The share price of materials giant Mineral Resources Limited (ASX: MIN) has been struggling lately, tumbling more than 17% over the last 30 days.

But there could be light on the horizon for the lithium and iron ore producer, with one broker tipping a 41% upside on its stock.

At the time of writing, the Mineral Resources share price is $46.01. That’s 21.6% lower than it was at the start of 2022.

For context, the S&P/ASX 200 Index (ASX: XJO) has slipped 13% so far this year, as has the S&P/ASX 200 Materials Index (ASX: XMJ).

Let’s take a closer look at what’s been going on with the resources giant and what one broker expects for its future.

Mineral Resources share price tipped to hit $65

The Mineral Resources share price has been plagued by retreating commodity prices and negative sentiment recently. But one broker expects the stock to perform a notable comeback.

Jefferies has reportedly upped its price target for Mineral Resources’ stock to $65. The broker also slapped the company’s shares with a buy rating, Livewire reports.

That would see the company’s stock returning to trade around the 52-week high it reached in January.

A falling iron ore price and a lithium sell-off event have taken their toll on the company’s shares since then.

Companies involved in lithium have had a rough slog over the last few weeks following a major turnaround on the market. Meanwhile, the price of iron ore has slumped around 28% since peaking in March.

Interestingly, there hasn’t been much news from the company over the last few months. Though, it was added to the S&P/ASX 50 Index (ASX: XFL) in June.

The post Could the Mineral Resources share price unload another 41% of upside? appeared first on The Motley Fool Australia.

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More reading

• Why did the Mineral Resources share price fall 10% in the 2022 financial year?
• The Mineral Resources share price is leaping higher again today. Here’s why
• Here are the top 10 ASX shares today
• Is now the time to be buying beaten down ASX 200 mining shares?
• These ASX 200 mining shares are bouncing back on Thursday

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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ASX biotech shares incurred heavy losses in FY22 as investors piled out of risk assets and moved into higher-quality corners of the market.

Here’s a closer look at three noteworthy ASX biotech shares and their outlook for FY23.

CSL Ltd (ASX: CSL)

Shares in the biotech giant gyrated last year but analysts tip they’ll deliver upside in FY23. Citi rates this ASX share a buy on a $330 valuation.

The Citi team say that CSL should benefit now that COVID-19 has wound back and blood plasma collections can resume en masse.

It forecasts around 20% growth in earnings per share (EPS) for CSL this financial year, as the market “shift[s] its focus to the strong underlying plasma product demand.”

Not only that, but CSL announced its acquisition of Vifor Pharma last year, and is likely to book its first round of revenue from the transaction in FY23.

This could weigh on the CSL share price if everything goes well.

Imugene Ltd (ASX: IMU)

Shares in Imugene have caught a bid lately and are up 33% in the past week. After booking heavy losses last financial year, things could be looking different in FY23 for the ASX biotech share.

As TMF reported last week, “Imugene advised it has appointed a new executive director and clinical scientist.”

That was Dr Sharon Yavrom, who comes with nearly 20 years of industry experience.

The latest results of its HER-Vaxx Phase 2 study were also a positive catalyst for the share price.

The HER-Vaxx segment is sure to be integral to Imugene’s growth narrative looking ahead, as it was in FY22.

Immutep Ltd (ASX: IMM)

Another ASX biotech share worth mentioning for FY23 is Immutep. The company is focused on developing novel oncology solutions through its lead drug compound, etfi.

Immutep shares underperformed in FY22, with investors incurring a substantial on-paper loss. But the biotech share caught a bid in the first week of July following a company announcement.

Immutep advised that part A of the phase II TACTI-002 trial met its primary objective, showing favourable anti-tumour activity.

The study was evaluating efti in combination with MSD’s pembrolizumab in 114 patients.

Investors reacted favourably after digesting the news.

The wider healthcare sector has also been strengthening in early FY23.

The post What’s the outlook for ASX biotech shares in FY23? appeared first on The Motley Fool Australia.

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• What’s the outlook for ASX 200 healthcare shares in FY23?
• Why analysts love this ASX share that lost investors 5.5% in FY22
• 4 ‘quality’ ASX shares to buy in scary times: expert
• Analysts name 2 ASX 200 blue chip shares to buy
• Up 33% in a week, what’s helping the Imugene share price higher?

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 CSL Ltd. 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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Woolworths Group Ltd (ASX: WOW) shares could be in the buy zone at the current level.

That’s the view of the team at Goldman Sachs, which has just added the retail giant’s shares to its conviction list.

What is Goldman saying about the Woolworths share price?

Goldman Sachs has added Woolworths to its conviction list in place of its old drinks business Endeavour Group Ltd (ASX: EDV). It explained:

We update our forecasts for WOW, reiterate our Buy rating and add to our regional Conviction List, with TP to A$40.50 (from A$41.70). We remain positive on EDV and reiterate Buy but remove from Conviction List after recent out performance with TP unchanged at A$8.30. Since adding EDV on CL from March 28th, the stock is +9.1% vs ASX200 -10.3%.

We reiterate our key positive thesis on EDV as a defensive alcohol retail leader with material advantage in consumer loyalty, re-opening beneficiary and accelerated growth leveraging B/S. Whilst we continue to see 6% upside, WOW now has a higher upside of 10% (3rd highest in our consumer/retail coverage, but with clear catalysts to re-rating).

What are these key catalysts?

Goldman has named three key catalysts for a re-rating of the Woolworths share price. These are its superior growth in the core business, adjacent revenues with higher margins, and its valuation.

In respect to its growth, Goldman is forecasting a sales “CAGR of 6.6% and underlying NPAT of 14.1% over FY22-24e, with key driver being market share gain of AU Foods business.” This is expected to be driven by an effective cost-price pass through and additional mix improvement with relatively stable volume growth.

As for its adjacent revenue opportunities, the broker highlights that Woolworths has a highly loyal consumer base and high frequency contact points. It believes that “the retail media business is the next material growth lever for WOW” and has “factored in A$1.1B sales, with 30% EBIT margin in 2030.”

Finally, the broker sees scope for the Woolworths share price to trade on higher multiples. It highlights that the valuation gap between its shares are Coles Group Ltd (ASX: COL) is at its lowest point in years.

The broker believes this is “unwarranted” due to Woolworths being the “superior operator with faster growth outlook.” In light of this, the broker expects “ better comps and margin management to become apparent, and the stock to re-rate.”

The post Why Goldman Sachs added Woolworths shares to its conviction list appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
• Why ‘superior operations’ puts Woolworths shares in this broker’s buy basket
• The Woolworths share price outperformed the ASX 200 in FY22. Here’s why
• Why Domino’s, EML, Talga, and Woolworths shares are pushing higher
• Why experts rate these top ASX dividend shares as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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 200 healthcare shares were a mixed bag in FY22 with many names underperforming their benchmark.

The S&P/ASX 200 Health Care Index (ASX: XHJ) tumbled in December and hasn’t made a recovery yet. It’s now trading down 7.5% in the year to date.

With the macroeconomic landscape shifting, ASX 200 healthcare shares might be set to catch a bid again.

How’s it looking for ASX 200 healthcare shares in FY23?

It appears investors are paying more attention to fundamental analysis in 2022.

For example, unprofitable ASX growth shares and ASX tech shares have been beaten down, whilst profitable ASX mining shares with high free cash flow have soared.

For the healthcare basket, these trends have had a big impact. Healthcare shares have been strengthening in the past month, up 4% in that time.

The sector trades on a price-to-earnings (P/E) ratio of 44.5x per Bloomberg data. Analysts are forecasting average earnings per share (EPS) growth of around 30% for H2 FY22 in the space.

Meanwhile, researchers at Deloitte have weighed in with their opinion on the outlook for the healthcare industry in FY23.

The Deloitte team said that a number of forces are “proving to be the catalyst for the clinical, financial, and operational transformation that health care has long promised to the world”.

“Despite COVID-19’s many devastating impacts, it does present the health care sector with a powerful opportunity to accelerate innovation and reinvent itself,” it added.

Catching a bid in FY23

The stage looks set for large-cap players within the ASX 200 healthcare space to catch a bid in FY23.

We’ve seen it happen already. Biotech giant CSL Limited (ASX: CSL) has jumped from $269 per share on 1 July to $287.99 now, for instance.

Meanwhile, sleep and respiratory specialist Resmed CDI (ASX: RMD) is up 7% in the past month of trade.

It will be an enduring test for ASX 200 healthcare shares to push through the current market volatility.

The post What’s the outlook for ASX 200 healthcare shares in FY23? appeared first on The Motley Fool Australia.

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• Why did the ResMed share price finish down in FY22?
• Why analysts love this ASX share that lost investors 5.5% in FY22
• 4 ‘quality’ ASX shares to buy in scary times: expert
• Analysts name 2 ASX 200 blue chip shares to buy
• Here’s how ASX healthcare shares performed in FY22

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 CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed 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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Lake Resources N.L. (ASX: LKE) shares will be worth watching closely on Tuesday.

Yesterday, the lithium developer was the subject of a scathing short attack from J Capital.

J Capital has previously targeted Nearmap Ltd (ASX: NEA), Vulcan Energy Resources Ltd (ASX: VUL), and WiseTech Global Ltd (ASX: WTC).

What is Lake Resources?

Firstly, a bit of background. Lake Resources is a clean lithium developer aiming to use an unproven direct lithium extraction (DLE) technology for the production of sustainable, high purity lithium from its flagship Kachi Project in Catamarca Province within the Lithium Triangle in Argentina.

The company caught the eye recently when its CEO, Steve Promnitz, quit with immediate effect and without comment. He also promptly sold all of his 10.2 million shares the next day.

What is J Capital saying about Lake Resources shares?

According to the report, its analysts believe Lake’s DLE technology isn’t going to work as planned and will “still use large amounts of water and produce toxic waste.”

The short seller also highlights that the technology, which is owned by partner Lilac Solutions, has lost an important supporter recently. It said:

Based on our research into cooperation partners, we are sceptical that the DLE technology developed by Lilac Solutions “Lilac” works. We have discovered that Warren Buffet’s Berkshire Hathaway Energy Renewables (BHE) has “parted ways” with Lilac.

Investors still have no evidence that the Lilac DLE technology works at scale and if so at what cost. If the DLE technology works then the number of “cycles” for which the extraction medium can be used will be a key cost driver. If the medium can only be used for a few hundred cycles then the costs may be prohibitively high.

The short seller also has doubts over Lake Resources’ production timeline. The company is aiming to begin production in 2024, but J Capital feels this is highly unlikely.

Lake claims that it will be in production in 2024. Lawyers in Argentina that we spoke to, who are familiar with mining projects in the area, said it would take at least 3 years for the project to be up and running. They considered this project to be in early-stage development.

Insider sales and option issues

J Capital has taken aim at management for consistently selling shares and for the company rewarding research firms with options.

Lake insiders have successfully sold $8.1 mln in stock in the last year. Lake granted 41.5 mln options to financial institutions that published favourable research on the company. Insider share sales have followed a pattern of Lake announcement, followed by favourable research, stock price rise and then insider sales.

At the time of writing, Lake has not responded to the short attack.

The post Lake Resources shares on watch amid short seller attack appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why are these ASX 200 lithium shares tumbling today?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why are Lake Resources shares becoming a short seller target?
• These are the 10 most shorted ASX shares

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 Nearmap Ltd. and WiseTech Global. The Motley Fool Australia has positions in and has recommended Nearmap Ltd. and WiseTech Global. 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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One of the beneficiaries of the COVID-19 retail boom was the JB Hi-Fi Limited (ASX: JBH) share price. But things aren’t as rosy now with the retailer’s shares declining over the financial year. The JB Hi-Fi share price dropped by more than 20% throughout FY22.

JB Hi-Fi is a leading retailer of electronics and home appliances. It has three key businesses – JB Hi-Fi Australia, JB Hi-Fi New Zealand, and The Good Guys.

In the first part of the COVID-19 pandemic, there was huge demand for products that enabled people to work, learn, and enjoy entertainment at home.

There may have been a question over how long that demand was going to continue. But FY22 showed consumers still wanted what JB Hi-Fi was selling — and in large numbers.

Let’s have a look at those numbers reported during FY22.

FY22 half-year result

The most important update from the company has been the report for the six months to 31 December 2022.

Share prices can be influenced when investors get the clearest picture of how a company has performed.

JB Hi-Fi said that total sales fell by 1.6% to $4.86 billion, though this was up 21.7% over two years. Online sales increased by 62.6% to $1.1 billion. Net profit after tax (NPAT) fell by 9.4% to $287.9 million – but it was up 68.8% over the two years.

JB Hi-Fi announced an interim dividend of $1.63 per share, as well as a share buy-back of up to $250 million.

The company said it had continued to see elevated demand across all of its sales channels despite the lockdowns.

When lockdowns finished, the company revealed that sales growth had continued.

Ongoing sales growth in the FY22 third quarter

In the three months to 31 March 2022, the company reported ongoing growth for all three of its brands.

The company said it was still seeing heightened customer demand and strong sales growth. This was continuing into the FY22 fourth quarter to date (at the beginning of May 2022).

JB Hi-Fi Australia sales went up by 11.9%. In New Zealand dollar terms, JB Hi-Fi New Zealand sales were up 4.8%. The Good Guys sales went up by 5.5%.

So, what’s hurting the JB Hi-Fi share price?

In the FY22 third-quarter update, the company noted there was ongoing disruption to stock availability and operations arising from COVID-19 and other local and global uncertainties.

Ord Minnett is one of the brokers that recently cut its profit projections for JB Hi-Fi. It expects a hit to sales because of increasing inflation and higher interest rates. That’s why it changed its rating to hold from buy. It cut its price target to $42.

UBS is another broker to have similar negative thoughts about the retail sector due to higher interest rates and more expensive energy and fuel hurting household budgets. Its rating is neutral with a price target of $38.

The post Why did the JB Hi-Fi share price fall more than 20% in FY22? appeared first on The Motley Fool Australia.

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• Down 16% in June: What put the JB Hi-Fi share price on sale?
• Why are ASX 200 retail shares getting bought up today?
• How did ASX 200 retail shares perform in June?
• ASX 200 retail shares in the doldrums today despite improving sales data
• ASX 200 midday update: Tech shares tumble, Collins Foods jumps

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This year has been a rough ride for most ASX shares, but small-cap companies have suffered more than their larger cousins.

The Cyan C3G Fund, which specialises in small-cap stocks, has felt the pain as much as any retail investor.

Portfolio managers Dean Fergie and Graeme Carson told clients in a memo that, as participants in the fund themselves, their personal wealth has also taken a massive haircut.

“There’s no other way to express it. We had a terrible FY22, with the fund falling 38%,” read the memo.

“Even against the S&P/ASX Small Ordinaries Industrials (ASX: XSI), which lost 24%, it was a poor result.”

While they admitted to some mistakes — mainly not taking some profits last year before the crash — the fund has a long-term focus.

“Nobody rings a bell at the bottom, but from what we’re seeing and hearing, our company outlooks are far better than the market prices are currently implying,” read the Cyan memo.

“As such, we remain particularly confident that the prices of our holdings will improve significantly in the near-term.”

With this philosophy in mind, there are a couple of ASX shares in the Cyan portfolio that have been particularly bruised. But Fergie and Carson are holding on for a turnaround.

Strong balance sheet and recurring revenues

Healthcare software provider Alcidion Group Ltd (ASX: ALC) saw its share price tumble nearly 70% over the 2022 financial year.

Fergie and Carson admitted COVID-19‘s impact on its United Kingdom growth and an “ill-timed” stock issue late last year just before markets plunged did not help.

“However, a raft of recent contract wins have shown significant catch-up by the company,” their memo read.

“Indeed, total revenue for FY22 is likely to come in at around $34 million — up 40% on the prior year — a positive result and in stark contrast to recent stock price action.”

Alcidion’s market capitalisation is now down to just $146 million, so analyst coverage is scarce.

However, the experts at Canaccord Genuity Corp agree with Cyan. They rate the stock as a strong buy, according to CMC Markets.

The Cyan portfolio managers said that all the original tailwinds are still there for the company to make a roaring comeback. 

“With Alcidion having a strong balance sheet, significant recurring revenues derived from government and private domestic and international hospitals and health care providers, there are numerous reasons to expect this stock could be a strong performer again in FY23.”

Sell-off of this takeover target is ‘overdone’

The share price for micro-investment platform Raiz Invest Ltd (ASX: RZI) plunged 60% over the 2022 financial year.

Fergie and Carson said the stock “hurt us materially”.

“Frustratingly, the company’s metrics have actually improved over the year,” read their memo.

“FUM [funds under management] is up from $905 million to $940 million and customer numbers globally are up 35% — albeit in Australia they have only risen 3%.”

While they admitted there is transitory concern about a slowdown in domestic growth, they reckon the market has overreacted.

“We seriously consider that the pull-back in the price is overdone, particularly in light of the $10 million investment Seven West Media Ltd (ASX: SWM) made in the company late last year.”

The Cyan team also thinks Raiz’s considerable customer base and reduced valuation could make it attractive as a takeover target.

“With almost 300,000 active and engaged financial customers in Australia, Raiz is generating strong recurring revenues and is likely to garner the interest of a myriad of local financial institutions.”

The post 2 ASX shares we’re sticking with after 60% falls: fund managers appeared first on The Motley Fool Australia.

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• ‘Frustrating’: Fund backs 3 great ASX shares with plunging prices

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

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The Westpac Banking Corp (ASX: WBC) share price has fallen by double digits over the last couple of months. Is this an opportunity, or are things going to get worse in FY23?

Westpac is one of the biggest banks in Australia, along with Australia and New Zealand Banking Group Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA). Collectively, they are called the big four ASX banks.

Since the announcement of the supersized interest rate hike by the Reserve Bank of Australia (RBA) in June, the Westpac share price has underperformed the other big four banks. In June, and again in July, the RBA decided to increase the interest rate by 50 basis points (or 0.5%).

As one of the biggest banks in Australia, changes in the official interest rate can have a significant impact on bank profitability.

Let’s consider how this could impact the bank margins.

Net interest margin (NIM)

One of the main ways to measure how profitable a bank is by looking at its NIM.

This measures the revenue it generates from lending compared to the cost of the money it’s lending out.

One of the biggest sources of funding for banks is the cash held for customers in savings accounts and transaction accounts.

For example, if a customer has $1,000 in a savings account and it earns a 1.5% interest rate and then it’s lent out at an interest rate of 3.5%, that would be a NIM of 2%.

In the Westpac FY22 half-year result, the bank’s NIM was 1.85%.

However, experts believe that the NIM could rise in light of the RBA interest rate rises.

Banks are passing on the rate hikes in full to borrowers while, at the same time, are being accused of being slow in passing on increases to savers.

Bad debts to rise?

However, while rising interest rates could help bank lending margins, it could also cause pain to the households on its loan book. That could be, or has already been, bad news for the Westpac share price.

Higher interest rates mean increased interest payments for households. This comes at the same time as elevated inflation which is also hurting household budgets.

This could push some households into mortgage stress, which could lead to elevated loan arrears for banks and possibly higher bad debts.

The broker Macquarie is one of the experts to note that the loan impairment expense could rise.  Macquarie is currently ‘neutral’ on Westpac, with a price target of $22.

FY23 expectations

Estimates on CMC Markets suggest that Westpac will generate earnings per share (EPS) of 154.9 cents and 190.5 cents in FY23. That implies a possible rise in profit of 23% in FY23, if the projections prove correct. That means the Westpac share price is valued at under 11 times FY23’s estimated earnings.

In terms of the dividend, CMC Markets numbers suggest an annual dividend per share of $1.23 in FY22 and $1.29 in FY23. This implies a possible grossed-up dividend yield of 9.3% in FY23.

The post Are clouds gathering for the Westpac share price in FY23? appeared first on The Motley Fool Australia.

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• Where’s the Westpac share price heading in July?
• What’s the outlook for ASX 200 dividend shares in FY23?
• Could rising rates hurt ASX 200 bank shares in the longer run?
• Here’s a look at the Westpac share price’s dismal 2022 financial year
• What’s going on with ASX 200 bank shares on Tuesday?

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 Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for ASX dividend shares to buy, then the two listed below could be worth considering.

Here’s what you need to know about these dividend shares:

Accent Group Ltd (ASX: AX1)

The first ASX dividend shares to look at is Accent. It is a footwear focused retailer that owns a growing collection of store brands such as Athlete’s Foot, HYPEDC, Platypus, Sneaker Lab, and Stylerunner.

Unfortunately, due to tough trading conditions caused by supply chain challenges and weaker consumer spending, Accent’s shares have fallen hard this year. However, the team at Bell Potter believe investors should look beyond this short term pain and focus more on the long term gains.

The broker recently reiterated its buy rating and $2.20 price target. It said:

We think AX1 has a long runway ahead in terms of the athleisure market opportunity and is well placed to gain share given its accelerated vertical sales strategy. We sit ~6% ahead of consensus NPAT expectations for FY24e primarily driven by higher store based revenues & vertical sales assisted by the Glue Store roll out which in our view should see overall margin expansion through the medium term.

As for dividends, Bell Potter is forecasting fully franked dividends of 5.8 cents per share in FY 2022 and then 10.7 cents per share in FY 2023. Based on the current Accent share price of $1.34, this will mean yields of 4.3% and 8%, respectively.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share that has been rated as a buy is the HomeCo Daily Needs REIT. It is a property company that invests in convenience-based assets across neighbourhood retail, large format retail, and health and services.

Goldman Sachs is a fan of the company and has a buy rating and $1.70 price target on its shares. It recently commented:

We believe HDN is undervalued at its current valuation given its diversified tenant base, and see it as well positioned to benefit from the shift to omni channel retailing, with additional external growth opportunities to drive earnings growth over the medium-term.

The broker is also forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.35, this will mean dividend yields of 5.9% and 6.7%, respectively.

The post 2 top ASX dividend shares that analysts rate as buys appeared first on The Motley Fool Australia.

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More reading

• How much has the Accent dividend paid to shareholders in the last 5 years?
• Experts say these ASX dividend shares are buys this month
• Why experts rate these top ASX dividend shares as buys
• Analysts name 2 top ASX dividend shares with big yields to buy
• What is the current dividend yield for Accent shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Redpoint Australian Equity Income Fund portfolio manager Max Cappetta gives his thoughts on where ASX shares are now and where they are heading.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Max Cappetta: My name is Max Cappetta and I am the portfolio manager for the Redpoint Australian Equity Income Fund.

The Redpoint Australian Equity Income Fund seeks to capture a higher and more consistent gross dividend yield relative to the S&P/ASX 200 Index (ASX: XJO) and is specifically managed for zero-tax rate retiree investors. 

We take an active approach to investment management focusing equally on capturing a higher income — through dividends and buybacks — and stock selection to deliver better total returns over the long term.

MF: The world has changed so much since we last spoke. How do you see the state of play at the moment for ASX shares and where do you see it going?

MC: We’ve obviously had the revaluation we had to have, if you will. Interest rates are on the way up. The ASX 200 is probably back to where it was in the middle of 2019 in price terms. 

Interestingly, we’re at 1.35% on the cash rate. In May 2019, we’re at 1.5%. So, we’re, in many ways, back to where we started, albeit there’s been a lot of volatility in between. 

I think the big question now is where do interest rates peak in this cycle? What is inflation going to do, which will obviously drive that decision on interest rates? And are we going to see an economic slowdown or are we going to see recession?

If we see a slowdown, there’s one set of outcomes and… if we’re going into a recession, then maybe you want to be looking at even more defensive positions, looking at things like company quality as being a place to hide in the meantime while this revaluation of markets continues to play out.

The interesting thing I think for us, particularly when we look at the opportunity for income investors, is really the dynamics of where income is being earned in the Aussie equity market. 

I think it’s going to be a really interesting thematic over the next year or two. We saw iron ore and resources very strong last year. And while there were a lot of good cash payments of dividends, the share prices were volatile given what was happening in China. We’ve now got a setup where the energy sector, the big oil and gas giants are going to be really leading with massive record dividend payments over the next six to 12 months, given what’s happened to energy prices.

We just need to be careful that if there is some resolution in Ukraine, and if we do in fact see global demand and global growth weaken, then that causes those commodity prices to come back.

But otherwise in the near term, there’s certainly good earnings to be had there while I think people start to reposition back into the industrial sector to get earnings growth that will emanate over the next few years — now that we are hopefully really getting out of the post-COVID and in many ways, getting back to some economic growth… once we figure out exactly where interest rates are going to stop.

The post The ASX sector set to pay out ‘massive record dividends’: fund manager appeared first on The Motley Fool Australia.

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