implementation understandably devastated the company’s bottom line.

Now, Australia’s new Labor Government’s apparent push against such tariffs could bring brighter days for the Treasury Wine shares.

Albanese slammed Chinese trade sanctions this week, saying the country should drop tariffs on Australian goods to improve the relationship between the two nations.

The comments came after Chinese Premier Li Keqiang sent a letter congratulating Albanese on his election win.

“The Chinese side is ready to work with the Australian side … to promote the sound and steady growth of the China-Australia comprehensive strategic partnership,” the letter stated.

But the olive branch wasn’t accepted unconditionally by Australia’s new leader. Speaking to press in Tokyo, Albanese said:

Australia seeks good relations with all countries. But it’s not Australia that’s changed, China has.

It is China that has placed sanctions on Australia. There is no justification for doing that. And that’s why they should be removed.

Treasury Wine share price snapshot

The Treasury Wine share price has suffered through 2022 so far. Though, things might not be as bad as they seem.

While the company’s stock has tumbled 6% year to date, it’s trading relatively in line with the broader market. Right now, the ASX 200 is 5% lower than it was at the start of 2022.

Additionally, the wine maker’s stock has outperformed the index over the last 12 months, gaining around 3% against the ASX 200’s 1% rise.

The post Could the new Labor Government herald better days for Treasury Wine shares? appeared first on The Motley Fool Australia.

More reading

• Treasury Wine share price beating the sell-off amid ‘made in China’ push
• Can a new $165m ‘state-of-the-art facility’ help restore the Treasury Wine share price?
• Broker tips the Treasury Wine share price to pop 23% higher
• Broker names 2 of the ‘best’ blue chip ASX 200 shares to buy now
• Broker names the best ASX shares to buy right now

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 Treasury Wine Estates 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 Fortescue Metals Group Limited (ASX: FMG) share price has surged in the past week, despite the recent market volatility.

Since this time last Wednesday, the iron ore mining outfit’s shares are up 10% buoyed by upbeat investor sentiment.

And today, Fortescue shares are currently adding to those gains to edge 1.49% higher to $21.08.

For context, the S&P/ASX 200 Index (ASX: XJO) is also in the green, up 0.80% to trade at 7,186 points.

Let’s take a closer look at what’s driving the miner’s shares upwards lately.

Iron ore prices rebound

After hitting a near 3-month low of around US$123 on 18 May, the price of iron ore has suddenly rebounded.

Courtesy of Trading Economics, the steel making ingredient is trading at US$130 per metric tonne at the time of writing. This represents an increase of roughly 5.6% compared to last Wednesday’s closing price.

Nonetheless, the uptick in iron ore prices will have a positive impact on Fortescue’s bottom line.

The company reported industry leading C1 costs of US$15.28 per wet metric tonne for H1 FY22.

C1 costs refer to the ‘direct’ production costs incurred in mining and processing the iron ore.

What’s causing iron ore prices to surge?

A major driving force that’s rallying up the iron ore price rise is China’s latest move to cut borrowing rates and reduce stockpiles of the steel making ingredient. This has led to optimistic sentiment in which futures have climbed across overseas markets.

To support economic growth, Chinese banks slashed interest rates for long-term loans by a record amount last week. Inevitably, this lessens mortgage costs for consumers and thus supports demand to take up new loans.

On the other hand, iron ore stockpiles at major Chinese ports fell for the eighth consecutive week.

The country’s strict COVID-19 zero policy and well documented property slump have weakened demand in the construction sector.

However, while government restrictions have weighed down on market confidence, iron ore consumption is expected to return to normal levels. This is based on stimulus packages released to the public to spur economic activity.

Fortescue share price snapshot

It’s been a rollercoaster ride for Fortescue shares, having moved unpredictably over the past 12 months. Its shares are down almost 2% since this time last year.

Based on valuation metrics, Fortescue presides a market capitalisation of approximately $63.77 billion.

The post Why has the Fortescue share price gained 10% in a week? appeared first on The Motley Fool Australia.

More reading

• Can Rio Tinto shares deliver 20% growth AND a juicy dividend yield in the coming year?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Better buy, BHP or Fortescue shares?
• Here’s why the Fortescue share price is surging on Monday
• How are ASX 200 mining shares responding to the election outcome?

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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The Airtasker Ltd (ASX: ART) share price is currently up by 8% after the business received the go-ahead to buy Oneflare.

Both Airtasker and Oneflare are local service platforms. A few weeks ago, Airtasker announced that it was going to buy the Oneflare business, using a capital raising to fund the deal. However, an enquiry by the Australian Competition & Consumer Commission (ACCC) halted the process.

ACCC update

Airtasker told the market today that the acquisition of Oneflare will proceed on 25 May 2022.

The ASX tech share told the market that the delay was due to queries from the ACCC about the acquisition.

The ACCC’s response? It confirmed that it does not intend to conduct a public review of the acquisition in regards to the Competition and Consumer Act 2010.

With that response, Airtasker will complete the acquisition and settle the private placement that it told the market about. That’s an underwritten placement of approximately 14.5 million new shares at $0.43 per share. The plan is to raise approximately $6.25 million. This will be used to fund the cash part of the deal, the FY23 estimated investment in Oneflare, and acquisition and placement costs.

What about the share purchase plan (SPP) Airtasker had planned for regular investors? This is the company’s answer:

Given the current share price is below the 43 cents price per share agreed for the placement, the board has decided to withdraw the SPP, noting that current shareholders can acquire shares in the company on-market at a lower price than the price previously anticipated for the SPP offer.

What is Oneflare?

Airtasker says that Oneflare is Australia’s third-largest local services platform with a strong presence in trades, home improvement and professional services.

Oneflare serves more than 540,000 customers and 14,500 verified businesses each year.

It has 480,000 unique visitors to Oneflare’s platform per month, with more than 50,000 posted jobs per month. The average task price is more than $2,300.

Why is Airtasker buying Oneflare?

There are three main factors that Airtasker points to.

First, it can strengthen network effects. Customers of both platforms will gain access to a wider range of skills and faster response times. Meanwhile, the taskers/businesses will get access to more job opportunities.

Next is that it can unlock the high-value trade opportunity. Airtasker said both platforms will gain access to a suite of features designed to empower ‘service pros’ in high-value service categories like trades, home improvement and professional services.

The third point was a single technology platform. It noted that operating a single technology platform to serve a significantly larger user base will create a range of technology, data, brand and financial synergies.

Airtasker share price snapshot

While the business is seeing a large rise today, the Airtasker share price has fallen by 26% in the last month amid the volatility for technology stocks on the ASX and internationally.

The post Here’s why the Airtasker share price is leaping 8% on Wednesday appeared first on The Motley Fool Australia.

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• Where I’d invest $10,000 into ASX shares this week
• Buy these great value 2 ASX growth shares: experts
• Why is the Airtasker share price edging higher today?
• Airtasker share price dives 6% as trading resumes
• Analysts say these small cap ASX shares have big futures

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 recommended Airtasker Limited. 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 Challenger Ltd (ASX: CGF) share price is sliding in lunchtime trade, down 3.7% to $7.25 per share.

Shares in the financial services company lost 0.4% yesterday, following its investor day presentation.

Those losses came despite the company reporting its normalised net profit after tax (NPAT) guidance for the 2022 financial year was likely to be at the higher end of its $430 million to $480 million guidance estimate.

With the Challenger share price down another 4% today, is it a buy?

An ASX share to benefit from rising rates

While some sectors are facing significant headwinds from rising interest rates – we’re looking at you ASX tech shares – others can benefit from higher rates.

Indeed, the Challenger share price could be one to get a lift, as rising yields from its annuity products are likely to attract fresh interest from retirees and other income investors.

So, are Challenger shares a buy?

According to UBS, yes.

Citing benefits from a rising interest rate environment – following record low rates during the pandemic years – the broker lifted its price target and upgraded Challenger to buy.

UBS said (courtesy of the Australian Financial Review) that Challenger was “on the cusp of a material rebound in life profitability“.

UBS head of insurance and diversified financials Scott Russell said:

It is not clear to us that consensus has fully factored this in. This has also addressed our previous concern that the group’s ROE [return on equity] was below its cost of equity, eroding shareholder value. We have lifted our price target and upgrade to a buy rating.

Challenger share price snapshot

The Challenger share price has been a strong performer, up almost 6% year-to-date and 44% higher over the past 12 months.

That compares to a year-to-date loss of 5.4% posted by the S&P/ASX 200 Index (ASX: XJO), while the ASX 200 is up 1.0% over the 12 months.

Challenger shares pay a 2.9% trailing dividend yield, fully franked.

The post The Challenger share price is sliding 4% today. Is it a buy? appeared first on The Motley Fool Australia.

More reading

• What’s going on with the Challenger share price today?
• 2 ASX shares (not banks!) to boom from rising interest rates: experts
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• ‘Outlook bright’: expert picks 2 ASX shares to buy right now

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 Challenger 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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Shares of AGL Energy Limited (ASX: AGL) are tracking higher on Wednesday to trade at $8.58 apiece.

Investors are bidding up the AGL share price despite further action against the energy giant’s planned spinout of its coal assets, reports say.

In wider market moves, the S&P/ASX 200 Energy Index (ASX: XEJ) has also climbed 71 basis points on the day.

AGL faces renewed pressure against demerger

In the latest blow for AGL’s planned divestment, industry super fund giant HESTA has stepped into the ring and shown its apprehension to the move.

HESTA owns a 0.36% stake in the energy giant per Bloomberg data. In a statement, the $68 billion super fund giant affirmed it will reject AGL’s demerger when voting next month, with CEO Debby Blakey noting AGL’s “emissions [are] effectively flowing through [HESTA’s] portfolio”.

“Shareholders are pushing for greater action on climate change and a more rapid transition that aims to enhance the company’s ability to create long-term, sustainable value,” Blakey said, cited by The Australian.

“AGL is one of Australia’s biggest emitters…If AGL commits to Paris-aligned emission reduction targets this will have a hugely positive impact on Australia’s pathway to net zero, lowering the overall systemic risk exposure of our members’ investments,” she added.

HESTA now joins the likes of billionaire tech entrepreneur Mike Cannon-Brookes – who earlier this year stepped in to veto the demerger in buying an 11% stake in the company – and a raft of other heavyweights in opposing the manoeuvre, including activist investor Snowcamp and Wilson Asset Management (WAM) chair Geoff Wilson.

Commentary from HESTA’s Blakey confirms the supergiant is well aligned with the criticism from these above entities:

We cannot simply divest away from the risk of Australia being slow to transition to a low-carbon future.

Responsible investors have a responsibility to their members to go to where the biggest emissions are and as owners try and first change the behaviour of these companies.

The demerger meeting is scheduled for 15 June and needs a 75% voting majority to go ahead. Interesting times in the month ahead for AGL, that’s for sure.

In the last 12 months, the AGL share price has clipped a 4% gain but has soared more than 40% this year to date.

The post AGL share price lifts despite intensifying demerger opposition appeared first on The Motley Fool Australia.

More reading

• What might a Labor government mean for ASX energy shares?
• AGL share price struggles as WAM boss slams demerger plan
• What might an ‘election won and lost on climate’ mean for AGL shares?
• Here’s why AGL shares hit the headlines again on Friday
• Why have AGL shares been getting so much love on Tuesday?

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

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This 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

After a brief respite on Monday, shares of electric vehicle (EV) leader Tesla (NASDAQ: TSLA) turned back south again on Tuesday. As of 11:50 a.m. ET today, the stock was down 4.5%.

So what

Tesla has announced plans to resume full-capacity production of EVs at its Shanghai Gigafactory as early as today. If it succeeds in getting production back up to full speed, it could be churning out nearly 950,000 vehicles per year in China, putting it back on track toward its goal of producing 1.5 million EVs per year. But probably not this year.

As Daiwa warns today in a note covered by The Fly, Tesla has already lost about 100,000 units of potential production in Shanghai as it sat on the kerb and waited for Chinese COVID containment regulations to lapse. Adding to Tesla’s troubles, Daiwa believes production ramp-ups at Gigafactories in Texas and in Germany have been slower than planned, reducing total 2022 potential production by another 80,000 vehicles.  

Result: In a year when Tesla aimed to produce 1.5 million EVs, it might succeed in building only 1.2 million.

Now what

And that’s OK. On the one hand, Daiwa cites this expected production miss as the reason it’s cutting its price target on Tesla by more than 30%, to $800 a share. Yes, this lower value on shares could complicate Elon Musk’s plan to finance his acquisition of Twitter (as analysts at Bernstein commented today). And yes, rival Volkswagen could very well try to take advantage of Tesla’s weakness at this point to accelerate its own EV plans and overtake it in sales by 2025.  

But it’s pretty irrelevant whether Tesla achieves 1.5 million EVs produced this year. In the grand scheme of things, that’s a short term and rather arbitrary milestone. What’s important is whether the company succeeds in producing at the rate of 1.5 million cars per year after the lockdown ends. And not only does Daiwa think it will, but that analyst estimates the company will keep growing its production, probably hitting 1.8 million cars in 2023.

That’s the goal you should focus on: what happens after the lockdown goes away and Tesla’s growth is able to rev higher unhindered. As long as it keeps doing that, this growth story remains intact.

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

The post Why Tesla stock turned south today appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock finally bounced today
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• Down almost 30% in the past month, here are 2 reasons to buy Tesla shares and 1 reason to hold off
• Why Tesla stock fell again today
• Why Tesla stock got dented today

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 Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is back on form and charging higher. The benchmark index is currently up 0.8% to 7,183.6 points.

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

BHP share price sinks

The BHP Group Ltd (ASX: BHP) share price has taken a big tumble on Wednesday. This has been driven by the Big Australian’s shares trading ex-dividend for its in-specie dividend. Eligible BHP shareholders can now look forward to receiving one new Woodside Energy Group Ltd (ASX: WDS) share for every 5.534 BHP shares they own when the demerger of BHP’s petroleum assets completes on June 1.

Pilbara Minerals shares fall following BMX auction

The Pilbara Minerals Ltd (ASX: PLS) share price is dropping today. This is despite the lithium miner releasing the results of the fifth Battery Material Exchange (BMX) auction. A cargo of 5,000 dmt at a target grade of ~5.5% lithia received a winning bid of US$5,955 per dry metric tonne. This was up from US$5,650 per tonne last month. While this came in 9% ahead of what Macquarie Group Ltd (ASX: MQG) was expecting, some investors appear to have been betting on even stronger pricing.

Worley wins two new contracts

The Worley Ltd (ASX: WOR) share price is charging higher today. This follows the announcement of two new contract wins. The first is the award of a contract for the fourth expansion of an integrated polyolefins complex in Ruwais, United Arab Emirates. The other is a contract by Heartwell Renewables for field engineering services for a greenfield renewable diesel plant in Hastings, Nebraska.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Nufarm Ltd (ASX: NUF) share price with a 5% gain. Bargain hunters appear to be swooping after recent weakness. Going the other way, the worst performer has been the BHP share price with an 8.5% decline. This has been driven by its shares trading ex-dividend this morning.

The post ASX 200 midday update: BHP and Pilbara Minerals shares tumble appeared first on The Motley Fool Australia.

More reading

• Do South32 shares have exposure to ‘green metals’?
• What exactly is the difference between Woodside Energy (WDS) and Woodside Petroleum (WPL)?
• Pilbara Minerals share price falls despite record BMX auction
• Why is the BHP share price sinking 10% today?
• 3 ‘disruptive’ ASX companies Aussies now can’t live without

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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South32 Ltd (ASX: S32) is one of the most diversified mining shares on the S&P/ASX 200 Index (ASX: XJO). Most miners tend to focus on one or two commodities. Take Fortescue Metals Group Limited (ASX: FMG). Despite its recent talk of expanding into hydrogen, Fortescue essentially remains a pure-play iron ore company today.

Fortescue’s fellow blue-chip miners in Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) are more diversified. But iron ore remains the most important commodity for these companies as well. Especially considering BHP has just finalised the sale of its petroleum assets to Woodside Energy Group Ltd (ASX: WDS).

But South32 is a different beast. It was spun out of BHP back in 2015. This was done to ensure BHP could streamline into its four most important commodities at the time – iron ore, oil, copper, and coal. Everything else that BHP owned got bundled into South32 and demerged.

So what does the South32 commodities portfolio look like today? And more importantly, do South32 shares give investors exposure to green metals?

Well, that’s a good question. And it largely rides on what you might define as a ‘green metal’. Obvious candidates like lithium can be ruled out. South32 is not a lithium miner and has no exposure to this quintessential green metal. But it does have some exposure to some other future-facing metals.

Is South32 an ASX green metals share?

Let’s start with the main ones. South32 has major operations in aluminium. It produces aluminium, as well as alumina and the ore bauxite, through its facilities in Africa. However, while aluminium is an important metal in our economy, it can’t really be described as a green metal. South32’s metallurgical coal operations are also a non-starter when it comes to green metals.

South32 also produces lead, manganese, and zinc. Again, these are essential base metals. But not what a typical investor might get too excited about when it comes to environmental impacts.

But we get a little warmer when examining South32’s silver operations. The company owns the Cannington mine in North Queensland, which is a world-leading source of silver. While silver’s applications remain tilted towards jewellery and electronics, silver is also a key ingredient in making solar panels.

But perhaps South32’s ‘greenest’ commodities come in the form of copper and nickel. These two metals have been used for thousands of years, including in countless applications today. However, both nickel and copper are essential ingredients in electric motors and batteries – the kind you will find in the next generation of electric cars and vehicles. These we can call ‘green metals’ for most intents and purposes.

So, all in all, South32 shares provide an investor with exposure to a wide range of minerals and metals. Some of these can be considered green, others less so.

At the current South32 share price, this ASX 200 miner has a market capitalisation of $21.94 billion, with a dividend yield of 3.53%.

The post Do South32 shares have exposure to ‘green metals’? appeared first on The Motley Fool Australia.

More reading

• 3 ‘disruptive’ ASX companies Aussies now can’t live without
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• What does AFIC’s ASX share portfolio look like?
• Here are the 3 most traded ASX 200 shares on Tuesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 S&P/ASX 200 Health Care Index (ASX: XHJ) is in the red today, but one ASX biotech share is beating the trend.

The Vectus Biosystems Ltd (ASX: VBS) share price is soaring 13.6%, currently trading at $1.25. In contrast, the ASX 200 Health Care Index is down 0.57% at the time of writing.

So why is this ASX biotech share having such a good day?

Human trial success

Vectus is working on treatments for fibrosis and high blood pressure to combat heart, kidney and liver diseases.

The company’s lead compound is VB0004 to treat high blood pressure and hardening functional tissue.

In today’s news, the company reported the results of the Single Ascending Dose Study for a human clinical trial. Five doses of VB0004 were administered with no adverse events to date. The 300mg dose significantly added to the therapeutic safety margin for VB0004.

Pharmacokinetic analysis showed the plasma half-life is 17 to 17.5 hours and maximal concentration after dosing takes place at six to eight hours. Vectus said this showed VB0004 was responsive to one dose per day.

A Multiple Ascending Dose (MAD) study involving the daily doses of 10mg for 14 days of VB004 to patients also showed no adverse events. A second group of people will now be involved in the MAD study, with three people already enrolled.

The results were reviewed by the Trial Safety Review Committee.

Vectus chair Ron Shiner said:

This is an exciting development in Vectus’ journey of validating an orally-dosable anti-fibrotic, which could not just slow down disease progression, but in fact, potentially provide clinical reversal of existing damage in a truly transformational agent.

Vectus share price snapshot

Vectus shares have rocketed nearly 29% in the past 12 months, but they are down 11% year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has climbed 2% during the past year.

The ASX biotech share has a market capitalisation of about $45 million based on its current share price.

The post Why is this ASX biotech share leaping 14% today? appeared first on The Motley Fool Australia.

More reading

• Is Telstra an ASX 200 share worth owning right now?
• Tabcorp share price slumps another 7% following demerger
• What’s happening with ASX 200 tech shares today?
• The Galileo Mining share price has been on a tear, but now it’s halted. What’s happening?
• Why Snap stock cratered on Tuesday

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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Could Telstra Corporation Ltd (ASX: TLS) be one of the best ASX blue-chip shares to own?

The telco is certainly one of the biggest businesses in the S&P/ASX 200 Index (ASX: XJO) with a market capitalisation of $45 billion, according to the ASX.

But simply being a large business doesn’t mean it’s a good option. There is more to it than that.

The prospect of growing earnings could be one of the more important things to look for. Let’s start with the prospect of profit rising.

T25 strategy

Telstra is just finishing up its T22 strategy, and now it’s going to work on its T25 strategy for the next few years.

The thought is that Telstra’s T25 strategy will deliver “growth, exceptional customer experiences and continued network and tech leadership”.

The blue-chip ASX share expects to achieve a compound annual growth rate (CAGR) of mid-single digits for the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to FY25. Telstra is also expecting a high-teen CAGR of underlying earnings per share (EPS) to FY25.

Part of that growth will come from the plan to reduce net fixed costs by another $500 million between FY23 and FY25.

Telstra also plans to ‘win’ with 5G by expanding its 5G network coverage to 95% of the population. Australian-based contact centres will support this expansion.

The company expects 80% of all mobile traffic to be on 5G by FY25. It’s already thinking about 6G, saying early planning will “clearly” be on the agenda by the end of T25.

Dividends

One of the things that many Aussies seem to want from their ASX blue-chip shares are dividends.

Telstra has committed to maximising its fully-franked dividends for shareholders and looks to grow them as cash flow, profit, and franking credits allow.

The telco has continued to pay an annual dividend of 16 cents per share, which translates into a grossed-up dividend yield of 5.9%.

Diversification

Some businesses have multiple earnings streams rather than having all the profit ‘eggs’ in one basket.

While Telstra earns most of its profit from providing telecommunications services in Australia, it is growing in other areas.

It is increasing its earnings presence in Asia (including the acquisition of Digicel Pacific). That deal made the ASX blue-chip share a leading provider of telecommunication services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu.

The business also has growing exposure to healthcare with its Telstra Health division. It expanded this by buying MedicalDirector.

Is the Telstra share price a buy?

The broker Morgan Stanley certainly thinks so, with a buy rating on the telco. The price target is $4.60, implying a possible rise of around 20% over the next year.

Morgan Stanley thinks that the success achieved by international peers with fixed wireless broadband is a good sign for Telstra. Fixed wireless comes with a higher profit margin than a connection through the NBN (National Broadband Network).

Just before midday on Wednesday the Telstra share price is climbing by 1.16% to $3.92.

The post Is Telstra an ASX 200 share worth owning right now? appeared first on The Motley Fool Australia.

More reading

• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Analysts rate these ASX 200 dividend shares as buys
• Why has the Telstra share price lagged the ASX 200 over the past week?
• Here are the 3 most traded ASX 200 shares on Friday
• These 3 shares are topping the ASX 200 volume charts on Thursday

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 positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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