The Dusk Group Ltd (ASX: DSK) share price has dropped heavily in 2022 — it’s down almost 50%.

Investors should certainly take the potential impacts of inflation and higher interest rates into account. But I believe the Dusk share price has fallen too far and could be an opportunity.

If you haven’t heard of Dusk before, let me outline what it does.

Dusk describes itself as a specialty retailer of home fragrance products. It offers a range of Dusk-branded “quality products at competitive prices” from its physical stores and online store.

The company claims to be Australia’s leading home fragrance, omni-channel retailer.

Some of the things it sells include candles, ultrasonic diffusers, reed diffusers, and essential oils, as well as fragrance-related homewares.

What’s attractive about the Dusk share price?

For starters, Dusk shares are now a lot cheaper than they were before. A 50% drop is very large. Is its current and future value really worth 50% less than it was at the start of the year?

Using the estimates on CMC, the business is projected to generate earnings per share (EPS) of 27 cents in FY22 (which has nearly finished), 19.7 cents in FY23, and 22.4 cents in FY24.

That means it’s valued at less than seven times FY22 estimated earnings, less than nine times FY23 estimated earnings, and less than eight times FY23 estimated earnings.

A low price/earnings (P/E) ratio doesn’t automatically mean great value. But I think when combined with some of the other things I’m going to write about, it will explain why I see Dusk as attractive.

The company’s cash level is an important part of the valuation, in my opinion.

According to the ASX, Dusk has a market capitalisation of $107 million. At the end of the FY22 first half, it had $33.3 million of net cash. So, almost a third of the Dusk valuation is backed by cash. The P/E looks even cheaper when taking the cash into account.

What is Dusk doing to grow its earnings?

While sales may move up and down over shorter-term periods, I think the company is doing the right things to try to grow earnings in the future, which will hopefully help the Dusk share price.

For example, it’s growing its store network. At HY22, it finished with 128 stores, which was an increase of six stores.

It’s also trying to grow its Dusk rewards active members, who pay to join. These members generated 62% of total company sales in the FY22 first half.

Online sales continue to grow, which could be important to connect with customers as more shopping is done online.

In the first eight weeks of the second half of FY22, online sales were up 19.4% year over year. They were also up 121.8% over a two-year period.

Dividends of 12.5% for FY23 and 14.4% for FY24

The Dusk share price is cheap in relation to its earnings. That means any dividends paid come at a higher dividend yield right now.

CMC forecasts a dividend per share of 15.2 cents in FY23 and 17.6 cents in FY24.

With Dusk’s dividend being fully franked, that translates into forward grossed-up dividend yields of 12.5% in FY23 and 14.4% in FY24.

Foolish takeaway

I’m not suggesting that Dusk is an extremely high-quality business, or that it will be very resilient during an economic downturn – it’s already seeing sales decline in FY22.

But I think it’s now so cheap that it looks good value for the long term if it continues to grow its store network, pay big dividends, and increase online sales.

The post Sniffing out an opportunity: Why I think the Dusk share price could be a buy appeared first on The Motley Fool Australia.

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More reading

• Do Dusk shares really have a 12% dividend yield right now?
• Candle in the wind: Why is the Dusk share price down 20% in a month?

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 Dusk Group 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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Qantas Airways Limited (ASX: QAN) has put staff on alert regarding an upcoming $5,000 bonus for employees.

Qantas shares are currently trading at $4.585, a 1.19% fall. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is up 0.22% so far on Tuesday morning.

Fellow travel shares are also not flying well. The Flight Centre Travel Group Ltd (ASX: FLT) share price is down 2.77% today, while Webjet Ltd (ASX: WEB) shares are 2.79% lower.

What’s happening at Qantas?

Qantas recently revealed it will offer up to 19,000 staff covered by its Enterprise Bargaining Agreement a $5,000 bonus. This is set to follow a two-year wage freeze.

But it has emerged this payment could be at risk if staff are involved in any action that “harms Qantas”.

In a question and answer document for employees, cited by the Australian Financial Review, Qantas said:

The workgroup covered by the Wage Freeze Enterprise Agreement must not have engaged in any action that harms Qantas or any Qantas Group company between the announcement date and the payment date

In a market update on Friday, Qantas informed shareholders the total cost of these payments will be $87 million in FY22.

Staff will be paid once new enterprise agreements are finalised. Nine agreements covering 4,000 staff are already complete, with these staff to be paid imminently.

Qantas highlighted travel demand “remains strong” and the company expects to lower net debt to about $4 billion in FY22.

The airline will cut domestic capacity between July 2022 and March 2023 due to rising fuel prices.

Qantas share price snapshot

The Qantas share price has shed nearly 3% in the past 12 months while it has slid more than 8% year to date.

In contrast, the benchmark S&P/ASX 200 Index (ASX: XJO) has lost nearly 10% in a year.

The airline has a market capitalisation of about $8.7 based on today’s share price.

The post Own Qantas shares? Here’s why the $5K staff bonus could be up in the air appeared first on The Motley Fool Australia.

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• Qantas share price climbs as first direct flight to Europe touches down in Rome
• ASX 200 midday update: Qantas’ market update, lithium shares rebound
• Qantas share price takes off following market update
• What’s dragging on the Qantas share price today?
• ASX 200 travel shares take off again on Tuesday. Here’s why

Motley Fool contributor Monica O’Shea 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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After being listed on the Australian share market for over three decades, the Sonic Healthcare Limited (ASX: SHL) share price reached an all-time high of $46.95 around the turn of the year.

And while the pathology services company’s shares have pulled back meaningfully since then and are currently fetching $32.82, they are still a long way from where they started.

Where did the Sonic Healthcare share price start life?

Finding information on the Sonic Healthcare IPO from 1987 is a lot harder than you would think. But there’s a very good reason for that.

That reason is that Sonic Healthcare actually started life as a (failed) mining company named Gunnersen Nosworthy and then Sonic Technology Australia. Yes, you read that correctly. The world’s third largest pathology/laboratory medicine company originally was aiming to be a miner.

But sensing an opportunity, the company purchased its first pathology practice during the year of its IPO. That purchase was the Sydney-based Douglass Laboratories.

After this acquisition, the company continued to operate primarily as a mining focused company with little success. In fact, the Sonic share price soon reached a record low of just 3 cents in 1990.

Things would ultimately change for the better in 1992 when a new management team came in and made sweeping changes. By 1995, the company changed its name to Sonic Healthcare and its share price was trading at 55 cents. The rest, as they say, is history.

What if you’d invested early?

If you had invested in the IPO you would have no doubt done incredibly well. However, I wouldn’t really count that as the company’s true beginnings as it wasn’t a healthcare company at that point.

So, for the purpose of this exercise, I’m going to count 55 cents as the first real Sonic Healthcare share price.

Based on this, if you had invested $10,000 into Sonic’s shares back in 1995, you would have ended up with 18,181 shares. So, with the Sonic share price currently fetching $32.82 and no share-splits evident, your parcel of shares would be valued at a mouth-watering $596,700 today.

Not a bad return!

The post What was the Sonic Healthcare share price when it first listed on the ASX? appeared first on The Motley Fool Australia.

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• 3 dividend-paying and ethical ASX shares to buy now: fund manager
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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 recommended Sonic Healthcare 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 Electro Optic Systems Holdings Ltd (ASX: EOS) share price has been put in the freezer this morning amid news of a proposed capital raise.

The Electro Optic Systems’ shares will remain halted at $1.54 until the market hears more from the company.

Let’s take a closer look at what the market might expect to hear from the space, defence, and communications stock.

Why is the Electro Optic Systems share price frozen?

Electro Optic Systems stock has been put on ice as the company looks to bolster its coffers.

It’s said to be embarking on capital raising activities. The proposed capital raise is to incorporate an institutional placement and a share purchase plan.

The company believes its stock will return to trade upon the announcement of the placement’s outcome.

However, if such an announcement isn’t released by Thursday’s open, the stock is expected to return to trade as normal.

The company has announced plenty of news this year. Its directed energy drone defence system was qualified, it received finance support from Export Finance Australia, and its subsidiary SpaceLink achieved notable breakthroughs in its communication satellite design.

Despite these developments, the Electro Optic Systems share price has tumbled 35% since the start of 2022. It’s also currently 65% lower than it was this time last year.

The post Why is the Electro Optic Systems share price frozen today? appeared first on The Motley Fool Australia.

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• Tassal share price rockets 14% on $1 billion takeover bid
• Better stock-split buy: Alphabet or Tesla?
• Collins Foods share price jumps 11% on FY22 results
• Do Bank of Queensland shares really offer a dividend yield above 6%?
• My top Warren Buffett stock 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 positions in and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings 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 Tassal Group Limited (ASX: TGR) share price is rocketing higher, up 13.85% in early trade.

Tassal closed yesterday at $3.97 per share and is currently trading for $4.57.

This comes after the Tasmanian-based salmon farming company reported a takeover proposal.

What takeover bid was announced?

The Tassal share price is surging after the company revealed it has received a “non-binding, indicative, incomplete and conditional” takeover proposal from Cooke Inc.

Cooke, a large, privately-held, Canadian-based seafood company, proposes to acquire 100% of the company’s shares in cash for $4.85 per Tassal share. That’s 22% higher than the Tassal share price at yesterday’s close.

With 214.82 million shares outstanding, the bid values the Aussie salmon farmer at just north of $1.04 billion.

Cooke disclosed it had acquired 5.4% of Tassal shares after the market close yesterday. The Canadian-headquartered company reported it has obtained Foreign Investment Review Board (FIRB) approval.

This isn’t the first time Cooke has attempted to reel in Tassal. Its offered two prior indicative non-binding confidential proposals, the first for $4.67 per Tassal share and the second for $4.80 per Tassal share.

After evaluating the earlier proposals, the Tassal Board opted not to pursue them.

As for the latest proposal, the board says it believes “Tassal has an attractive independent future and is well positioned to deliver growth in shareholder value.”

As such:

[The Board] has determined that the Indicative Proposal does not reflect the fundamental value of the business and is not in the best interests of shareholders. Accordingly, the Company’s Board has determined not to engage with Cooke regarding the Indicative Proposal. Shareholders are advised that they do not need to take any action.

Goldman Sachs is acting as Tassal’s financial advisor.

Tassal share price snapshot

The Tassal share price has been a strong outperformer in 2022, up 30%.

That compares to a year-to-date loss of 13% posted by the All Ordinaries Index (ASX: XAO).

The post Tassal share price rockets 14% on $1 billion takeover bid appeared first on The Motley Fool Australia.

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

Stock splits generate a ton of excitement among investors. A stock split does not directly affect the value of an investor’s holdings but opens up other opportunities. There is often a lot of stock-price movement around the announcement and split dates. But what about afterward? Once the excitement dies down, the stock will start trading on economics again. With this in mind, which of these juggernauts is the better long-term play? 

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google, and Tesla (NASDAQ: TSLA) are on the clock, with Alphabet’s 20-for-1 split coming up on July 1 and Tesla’s date still to be determined. Tesla will hold its shareholder meeting on August 4th when it is expected a 3-for-1 split will be approved. The execution of the split will likely follow shortly after. Based on recent prices, Alphabet will trade in the range of $115 per share and Tesla around $240 per share post-split. This could change drastically in today’s topsy turvy market, of course.

What is the outlook for Alphabet?

Alphabet had a tremendous 2021 by nearly any measure. As shown below, sales and cash from operations rose 41% to $257.6 billion and $91.7 billion, respectively. And the company’s diluted earnings per share (EPS) reached $112.20 on over 90% growth. 

The company followed up this performance with a strong first-quarter 2022 in which sales, cash from operations, and EPS increased year over year. But what about the future? With a potential recession around the corner, investors are rightly concerned that ad budgets will be cut, which could hurt Alphabet’s results. 

Alphabet has a few aces up its sleeve to weather an economic slowdown. First, Google Search currently holds a market share of over 85%, according to Statista. The Federal Trade Commission (FTC) believes it is a monopoly, but unless Congress passes comprehensive legislation, Alphabet will continue to dominate. This gives the company tremendous pricing power, which is critical to maintaining profitability. 

Alphabet also has two other fast-growing revenue streams in YouTube and the Google Cloud. YouTube revenues spiked 46% in 2021 partly due to people staying in more due to COVID-19. The growth slowed to 14% year over year in Q1 2022 as the pandemic waned, but the upward trend remains.

Google Cloud may be the most important segment to watch moving forward. This segment competes with Amazon‘s Amazon Web Services (AWS) and Microsoft‘s Azure. Cloud computing is expected to continue its explosive growth in the foreseeable future. Sales for Google Cloud grew 47% in 2021 to $19.2 billion. The rub is that this segment isn’t profitable, while AWS produces enormous operating profits for Amazon. If Alphabet can scale to profitability, it will be a giant boon for profits and shareholders.

On the valuation front, Alphabet trades for its lowest price-to-earnings (P/E) ratio since the beginning of 2019, as shown below. 

GOOG PE Ratio data by YCharts.

Even if the company experiences short-term headwinds, this price looks enticing for long-term investors. 

What is the outlook for Tesla?

Let’s face it, whatever we think of Tesla’s valuation (it’s high!) or outspoken CEO Elon Musk (he’s polarizing!), the company’s rise has been absolutely phenomenal. And shareholders have been richly rewarded. An investment of $10,000 in Tesla stock 10 years ago would be worth over $1 million today, while the same investment five years ago would be worth more than $95,000. 

There are positive and negative factors on the horizon for Tesla. Gas prices are shocking Americans at the pump. This could lead many to consider an electric vehicle maybe for the first time. Tesla is experiencing massive demand already, with many cars sold out until 2023.

The big question is whether this demand can continue in a potential recession.

Consumer sentiment is generally a leading indicator of upcoming consumer spending. As shown below, sentiment is not only lower than in March 2020, but it is far lower than even during the Great Recession. This is disturbing for any company that relies upon consumer spending. 

US Index of Consumer Sentiment data by YCharts.

Competition is heating up. For years, Tesla has enjoyed an incredible first-mover advantage. Tesla was laser-focused on electric vehicles while other automakers scuffled along. That’s changing quickly as traditional automakers invest billions in electrifying large parts of their fleets in the coming years.

The final concern is the valuation. Tesla has a larger market cap than the following seven largest automakers combined. Tesla crushes most of these on growth and profitability, and investors have been willing to pay a premium on the stock for years. Still, caution is warranted with an economic storm on the horizon. Companies with high valuations may fare worse than others. 

Which has the stronger bull case?

Alphabet has a few advantages over Tesla in an inflationary environment and with an economic slowdown likely. Alphabet relies on business spending while Tesla relies on consumers. Business spending may prove more durable because advertisers must continue to invest to grab limited consumer dollars. Due to inflation, Tesla also has to contend with rising costs for raw materials. One of Tesla’s draws is its profitability, and its margins could be crimped. A manufacturing company will be more affected by this than a tech company.

This all adds up to Alphabet stock being the better bet currently. That said, Tesla likely has a higher long-term ceiling but much more risk. Long-term investors could consider both stocks and weigh them according to their risk tolerance.  

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

The post Better stock-split buy: Alphabet or Tesla? appeared first on The Motley Fool Australia.

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Bradley Guichard has positions in Alphabet (C shares). Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Microsoft, and Tesla. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. 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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The Collins Foods Ltd (ASX: CKF) share price is on the charge on Tuesday morning. This follows the release of the KFC restaurant operator’s full-year results.

At the time of writing, the company’s shares are up 11% to $9.95.

Collins Foods share price higher on full year results

• Revenue up 11.1% to $1,184.5 million
• Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) up 12.5% to $297.2 million
• Underlying EBITDA up 12.6% to $209.2 million
• Underlying net profit after tax up 25% to $59.7 million
• Fully franked final dividend up 20% to 15 cents per share

What happened during FY 2022?

For the 12 months ended 1 May, Collins Foods delivered an 11.1% increase in revenue to $1,184,5 million. This was driven by a combination of same store sales growth and new store openings.

For the KFC Australia business, where the company was cycling record same store sales, the company reported a 6.1% increase in revenue to $955.5 million. This was underpinned by same store sales growth of 1.4% and the opening of 10 new restaurants. Supporting this growth was its digital and delivery offering, which accounted for 16.9% of sales in the second half.

In Europe, Collins Foods reported a 41.2% jump in revenue to $190.4 million. This reflects a 16.8% increase in same store sales, the acquisition of 15 restaurants, and the opening of 3 new restaurants.

The Taco Bell business delivered a 27.5% increase in revenue to $35.8 million in FY 2022. This was driven by the opening of 4 new restaurants, which offset an 8.1% decline in same store sales. Pleasingly, the business returned to same store sales growth in the fourth quarter.

Finally, the Sizzler Asia business posted a 10.8% increase in revenue to $2.8 million.

On the bottom line, thanks to stronger margins, Collins Foods’ underlying net profit after tax grew 25% to $59.7 million. This allowed the board to declare a final fully franked dividend of 15 cents per share, bringing its full-year dividend to 27 cents per share. This represents a 17% year on year increase.

Management commentary

Collins Foods managing director and CEO, Drew O’Malley, was pleased with the company’s performance. He said:

KFC Australia managed to deliver positive same store sales growth for the full year, despite cycling unprecedented growth in the prior year. The KFC brand has never been stronger in Australia, and metrics around quality, value, and purchase intent are at record levels, particularly important in times like these. At the same time, we continue to amplify our strengths in convenience with further growth in digital, delivery and innovation, including the introduction of drone delivery and, more recently, UberEats.

KFC Europe had an impressive year of recovery, with same store sales growth and margins above pre-COVID FY19 levels. We cemented our position in the Netherlands with acquisitions taking us to 55% of the franchisee market and the commencement of the Netherlands Corporate Franchise Agreement. We are already seeing the benefits of effective control with improved marketing campaigns and an expanding development pipeline, as we build toward scale in this market.

Taco Bell returned to positive same store sales growth in Q4 FY22. We have been making additional investments in media to support core brand positioning around taste and value. We have also seen new store openings perform ahead of expectations, providing confidence in the brand’s potential as we look to accelerate the pace of development.

Outlook

O’Malley remains positive on the company’s outlook despite the challenges it is facing from inflation and supply chain shortages. He commented:

The global environment continues to exhibit unprecedented challenges with inflationary pressures and supply chain shortages. Our QSR brands are nonetheless in excellent shape to navigate this landscape. Their proven track record of consumer appeal regardless of economic conditions, combined with our relentless pursuit of operational excellence, ensures we are well positioned to manage through the current inflationary environment.

He also revealed that sales results over the first seven weeks of FY 2023 have been encouraging. This is particularly the case in Europe, with all business units reporting positive same store sales.

And while there has been some “unavoidable” short term pressure on margins, management expects them to recover in the mid-term.

Finally, over the next 12 months, the company is expecting to grow its store footprint by 20 to 29 new restaurants.

O’Malley concludes:

Collins Foods possesses the key ingredients to weather turbulent times – a strong balance sheet, world-class brands, and a passionate and dedicated team of experienced operators. We continue to monitor the landscape for acquisition opportunities that fit our portfolio and capabilities. And ultimately, we believe that by staying focused on providing unmatched experiences for our customers and people, our long-term prospects are as bright as ever.

The post Collins Foods share price jumps 11% on FY22 results appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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 Bank of Queensland Limited (ASX: BOQ) share price has had a rough couple of weeks.

It’s slipped 7.7% since the end of May – a similar performance to that of the S&P/ASX 200 Index (ASX: XJO).

At the time of writing, the Bank of Queensland share price is $6.93. That leaves the approximately $4.5 billion ASX 200 bank trading with a dividend yield of more than 6%.

Let’s take a closer look at the notable dividend ratio offered by Bank of Queensland.

Bank of Queensland shares offer a 6.3% dividend yield

Have you been invested in Bank of Queensland shares for the last 12 months? You’ve likely received 44 cents in dividends for each stock held over that time.

That figure encompasses a 22-cent final dividend for financial year 2021, paid in November. A 22-cent interim dividend, paid in May, topped it off.

Considering the current Bank of Queensland share price, that leaves the stock boasting a dividend yield of approximately 6.35%. Not too shabby.

Additionally, Bank of Queensland pays out fully franked dividends. That could make its yield even more attractive to some shareholders as franked dividends can provide benefits at tax time.

On top of that, the ASX 200 bank offers a dividend reinvestment plan (DRP). That allows shareholders to receive their payout in the form of new shares in the bank, thereby increasing their holding without paying brokerage, commission, or stamp duty fees.

The 6.35% dividend yield offered by Bank of Queensland shares is one of the highest among ASX 200 bank stocks.

Though, it’s bested by Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares’ current 6.38% dividend yield.

Meanwhile, Bendigo and Adelaide Bank Ltd (ASX: BEN) and Westpac Banking Corp (ASX: WBC) are trading with respective dividend yields of 5.74% and 6.07%.

The post Do Bank of Queensland shares really offer a dividend yield above 6%? appeared first on The Motley Fool Australia.

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More reading

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• Top ASX dividend shares to buy in June 2022
• The Bank of Queensland share price just hit a 52-week low. Time to buy?
• Analysts name 2 top ASX 200 dividend shares to buy right now
• Why did the Bank of Queensland share price fall 7% in May?

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 positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended 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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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.

Investing is tough enough in normal times. When volatility spikes, inflation is high, and the economic future looks incredibly uncertain, investing becomes substantially more difficult for most of us mere mortals. In times like these, looking to Warren Buffett — easily among the greatest of all living investors — for inspiration can be a great way to keep investing despite those challenges. 

Buffett built his fortune over decades by buying companies that generate cash — lots of cash. Buffett’s picks are not typically the fastest-growing businesses out there, but their ability to generally make money in good times and in bad make them worthy of consideration in times like these. With that in mind, there is one Warren Buffett stock that stands out as my absolute top to consider buying right now: Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B).   

What’s so special about Berkshire Hathaway?

Alone among Buffett’s stock picks, Berkshire Hathaway is the one that can count him as an employee. As CEO of the company, Buffett both directs the operations of the business and the investment of all that cash it throws off. And that makes it the hub of all Buffett-related investing activities.

With an investment in Berkshire Hathaway, you get the only Buffett pick that also gives you access to the insurance businesses that the company controls, as well as the legion of subsidiaries it owns. Your ownership stake gets you all that, plus the benefits that come from having Buffett and his designated successors controlling the investment of the excess cash those businesses generate.

You’re not just getting access to Buffett’s investments by buying shares of Berkshire Hathaway, you’re also getting them at a remarkably low cost. The company trades at just around 1.2 times its book value. In essence, that basically means that if you wanted to assemble the company yourself from its component parts, it’d cost you almost as much, and you wouldn’t get Buffett as part of that deal.

That combination of factors adds up to make Berkshire Hathaway my top Warren Buffett stock to consider buying now.

Is there a downside?

All that said, there is some risk associated with owning Berkshire Hathaway. First and foremost, the company is practically synonymous with Buffett, as he has led the company for over half a century. Buffett is over 90 years old, so his tenure as Berkshire Hathaway’s leader is closer to the end of its term than the beginning of it. There is a risk that when Buffett eventually does step down or pass away, Berkshire Hathaway’s stock could fall in fear of the unknown.

In addition, unlike many of Buffett’s investment picks, Berkshire Hathaway does not pay a dividend. As a result, the only way for shareholders to tangibly benefit from any rewards they might see from being owners is to be willing to sell at least part of their stakes. That’s a little odd for a company that’s known for being defensive and cash rich — and not among the fastest growing ones in the marketplace.

All told, it’s a great company, despite those downsides

When all is said and done, no investment is perfect, not even Berkshire Hathaway. As a result, although it is my top Warren Buffett stock to consider buying right now, it’s one that best fits within an overall intelligent asset allocation strategy. By owning it as part of that overall strategy, you can give yourself your best chance of balancing the risks and rewards of being a shareholder within the context of your overall portfolio.

Of course, a smart overall allocation strategy is one that takes time to get in place. So get started now, and get yourself in a spot where you can own a piece of this tremendous Buffett company with him at the helm. 

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

The post My top Warren Buffett stock to buy right now appeared first on The Motley Fool Australia.

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Chuck Saletta 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 Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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Experts have picked out two ASX dividend shares that could provide attractive total returns.

Businesses that pay out an attractive amount of income are appealing to many ASX investors. But growth is important too, and some ASX shares offer the best of both worlds.

Brokers are constantly looking for shares that could be good value. Sometimes they get it wrong, but these two are well-liked and could offer compelling total returns (growth and income).

Telstra Corporation Ltd (ASX: TLS)

The first ASX dividend share we’ll look at is Telstra.

Telstra is the largest telecommunications business in Australia. It provides a wide range of telco services including mobile, NBN, digital health services through Telstra Health, and more.

Telstra is currently rated by a few different brokers, including Morgan Stanley.

Their price target, which is where the broker thinks the Telstra share price will be in 12 months, is $4.60. That implies a possible rise of almost 20%.

In terms of the dividend, the broker is expecting Telstra to pay an annual dividend of 16 cents per share. That equates to a grossed-up dividend yield of 5.8%.

Telstra recently announced that from 1 July, its mobile plan prices would increase in line with CPI inflation. From now on, plan pricing is going to include an annual review “and may increase annually”. That could be helpful for growing the total revenue and net profit after tax (NPAT).

But the company is doing a number of other things to try to increase its profitability, including cutting costs, providing access to its regional network to TPG Telecom Ltd (ASX: TPG) customers, and acquiring Digicel Pacific.

Telstra has said that it plans to grow its dividend over time as its profit and cash flow rise.

Universal Store Holdings Ltd (ASX: UNI)

This ASX dividend share is a specialty retailer of youth casual apparel. The business operates 78 physical stores across Australia.

The product strategy is to offer a “frequently changing and carefully curated selection of on-trend apparel products” to a target market of 16 to 35-year-olds.

One of the company’s main tactics is to open new stores. It has opened 13 stores since its initial public offering (IPO). The company thinks it can reach at least 100 stores across Australia and New Zealand. It has a plan to open another five to eight stores in the next year, predominately in Queensland and NSW.

Online sales are another area of growth. Despite a growing store network, 17.7% of its sales are online, up from 8.8% at the IPO. Universal is continuing to invest in its online capabilities and its digital marketing.

It’s also working on its IT and logistics. A new, purpose-built distribution centre and office are on track for the first half of FY23.

In a recent trading update, Universal said that in the FY22 second half, it had seen total sales growth of 6.9% year on year and online sales growth of 27.3%.

Morgans currently rates this ASX dividend share as a buy with a price target of $5.60. That’s a potential upside of about 25%.

In FY23, Morgans thinks Universal will pay a grossed-up dividend yield of 8.9%.

The post Looking to buy ASX dividend shares? Here are 2 that experts rate highly appeared first on The Motley Fool Australia.

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More reading

• ‘Don’t get too bearish’: 3 ASX shares Wilsons just added
• Could Telstra shares be set for a new ASX-listed competitor?
• ‘Just didn’t cut it’: Look out Telstra, a new high-speed start-up is coming for you!
• 2 ASX dividend shares that brokers are tipping as buys right now
• Why these top brokers are forecasting high-speed gains for the Telstra share price

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 Australia has recommended TPG Telecom 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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