Could the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price be an attractive option to consider for dividend income?

ANZ is one of the big four ASX banks, alongside National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).

The big banks have a reputation as ASX dividend shares.

How big is the ANZ dividend going to be?

Commsec has estimated what the ANZ dividend could be looking ahead, based on numbers provided by external data providers.

In FY22, the ANZ annual dividend is projected to be $1.44 per share. That would translate into a grossed-up dividend yield of 7.4% at the current ANZ share price.

Then, in FY23, that dividend is expected to increase to $1.55 per share. This would mean the FY23 grossed-up dividend yield could be 8%.

In FY24, the annual dividend could rise again to $1.65 per share. If that happened, the ANZ grossed-up dividend yield would be 8.5%.

The latest dividend

The last time investors got a dividend update was the FY21 final dividend paid on 16 December 2021, which was 72 cents per share. That brought the full-year dividend to $1.42 per share, an increase of 82 cents compared to the 60 cents per share dividend in FY20.

The FY21 ANZ grossed-up dividend yield represents a grossed-up dividend yield of 7.3%.

Is the ANZ share price a buy?

Morgan Stanley recently called the ANZ share price a buy, with a price target of $30.30.

The broker thinks that the net interest margin (NIM) of ANZ could benefit as interest rates rise.

ANZ economists predict that the Reserve Bank of Australia (RBA) will start raising the interest rate in June 2022. All the big four banks now believe that the RBA will increase the interest rate.

However, the NIM could be impacted by higher costs for term deposits, which ANZ apparently has a lot of.

Morgan Stanley puts the ANZ share price at 13x FY22’s estimated earnings and under 12x FY23’s estimated earnings.

Latest profit update from ANZ

In February 2022, the ANZ gave a quarterly update for the three months to 31 December 2021. The bank advised the net interest margin fell eight basis points for the quarter, but the impact of rising rates was expected to moderate headwinds such as competition.

The bank added that it had made progress in Australia to improve its systems and processes.

It also said that the credit quality environment remained benign.

The post Is the ANZ share price a smart idea for dividend income? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 bank shares having such a stellar start to the week?
• Leading brokers name 3 ASX shares to buy today
• Is the NAB share price entering a ‘sweet spot’?
• Why these ASX bank shares could outperform over the next 6 weeks
• Who owns ANZ shares? Take a look. You might be surprised

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 Westpac Banking Corporation. 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 Adore Beauty Group Ltd (ASX: ABY) share price has suffered in 2022. But there are a few factors that could make it a compelling proposition.

Adore Beauty is a leading online retailer of a wide range of beauty products. The company says it has evolved into an integrated content, marketing, and e-commerce business that sells more than 11,700 products from more than 270 brands.

The Adore Beauty share price has fallen by around 54% since the start of 2022.

But, for these three reasons, the ASX share could be an attractive idea:

Business growth

Some businesses achieved booming sales during the COVID-19 years of FY20 and FY21 but then lost that momentum.

However, Adore Beauty has grown a lot over the last two years and it continues to grow.

In the first six months of FY22, revenue rose 18% to $113.1 million. This was an 18% increase year on year. Over two years, the compound annual growth rate (CAGR) was 47%.

It’s also seeing growth of active customers that reached 876,000 in HY22 (up 13% year on year).

Not only is the number of customers growing, but the annual revenue per active customer is increasing as well. In the 2019 calendar year, the average active customer spend was $210. In 2020, this figure was $213 and, in 2021 it rose 5.3% year on year to $224. The company said that this reflects a larger proportion of returning customers and “strong” average order value growth. In HY22, there was returning customer growth of 56%.

The company has implemented strategic initiatives to reduce the loss of customers within the first year and improve retention, such as its mobile app and a loyalty program.

Adore Beauty is also growing its core product range and it’s targeting related ‘verticals’ that the company believes stay true to its ‘brand voice’ and that customers will respond to.

Some of those verticals include ‘fragrance’ and ‘Korean beauty’.

Growing industry

Some businesses, or entire sectors, can benefit from a tailwind that can help grow demand and revenue.

According to Adore Beauty’s sources, Australia’s beauty and personal care market is an $11.2 billion market, with a forecast CAGR of 3.8% to 2024.

The online beauty and personal care sales account for $1.3 billion, or 11.4%, of the total market. It’s growing faster than the overall market and is forecast to increase at a CAGR of 26% to 2024. Adore Beauty claims to be the market leader in online beauty, with a 13% market share.

Further, Adore thinks that the online beauty market can benefit from several tailwinds.

First, COVID-19 has accelerated the shift from in-store shopping to digital channels.

Second, demographics can organically help its growth. Digital native ‘millennials’ and ‘Gen Z’ are entering the online shopping world.

Finally, online sales in Australia are “significantly under-penetrated” compared to the US and the UK.

Long-term margin expansion

The Adore Beauty share price could benefit in the long-term from the company’s plans to grow its profit margins.

The ASX share plans to benefit from operating leverage to grow its contribution profit margin percentage.

It’s going to scale its private-label offering, which is expected to increase its margins.

The ASX share also expects to increase its marketing return on investment (ROI) as the company benefits from the impact of returning customers, the growth of brand awareness, and its mobile app.

Adore Beauty also plans to forge closer relationships with brands to optimise terms and increase brand funding.

Growth will also allow the business to slow its investment in fixed costs.

The post 3 factors that could make the Adore Beauty share price too good to miss appeared first on The Motley Fool Australia.

More reading

• Why is the Adore Beauty share price tumbling 9% to an all-time low?
• Are these 2 ASX tech shares great buys in April 2022?
• Analysts name 2 excellent ASX growth shares to buy and hold
• 2 retailer ASX shares ready to make you rich: experts
• 2 ASX growth shares experts think have exciting futures

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty 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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Trevor Muchedzi at The Motley Fool Australia presents the ASX Earnings Insights: Motley Fool Halftime Report.

Scroll down to download the full report.

The post ASX Earnings Insights: Motley Fool Halftime Report appeared first on The Motley Fool Australia.

More reading

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• These are the 2 best ASX dividend shares to buy right now: fund manager
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• 5 things to watch on the ASX 200 on Tuesday
• Whitehaven share price could surge 45% if coal price remains strong: broker

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Brokers are always on the lookout for ASX share opportunities. The two stocks in this article could be two compelling ideas that have been identified as buys.

Share prices change every trading day. Over the weeks, a business can become significantly cheaper (or more expensive). This can open up opportunities for investors.

The below businesses are ones that brokers have rated as buys.

Kelsian Group Ltd (ASX: KLS)

Kelsian used to be called SeaLink Travel. It describes itself as Australia’s largest integrated land and marine, tourism and public transport service provider with established international operations in London and Singapore.

It operates around 4000 buses, 120 ferries and 24 light rail vehicles, carrying over 207 million customers, according to Kelsian.

The ASX share is currently rated as a buy by at least three brokers, including UBS with a price target of $10. This implies a potential upside of around 30%. The broker is attracted to the constant demand of the bus operations.

When it released its FY22 half-year result, the company said that “essential services continue to run on a full schedule, while the marine and tourism portfolio is poised to take advantage of the return of interstate and international visitors.”

In the medium-to-long term, the company said it’s in a position to take advantage of the extensive pipeline of organic growth opportunities in its contracted businesses. It’s also exploring acquisition opportunities in international markets.

UBS thinks Kelsian is valued at approximately 20x FY23’s estimated earnings.

Serko Ltd (ASX: SKO)

Serko says that it’s transforming the world of business travel and expense, using technology, predictive workflows and a marketplace.

It’s currently rated as a buy by the broker Citi, with a price target of $5.75. That implies a potential rise of around 20% over the next year.

The broker is attracted to the quality of Serko’s offering as well as the potential for Serko to benefit from a travel restart. Serko’s partnership with Booking Holdings Inc (NASDAQ: BKNG) is seen as an important area to grow value for the business.

In February 2022, Serko gave a ‘trading conditions update’.

The ASX share said that the rapid spread of the COVID-19 Omicron variant and related restrictions reduced business travel volumes in key markets and expected revenue for the result for the 12 months to 31 March 2022.

Due to that disruption, the company reduced its revenue guidance range for the year to between NZ$18 million to NZ$20.5 million, down from NZ$21 million to NZ$25 million. The low end of that range assumes the volumes in each market in February and March would be materially lower than the volumes in the last week of January.

The high end of the range assumes a gradual continuing of the improving trend in transaction volumes driven by normal seasonality. It also assumes a recovery of business volumes from Booking.com and within the Australian market as COVID-19 disruptions reduce.

The company’s expectation was that the recovery in booking volumes would be partially offset by lower New Zealand bookings. The ASX share was seeing some “early signs of recovery” in Australia when it updated the market, but demand in New Zealand had been significantly affected.

The post 2 little-known ASX shares that brokers rate as strong buys appeared first on The Motley Fool Australia.

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• Why CBA, Kelsian, PolyNovo, and Weebit Nano shares are pushing higher
• Why this fundie is steering clear of ASX mining shares
• 2 exciting small cap ASX shares for your watchlist
• 3 small cap ASX shares analysts are tipping for big things

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 Booking Holdings and Serko Ltd. The Motley Fool Australia has recommended Booking Holdings and Serko 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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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part two of this edition, Senior Portfolio Manager & Co-Founder of Plato Investment Management Peter Gardner tells us how to avoid dividend traps and shares his top 2 ASX dividend shares to buy today.

Motley Fool: Investors can get pulled in by ASX dividend shares with high trailing yields that may not be repeated. What’s your experience here?

Peter Gardner: We often talk about avoiding dividend traps because we think this is a critically important factor in generating strong income to help our clients make ends meet.

Dividends traps occur when you look at company data and see a large dividend yield. The problem is this yield figure is based on historical dividends and can be taken against a falling share price. When it comes to dividend traps, that super-high historical yield figure may never come to fruition because the company’s earnings may be likely to fall, causing it to reduce or completely cut its dividends.

MF: So how do you target tomorrow’s high yielding ASX dividend shares?

PG: You first have to eliminate the dividend traps. At Plato, we’ve developed statistical models over many years to help forecast the likelihood of dividend cuts and avoid dividend traps.

When identifying where dividends are poised for growth, investors should remember that the ability of a company to pay and grow its dividends is linked to earnings and cash flow growth. So, a strong underlying business model is very important.

MF: What else do you look for to avoid dividend traps?

PG: Some other factors that can impact a company’s future profitability, and their ability to pay dividends, include macro factors like prevailing tax policy or the overall state of the economy.

Industry-specific factors can also create issues for a subsector of the market. For example, the impact of the price of oil on airline shares.

MF: What are the 2 best ASX dividend shares to buy right now? 

PG: Macquarie Group Ltd (ASX: MQG). That’s because Macquarie has continued to deliver consistent earnings growth and consistent dividends in recent years despite the challenges that have faced the financial services sector. Most recently it achieved a record profit for the December 2021 quarter.

The Group is very diversified, and we are particularly buoyed by the strong performance of its markets facing business, strong AUM [assets under management] growth, and investment in renewables.

Importantly, it has a lot of cash on its balance sheet which indicates it can sustainably grow dividends in the foreseeable future.

MF: And your second top ASX dividend share?

PG: Then there’s BHP Group Ltd (ASX: BHP).

The big Australian is in a really good position to continue delivering big dividends for its Australian shareholders.

During the recent reporting season, BHP announced a record first-half dividend of $1.50 per share, fully franked. This equates to a gross dividend yield of 6.2% for this dividend alone. While it was 49% larger than last year’s interim dividend, the payout ratio is still a healthy 78%.

This dividend was announced along with increasing revenues, increasing [earnings before income, taxes, depreciation and amortisation] EBITDA, and increasing profit.

There’s also the BHP and Woodside merger deal on the horizon which we believe will be a tax-effective income opportunity for BHP shareholders. The deal will likely see BHP’s petroleum assets spun off in the form of a special dividend with franking credits attached, in order to merge with Woodside. Franking credits are one of the most tax-effective forms of income for low-tax investors.

We also see BHP’s recent delisting from the London Stock Exchange as a positive for Australian shareholders. This enables more of those franking credits to ultimately be distributed to shareholders.

MF: What investment move do you most regret?

PG: We’ve been on the right side of some of the more recent trends in the markets as bond yields rose, capturing the outperformance of commodities and missing the underperformance of expensive tech.

But our biggest recent regret – there are always plenty of regrets in funds management – is not having a larger exposure to commodities and a lower exposure to stocks impacted by rises in bond yields.

For example, we have holdings in James Hardie Industries PLC (ASX: JHX) and Aristocrat Leisure Ltd (ASX: ALL) whose underlying businesses have been performing well, but who have also been hit as bond yields rose.

MF: Has Russia’s invasion of Ukraine changed your investment approach? 

PG: You can’t ignore this sort of event and we must consider how it could impact company dividends now and into the future.

However, our investment approach has not changed, as this horrific event has just exacerbated some pre-existing trends that we were exposed to such as continued increases in commodity prices and concerns about inflation.

We’re one of the most active, nimble income funds that I know of, and we rotate our portfolio in order to capture the strongest dividends in the market. We also continue to generate additional income through tax-effective portfolio management, something unencumbered by the sad developments in Ukraine.

(If you missed part one of our interview with Peter Gardner, you can find that here.)

The post These are the 2 best ASX dividend shares to buy right now: fund manager appeared first on The Motley Fool Australia.

More reading

• ASX mining shares were the leaders last quarter. Here are the top performers
• Why is the Macquarie share price underperforming today?
• Top ASX dividend shares to buy in April 2022
• How retirees can maximise returns from ASX dividend shares: fund manager
• BHP and Woodside one step closer in creating $40 billion energy giant

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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Are you looking for dividend shares to add to your income portfolio this week? If you are, then the two listed below could be worth considering.

These dividend shares have been rated as buys and tipped to provide investors with attractive yields. Here’s what you need to know about them:

Centuria Industrial REIT (ASX: CIP)

The first dividend share to look at is Centuria Industrial. It is the largest domestic pure play industrial REIT on the Australian share market.

These properties are in demand with tenants. For example, in February, the company released its half year results and revealed an 8.9-year weighted average lease expiry with a 99.2% portfolio occupancy. This supported strong funds from operation (FFO) and allowed management to upgrade its guidance.

Macquarie is very positive on Centuria Industrial and currently has an outperform rating and $4.27 price target on its shares. The broker is also forecasting dividends per share of 17.3 cents in FY 2022 and 17.8 cents FY 2023. Based on the current Centuria Industrial share price of $3.86, this equates to yields of 4% and 4.2%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share that could be a top option for income investors is telco giant, Telstra. Especially given that its outlook is now the most positive it has been in over a decade.

In fact, in February, Telstra released its half year results and reported underlying earnings growth for the first time in years. This was driven by the success of its T22 strategy, which will soon be replaced with the T25 strategy.

The latter is aiming to deliver solid and sustainable earnings growth over the coming years, which bodes well for its dividend payments.

For now, the team at Morgans continues to forecast fully franked dividends per share of 16 cents in FY 2022 and FY 2023. Based on the current Telstra share price of $4.03, this will mean yields of approximately 4% for investors.

Complementing this is Morgans’ belief that Telstra’s shares have plenty of room to climb higher. Its analysts have an add rating and $4.56 price target on its shares.

The post Analysts name 2 ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

More reading

• 2 high-yielding ASX 200 dividend shares rated as buys by brokers
• Is the Telstra share price a buy for dividends and growth?
• Here’s how the Telstra share price performed last quarter
• Could April be a good month for the Telstra share price?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday, the S&P/ASX 200 Index (ASX: XJO) gave back the majority of its morning gains to finish the day a fraction higher. The benchmark index rose slightly to 7,485.2 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to tumble following a poor start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 28 points or 0.4% lower. On Wall Street, the Dow Jones fell 1.2%, the S&P 500 was down 1.7%, and the Nasdaq sank 2.2% higher.

Tech shares on watch

It could be a tough day for the tech sector after Wall Street’s Nasdaq index was sold off overnight. The tech focused index fell 2.2% amid concerns that a three-year high in the benchmark U.S. interest rate would start to slow the economy. This may not bode well for ASX 200 tech shares such as Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO) today. In other tech news, the Bitcoin price sank 8%.

Oil prices sink

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a poor day after oil prices sank overnight. According to Bloomberg, the WTI crude oil price is down 3.5% to US$94.78 a barrel and the Brent crude oil price has fallen 3.7% to US$98.94 a barrel. This was driven by fears that China’s COVID lockdowns could hit demand.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.65% to US$1,957.80 an ounce. Demand for safe haven assets increased due to market volatility.

Mineral Resources shares upgraded to buy rating

The Mineral Resources Limited (ASX: MIN) share price could be great value according to analysts at Goldman Sachs. This morning the broker upgraded the mining and mining services company’s shares to a buy rating and lifted its price target by 42% to $70.80. Goldman notes that its upgrade was underpinned by “6 major changes to our MIN volume/growth assumptions (in addition to upgrades to both our lithium and iron ore price forecasts).”

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

More reading

• How did ASX lithium shares perform today?
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Here are the best and worst performing ASX sectors of the quarter
• Why is the Macquarie share price underperforming today?

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 Altium and Xero. The Motley Fool Australia owns and has recommended Xero. 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 Whitehaven Coal Ltd (ASX: WHC) share price has rocketed 72% in the year to date, but could it surge even more?

The company’s shares finished flat on Monday at $4.49 apiece. For perspective, the S&P/ASX 200 Index (ASX: XJO) edged just 0.1% higher today.

Let’s check the outlook for Whitehaven Coal.

Price target lift

The Whitehaven share price may be on fire this year, but the team at Morgans believes it can go even higher.

Whitehaven operates coal mines in New South Wales and Queensland.

Analysts at Morgans have lifted their price target on the company’s shares to $5.20. This is 15.8% more than today’s closing price. The broker has pushed the company’s earnings estimates higher due to rising thermal coal price predictions. Morgans expects this could lead to big dividends in the short term.

Further, the broker believes the company’s share price could climb even higher to $6.53, according to a report in the Australian Financial Review. This is 45% more than today’s closing price. Morgans analyst Tom Sartor reportedly said:

We sense recent energy market dynamics has awakened a wider investor set to the importance of thermal coal.

The coal price has exploded 213.21% in a year, Trading Economics data reveals. Meanwhile, the European ban on Russian coal could tighten global coal markets further, creating a domino effect, oilprice.com reported.

Share price snapshot

The Whitehaven share price has soared 148% in the past year while it has gained nearly 14% in a month.

For perspective, the S&P/ASX 200 Index has returned 7% in the past year.

Whitehaven has a market capitalisation of $4.56 billion based on its current share price

The post Whitehaven share price could surge 45% if coal price remains strong: broker appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• 3 ASX 200 shares starting the week with new 52-week highs
• Why ASX coal shares are charging higher again today
• Black gold! Here’s how well ASX energy shares performed over the March quarter
• In a sea of red, these ASX 200 coal shares are floating above water. Here’s why

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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If you’re looking to add some quality shares to your investment portfolio, then you might want to look at the ASX 200 shares listed below.

Here’s why analysts are tipping these ASX 200 shares as ones to buy right now:

TechnologyOne Ltd (ASX: TNE)

The first ASX 200 share that could be in the buy zone right now is TechnologyOne. It is an enterprise software company servicing the government, financial services, health & community services, education, utilities and managed services markets.

Bell Potter is very positive on TechnologyOne. This is largely due to the company’s ongoing shift to becoming a SaaS-focused business. The broker expects this to underpin greater recurring revenues and stronger margins, which in turn could support a rerating of its shares. Bell Potter’s analysts currently have a buy rating and $14.00 price target on its shares.

The broker commented: “The key competitive advantage of the company is it has developed a fully integrated SaaS solution of its software and is now switching customers to this solution. The migration is now >50% complete and Technology One is starting to reap the benefits of greater recurring revenue and a higher margin. This combination will in our view drive double digit earnings growth for years to come and, as the migration of customers approaches 100%, we expect the multiple to re-rate to that of a pure SaaS company.”

Wesfarmers Ltd (ASX: WES)

Another ASX 200 share that could be a buy is Wesfarmers. It is the conglomerate behind retailers such as Bunnings, Kmart, Officeworks, and Target, as well as a collection of chemicals and industrial businesses such as Covalent Lithium and Coregas.

Morgans is a fan of the company and believes it is well-placed for growth over the long term. This is thanks to the strength of its portfolio and its highly-regarded management team. The broker has an add rating and $58.50 price target on its shares.

It said: “WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. While COVID-related staff shortages are a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the recent pullback in the share price as a good entry point for longer term investors.”

The post Here are 2 excellent ASX 200 shares analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• Can Wesfarmers shares deliver an attractive dividend yield AND 20% upside in 2022?
• The Wesfarmers share price tumbled 15% in the March quarter. What’s next?
• Brokers name 2 ASX 200 dividend shares to buy now
• Broker names 3 more of best ASX 200 shares to buy in April
• Coles share price falls amid reports Wesfarmers is selling down its stake: Time to buy?

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 owns and has recommended Wesfarmers 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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Many ASX lithium shares closed lower on Monday, but not every lithium company had a bad day.

The Lake Resources (ASX: LKE) share price surged 7% while the Core Lithium Ltd (ASX: CXO) share price finished flat. It was a better result than for Mineral Resources Limited (ASX: MIN) shares which closed 3.28% lower on Monday while Pilbara Minerals Ltd (ASX: PLS) slipped 3.75%.

Let’s take a look at what may have impacted ASX lithium shares today.

Lithium shares’ mixed performance

Other ASX lithium shares that lost ground today included Allkem Ltd (ASX: AKE), Liontown Resources Ltd (ASX: LTR), and Vulcan Energy Resources Ltd (ASX: VUL). Their share prices fell 0.23%, 2.6%, and 4.76% respectively.

Conversely, the Lake Resources share price surged as much as 16% to $2.16 this morning before retreating to $1.99. It came amid Lake’s news that it had signed a memorandum of understanding with automotive giant Ford Motor Company. Under the deal, Lake will supply Ford with 25,000 tonnes of lithium a year from Lake’s Kachi Project in Argentina.

Meanwhile, broker UBS shared its outlook on direct lithium extraction (DLE) technology following a call with International Battery Metals CEO Dr John Burba. In comments reported in the Australian Financial Review, UBS expressed caution on DLE technology:

Despite DLE showing promise for individual projects, we are wary how quickly supply can ramp up from a standing start.

Our current view on the lithium balance indicates the market will remain in deficit at least for the next few years with demand needing to be rationed in order for the market to balance.

Elon Musk weighs in

Also potentially weighing on lithium shares today were comments from Tesla founder Elon Musk on Saturday. In a tweet, Musk suggested Tesla may take up lithium mining. He said:

Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.

There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.

The lithium price has surged almost 79% since the start of 2022, Trading Economics states.

Meanwhile, Pilbara Minerals provided an update on its joint venture with Korean company Posco today. The companies will build a downstream lithium chemicals conversion plant in Korea.

Also today, Macquarie predicted the Mineral Resources share price could soar another 35%. The company placed an $83 price target on Mineral Resources shares with an outperform rating.

The post How did ASX lithium shares perform today? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why A2 Milk, Ionic Rare Earths, Pilbara Minerals, and Tyro shares are dropping
• Why IGO, Lake Resources, Regis Resources, and ResApp shares are charging higher
• Lake Resources share price shoots 16% higher on lithium deal with Ford

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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