Bitcoin (CRYPTO: BTC) is many things to many people.

Undoubtedly the world’s original crypto provides a means of storing or transferring money that’s outside the realm of traditional banks.

But crypto enthusiasts claims that it is akin to digital gold, a new virtual haven asset, have come under fire as the token has closely tracked risk assets in recent months.

Gold prices have largely trended higher as investors first worried about soaring inflation and rising interest rates, and then watched horrified as Russia built its forces around Ukraine and launched a full invasion.

Bitcoin, meanwhile, performed more in line with tech shares and other risk assets.

Haven asset or risk asset?

Gold has been used as a store of wealth for thousands of years, while Bitcoin only came into virtual life in the wake of the 2008 global financial crisis. So as it matures over the coming years or decades, its volatility and haven status may well change as well.

But looking at the past month’s performance, the token didn’t quite stack up to gold as investors scrambled for a safe place to park their wealth amid Russia’s military build-up on the Ukrainian border.

One month ago, Bitcoin was trading for US$44,142 (AU$61.138). On 24 February, the day Russia invaded, it had fallen to US$34,459, according to data from CoinMarketCap.

Now Bitcoin did briefly rally from there, partly on the back of news that cryptos were assisting the Ukrainian defence efforts, topping out at US$45,077.

Nonetheless it gave back those gains within days and is currently trading for US$39,330, down 11% over the month.

Gold, on the other hand, was trading for US$1,853 per troy ounce on 16 February. By 8 March it had soared to US$2,050 as bullion demand rocketed. While the yellow metal has since retraced to today’s US$1,917 per ounce, it still remains up 3.5% over the month.

What the experts are saying about Bitcoin

Those are the past month’s price moves for gold and Bitcoin.

So, what are the experts saying?

According to Nigel Green, CEO at deVere Group (quoted by The Australian):

The correlation between crypto and stock markets has been pretty solid over the last few months on both inflation news and geopolitical issues. But this might all change again. The digital gold fundamentals for Bitcoin remain unaltered – namely its limited supply.

If you’re not familiar, Bitcoin was designed with a cap of 21 million tokens. Though these can be split into satoshis, or a 100 millionth of a Bitcoin. To date roughly 19 million Bitcoin have been mined. And crypto analysts estimate some 3 million of those may have been lost already.

Anatoly Crachilov, CEO of Nickel Digital Asset Management also warns that cryptos have only very recently emerged.

According to Crachilov, “Investors should not view Bitcoin as a safe haven asset at the current early stage of its adoption curve. Bitcoin clearly behaves as a risk-on asset and will remain such until wider institutional adoption takes place.”

The post Why this expert says Bitcoin isn’t ‘a safe haven asset’, at least not yet appeared first on The Motley Fool Australia.

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• The Bitcoin price is rocketing 8% today. What’s going on?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. 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 mining and resources giant Rio Tinto Limited (ASX: RIO) are up from the open today and now trade at $107.19 apiece, 0.41% higher than yesterday’s close.

Rio shares dropped dramatically in early March, alongside the wider sector, amid global supply concerns on commodity markets.

Not only that, but investors don’t appear galvanised by the company’s latest acquisition of Turquoise Hill. The proposed acquisition will raise the company’s stake in the Oyu Tolgoi copper operation in Mongolia to 66%.

Is Rio a buy now? Here’s what analysts say

Analysts at Barrenjoey Markets are still neutral on the miner following the update, despite the broker noting Rio got a good discount on the deal.

“We value Oyu Tolgoi at US$15.6 billion at an LT copper price of US$3.75/lb, which implies RIO is paying US$3.10/lb LT,” it said.

“On face value, this seems a good deal for RIO shareholders, but we note there remains both technical development risk (will the block cave work?), financial risk (increased capex) and longer-term sovereign risk may still exist,” it added.

Meanwhile, analysts at Morgan Stanley were more constructive on the move. They laid out several points regarding the deal in a recent note.

The broker says the project has been somewhat de-risked following agreements with the Mongolian government. This contrasts with recent regulatory developments in Chile that have made acquiring copper assets more difficult. The broker believes the agreements with the Mongolian government are “tilting the odds in favour of an asset with which the company is already familiar”.

It also says the underground project is at an inflection point and will benefit from the reshuffle, whilst offering Rio a number of “culture/governance/sustainability objectives at Oyu Tolgoi”.

Morgan Stanley rates the mining giant as a buy and values Rio at $122.5 per share.

That’s well behind Macquarie’s valuation of $140 per share, however. Macquarie’s analysts also chimed in on the transaction and said that if Rio buys the rest of the operation “it would boost group copper production by 10% over the next five years and 17% on average for the next 10 years”.

Credit Suisse also has Rio set to outperform at $130 per share, joined by Goldman Sachs which is urging its clients to buy Rio at a $131.50 price target.

Jefferies, Bernstein, and Morgans are each neutral on the stock.

According to Bloomberg, 41% of analysts have Rio as a buy right now whereas 47% have it as a hold, and roughly 12% say sell.

Rio Tinto share price summary

In the last 12 months, the Rio Tinto share price has fallen more than 5% into the red. However, this year to date, it has regained strengths and is up 7% in the green.

But gains have weakened lately and it is now 10% in the red over the past month, as shown in the chart below.

The post Is the Rio Tinto (ASX:RIO) share price a buy following the miner’s latest acquisition news? appeared first on The Motley Fool Australia.

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• Why are ASX 200 mining shares having such a dire day?
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• Cash machines: 6 ASX 200 shares with the highest dividend yields right now

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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As we would all probably be aware of, the past few months haven’t been easy for most ASX shares. Since the start of the year, the S&P/ASX 200 Index (ASX: XJO) has lost more than 6% of its value on current pricing. And many famous ASX 200 blue-chip shares, ranging from Woolworths Group Ltd (ASX: WOW) to Telstra Corporation Ltd (ASX: TLS) have seen their share prices take a big hit. But this market malaise has also given ASX dividend shares a unique boost.

As any income seeker would know, when a company’s share price drops, its starting dividend yield rises proportionally. And that can make for an advantageous situation for the right companies. So here are 3 quality ASX dividend shares that have witnessed selloffs recently, but which have also seen a boost to their running yields. 

3 quality ASX dividend shares with boosted yields 

NIB Holdings Limited (ASX: NHF)

NIB is one of the largest private health insurers in the country. But NIB also has its fingers in some other pies, such as travel insurance. Its share price remains down by close to 10% year to date as it currently stands. Hence, NIB has certainly been suffering over 2022 thus far. 

But on today’s pricing, NIB’s dividend is now at a notable 3.8%. What’s more, this company’s dividends usually come fully franked. That means we can gross-up that dividend yield to a robust 5.43% when including the value of those franking credits. 

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman is actually a bit of a trend bucker. It has had a very comfortable year in 2022 thus far, rising close to 10%. However, this famous retailer and dividend share remains down more than 2% over the past 12 months, vastly underperforming the ASX 200. 

But this has only made the dividend increase that the company delivered last year even more potent. On current pricing, Harvey Norman shares offer a running yield of 6.34%. But it gets better, seeing as Harvey Norman’s dividends also typically come fully franked. That gives it a whopping grossed-up yield of 9.06% right now.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX 200 dividend share that has been through the wars in 2022 until this point. The construction materials company has now lost close to 13% this year alone. But that has given its dividend yield a boost, with the company now having a yield of 2.83% (or 4.04% grossed-up with full franking) as it currently stands. Brickwroks’ core business of producing bricks and other building materials is a cyclical one. However, the company seems to have done a good job of smoothing this out by using its excess property assets to boost its ongoing cash flows.

Its dividend might not seem like the highest yield. But Brickworks has one of the best dividend records on the ASX. It hasn’t cut its shareholder payments in over 40 years, giving it a well-deserved reputation as a reliable income share. 

The post 3 quality ASX dividend shares that have been sold off appeared first on The Motley Fool Australia.

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• 3 reasons why Soul Pattinson (ASX:SOL) is a strong ASX dividend share idea
• Here’s why the Brickworks (ASX:BKW) share price has loads of growth potential: expert
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Motley Fool contributor Sebastian Bowen owns Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks. The Motley Fool Australia owns and has recommended Brickworks, Harvey Norman Holdings Ltd., and Telstra Corporation Limited. The Motley Fool Australia has recommended NIB 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 Suncorp Group Ltd (ASX: SUN) share price is down 0.6% in early trade.

Suncorp shares closed yesterday at $11.03 and are trading for $10.96 at the time of writing.

Below we look at the S&P/ASX 200 Index (ASX: XJO) financial services and insurance giant’s latest figures on the east coast flood damage.

What flood claims were reported?

The Suncorp share price is edging lower after the company reported on the ongoing flood recovery in Queensland and New South Wales. The flooding came amid 15 consecutive days of torrential rains.

Suncorp reported that as of Monday it had received more than 34,000 claims related to the flood damage, with at least 80% involving homes. Approximately 60% of claims stem from Queensland with the other 40% in New South Wales.

The storms have resulted in four separate natural hazard events being recognised.

Suncorp estimates its net retained loss from the combined events is around $75 million. It reported that recoveries are being triggered under a combination of the company’s various reinsurance cover policies. Suncorp said it “remains well protected for the remainder of the year” under existing reinsurance cover.

The Suncorp share price could be under some additional pressure after it increased its estimate of natural hazard costs for the full year by $25 million to $1.1 billion.

Commenting on the flood damage and claims, Suncorp CEO Steve Johnston said, “It’s some of the most widespread devastation I have witnessed, and it is a tragedy for so many Australians. I am very proud of how our people have responded when our customers need us most.”

Johnston pointed to Suncorp’s use of aerial imagery, real-time data and on-the-ground insights to help it quickly focus support where it’s most needed:

Our ongoing focus on the digital experience resulted in around 70% of claims lodged online. This allowed us to quickly understand the scale of the event, deploy resources and support our customers faster than ever before. We have also sent more than 1.1 million digital messages to promote online lodgement and provide information on the claims process.

With the floods coming after a big prior run of claims, Suncorp is expanding its workforce.

“The floods came after a six-month period where we had already received more than 50,000 natural hazard claims, so we are currently recruiting more people to help us move as quickly as we can to support our customers,” Johnston said.

Suncorp share price snapshot

The Suncorp share price has begun to recover since its sharp February slide. So far in 2022 Suncorp shares remain down 4.5%. For some context, the ASX 200 is down 6.2% year to date.

The post Suncorp (ASX:SUN) share price dips amid rising flood claims appeared first on The Motley Fool Australia.

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

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

The stock market has been under pressure for months, but Tuesday brought some respite for hard-hit investors. The Nasdaq Composite (NASDAQINDEX: ^IXIC) rose nearly 2% as of 11 a.m. ET, and while it remains far below its all-time highs, some encouraging signs seemed to turn market sentiment back in a positive direction.

Airline stocks did particularly well, with major companies like American Airlines Group (NASDAQ: AAL) and United Airlines Holdings (NASDAQ: UAL) climbing 10% or more Tuesday morning. Airlines across the industry announced some favorable numbers and outlooks that made shareholders feel more comfortable about the prospects for travel in the near future. 

American faces a less bad future

American Airlines provided updated financial and operational guidance for the first quarter of 2022. Its figures presented a mixed picture that nevertheless gave investors more confidence.

On the positive side, some elements of American Airlines’ operations won’t be as bad as initially feared. The company now believes its first-quarter revenue will drop 17% from where it was three years ago, before the beginning of the COVID-19 pandemic. That leaves plenty of room before American has made a full recovery, but it’s better than the 20% to 22% drop that the airline had previously anticipated. 

However, some other aspects were more troubling. Rising crude oil prices have pushed the company’s expectations for first-quarter jet fuel costs up sharply to between $2.73 and $2.78 per gallon. That increase, along with lower-than-expected capacity, should push cost per available seat mile up 11% to 13%, higher than its previous estimates for an 8% to 10% rise. With no hedging arrangements in place currently, costs for the remainder of the year are subject to significant volatility.

United sings a similar song

United similarly released its financial outlook update, which also included some numbers for the full 2022  year. Overall, the airline tried to point to encouraging travel demand as COVID-19 case counts have fallen in the U.S., but its numbers weren’t as strong as American’s in relation to its past guidance.

On one hand, United does expect to see slightly better revenue performance in the first quarter than it previously thought. The airline sees operating revenue at the upper end of its previous guidance for a 20% to 25% drop in comparison to pre-pandemic levels in the first quarter of 2019. United also sees positive adjusted pre-tax income for the second quarter of 2022.

However, additional flight cancellations due to geopolitical conditions have United expecting capacity for the quarter to fall 19%, worse than the 16% to 18% guidance it previously gave. Costs will rise about 18% from three years ago, with fuel prices expected to average $2.99 per gallon in the first quarter and $3.50 per gallon for the second quarter. All of those factors will likely combine to send full-year capacity figures down high single-digit percentages in 2022 compared to 2019, in United’s view.

Flying higher?

Some other airline stocks saw similar patterns. JetBlue Airways (NASDAQ: JBLU) now sees revenue being down just 6% to 9% from 2019 levels, better than its previous 11% to 16% estimate. Delta Air Lines (NYSE: DAL) sees revenue recovering to down 22% from its pre-pandemic levels, improving from past guidance for a 24% to 28% reduction. And Southwest Airlines (NYSE: LUV) now sees revenue down just 8% to 10%, better than its initial 10% to 15% projection.

There’s still considerable uncertainty, especially given the rise of another omicron subvariant that could be more transmissible and cause more dramatic health effects. Yet investors appear to be tired of the pessimism surrounding the airline industry. At least for today, airline shareholders are looking at the potential bright side after years of tough times. 

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

The post These 2 hard-hit Nasdaq stocks flew 10% higher Tuesday appeared first on The Motley Fool Australia.

More reading

• Could Warren Buffett’s airline sales turn out to be right after all?

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Delta Air Lines, JetBlue Airways, and Southwest Airlines. 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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The Insurance Australia Group Ltd (ASX: IAG) share price has rebounded more than 6% over the past week despite the recent flooding events.

At the time of writing, the insurance giant’s shares are swapping hands for $4.545, up 0.11%.

What happened with IAG?

Last week, the company provided the ASX with an update regarding the severe weather impacting Australia’s east coast, sending IAG shares initially lower.

In its 9 March release, IAG advised it received more than 24,000 claims across southeast Queensland and New South Wales.

And while strong weather continued to hit the eastern seaboard, the number of claims was expected to rise.

Nonetheless, management called for calm saying that it has extensive reinsurance protection in place.

Current estimates of the net claims cost from the storm and flooding events are at approximately $74 million. This is lower than the $95 million forecast disclosed in early March, due to development on previous claims.

As such, IAG has utilised roughly $95 million of the $236 million of aggregate cover following the weather-related event.

From February 2022, the company increased its expectation for FY22 net natural perils claims costs to approximately $1.1 billion. Previously that number stood at an estimated $1.045 billion.

Pleasingly, IAG reaffirmed its reported margin guidance range of 10% to 12% for FY22. However, given the increase in estimated net natural perils claims costs, the lower half of the guidance range is more likely.

Is it time to sell?

The team at UBS maintained its sell rating on IAG shares, given the severe impact of the floods.

Its analysts have given the insurance giant’s shares a price target of $4.20, implying a downside of around 7%.

It appears the broker believes that IAG is currently overvalued.

UBS predicts the company’s earnings will fail to meet the market’s expectations for FY22 and FY23.

IAG share price summary

The IAG share price has gained around 6.5% in 2022, however, it’s a different story when looking over a longer timeframe.

Since January 2020, before the onset of the COVID-19 pandemic, the company’s shares are down more than 40%.

Based on valuation grounds, IAG presides a market capitalisation of roughly $11.2 billion, with approximately 2.47 billion shares on issue.

The post Is it time to sell IAG (ASX:IAG) shares following the recent flood events? appeared first on The Motley Fool Australia.

More reading

• Why is the IAG (ASX:IAG) share price edging higher today?
• Top brokers name 3 ASX shares to sell today
• ‘Widespread flooding’ update: IAG (ASX:IAG) share price backtracks
• ASX 200 (ASX:XJO) midday update: Origin’s $250m buyback, Nickel Mines smashed
• The IAG (ASX:IAG) share price managed to gain 8% in February. Here’s how

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 owns and has recommended Insurance Australia 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 Australian Vanadium Ltd (ASX: AVL) share price has been a very strong performer on Wednesday.

In morning trade, the vanadium developer’s shares are up a whopping 23% to 4.3 cents.

Why is the Australian Vanadium share price racing higher?

The catalyst for the rise in the Australian Vanadium share price on Wednesday was news that the company has been awarded a major government grant.

According to the release, the company has been awarded a $49 million grant under the Australian Government’s Modern Manufacturing Initiative (MMI) Collaboration Stream. The funds will be put towards the development of the Australian Vanadium Project near Meekatharra and Geraldton, which aims to create an Australian green fuelled vanadium industry.

The release notes that vanadium is on the critical metal list in many countries, including Australia, the United States, Japan and many European countries. The metal is used in critical aerospace and chemical applications, is a key component in high strength and specialty steel products, and has an important and growing use in long duration, safe energy storage applications.

This clearly fits the bill for the $1.3 billion MMI, which forms part of the government’s Resources Technology and Critical Minerals Processing Roadmap that aims to develop Australia as a regional resources technology and critical minerals processing hub within 10 years.

‘Delighted’

Australian Vanadium’s Managing Director, Vincent Algar, revealed that he was delighted with the news.

He commented: “AVL is delighted to have been awarded this grant from the Australian Government. Our project will create hundreds of jobs in Australia and help to build the critical vanadium industry both locally and internationally. We have developed an innovative and collaborative approach to building a fully integrated project, from mine through to processing and end use in the steel and battery markets.”

“Our collaborations are allowing us to build a project with unique social and environmental benefits. We look forward to working with our partners to bring the Australian Vanadium Project into production and further develop downstream opportunities for green steel and the vanadium redox flow battery market,” Algar concludes.

The post Here’s why the Australian Vanadium (ASX:AVL) share price is racing 23% higher appeared first on The Motley Fool Australia.

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The Arafura Resources Limited (ASX: ARU) share price has been racing higher on Wednesday morning.

At the time of writing, the rare earths developer’s shares are up a massive 23% to 24 cents.

Why is the Arafura Resources share price shooting higher?

Investors have been bidding the Arafura Resources share price higher today following the release of a positive announcement out of the rare earths developer.

According to the release, the company has been awarded grant funding of $30 million under the Federal Government’s Modern Manufacturing Initiative (MMI).

This will contribute to the construction of a $90.8 million rare earth separation plant at its Nolans Project, which is located 35 kilometres north of Alice Springs in Australia’s Northern Territory.

The release notes that the $1.3 billion MMI forms part of the Resources Technology and Critical Minerals Processing Roadmap that aims to develop Australia as a regional resources technology and critical minerals processing hub within 10 years.

The Nolans Project is Australia’s only shovel-ready NeodymiumPraseodymium (NdPr) project. The company highlights that it is a globally significant development with potential to supply around 5% of world NdPr oxide demand. It also has an ore to oxide business model that will see downstream processing established locally and enable Australia to play a leading role in the diversification of critical raw materials.

Arafura Resources’ Managing Director, Gavin Lockyer, appeared to be very pleased with the news.

He said: “This grant is an exciting milestone for Arafura, recognising the strategic significance of the Nolans Project and its place in the future of critical minerals processing in Australia.”

“Rare earths are critical to the manufacture of electric vehicles and wind turbines, with demand growth forecast to be exponential in coming decades. Australia has a window of opportunity to invest in strategically important rare earths projects such as Nolans and maximise the local jobs and investment benefits of the clean energy revolution,” he added.

The post Cash to splash: Why the Arafura Resources (ASX:ARU) share price is leaping 23% today appeared first on The Motley Fool Australia.

More reading

• Why is the Arafura Resources (ASX:ARU) share price leaping 8% 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. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Elon Musk’s social media followers have seen him comment on how to deal with an inflationary environment recently, and now the Tesla (NASDAQ: TSLA) CEO is showing people how his company is addressing rising commodity prices. Today, investors took the news of rising Tesla vehicle prices as a good sign for the business, pushing Tesla shares up 2.9% as of 11:55 a.m. ET. 

So what

Tesla has announced it is raising prices on its electric vehicles for the second time in a week, as reported by CNBC. Last week, Tesla said it raised prices on certain models in the U.S. by $1,000, and some Model 3 and Model Y vehicles made in China by more than $1,500. Now, it seems rising commodity prices and other inflationary pressures are bringing another price increase. 

Now what

While the company didn’t spell out the reasons behind the most recent price plan, Musk said on social media earlier this week that Tesla and his private space company, SpaceX, are both seeing “significant recent inflation pressure in raw materials & logistics.” Commodities including nickel, used in EV batteries, have been on the rise recently.

Today, Tesla increased prices of all U.S. vehicle models, and some Model 3 and Model Y versions in China. Tesla’s China website showed a new 5% increase on the starting price for the Model 3 Performance to the equivalent of about $57,650, according to the report. Prices for two of the company’s Model Y SUV options also increased by 5%. 

The investor take on the price increase seems to be that the company remains supply constrained. Demand for its products is still strong, and increasing vehicle prices will allow it to maintain its margins, even with production costs increasing. 

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

The post Why Tesla stock jumped today appeared first on The Motley Fool Australia.

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Howard 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. 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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If you’re wanting exposure to the banking sector, then Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares could be one way to do it.

That’s the view of the team at Goldman Sachs, which this morning spoke positively about the banking giant.

What did Goldman say about the ANZ share price?

According to a note out of the investment bank, its analysts have retained their buy rating and $30.84 price target on the bank’s shares.

Based on the current ANZ share price of $26.69, this implies potential upside of 15.5% for investors over the next 12 months.

And with Goldman expecting a 12-month fully franked dividend yield in the region of 5.5%, the total potential return on offer stretches to a sizeable 21%.

What did the broker say?

Goldman has been looking over the banking sector and believes that the market’s view on major bank net interest margins (NIMs) is too bearish given its view on rates.

It notes that the market and its own Economics Team are forecasting the cash rate to rise to just above 2.5% by the end of 2024. It believes this will be good news for retail banks as the rates earned on assets will generally follow the cash rate higher, while the cost of liabilities should rise more slowly.

Based on this, it feels the market’s view on bank NIMs is too conservative.

It explained: “Using CBA’s 1H22 NIM sensitivity disclosures as a guide, we estimate the current market pricing for the RBA cash rate implies about a nearly 30 bp tailwind to major bank net interest margins out to Dec-24. Adjusting this for the c. 40 bp variable rate mortgage front- vs. back-book spread, and GSe/Visible Alpha (VA) consensus NIM forecasts, it implies GS/VA is forecasting 24/26 bp of NIM impact from incremental price competition (and/or liquid impacts etc) over this period.”

“Our analysis of both mortgage book and deposit competition suggests that this rate of forecast competition, while possible, would appear conservative, leaving potential upside risk to NIMs. This is particularly the case given our view that, as rates rise, major banks will increasingly become the marginal competitors, as their rate inert deposit bases become more valuable,” Goldman added.

This could bode well for ANZ and its share price in the coming years.

The post Top broker says the ANZ share price is excellent value for investors 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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