Exchange-traded funds (ETFs) can be an effective way to invest in shares and also get diversification.

There are some ETFs that are based on an index, like the S&P/ASX 300 Index (ASX: XKO), which is tracked by the Vanguard Australian Shares Index ETF (ASX: VAS).

However, there are other ETFs that have portfolios selected through a series of rules based on quality, ethical, or other factors.

The following two ETFs have been rated as buys on a recent Livewire episode of ‘buy hold sell’:

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

The ETHI ETF has been rated as a buy by both Felicity Thomas from Shaw and Partners and Ben Nash from Pivot Wealth.

Thomas said that it is one of her favourite ETFs, partly thanks to the positive carbon screening.

Nash also likes the positive screening, noting sustainable investing is getting “more and more attention” with more fund inflows. The companies involved can benefit from the decrease in the cost of capital and this could help them perform better over the long term.

BetaShares explains that companies are selected from global ‘developed’ markets and they must meet market capitalisation and liquidity requirements. Next, companies must be in the top one-third of performers in terms of their carbon efficiency or engaged in activities that can help reduce carbon use by other industries.

Finally, a number of exclusions are then applied to the remaining businesses. For example, no fossil fuel producers; no companies significantly engaged in services like gambling, alcohol, or junk food; no companies with human rights or supply chain issues; and so on.

Some of the 200 businesses in the portfolio include Nvidia, Visa, Home Depot, Mastercard, Toyota, ASML, Cisco Systems, UnitedHealth, and Adobe.

There are four sectors that have a weighting of more than 10%: IT (with a 40.5% weighting), healthcare (17.2%), financials (15.4%,) and consumer discretionary (13.1%).

VanEck MSCI International Quality ETF (ASX: QUAL)

This is an ETF that is provided by VanEck, which has a focus on quality international businesses. It’s rated as a buy by Felicity Thomas because of its exposure to quality companies with “high revenue growth and a solid balance sheet”.

VanEck says this ETF is about accessing the world’s highest quality companies based on key fundamentals including a high return on equity, earnings stability, and low financial leverage.

The ETF provider also points to its “outperformance potential”. It noted that “investments focused on companies with quality characteristics have delivered outperformance over the long term relative to global equity benchmarks”.

It was invested in around 300 names at the end of March 2022. Its biggest positions at the end of the last month were: Apple, Microsoft, Nvidia, Meta Platforms, Johnson & Johnson, Alphabet, UnitedHealth, Visa, and ASML.

The QUAL ETF has outperformed the MSCI World ex Australia Index by an average of more than 3% per annum over the past five years, though past performance is not a reliable indicator of future performance. It has an annual management fee of 0.40%.

The post 2 top ETFs rated as buys for May appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, 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. 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. owns and has recommended Adobe Inc., Alphabet (A shares), Apple, Cisco Systems, Mastercard, Meta Platforms, Inc., Microsoft, Nvidia, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and Johnson & Johnson and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Apple, Mastercard, Meta Platforms, Inc., and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Vanguard Australian Shares High Yield ETF (ASX: VHY) has been outperforming the broader market in 2022.

It’s gained around 3.3% year to date while the S&P/ASX 200 Index (ASX: XJO) has slipped 3.5%.

The exchange-traded fund (ETF) aims to invest in high-quality dividend paying stocks, housing many of the ASX’s biggest names.

Right now, the ETF is trading at a share price of $68.29.

Currently, the $2.33 billion ETF is invested in 64 ASX shares. Let’s take a look at which stocks it’s holding.

Vanguard Australian Shares High Yield ETF‘s holding

The Vanguard Australian Shares High Yield ETF boasts an equity yield of 5.75% as of 31 March, with 40% of its holdings housed in one sector.

That is, the financial sector. The ASX 200’s ‘big four’ banks and Macquarie Group Ltd (ASX: MQG) make up 5 of the ETF’s top 10 holdings.

Though, its largest holding is in BHP Group Ltd (ASX: BHP). The mining giant’s stock makes up around 10.75% of the ETF’s holdings.

Its holding in Commonwealth Bank of Australia (ASX: CBA) only just trails that figure. It comes in at 10.3% of the ETF.

Its top 10 investments are rounded out by retail conglomerate, Wesfarmers Ltd (ASX: WES); telco, Telstra Corporation Ltd (ASX: TLS); miner, Rio Tinto Limited (ASX: RIO); and toll road operator, Transurban Group (ASX: TCL).

Another 3 ASX dividend shares each makeup more than 2% of the fund – they are iron ore producer, Fortescue Metals Group Limited (ASX: FMG); oil and gas icon, Woodside Petroleum Limited (ASX: WPL), and supermarket giant, Coles Group Ltd (ASX: COL).

Finally, 2 more stocks make up more than 1% of the fund – gas pipeline operator, APA Group (ASX: APA) and miner, South32 Ltd (ASX: S32).

Sadly, while the Vanguard Australian Shares High Yield ETF has gained more than 3% this year, its ‘sibling’, the Vanguard Australian Shares Index ETF (ASX: VAS), has slumped 4.25%.

The post Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended APA Group, COLESGROUP DEF SET, Telstra Corporation Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The CSR Ltd (ASX: CSR) share price has travelled in circles over the past 12 months amid a challenging environment.

Overall, the building products company’s shares have remained steady over the past 12 months. The volatility can be attributed to the COVID-19 pandemic which previously caused disruptions to CSR’s operations.

Nonetheless, management has steered the business to perform financially following good manufacturing performance and ongoing cost discipline.

With the company’s full-year results around the corner, is now the time to pick up CSR shares?

What to expect for the upcoming FY22 result?

In November 2021, CSR noted that building activity grew in line with expectations going into the new calendar year.

While there are fewer trading days in the second half, management expects elevated activity due to the traditional seasonality of the building industry.

The diversified nature of its building products business is well-positioned for the current trading period and beyond. This is supported by the company’s continued focus on maximising market opportunity, executing strategy, and maintaining cost and operational discipline.

In its property portfolio, EBIT for the year ending March 2022 (YEM22) is expected to be around $34 million. This reflects a massive increase when compared to the $6.6 million achieved in H1 FY22.

In its aluminium business, EBIT for YEM22 is expected to be in the range of $35 to $41 million. However, this is assuming all other revenue and cost areas (including coal costs) are unchanged.

Broker opinions on the CSR share price

A number of analysts believe that the CSR share price offers an attractive investment opportunity.

The team at Jarden initiated an outlook on the company’s shares to “overweight”, with a price target of $6.70. This implies a potential upside of almost 10% based on the current CSR share price.

In addition, Citi slashed its rating by 5.7% to $6.63 which also represents a similar upside for investors.

The most bullish broker, Macquarie, lifted its price target by 5.4% to $6.80 on the company’s shares.

It seems the above brokers believe the CSR share price still has room to grow in the near-term future.

CSR share price snapshot

When looking year to date, the CSR share price has nudged up almost 3% in value.

The company has a price-to-earnings (P/E) ratio of 12.20 and commands a market capitalisation of roughly $2.93 billion.

The post Is the CSR share price fully valued in April 2022? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Whispir Ltd (ASX: WSP) share price is pushing higher on Wednesday.

This follows the release of a strong quarterly update by the communications workflow platform provider, which has helped its shares avoid the tech selloff.

At the time of writing, the Whispir share price is up 2% to $1.54.

Whispir share price higher on strong quarterly growth

• Annualised Recurring Revenue (ARR) up 24.1% year on year to $62.4 million
• Quarterly cash receipts up 81.6% over the prior corresponding period to $19.8 million
• Free cash outflows for the quarter of $5.6 million
• Cash on hand of $31.2 million

What happened during the quarter?

For the three months ended 31 March, Whispir reported an 81.6% increase in quarterly cash receipts to $19.8 million. And while this was down 22% on the previous quarter, it was in line with management’s expectations. It notes that the previous quarter benefited from COVID vaccine rollout programs.

Despite this, the company’s ARR grew both quarter on quarter and year on year. Whispir ended the period with ARR of $62.4 million, up 4% from the end of December and 24.1% from a year earlier. This was supported by the addition of 82 new customers during the period.

Another positive was that Whispir’s cash outflows reduced as cost efficiencies and savings were realised. The company reported free cash outflows for the quarter of $5.6 million, which was in line with expectations. This was driven largely by a 47% reduction in administration and corporate costs to $2.2 million.

Whispir’s Founder and CEO, Jeromy Wells, commented: “We have had an exceptional three quarters, and I fully expect our sales momentum to continue into the last quarter, which is traditionally the strongest quarter of the year for Whispir. Our sales momentum, combined with savings delivered from operational efficiencies, provide line of sight to sustainable profitable operations.”

Outlook

Also supporting the Whispir share price today was the company’s outlook statement.

Management revealed that the company continues to be on track to meet its FY 2022 guidance, with revenue trending towards the upper end of the guidance range to $68 million.

The post Whispir share price avoids tech selloff and pushes higher amid strong quarterly update appeared first on The Motley Fool Australia.

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

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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

At long last, it’s official: Barring a shareholder revolt or a veto by regulators, Tesla (NASDAQ: TSLA) CEO Elon Musk will be buying Twitter (NYSE: TWTR) in a deal valued at $44 billion.

Investors in the electric-car superstar are apparently upset, and as of 10:12 a.m. ET on Tuesday, shares of Tesla were down 7%.

So what

Why the price drop? After all, as investment bank Wedbush sighed in relief today, Musk’s successful bid for Twitter should put an end to this “soap opera.” Wedbush doesn’t think there will be any regulatory objections, in which case Musk and Tesla should be able to get back to building electric cars and growing their profits. 

But Reuters this morning reminded Tesla investors of one potential “Chinese headache” that could arise from Musk’s Twitter deal. To wit, one quarter of Tesla’s sales come from China, and the company produces half of its cars at its Shanghai Gigafactory (with many of those cars currently being exported). China’s Global Times accentuated the point, noting how important the Chinese market is to Tesla’s growth ambitions, producing 53% sales growth in the first quarter.

If the same CEO who controls Tesla also comes to control Twitter, and someone on Twitter says something that the Chinese government doesn’t like, China might now be tempted to punish Tesla in order to gain leverage over what Musk allows (or doesn’t allow) to be said on Twitter.

Now what

That’s the headache that Reuters predicts, and it’s already producing pain for Tesla stock. But how worried should Tesla investors be about this possibility?

Perhaps not as worried as they are, I suspect. It’s not really a question of if China decides to pressure Tesla for views it disapproves of. It has already pressured the company many times before, generally to promote its own domestic automakers at Tesla’s expense.

Yet Musk and Tesla have navigated these obstacles with aplomb to date. After all, China might need Tesla as much as Tesla needs China, limiting the pressure it can bring. The $13.4 billion in revenue Tesla produced in the country last year generates tax revenue for the Chinese government. The Shanghai Gigafactory is also ramping up toward providing a total of 19,000 jobs.    

Plus, although Tesla’s revenue grew 53% in China last year, its revenue grew 80.5% worldwide. As time goes on, I think China is going to be less significant to Tesla’s growth trajectory, rather than more, and worries about China’s political power over Tesla will dwindle as well. 

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

The post Why Tesla stock just crashed 7% appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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There have been some very painful sell-offs for some ASX shares in the last few months.

Sometimes a decline can mean that the company is now an opportunity and is in the ‘buy zone’.

However, just because a business has fallen heavily doesn’t mean it’s going to rebound rapidly.

With that in mind, these are two ASX shares that brokers think are opportunities.

City Chic Collective Ltd (ASX: CCX)

Since the start of 2022, City Chic shares have fallen by more than 50%.

The business sells plus-size clothes, footwear and accessories to women in multiple regions.

City Chic operates under a number of different brands in different countries. In the United States it has its Avenue business, in the United Kingdom is Evans, and in the European Union it has its Navabi brand. City Chic products are sold in its store network locally, and through partnerships and online in the northern hemisphere.

City Chic has been reporting revenue growth. In the first half of FY22, sales increased by 49.8% to $178.3 million. However, one-off COVID impacts meant that underlying net profit after tax (NPAT) was roughly flat at $14 million.

The company said that it has continued to grow sales in the first eight weeks of the second half of FY22. US growth continues, while the UK and EU are showing signs of a recovery. The ASX share is developing new ranges with existing partners and onboarding new partnerships in the second half and into FY23.

It’s currently rated as a buy by several brokers, including Citi, which has a price target of $3.70 on the business. That implies a possible upside of around 40% over the next year. It acknowledges short-term growth may be slowing, but it sees attractive long-term growth for the business.

At the current City Chic share price, it’s valued at 18x FY23’s estimated earnings, according to Citi. It could also start paying a dividend in FY23.

BWX Ltd (ASX: BWX)

Since the start of 2022, the BWX share price has fallen by around 55%.

It has a number of natural beauty brands and businesses. Its beauty brands include Sukin, Mineral Fusion, Andalou Naturals, Nourished Life and Go-To Skincare. And it has two e-commerce platforms, Nourished Life and Flora & Fauna.

The business is growing. In the FY22 half-year result, it generated revenue growth of 26.5% to $106.9 million and underlying NPAT increased 22.1% to $4.7 million.

One of the ways that BWX is laying the foundation for growth is by increasing its global points of distribution. In HY22, this increased by 21% year on year to 1.6 million. It’s aiming to reach 2 million by the end of FY22.

It also wants to increase its direct-to-consumer sales – total online sales contributed 41% of total revenue for HY22.

BWX expects “strong” underlying revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) growth in FY22. The ASX share said this outlook was supported by sales momentum in the second quarter of FY22, which has continued into the third quarter of FY22.

Its new facility in Clayton will also be a “significant” enabler of greater efficiency across its operations and financial management. It said it will keep reinvesting this leverage back into its brands to support longer-term value creation.

The BWX share price is rated as a buy by Citi, with a price target of $4.90. That implies a potential increase of more than 150%.

The post Brokers: 2 beaten-up ASX shares to buy next month appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The share price of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is edging into the green in early trading today amid news of an acquisition.

The forward movement comes despite the NASDAQ 100 Index (NASDAQ: NDX) falling overnight. The S&P/ASX 200 Index (ASX: XJO) has also started off today with difficulty.

Soul Pattinson’s latest acquisition

The ASX share owns a diversified portfolio of listed businesses and private businesses.

One of Soul Pattinson’s holdings is the business Ampcontrol.

Ampcontrol says that it delivers integrated electrical, electronic, and control solutions to improve safety and efficiency in mining, renewables, infrastructure, and industrial applications. Soul Pattinson notes that Ampcontrol’s mining sector presence is “strong” with products and services.

At the end of the first half of FY22, Soul Pattinson owned a 42.9% stake in Ampcontrol.

However, now Soul Pattinson has moved to buy all of Australia’s largest privately-owned electrical engineering business, according to the Australian Financial Review.

The newspaper reports that Soul Pattinson has paid to buy the entire business on an enterprise value basis of around $200 million. The other shareholders were reported to be the founders of the business – Keith Grant, Peter Cockbain, Tony Studdert, and Neville Sawyer.

How much revenue and profit does Ampcontrol generate? The AFR noted that, in FY21, the business generated $256.5 million of revenue and $44.9 million of earnings before interest, tax, depreciation and amortisation (EBITDA).

It was also reported that Ampcontrol was a possible contender to list with the help of Bell Potter and Morgans, but it wasn’t able to make a listing happen.

How big of a deal is this?

A $200 million valuation may sound like a lot of money but on the ASX that would only count as a small cap company. Soul Pattinson’s market capitalisation is more than $9.5 billion at the time of writing.

At the end of the ASX share’s FY22 first half, its total portfolio value was $9 billion after the merger with the listed investment company (LIC) Milton Corporation. A $200 million valuation is, therefore, a small percentage of the overall portfolio.

However, at 31 January 2022, Soul Pattinson’s private equity portfolio was worth $650 million. So, Ampcontrol’s value will be a sizeable part of Soul Pattinson’s private business portfolio.

In the half-year result, the ASX share noted that it has “ample liquidity available for new investments due to a strong working capital position.”

Soul Pattinson share price snapshot

Since the start of 2022, the Soul Pattinson share price has dropped by more than 10%.

It’s down almost 13% in the past 12 months.

The post Soul Pattinson share price rises after electric deal for Ampcontrol appeared first on The Motley Fool Australia.

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• Keen to bag the Washington H Soul Pattinson dividend? Read this
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Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In morning trade, the Brainchip Holdings Ltd (ASX: BRN) share price has continued its long slide.

At the time of writing, the artificial intelligence technology company’s shares are down 6.5% to 85.5 cents.

This means the Brainchip share price is now down 63% from its January high of $2.34.

Why is the Brainchip share price sinking today?

Investors have been selling down the Brainchip share price amid weakness in the tech sector and in response to the release of a disappointing quarterly update.

In respect to the latter, after the market close on Tuesday, Brainchip released its quarterly update for the period ending 31 March.

According to the release, for the three months, Brainchip recorded cash receipts of just US$205,000.

This was despite the company announcing in January that it has begun taking orders for the first commercially available Mini PCIe board leveraging its Akida neural networking processor, which rounded out its suite of AKD1000 offerings. Furthermore, the company revealed that it spent US$834,000 on advertising and marketing during the period.

Given that the Brainchip share price prior to today implied a market capitalisation of approximately $1.6 billion, investors appear to believe that this level of sales doesn’t justify such a lofty valuation.

Were there any positives?

One positive from the release was that Brainchip’s cash balance has been boosted thanks to its funding arrangement with LDA Capital. That arrangement saw Brainchip issue US$16.1 million worth of shares to LDA Capital upon the submission of capital call notices. However, it is unclear if LDA Capital is holding onto these shares or simply offloading them upon receipt for a quick profit.

Nevertheless, at the end of the period, Brainchip had cash and cash equivalents of US$31.2 million, up from US$19.4 million at the end of December.

Time will tell whether this will be sufficient to see Brainchip through to profitability, if it ever gets there.

The post Brainchip share price sinks amid weak quarterly update appeared first on The Motley Fool Australia.

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• Let’s get technical! 5 best All Ords tech shares of the quarter revealed

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

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Experts have buy ratings on some ASX shares that have low price-to-earnings ratios. Hence, these shares could be opportunities in May 2022.

Businesses that have low earnings multiples are sometimes viewed as ‘cheap’ if they are expected to grow earnings. This can also lead to a high dividend yield if the ASX shares have a relatively high dividend payout ratio.

Here are two that experts rate as buys:

Best & Less Group Holdings Ltd (ASX: BST)

Best and Less is an apparel retailer which aims its ‘affordable’ products at mums and families.

The company is rated as a buy by the broker Macquarie, with a price target of $4.10. That suggests a possible upside of around 30%.

While the first half of FY22 was affected by COVID lockdowns, there were some statistics that showed improvement. The gross profit margin improved by 210 basis points to 50.8%. The cost of doing business (CODB) decreased by 7% to $115.4 million, however net profit after tax (NPAT) did drop by 21.3% after a 13.8% decline in revenue to $287.5 million.

According to Macquarie, the Best & Less share price is valued at under 9 times FY22’s estimated earnings and around 8 times FY23’s estimated earnings.

Macquarie expects the Best & Less dividend yield to be high. In FY22, the grossed-up dividend yield is expected to be 12.4%. Then, in FY23, Macquarie expects the Best & Less grossed-up dividend yield to be 12.9%.

The cheap ASX share has a number of strategies to keep growing the business including increasing its market share in ‘baby and kids’, improving the womenswear offer, investing in online capabilities and securing new store sites.

Adairs Ltd (ASX: ADH)

Adairs is a retailer of homewares and furniture through three different brands: Adairs, Mocka and Focus on Furniture.

The business has a number of plans to grow its operations.

Adairs says that its larger stores are much more profitable than its smaller format stores. So it’s working on upsizing its stores in certain locations.

The business has opened a new national distribution centre. This is aimed to increase efficiencies, improve stock flow, allow it to fulfil more online orders and save on costs.

It’s aiming to grow its membership numbers because members typically spend more and are more loyal.

The cheap ASX share also plans to expand the Focus on Furniture store network in Australia, as well as grow its online sales.

It’s currently rated as a buy by the broker Morgans. The Adairs share price is valued at 7 times FY23’s estimated earnings. Adairs has a projected grossed-up dividend yield of 13% for FY23.

The post 2 cheap ASX shares to buy in May: Experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Northern Star Resources Ltd (ASX: NST) share price is dropping on Wednesday.

In morning trade, the gold miner’s shares are down 2% to $10.00.

Why is the Northern Star share price dropping?

Investors have been selling down the Northern Star share price today after the gold miner’s quarterly update disappointed.

For the three months ended 31 March, Northern Star reported total gold sold of 380,075 ounces at an all-in sustaining cost (AISC) of A$1,656 per ounce.

This reflects 212,820 ounces of gold sold with an AISC of A$1,659 per ounce at Kalgoorlie, 109,766 ounces of gold sold with an AISC of A$1,444 per ounce at Yandal, and 57,489 ounces of gold sold at an AISC of US$1,483 per ounce at Pogo.

While this means that its Australian operations, which account for 85% of total production, are on track to meet FY 2022 production and cost guidance, this won’t be the case for its Pogo operation. It is expected to fall short of its guidance for production and costs.

In light of this, management has retained its FY 2022 group production guidance at 1.55M ounces to 1.65M ounces but has lifted its AISC guidance to A$1,600 to A$1,640 per ounce. The latter is up from its previous guidance of A$1,475 to A$1,575 per ounce.

Nevertheless, for the quarter, thanks to an average realised price of A$2,468 per ounce, Northern Star reported sales revenue of A$937 million for the quarter. This was broadly in line with what was recorded during the December quarter.

Management commentary

Northern Star’s Managing Director, Stuart Tonkin, acknowledged that the company had a tough quarter.

He commented: “During the quarter, Kalgoorlie was impacted due to unplanned mill downtime events while Yandal performed in line with expectations. As foreshadowed, higher mining inventory at Pogo is delivering a better milling outcome but we have more work to do to deliver on Pogo’s potential.

“Group-wide and against a challenging operating backdrop, we continue to safely advance the foundation of our five-year profitable growth plan. One year in, we have significantly lifted material movement volumes at KCGM, working through the OBH cutback, almost completed the Thunderbox mill expansion and successfully commissioned Pogo’s expanded mill.”

The post Northern Star share price tumbles on guidance update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 Bruce Jackson.

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