With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

City Chic Collective Ltd (ASX: CCX)

According to a note out of Citi, its analysts have retained their buy rating and $4.00 price target on this plus sized retailer’s shares. This follows the recent release of the results of one of its main rivals in the United States, Torrid. The broker believes this update points to City Chic’s US operations outperforming its rival. Though, it does note that Torrid will be increasing its marketing spend, which could increase competition. Nevertheless, it remains positive on the company and continues to forecast solid profit growth in the coming years. The City Chic share price is trading at $3.41 today.

South32 Ltd (ASX: S32)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $7.00 price target on this mining giant’s shares. Macquarie highlights that South32 is generating significant free cash flow. The broker expects this to continue and is forecasting huge free cash flow yields in the near term, which it expects to underpin big returns to shareholders. The South32 share price is fetching $4.94 on Monday.

Westpac Banking Corp (ASX: WBC)

Another note out of Citi reveals that its analysts have retained their buy rating and $27.00 price target on this banking giant’s shares. Citi has been looking at the banking sector, which has been booming despite global peers tumbling this year. And while its suspects that the recent sector outperformance may be hard to sustain given how revenue growth is difficult to find right now, it still sees a lot of value in the Westpac share price. In fact, Australia’s oldest bank remains its top pick among the majors. The Westpac share price is trading at $23.58 today.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• 25% upside and healthy yield: Why this broker is bullish on the Westpac share price
• 2 high yield ASX dividend shares brokers rate as buys
• Fundie tells why two-thirds of all dividends come from just 7 ASX shares. Guess which ones?
• Analysts name the best ASX 200 dividend shares to buy now
• What are the real benefits of ESG investing? Here’s what Westpac says

Motley Fool contributor James Mickleboro owns 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 Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price is down 0.4% as we head into lunchtime.

That puts shares in the ASX 200 telco giant down 6.8% so far in 2022, compared to a 3.5% year-to-date loss posted by the S&P/ASX 200 Index (ASX: XJO).

At the current Telstra share price, the company pays a trailing dividend yield of 2.8%, fully franked.

So, is Telstra a good buy in 2022?

What the brokers are saying

Telstra has been in focus as the company has been monetising its assets, cutting costs and working to improve customer satisfaction and retention. As part of its next steps under the T25 strategy, Telstra will also expand its 5G coverage.

Goldman Sachs said that, “Combined with its greater infrastructure assets, Telstra is our preferred integrated telecom.”

Goldman has a neutral rating on the telco, with a 12-month price target of $4.30. That’s 9% higher than the current Telstra share price.

Goldman noted:

The most significant development was the announced mobile networking sharing agreement between Telstra and TPG Telecom Ltd (ASX: TPG), whereby TPG is paying for access to a significant portion of TLS regional coverage. This is driving incremental wholesale earnings for TLS, improving the quality/speed of its metro and regional networks.

Goldman is forecasting 7% underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) growth of 7% for FY21-FY23.

Morgans is even more positive on Telstra.

The broker believes ASX 200 investors are undervaluing Telstra based on the sum of its parts. Morgans has an add rating on Telstra shares with a price target of $4.55, 15% higher than the current price.

Morgans forecasts the telco will pay dividends of 16 cents per share, fully franked, in FY22 and FY23.

Telstra share price snapshot

Though it’s slipped in 2022, the Telstra share price remains up an impressive 21.1% over the past 12 months. By comparison, the ASX 200 is up 8.3% during that same time.

The post Is the Telstra share price a buying opportunity after sliding 7% in 2022? appeared first on The Motley Fool Australia.

More reading

• 2 high-yield ASX dividend shares that brokers love
• 2 ASX 200 dividend shares analysts are urging income investors to buy
• These ASX 200 shares are topping the volume charts on Friday
• These 3 ASX 200 shares are topping the volume charts this Thursday
• ‘Significant step’: What’s boosting the Telstra share price this week?

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 Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Today is a big day for the S&P/ASX 200 Index (ASX: XJO), the All Ordinaries Index (ASX: XAO), and any other ASX-based index for that matter. That’s because this Monday is the day that Australian share market indexes are rebalanced.

Why is this a big deal? Well, the ASXC 200, the All Ords, and any other index covering ASX shares are ever-changing. Companies grow and shrink and this needs to be taken into account by the indexes that cover them. See, most indexes, including the ASX 200 and the All Ords, are decided using market capitalisation, or company size. Since a company’s market cap is determined by the share price, this is constantly changing.

The ASX’s 43rd-largest company, for example, might be one ASX share one day and another the next. To compensate for the fluctuations of the market, the company that runs most indexes here in Australia – S&P Global – takes stock of the current standing of the market every 3 months, and rebalances its indexes accordingly.

So, today, the effects of the most recent rebalancing go into effect. These are always rather important changes. The myriad of index funds that track the ASX 200, or other indexes, have to mirror whatever changes are made to the indexes they track.

Thus, a rebalancing always sees a large amount of capital shuffled around on the ASX in the weeks leading up to it. Also, some fund managers have mandates which dictate they can only invest in, say, All Ords shares. This has consequences for the markets and many investors too.

All Ords and ASX 200 rebalancing comes into effect

So what changes have just gone into effect today?

Well, it varies. For example, the S&P/ASX 50 Index only has one change. It has swapped out Aurizon Holdings Ltd (ASX: AZJ) for BlueScope Steel Limited (ASX: BSL).

But the All Ordinaries has dozens and dozens of holdings removed today. These have been replaced with dozens and dozens of new shares.

Let’s just quickly run through the changes to the ASX 200 though. So the ASX 200 Index had had 4 ASX shares removed today, replaced with 4 new ones. The companies departing the ASX 200 are Mesoblast Limited (ASX: MSB), Skycity Entertainment Group Limited (ASX: SKC), Spark New Zealand Ltd (ASX: SPK), and Unibail-Rodamco-Westfield (ASX: URW).

In their place, the ASX 200 is welcoming AVZ Minerals Ltd (ASX: AVZ), City Chic Collective Ltd (ASX: CCX), De Grey Mining Limited (ASX: DEG), and Home Consortium Ltd (ASX: HMC).

So that’s what the ‘new’ ASX 200 Index looks like. In reality, these shares are going to be at the bottom of the ASX 200. Thus, they are not going to have meaningful weightings in the new index (likely under 0.05%). But still, these changes do have a meaningful impact on how investing is done on the ASX for the reasons mentioned above.

At the time of writing, the ASX 200 is up by 0.22% so far today, and is sitting at just over 7,310 points.

The post The ASX quarterly rebalance takes effect today. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Hamish Douglass resigns from Magellan, Block jumps
• 2 small-cap ASX shares to rule them all this year: experts
• 5 things to watch on the ASX 200 on Monday
• These were the worst performers on the ASX 200 last week
• Is the bull market over?

Motley Fool contributor Sebastian Bowen 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 Aurizon Holdings 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 Carnarvon Energy Ltd (ASX: CVN) share price won’t be going anywhere on Monday. This comes as the company requested that its shares be placed in a trading halt.

At the time of writing, the energy producer’s shares are frozen at 32 cents apiece.

Why is the Carnarvon share price halted?

Prior to the market opening, the company requested the Carnarvon share price be halted while it prepares an announcement.

According to the release, the company is planning to make an announcement in relation to the Pavo-1 well result.

Carnarvon has requested that the trading halt remains in place until Wednesday 23 March or following the release of the announcement, whichever comes first.

More on Pavo-1 well

Located around 160 kilometres north-east of Port Hedland in Western Australia, the offshore platform made news in recent times.

After spudding in early February, operations were halted due to cyclone activity in the region.

At the time, the Pavo-1 well drilled around 3,282 metres of measured depth (MD) before suspending works.

However, just over a week ago, the rig returned to full-manning levels with drilling and logging operations set to re-commence.

The Pavo-1 well is targeting a resource of 82 million barrels of liquid hydrocarbons in the Caley Formation sands.

Santos Ltd (ASX: STO) holds a 70% stake in Pavo-1, while Carnarvon retains the remaining 30%.

Carnarvon share price summary

Over the past 12 months, the Carnarvon share price has moved in circles ranging from 21.3 cents to 36 cents.

Particularly, since the start of the year, its shares have recorded wild swings of more than 50% in either direction.

The company’s shares are down 5% in 2022.

Based on valuation grounds, Carnarvon has a market capitalisation of roughly $500.92 million, with approximately 1.57 billion shares outstanding.

The post Here’s why the Carnarvon (ASX:CVN) share price is halted today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Carnarvon (ASX:CVN) share price is popping 8% today

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 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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The Ardea Resources Ltd (ASX: ARL) share price is booming amid a promising update on a nickel project.

Ardea Resources shares have surged 40% in the past two trading days and are currently swapping hands at $1.28 each. At the time of writing, the company’s shares are up more than 25% on the day.

So what is boosting the Ardea Resources share price lately?

Major project status

The Ardea Resources share price has been booming since Friday when the company informed the market it had received major project status for the Kalgoorlie Nickel project in Western Australia.

The company describes the venture as Australia’s largest nickel-cobalt critical minerals project.

Commenting on the news, managing director Andrew Penkenthman said:

With the award of Major Project Status, Ardea is well placed to provide a significant sustainable and ethical supply chain for the lithium-ion battery sector, from the best resources operating jurisdiction in the world, being Western Australia.

Today, Ardea further updated the market on federal government recognition of the project. The company provided a link to a media release from Prime Minister Scott Morrison.

Morrison said the major project status declaration would bring the operation to life sooner. He said:

With 1,500 jobs each year for the three-year construction and 500 jobs a year for the 25-year operation, this project is a major project and will get every support possible from my Government.

The release also quoted Energy Minister Angus Taylor, Resources Minister Keith Pitt and federal member for O’Connor Rick Wilson MP. Wilson added:

Providing support to this project will help boost Australia’s position in the global critical minerals processing industry and add to regional WA’s reputation as a major contributor to the nation’s booming resource sector.

Ardea said the major project status consolidates the company’s interactions with all tiers of government in Australia.

Ardea Resources share price snapshot

The Ardea Resources share price has surged 174% in the past 12 months, while it is up 187% this year to date.

In the past month, Ardea Resources shares have soared 63%, thanks largely to a 58% rise in just the past week.

Ardea Resources has a market capitalisation of about $223 million based on the current share price.

The post Nickel backing: Here’s why this ASX mining share has surged 40% in 2 days appeared first on The Motley Fool Australia.

More reading

• Broker tips A2 Milk (ASX:A2M) share price to rise 30% from here
• What’s impacting the Santos (ASX:STO) share price on Monday?
• ‘Exciting’ results: Here’s why the Liontown (ASX:LTR) share price is climbing 6% today
• ASX 200 (ASX:XJO) midday update: Hamish Douglass resigns from Magellan, Block jumps
• BHP shareholders set for $30 billion windfall: Macquarie

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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The A2 Milk Company Ltd (ASX: A2M) share price is pushing higher on Monday.

In early afternoon trade, the struggling infant formula company’s shares are up 1.5% to $5.47.

Why is the A2 Milk share price pushing higher?

Today’s gain by the A2 Milk share price may have been driven by a broker note out of Bell Potter this morning.

According to the note, the broker has retained its buy rating, albeit with a trimmed price target of $7.15.

Based on the current A2 Milk share price, this implies potential upside of 30% for investors over the next 12 months.

What did the broker say?

Bell Potter has been looking at monthly activity points and appears pleased with what it saw.

The broker highlights that Australia-China exports, which is a daigou proxy, were up 33% year on year in January. It was a similar story for Christchurch exports to China, which rose 20% year on year in January. Bell Potter notes that “historically there has been a high correlation between the value of exports to China ex-Christchurch (CHC) and A2M reported PRC revenues.”

One slight negative, though, is that the broker has raised its costs of goods sold assumptions in FY 2023 to reflect higher ingredient costs and the likelihood that there will be no price increases to offset this. This results in a 4% downgrade to its earnings for FY 2023 and FY 2024, which led to the 7.1% price target reduction.

Nevertheless, the broker doesn’t believe this will stop the company doubling its earnings per share by FY 2026. Hence why it remains very positive on the A2 Milk share price.

It commented: “There is no change to our Buy rating. We see the scope for EPS to double by FY26e, if A2M can execute on the China offline expansion strategy, while regaining 50% of the lost sales (from FY20-21) in English label IMF. Exiting the loss making US assets or navigating a turnaround at the MVM asset would likely accelerate this turnaround. We do not see the current share price as reflecting this potential.”

The post Broker tips A2 Milk (ASX:A2M) share price to rise 30% from here appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• The A2 Milk (ASX:A2M) share price has spilled another 12% in 3 weeks. Is now the time to pounce?
• Why this broker sees 40% upside for the A2 Milk (ASX:A2M) share price
• Hot or cold? Here’s how the A2 Milk (ASX:A2M) share price performed in February
• A2 Milk (ASX:A2M) share price slips amid ‘long-term implications’ of flooding

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 A2 Milk. 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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Shares in Santos Ltd (ASX: STO) are rangebound on Monday and now trade less than 1% in the red at $7.51 apiece.

There’s a lot feeding into the Santos share price this week, not in the least buoyant commodity markets that are staging multi-year highs.

Brent crude futures have surfaced at US$110/Bbl on Monday and are now up almost 14% for the month, despite a recent cooling off.

Price raced to near record highs in February amid tensions in Europe, as the sensitivity of a supply shock was felt immediately in the markets. Beforehand, prices were already in a strong rally that started back in December.

Jitters then appeared to settle somewhat as prices reverted back to longer-term averages, before jumping 12% again over the weekend. Santos is shown against the Brent Crude April 2022 futures contract below.

What’s up with the Santos share price today?

Santos also released an important update before the open of trade today regarding the Tanumbirini 2H (T2H) and 3H (T3H) horizontal gas wells in the Beetaloo Basin.

The hydrocarbons giant advised of an approximately 17% increase to previously reported gas flow rates from T2H and T3H.

Santos is a joint partner with Tamboran Resources Limited (ASX: TBN) on the project, found on exploration permit (EP) 161 in the Beetaloo Basin.

Santos, the project’s operator on a 75% working interest, had spudded the well back in May 2021 and recalibrated historic flow data as recently as February 2022.

Flow data now indicates that average gas flow rates from T2H and T3H were “2 million standard cubic feet per day (“mmscfd”) (normalised at 3 mmscfd over 1,000-metres) and 1.7 mmscfd (normalised at 2.9 mmscfd over 1,000-metres) respectively.”

“Further market updates on T2H and T3H are anticipated following the installation of tubing during the second quarter of calendar year 2022,” the company added.

Tamboran CEO, Joel Riddle said the updated data gives more confidence in the project’s viability and profitability.

“Flow testing at this rate from the fracture stimulation program gives us increased confidence in the productivity,” he said.

Santos share price snapshot

In the last 12 months, the Santos share price has gained 5% and has gained 19% this year to date, ahead of most peers.

During the past month, shares have climbed another 7% before levelling off during the past week of trading.

The post What’s impacting the Santos (ASX:STO) share price on Monday? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Oil price could hit US$200 per barrel this year: expert
• Why ASX 200 energy shares are trouncing the index today
• ASX 200 (ASX:XJO) midday update: Energy shares rise on oil price jump, Megaport sinks
• Why the wild ride looks set to continue in 2022 for Santos (ASX:STO) shares

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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The Liontown Resources Ltd (ASX: LTR) share price is taking off today following the company released its latest drilling results.

At the time of writing, the lithium developer’s shares are trading 6.02% higher at $1.76.

What did Liontown update the ASX with?

The Liontown share price is lifting today after the company confirmed “growth potential” at Buldania Lithium Project, Western Australia.

In its release, Liontown advised that it had received all assays from the recently completed drilling campaign.

This comprises 42 reverse circulation (RC) drill holes for a total of 6,338 metres, designed to test multiple targets. The results included shallow extensions to the Anna deposit as well as regional geochemical/geological targets within the Northwest prospect.

Key drilling highlights include:

Anna deposit:

• 3 metres at 1.1% Li2O from 36 metres (BDRC0189)
• 21 metres at 0.5% Li2O from 8 metres (BDRC0190)
• 17 metres at 1.1% Li2O from 18 metres (BDRC0193)
• 15 metres at 1.0% Li2O from 23 metres (BDRC0197)
• 4 metres at 1.6% Li2O from 45 metres (BDRC0197).

Liontown noted the shallow lithium mineralisation defined east and outside of the current Anna Mineral Resource Estimate. The new zone extends over a strike length of around 150 metres and 300 metres down-dip.

A review of these targets is in progress prior to committing to further drill testing.

Northwest prospect:

• 5 metres at 1.3% Li2O from 32 metres (BDRC0203)
• 10 metres at 1.1% Li2O from 48 metres (BDRC0203)
• 6 metres at 0.8% Li2O from 12 metres (BDRC0204)
• 3 metres at 1.1% Li2O from 189 metres (BDRC0205)
• 6 metres at 1.0% Li2O from 70 metres (BDRC0215).

The company stated that multiple spodumene-bearing pegmatites have now been intersected over a strike length of 800 metres with mineralisation open in all directions.

The company plans to conduct further drilling to determine the size and continuity of the mineralised pegmatites.

Management commentary

Liontown managing director and CEO Tony Ottaviano commented:

The recent drilling results demonstrates the potential for Liontown to continue to grow its 100%-owned, Western Australian-based lithium resource base, which includes the world-class Kathleen Valley Lithium Project.

The expanding Northwest Prospect presents an exciting opportunity for further follow up exploration and, along with the potential for incremental extension of the Anna Deposit, ensures that Buldania continues to emerge as an attractive asset.

Our in-house lithium exploration capability and expertise continues to deliver exploration success across our portfolio, building on the outstanding track record at Kathleen Valley.

Liontown share price snapshot

It has been an outstanding 12 months for the Liontown share price, climbing more than 330% for the period.

The company’s shares reached an all-time high of $1.995 in November, before settling back since.

Based on today’s price, Liontown commands a market capitalisation of roughly $3.78 billion, with approximately 2.19 billion shares on issue.

The post ‘Exciting’ results: Here’s why the Liontown (ASX:LTR) share price is climbing 6% today appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Why are ASX 200 mining shares having such a dire day?
• 3 ASX lithium stocks that brokers rate as buys
• What’s the difference between lithium hydroxide and spodumene and which ASX shares are involved with each one?
• How did ASX lithium shares perform in February?

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 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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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) is off its intraday highs but remains on course to record a positive gain. The benchmark index is currently up 0.4% to 7,325.8 points

Here’s what is happening on the ASX 200 today:

Hamish Douglass resigns as Magellan director

The Magellan Financial Group Ltd (ASX: MFG) share price is trading lower today. This follows news that the embattled fund manager’s founder, Hamish Douglass, has resigned as a director with immediate effect. Douglass took indefinite leave from the role as Chairman last month following a period of intense pressure and focus on both his professional and personal life.

Block share price reaches ASX high

The tech sector has been performing positively on Monday with the Block Inc (ASX: SQ2) share price the highlight. Its shares jumped 11% in morning trade to reach their highest level since listing on the Australian share market. This latest gain means the Block share price is now up over 60% in less than a month. The S&P ASX All Technology index is up 1.9% at the time of writing.

Qube announces $400m share buyback

The Qube Holdings Ltd (ASX: QUB) share price is rising today after the logistics facilities company announced a $400 million off market share buyback. Qube decided to buy back shares following a strong performance during the first half and the completion of the Moorebank Logistics Park transaction.

Best and worst ASX 200 performers

The best performer on the ASX 200 index on Monday has been the Block share price with a gain of almost 9%. This follows a strong rise by its US listed shares on Friday night. The worst performer has been the Atlas Arteria Group (ASX: ALX) share price with a 4% decline on no news. The toll road operator’s shares trade ex-dividend tomorrow but some shareholders aren’t sticking around to qualify for its final dividend.

The post ASX 200 (ASX:XJO) midday update: Hamish Douglass resigns from Magellan, Block jumps appeared first on The Motley Fool Australia.

More reading

• Block (ASX:SQ2) share price jumps 11% to new ASX high
• Qube (ASX:QUB) share price rises amid $400m off-market buyback
• 5 things to watch on the ASX 200 on Monday
• These were the worst performers on the ASX 200 last week
• Is the bull market over?

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 Block, Inc. The Motley Fool Australia owns and has recommended Block, Inc. 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 BHP Group Ltd (ASX: BHP) share price spiked just after the open on Monday and is trading at $46.62, up 0.8% at the time of writing.

ASX mining shares have surged these past 6 months. BHP has sprung off a low of $35.36 a share in early November and now trades more than $11 higher. It has rallied as much as 42% in that time.

BHP’s key markets have all staged multi-year long rallies and are now surpassing record highs as global tensions mount and inflationary pressures rise.

Why is BHP staging a rally?

Futures on oil, gold, coal, uranium, and copper have surged to new highs, meaning producers have likely locked in forward earnings on these as well.

Most markets have started to cool, however, this hasn’t slowed the pace of earnings upgrades for companies like BHP for the upcoming 12 months.

The company’s result could be an earnings waterfall that sees shareholders on the receiving end of lucrative dividends, analysts familiar to BHP are saying.

In a recent note, JP Morgan estimates dividends of $3.01 per share in FY22 and $2.26 per share in FY23.

Meanwhile, analysts at Barclays investment bank highlighted the miner’s free cash flow (FCF) was a huge driver of management declaring the H1 dividend of $1.50 per share. This was 35% ahead of Barclays’ forecast and 21% more than consensus.

“The key driver was a much stronger FCF performance on surprisingly low cash tax and capex,” Barclays said in a note from February.

“The H1 dividend payment equates to $7.6 billion (8.7% annualised yield) and compares to H1 FCF of $7.2 billion post-minority dividends.”

It has a hold rating on the stock and values BHP at $47.38, just behind the consensus of $47.41, according to Bloomberg data.

Meanwhile, analysts at Macquarie reckon shareholders are in for a “US$32 billion windfall by September” from the proceeds of its petroleum demerger. Macquarie says “the implied value…has increased from $20 billion at the time of the announcement to $28 billion”.

It rates BHP a buy at a $61 per share price target. This is behind Argus Media which values BHP at $84.75 per share with a buy rating.

The skew of ratings is weighted towards a hold, according to Bloomberg data. It has 50% of analysts neutral on BHP while one-third say to buy BHP right now.

Funnily enough, that’s well down from the 75% saying to buy BHP around 1 year ago. It’s worth noting the spread between the average price target and the BHP share price has narrowed to 0.89. This indicates the share price is trading close to the consensus valuation.

BHP share price snapshot

In the last 12 months, the BHP share price has held gains and is up around 3.7% in that time.

Year to date, it has surged more than 12% (as shown below) after dropping some of its gains during the past week of trading.

It is also now 3% in the red following the consolidation.

The post BHP shareholders set for $30 billion windfall: Macquarie appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Brokers name 3 ASX shares to buy today
• Fundie tells why two-thirds of all dividends come from just 7 ASX shares. Guess which ones?
• BHP share price rebounds after 9-day slide. Here’s why
• This ASX 200 share has the honour of being the biggest dividend payer in the ENTIRE world

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