Bank shares on the S&P/ASX 200 Index (ASX: XJO) delivered a decent set of profit results this month, but investors shouldn’t bank on more good times ahead, according to experts.

The sombre outlook comes as the big four ASX banks delivered a 5.1% increase in operating cash profit to $14.4 billion, according to KPMG’s analysis that was reported in The Australian.

ASX 200 bank shares deliver earnings bounce

This should be great news for the Commonwealth Bank of Australia (ASX: CBA) share price, Westpac Banking Corp (ASX: WBC) share price, National Australia Bank Ltd (ASX: NAB) share price and Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price.

After all, their profit growth puts them at just 0.4% below their pre-COVID-19 earnings. The growth in their latest half-year results is a function of continued strong demand for both residential and business loans.

The value of mortgages improved 2.5% to $1,812 billion, although business lending growth is the highlight as that expanded 4.8% to $1,077 billion, reported The Australian.

Why the good times for banks are under threat

This isn’t the time for investors in ASX 200 bank shares to get complacent though. It’s like the fine print you see in financial services ads: past performance shouldn’t be used as a guide for future performance.

That’s the verdict by analysts quoted in the article. KPMG’s head of banking Steve Jackson warned, “with uncertainty ahead, it will be interesting to see how they maintain their current momentum’’.

Cost savings lever is harder to pull

Further, ASX 200 bank shares have limited ability to leverage on cost savings, according to KPMG and EY. Cost-cutting is one of the key features of Westpac’s bullish profit results released yesterday.

This is because bank margins will continue to be squeezed by the jump in inflation and intense competition from non-bank lenders.

EY’s banking and capital markets leader, Tim Dring, believes that margin headwinds will continue into the second half of the year. But the outlook is brighter because of the RBA’s recent larger-than-expected cash rate rise.

Rising interest rates are a double-edged sword

“While margin compression is likely to continue in the short term, the rising interest rate cycle should ease NIM [net interest margin] pressures and lead to improved profitability for the banks over the medium term,’’ Dring said.

“However, ongoing economic risks point to continued uncertainty for the banking sector’s outlook.”

Rising interest rates are a double-edged sword for ASX 200 bank shares. While it will enable banks to charge more for loans, it also could lead to a deterioration in asset quality and slow loan growth.

ASX 200 bank shares running out of growth options

The positive assessment of the banks’ results was echoed by PwC Australia, which noted they delivered the “cleanest result in years”. But PwC too warned that the momentum could fade.

While there was a general absence of significant one-off charges, such as write-downs and restructuring costs, as banks streamlined and downsized, growth will be harder to come by due to the simplification strategy.

The post What’s the outlook for ASX 200 bank shares amid rising interest rates? appeared first on The Motley Fool Australia.

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• Is the ANZ share price a buy and a dividend opportunity?
• Here are the top 10 ASX shares today
• 3 ASX All Ordinaries shares that managed to post decent gains on Monday
• Why BrainChip, PolyNovo, TPG, and Westpac shares are pushing higher

Motley Fool contributor Brendon Lau has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking Corporation. 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 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.

Investors endured another round of selling in the stock market, piling on after last week’s turbulent performance. For six months now, major market benchmarks like the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) have consistently lost ground. The S&P is inching closer toward joining the Nasdaq in bear market territory with a 17% drop from its highs at the beginning of the year.

Index	Daily Percentage Change	Daily Point Change
Dow	(1.99%)	(654)
S&P 500	(3.20%)	(132)
Nasdaq	(4.29%)	(521)

Data source: Yahoo! Finance.

One area that has been hit especially hard lately is the e-commerce industry. Companies thrived in 2020 and 2021 as consumers had to resort to internet-based shopping during pandemic-related lockdowns. Now, though, reopening trade has many investors feeling like the heyday of these stocks is over. Moreover, with geopolitical pressures emerging onto the global scene, some believe that the factors that made e-commerce as lucrative as it was could be fading. Below, we’ll look at some of the stocks seeing big losses and assess their longer-term prospects.

Big losses in internet retail

Today’s session had some big losses, but many of the bottom performers were in the global e-commerce arena. Consider the following:

• Latin America’s MercadoLibre (NASDAQ: MELI) fell 17%.
• In Singapore, Sea Limited (NYSE: SE) was down more than 15%.
• E-commerce supporter and buy now/pay later specialist Affirm Holdings (NASDAQ: AFRM) gave up more than 17% of its value.
• Canadian e-commerce platform provider Shopify (NYSE: SHOP) fell 10%.
• Online auto specialist Carvana (NYSE: CVNA) was down around 16.5% on the day.
• South Korea’s Coupang (NYSE: CPNG) was one of the biggest losers, falling more than 22%.

As you can see, the selling was relatively indiscriminate and worldwide in scope. Even giants in the industry saw sizable declines, with Amazon.com (NASDAQ: AMZN) falling 5% and China’s Alibaba Group (NYSE: BABA) posting a nearly 6% drop.

Most of these declines merely added to much more extensive drops over the past several months. The six stocks in the bullet points above are all down between 60% and 90% from their best levels over the past year, and even Amazon and Alibaba have fallen 40% to 60%.

The long-term picture for e-commerce

E-commerce has made itself an integral part of the overall retail industry, and its long-term prospects remain favorable. Industry watchers see e-commerce continuing to gain market share from brick-and-mortar stores, with one analyst seeing $17.5 trillion in global digital commerce taking place by 2030, up from just over $4.2 trillion in 2020.

But just because there’s more e-commerce activity doesn’t automatically mean that investing in the space will be equally lucrative. Greater competition could drive margins down, while higher logistics costs could weigh on profitability as well. However, if retailers try to take back some of the features that have made e-commerce popular, such as fast shipping at little or no cost, it could set back prospects for internet retail growth.

The wild card in e-commerce is the extent to which the industry has relied on functional global supply chains. If the free flow of goods comes to a halt, it will have ramifications for the entire retail industry, but e-commerce in particular could see its anticipated higher growth rates come to a standstill.

Lastly, investors need to remember that despite their recent drops, most of these stocks are still sporting solid gains. Amazon has doubled since late 2017, while MercadoLibre and Shopify have tripled and Sea is up nearly 300%. Those huge swings serve as a reminder that the price of extremely high returns from high-growth stocks can be massive volatility, making it essential to find the best stocks earlier rather than later.

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

The post Is global e-commerce really at risk? appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dan Caplinger has positions in Amazon, MercadoLibre, and Shopify. 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 Affirm Holdings, Inc., Amazon, MercadoLibre, Sea Limited, and Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia has recommended 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 value of Bitcoin (CRYPTO: BTC) just plummeted more than 10% over the past 24 hours, but one expert reckons this merely presents a great chance to buy.

In line with growth stocks, the flagship cryptocurrency is feeling the wrath of investors wanting to shift away from so-called “risk assets”.

The 24 hours ending Tuesday morning Australian time was the largest one-day plunge since January, according to Bloomberg.

Bitcoin has now lost almost 34% of its value so far this year and has halved since November.

But DeVere Group chief Nigel Green forecasts that large Bitcoin investors, dubbed “whales”, will take the chance to buy more on the current dip.

“This is because the robust fundamentals of the world’s largest cryptocurrency — including being a digital, borderless, viable, decentralised, tamper-proof, unconfiscatable monetary system — remain the same.”

Bitcoin’s bull case

Green also predicted a significant milestone this week would pique the interest of whales and institutional investors.

“Strike, a fintech payment processor for the Bitcoin Lightning Network, is now integrating with BlackHawk Network, the largest payment processor in the world,” he said.

“This allows Bitcoin to enter the physical locations of retail outlets and hospitality venues, which make up 85% of all US transactions.”

This deal would prompt large investors to increase their Bitcoin exposure, according to Green.

“As typically happens with price dips, they will shrug off concerns about dips, using them as buying opportunities, and focus on long-term trends,” he said.

“Institutional investors and well-resourced individuals will be moving to buy what they are currently regarding as ‘discounted’ Bitcoin.”

Bitcoin’s bear case

Not every expert is as upbeat about Bitcoin as Green.

Michael Novogratz is the founder and chief executive of Galaxy Digital Holdings Ltd (TSE: GLXY), which invests in digital assets.

In an earnings call overnight, he forecast that more pain would come for crypto owners before valuations settle down.

“My instinct is there’s some more damage to be done,” he said, according to Bloomberg.

“And that will trade in a very choppy, volatile, and difficult market for at least the next few quarters before people are getting some sense that we’re at an equilibrium.”

The post Bitcoin just fell 10% in a day: Time to strike? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Bitcoin and owns shares in Galaxy Digital Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. 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

Shares of Meta Platforms (NASDAQ: FB) took a hit on Monday, declining as much as 3.7%. But as of 1:30 p.m. ET, the stock was down 2.1%. The stock’s decline worsens a sharp year-to-date decline as investors worry about the social media company’s ability to return to strong revenue growth rates.

While this theme could be behind some of the stock’s pullback on Monday, it was likely mainly driven by bearishness in the overall market.

So what

Highlighting what a brutal year it’s been for the parent company of Facebook, Instagram, and WhatsApp, shares have cratered more than 40% year to date as of this writing. However, the stock is notably up from levels in April, before the company impressed investors with better-than-expected earnings per share. 

The stock’s move lower on Monday comes as the overall market tumbles with investors worrying about the impact of inflation and rising interest rates on the economy and on an already uncertain operating environment for many companies. Capturing the broader market drawdown on Monday, as of this writing, the S&P 500 is down about 2.6% and the Nasdaq Composite is down 3.5%.

Now what

Meta grew its revenue just 7% year over year in the first quarter as the company faces off against tough year-ago comparisons and continues to deal with Apple‘s recent changes to ad tracking and measurement on iOS, its mobile operating system.

Looking ahead, management expects continued headwinds. While the company is making progress on addressing challenges presented by iOS, Meta isn’t fully out of the woods yet. In addition, the company’s year-ago comparison in Q2 is particularly tough. To this end, management guided for second-quarter revenue to come in at $28 billion to $30 billion, compared with $28.6 billion in the year-ago quarter. The low end of this guidance range, therefore, would notably translate to a year-over-year decline.

Of course, Meta hopes that, as it works through its tough year-ago comparisons in the first half of the year and solves challenges associated with iOS, revenue growth can reaccelerate.  

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

The post Why Meta Platforms Stock Dipped on Monday appeared first on The Motley Fool Australia.

More reading

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• Where will Meta Platforms be in 5 years?

Daniel Sparks has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Meta Platforms, Inc. The Motley Fool Australia has recommended Amazon and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The ASX share market is expected to have another volatile day today. But this volatility is opening up some opportunities to buy some quality, beaten-up businesses according to experts.

Legendary investor Warren Buffett once said about investing during difficult times:

Be fearful when others are greedy and greedy when others are fearful.

Here are two ASX shares that have fallen heavily and have brokers excited:

Xero Limited (ASX: XRO)

Xero is one of the world’s largest cloud accounting businesses with over three million subscribers at last count. However, its market capitalisation is rapidly falling. At the time of writing, the Xero share price has dropped 42% since the start of the year.

The broker Ord Minnett currently rates the ASX tech share as a buy, with a price target of $107. That implies a possible upside of close to 30% over the next year. Ord Minnett likes the market share that Xero has captured in some key markets like the UK and Australia. It also thinks the business is exposed to a good tailwind of businesses transitioning to cloud software.

The company reported in its FY22 half-year result that its number of subscribers increased by 23% to 3.01 million and the annualised monthly recurring revenue (AMRR) rose by 29% to NZ$1.13 billion.

Xero’s CEO Steve Vamos noted the compelling environment for the business when he said:

There are multiple drivers for cloud-based software adoption, including digitisation of tax compliance, innovation of financial services and an imperative for small businesses to prepare for the future. These, combined with our commitment to purpose, relationship with customers and partners, and proven history of innovation all point to exciting opportunities ahead for Xero.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of the largest online-only retailers in Australia.

While the company has continued to report revenue growth and business progress, the Temple & Webster share price has not escaped from the heavy sell-off seen this year. At the time of writing, the Temple & Webster share price has fallen 61% in 2022.

The company sells more than 200,000 homewares and furniture products from hundreds of suppliers. It runs a ‘drop ship’ model where suppliers send products directly to customers which enables faster delivery times and reduces the need to hold inventory, allowing for a larger product range. The ASX share also has a private label range.

Temple & Webster has also launched a home improvement website called The Build which aims to provide its customers with what it claims its the “biggest and best” range. The website includes products such as bathroom fixtures, lighting fixtures, blinds and curtains, and wallpaper. It plans to sell future product categories such as flooring, outdoor living, tools, equipment and more in the coming months. Management says this is a $16 billion addressable market opportunity.

UBS currently rates the company as a buy, with a price target of $8.20 after seeing its recent update.

Between January to April 2022, the ASX share’s revenue rose 23% year on year. It said that its diversified supply chain is holding up “well” and is underpinning growth.

While the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be in the low single digits in FY22, the company is choosing for it to be low by investing in so many areas for growth such as marketing, artificial intelligence, augmented reality, logistics, and its private-label products.

The post 2 quality ASX shares to buy in this volatility: experts appeared first on The Motley Fool Australia.

More reading

• Xero share price slumps to lowest price since 2020. Broker tips 50% upside
• 3 quality ASX All Ordinaries shares tumbling 10% or more today
• Why Macquarie, REA, Temple & Webster, and Xero shares are sinking
• Here’s why ASX 200 tech shares are having such a disastrous run on Friday
• The Temple & Webster share price is being crushed, down 14%

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 positions in and has recommended Temple & Webster Group Ltd and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Temple & Webster 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 Block Inc (ASX: SQ2) share price is the worst performer on the ASX 200 index on Tuesday morning.

At the time of writing, the payments giant’s shares are down a massive 11% to $119.07.

This means the Block share price is now down a disappointing 39% from its ASX high of $196.00.

Why is the Block share price crashing?

Investors have been selling down the Block share price on Tuesday due to a combination of significant weakness in the tech sector and company-specific factors.

In respect to the former, overnight the tech-focused Nasdaq index continued its poor run and sank 4.3%. Investors were selling stocks amid concerns that rising interest rates will slow economic growth and potentially even cause a recession.

This means the famous index is now down by a disappointing 26.5% since the start of the year.

What else?

In addition to the above, a material pullback in the bitcoin price could also be weighing on the Block share price. At the time of writing, the bitcoin price is down a whopping 12.5% to US$30,229.50.

The Afterpay-owner generates significant revenue from customers using its Cash App to buy and sell the cryptocurrency, so its weakness could be seen as a negative for the company.

Finally, a number of brokers in the United States have suddenly become bearish on Block’s shares, which certainly isn’t helping with investor sentiment.

Overnight, analysts at Barclays, Goldman Sachs, Morgan Stanley, and UBS all hit Block with either rating downgrades or lowered price targets. This was despite the Block share price already trading 41% lower since the start of the year prior to yesterday’s decline.

Former Afterpay shareholders will no doubt be hoping a strong second quarter wins analysts around and gets Block’s shares heading in the right direction again soon.

The post Why is the Block share price plunging 11% on Tuesday? appeared first on The Motley Fool Australia.

More reading

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

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ETF Securities has claimed an Australian and Asian first, launching exchange-traded funds (ETFs) that allow direct ownership of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

ETFS 21Shares Bitcoin ETF (EBTC) and ETFS 21Shares Ethereum ETF (EETH) will commence trading on ASX rival CBoe Australia on Thursday.

Most trading platforms that allow access to the ASX also allow shares to be bought on Cboe Australia.

The funds will be operated by ETFS with Swiss crypto-investment giant 21Shares providing research and background support.

ETF Securities had first brought the idea of cryptocurrency ETFs to Australian authorities way back in 2017.

“These funds are a culmination of many years of hard work by the ETF Securities and 21Shares teams,” ETFS head of distribution Kanish Chugh said.

“We have worked with regulators, service providers, and other stakeholders to ensure they are best in class.”

Direct ownership of crypto, no middleman

While there are a number of existing ETFs that track the fortunes of crypto, this pair is understood to be the first to allow investors to directly own Bitcoin and Ethereum.

“These funds do not use derivatives of any kind,” stated ETF Securities.

“They are not built as feeder funds into offshore ETFs. Nor do they engage in any lending or staking of the bitcoins and ether.”

As security measures, the bitcoin and ether will be held in cold storage within Faraday cages to ensure they are offline from the internet and away from “uncontrolled flows of electricity”.

ETF Securities claim the new funds offer a safer way of owning crypto, with all the built-in protections that traditional ETFs provide.

“Up until now, Australians keen to buy bitcoin or ether have been forced onto unregulated crypto exchanges, which come with weaker investor protections,” the company stated.

“By bringing cryptocurrency into an ETF, investors can trade and own it in a tightly regulated environment with government oversight.”

Crypto valuations have suffered greatly this year, in sync with growth stocks.

Against the Australian dollar, Bitcoin has dropped more than 52% of its value since November, and almost 20% just in the past week.

Ethereum has also halved since November and has shed in excess of 19% over the past five trading days.

Chugh said the correction had only whetted the appetite of local investors.

“Australian investor interest in cryptocurrencies has not waned in recent months even as we have seen underperformance,” he said.

“With Bitcoin’s recent sell-off as well, it may present an opportunity for investors who have been looking for attractive entry points into this new asset class.”

The post First-ever Aussie Bitcoin and Ethereum ETFs finally launch this week appeared first on The Motley Fool Australia.

More reading

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• Why Ethereum, Dogecoin, and The Sandbox dropped today
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• Another country adopts Bitcoin as legal tender. What does this mean for investors?

Motley Fool contributor Tony Yoo has positions in Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. 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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Last week, we looked at three “champion stocks” that analysts at Bell Potter believe are great buy and hold options for investors. You can read about those ASX 200 shares here.

The good news is that there are a few more shares that the broker has on its list. Here are three other champion stocks to consider:

Brambles Limited (ASX: BXB)

The first ASX 200 champion stock to look at is Brambles. Bell Potter is a fan of this logistics solutions company, particularly given its defensive earnings and growth opportunities in emerging markets.

The broker explained:

A global logistics company operating in more than 60 countries, which provides reusable pallets, crates and containers for shared use by multiple participants throughout a supply chain under a model known as “pooling”. The group primarily serves defensive growth sectors such as fast-moving consumer goods (dry food, grocery, and health and personal care), fresh produce and beverages. Further expansion into emerging markets should generate additional earnings growth.

Goodman Group (ASX: GMG)

This integrated industrial property company is a champion stock according to Bell Potter. The broker believes Goodman is well-placed for long term growth thanks to its world class portfolio and increasing demand for industrial property.

Bell Potter commented:

One of the world’s largest integrated industrial property groups with operations centred around development, management and ownership throughout Australia, New Zealand, Asia, Europe, United Kingdom, North America, and Brazil. The long term outlook for industrial and logistics properties is favourable given the continuing growth in ecommerce (or on-line retail sales) and the growing middle class in developing countries.

Sonic Healthcare Limited (ASX: SHL)

A final ASX 200 champion stock for investors to consider is Sonic Healthcare. Bell Potter believes the pathology provider is well-placed for growth due to growing demand for pathology services and international expansion opportunities.

It explained:

The world’s third largest pathology provider with significant operations in the USA, United Kingdom, Germany, Switzerland, Belgium, Australia and New Zealand. Against the backdrop of continuing growth in the demand for pathology services over the longer term, the group has further international expansion opportunities in both existing and new geographical markets.

The post Broker names 3 more ‘champion’ ASX 200 shares to buy and hold appeared first on The Motley Fool Australia.

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• Is the Goodman share price a big opportunity?
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• 2 ASX 200 blue chip shares to buy in May: Analysts

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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Where are ASX shares heading?

It’s the question we’d all love to know the answer to at any given time. But in a year of turmoil like 2022, it would be even more useful to know.

While no one has a working crystal ball, there are observations that one can make to guesstimate which direction stocks might be going.

FNArena founder Rudi Filapek-Vandyck recently warned in a memo for his subscribers about a statistical anomaly that could worry some people.

Something smells funny

Filapek-Vandyck’s investment advisory firm keeps track of buy, hold and sell recommendations in the industry.

After last month ended, he noticed something odd.

“As of the end of April, and with the S&P/ASX 200 Index (ASX: XJO) still within reach of its all-time high, total recommendations for the seven stockbrokers monitored daily by FNArena on 437 individual stocks comprise of 60% buys (and equivalents) versus less than 35% in hold/neutral ratings and sell ratings close to 5%.”

So what’s so strange about that?

FNArena started compiling these statistics 16 years ago, and the current proportion of buy recommendations is incredibly high compared to long term averages.

“The only precedent over the past 16 years occurred in 2011 when financial markets were gripped by anxiety that debt-laden Greece might turn into the bombshell that would cause the implosion of the European Union.”

Filapek-Vandyck said such a record-breaking number of analyst recommendations to buy means one thing.

“Historically, such a large percentage in buy ratings — and respective low percentages for hold and sell recommendations — points to bear market conditions for the local share market.”

Uh-oh.

Watch out for the economy and earnings

However, the ASX 200 has remained flat over the past 12 months.

It has not yet entered a true bear market, with “buy the dip” rallies coming regularly after pullbacks.

But underneath the relative calm of the ASX 200, some sectors have halved their valuations while others have thrived.

“The experience has been equally disheartening for the likes of Aristocrat Leisure Limited (ASX: ALL), Life360 Inc (ASX: 360), Tyro Payments Ltd (ASX: TYR)… and many others, while the likes of Perseus Mining Limited (ASX: PRU)) and Flight Centre Travel Group Ltd (ASX: FLT)) offset with stellar gains,” said Filapek-Vandyck.

“Maybe it is this extreme polarisation that is fundamentally responsible for why stockbroker ratings are signalling bear market conditions while the index is not reflecting it?”

He suspects that many of those non-cyclical stocks have been oversold now and the depressed share prices don’t “tell us anything about the future outlook”.

While positive financials in August might revive the ASX’s fortunes, Filapek-Vandyck feels 2022 is similar to 2011 in that a bear market can be triggered any time.

“We’ve now had the bond market reset and the inflation scare — next up will be global growth slowing plus the unknown consequences of liquidity withdrawal,” he said.

“For the above signals to provide the same positive message to investors as they have done in the past, corporate earnings in Australia must show resilience in the face of ongoing operational challenges.”

For now, Filapek-Vandyck recommends investors sit tight and “avoid profit warnings as much as we can”.

“The macro picture remains all-important in 2022. Plus, I’d keep on arguing, a more conservative portfolio approach.”

The post Unprecedented: Does this event mean we’re now in a bear market? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. and Tyro Payments. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Tyro Payments. 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 in the market for some dividend shares, then look no further. Listed below are two highly rated dividend shares that analysts have recently rated as buys.

Here’s what you need to know about them:

Bank of Queensland Limited (ASX: BOQ)

The first ASX dividend share for investors to consider is Bank of Queensland.

The team at Morgans appears to believe it could be a good option for investors that don’t already have meaningful exposure to the banking sector. Particularly at the current level, which the broker sees as very attractive given its transformation and recent acquisition of ME Bank.

Morgans commented: “We see exceptional value in Bank of Queensland’s stock. The Company has been executing well on its transformation program, it continues to grow its home loan book at above-system levels, we don’t expect its NIM to fare worse than the industry-wide trend, and cost synergies associated with the ME Bank acquisition are being realised at a faster rate than originally anticipated.”

The broker currently has an add rating and $11.00 price target on the bank’s shares. As for dividends, it is forecasting fully franked dividends per share of 49 cents in FY 2022 and then 54 cents per share in FY 2023. Based on the current Bank of Queensland share price of $7.60, this will mean yields of 6.45% and 7.1%, respectively.

Coles Group Ltd (ASX: COL)

Another ASX dividend share for investors to consider is retail giant, Coles.

It is one of Australia’s largest retailers with a growing network of supermarkets, liquor stores, and convenience stores across the country.

This strong network, its defensive qualities, and long track record of same store sales growth has analysts forecasting growing sales and earnings in the coming years. Especially in the current inflationary environment.

Citi is a fan of Coles and was pleased with its third-quarter update. As a result, it put a buy rating and $19.30 price target on its shares. It commented: “Coles provided its 3Q22 trading update with sales in line with our expectations. There were no observable signs of trading down or lower volumes in response to higher food inflation.”

The broker is also expecting Coles to increase its dividend meaningfully in the coming years. For example, it is forecasting fully franked dividends of 63 cents per share in FY 2022 and then 72 cents per share in FY 2023. Based on the current Coles share price of $18.79, this will mean yields of 3.4% and 3.8%, respectively.

The post Analysts name 2 ASX dividend shares to buy with growing yields appeared first on The Motley Fool Australia.

More reading

• What is the current dividend yield on Bank of Queensland shares?
• Which ASX supermarket shares could win (and lose) as higher inflation hits shelves?
• Why BrainChip, Coles, Fisher & Paykel Healthcare, and PolyNovo shares are rising
• Guess which ASX 200 shares are defying today’s sell-off to climb higher
• Why is the Bank of Queensland share price slipping again on Thursday?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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