This year has been dramatic for AGL Energy Limited (ASX: AGL) and its share price, but is the future looking brighter for the embattled energy provider?

James Gerrish, Shaw and Partners senior investment advisor and author of Market Matters, thinks the worst might be over for AGL shareholders.

As of yesterday’s close, the AGL share price is $5.88. That’s 51.49% lower than it was at the start of 2021.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 10.4% this year.

Let’s take a look at what this expert tips for the future of the soon-to-be-demerged company.

Will 2022 be the AGL share price’s year?

The AGL share price might not dip much lower than its current share price. In fact, it could be readying itself for future gains, according to Gerrish.

He recently told Livewire that he believes the energy provider’s stock will have a roaring 2022 compared to its performance in 2021. Gerrish commented on the AGL share price’s tumble:

A large portion of that drop is correct, but it now becomes an asset at play…

[At around its current share price] it’s cheaper than its retail business. So that for me is a buy and will do better in ’22 than it did in ’21.

That retail business is expected to be split from the company’s generation business if it undergoes its planned demerger.

AGL’s power generation business will be handed to a new entity, Accel Energy. Meanwhile, its retail business will become AGL Australia.

The company’s chair, Peter Botten, told its annual general meeting that AGL share price’s “disappointing” recent performance was mainly due to low wholesale energy prices and growing demand for decarbonisation.

According to the Clean Energy Regulator, AGL was Australia’s largest carbon emitter over the 2019-2020 year.  It put out 42.2 million tonnes of scope 1 carbon emissions in that time.

All eyes will be on the AGL share price next year, and not just because of Gerrish’s prediction. Plenty will also be eager to learn if the company’s demerger will come to fruition in the final quarter of financial year 2022.

The post Could the worst be over for the AGL (ASX:AGL) share price? appeared first on The Motley Fool Australia.

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• Experts tip 2 beaten up ASX shares for gains in 2022
• Why did the AGL share price outperform the ASX 200 today?
• AGL (ASX:AGL) share price climbs amid Fortescue Hydrogen partnership news
• Own AGL (ASX:AGL) shares? Report finds 73 environmental risks at power plant
• What happened to the AGL (ASX:AGL) share price in November?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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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It’s been a brutal time for buy now, pay later ASX shares – so it must be some relief for Zip Co Ltd (ASX: Z1P) to come first in a league table.

The Zip share price has dipped more than 11% this calendar year, but it’s a shocking 64% plunge since the February peak.

However, when budget trading software Superhero on Monday revealed the most-traded stocks on its platform for the year, Zip won the honour of the stock with the most user transactions:

Top 5 most-traded ASX shares on Superhero

(between 1 January and 30 November 2021 inclusive)

1. Zip Co Ltd
2. Flight Centre Travel Group Ltd (ASX: FLT)
3. Fortescue Metals Group Limited (ASX: FMG)
4. Qantas Airways Limited (ASX: QAN)
5. Afterpay Ltd (ASX: APT)

Not a great time for buy now, pay later

Ever since Afterpay’s blockbuster takeover deal to Block Inc (NYSE: SQ) was revealed in August, the BNPL shares have suffered.

Perhaps the market thinks the sector is maturing? Investors could also be concerned about credit regulation coming in to stifle growth, or that other larger players will simply swallow all the little fish.

Despite the popularity on Superhero, sceptics are lining up to predict Zip shares will be diving even further.

On Monday, Zip stocks were reported to be one of the most shorted on the ASX at the moment.

The Motley Fool’s James Mickleboro reported that 9% of Zip shares have been lent out for shorting, according to the Australian Securities and Investments Commission.

“Intense competition, concerns about rising industry fraud, and increasing costs could be weighing on sentiment.”

The possibility of higher interest rates, combined with thirst for expansion, is also a worry, according to payments consultant Grant Halverson.

“The moment their bad debts go up their cost of funding will go up 3 or 4 times faster than the actual rate rises and the rating agencies will downgrade them, and then they’ll get to junk status,” he said in the Australian Financial Review.

“Because they’re all frantically going at the US, they’re racing to the bottom. And that means probably more bad debts because they’ve gone after customers who haven’t got credit ratings.”

The post Zip (ASX:Z1P) shares just topped these end-of-year rankings appeared first on The Motley Fool Australia.

More reading

• This broker is bearish on the Fortescue (ASX:FMG) share price
• Afterpay (ASX:APT) shareholders vote in favour of Square takeover
• 5 things to watch on the ASX 200 on Tuesday
• Love ’em or hate ’em, Flight Centre (ASX:FLT) shares were the second most traded on Superhero this year. Here’s why
• What has experts worried about ASX BNPL shares in 2022?

Motley Fool contributor Tony Yoo owns Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AFTERPAY T FPO, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel 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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It is a big day for the Afterpay Ltd (ASX: APT) share price.

This morning the buy now pay later provider’s shareholders were given the opportunity to vote on the takeover proposal by Square.

Background

In August, the two parties agreed an all-scrip deal that would see Afterpay shareholders receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay share they hold.

At the time, the Square share price was trading at US$247.26, which implied a transaction price of approximately $126.21 per Afterpay share. It also valued the deal at approximately US$29 billion or A$39 billion.

While this worked out to be an attractive 30.6% premium to the Afterpay share price at the time of $96.66, the Square share price has tumbled materially since then and was fetching $175.39 at Monday’s close.

Based on this and current exchange rates, this means the takeover offer now equates to just $92.67, which is a 4.1% discount to the Afterpay share price prior to the receipt of the offer.

Ahead of the vote, the company released its rationale for recommending the offer.

It commented: “The Board considers that while the future growth prospects of a standalone Afterpay are strong, we believe that the combination of Afterpay with Block will deliver an unprecedented opportunity for both companies. For Afterpay, the combination is expected to further accelerate growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable services to its merchants and customers. It also provides an exceptional opportunity for our team members to become part of a high-growth global company.”

Shareholders vote

Despite losing significant value since being tabled, shareholders voted overwhelmingly in favour of the proposal at this morning’s extraordinary general meeting.

While the full results of the vote have not yet been revealed, that won’t matter. The proxy vote revealed that at least 86.35% of total shareholder votes were in favour of the scheme. This is more than the 75% threshold that was required to pass the scheme.

As a result, Afterpay looks almost certain to become part of Square early next year. It is only approval from the Bank of Spain that the companies are now waiting on.

The post Afterpay (ASX:APT) shareholders vote in favour of Square takeover appeared first on The Motley Fool Australia.

More reading

• Zip (ASX:Z1P) shares just topped these end-of-year rankings
• 5 things to watch on the ASX 200 on Tuesday
• What has experts worried about ASX BNPL shares in 2022?
• Afterpay (ASX:APT) shareholders will vote on the Square takeover next week. Here’s what you need to know
• Why Afterpay, AVZ, Irongate, and Santos shares are dropping

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 AFTERPAY T FPO and Block, Inc. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. 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 Fortescue Metals Group Limited (ASX: FMG) share price may have fallen heavily this year but one leading broker isn’t in a rush to invest.

Why isn’t the broker positive on the Fortescue share price?

According to a note out of Morgans, its analysts have retained their hold rating but lifted their price target on the company’s shares to $16.90.

Based on the current Fortescue share price of $18.46, this implies potential downside of 8.5% for investors.

Morgans notes that the company has announced plans to transition to new leadership which will support its shift to becoming a global diversified energy and resources player.

However, the broker suspects the company may struggle to find a new CEO with experience in iron ore and renewables given how different they are.

What else did the broker say?

The note reveals that Morgans believes the next five years will be difficult for Fortescue due to the evolving iron ore market. In light of this and its expectation that the company will remain entirely dependent on iron ore earnings for at least the next decade, it feels management’s bold transition plans are risky.

It commented: “Given the iron ore dynamics, we had expected FMG to diversify actively but had thought a safer option might have been to enter other mature markets (i.e. base metals) where cycles and economics are already well established and understood, allowing for a faster transition.”

“Instead FMG has prioritised diversification through combating climate change in various markets, the projects for which are typically capital hungry with less certain (and often lower) return profiles.”

In light of the above, Morgans’ analysts have maintained their “Hold rating on FMG, but have lost conviction in the overarching strategy and capital framework.”

The post This broker is bearish on the Fortescue (ASX:FMG) share price appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
• Fortescue (ASX:FMG) Future Industries signs Indonesian hydrogen deal
• ASX 200 (ASX:XJO) midday update: Fortescue CEO steps down, Westpac buyback update

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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Woolworths Group Ltd (ASX:WOW) may be on the look out for another acquisition to boost and diversify its earnings.

The business is more than just a supermarket business. It also has a business to business segment, which includes PFD Services which it invested in, showing it is willing to expand. PFD Services distributes a wide range of foodservice products.

Woolworths on the hunt

According to reporting by The Australian, the healthy meal delivery business Lite n’ Easy is currently going through a sales process.

It was speculated that the owners, Graham Mitchell of Mitchell’s Quality Foods, are in discussions with one particular group for a potential transaction.

How much could Lite n’ Easy go for? Seemingly around $1 billion if the reporting by the newspaper is correct.

That potential $1 billion valuation compares to the earnings before interest, tax, depreciation and amortisation (EBITDA) of $65 million by Lite n’ Easy.

Some private equity groups have been sniffing around the business, including Kohlberg Kravis Roberts, BGH Capital and Pacific Equity Partners.

KKR’s interest in the business comes from the fact it has an Australian food manufacturing business – Arnott’s Biscuits – which could benefit from a division focused on ready-made meals.

The Australian named Woolworths as a business that shouldn’t be discounted as a contender for Lite n’ Easy.

Could Woolworths afford the deal?

The potential sale of Lite n’ Easy comes at an interesting time.

Whilst Woolworths may be capable of funding a $1 billion acquisition, it is already in the thick of a takeover battle for another business – the ASX pharmacy business Australian Pharmaceutical Industries Ltd (ASX: API).

Woolworths has launched a non-binding bid to buy 100% of API at a cash offer price of $1.75 per API share, equating to a total equity value of $872 million.

This API offer gazumped the bid from Wesfarmers Ltd (ASX: WES) by 12.9%, or $0.20 per share in dollar terms.

It will be interesting to see whether Woolworths tries to pursue both potential options.

Woolworths notes that the board of API has determined that the Woolworths proposal is, or reasonably likely to be, a superior proposal.

What’s the thinking behind the API offer?

The Woolworths CEO Brad Banducci explained why the company is interested in the business:

There is a compelling strategic rationale to support Woolworths Group’s acquisition of API. Health and wellness is a large, fast-growing category and API would be a fantastic addition to our food and everyday needs ecosystem.

If successful, we will continue to support API’s community pharmacy partners to deliver better experiences for both customers and pharmacists. We will also work to strengthen API’s wholesale and distribution business to ensure that all Australians continue to have timely, cost-effective access to a full range of PBS and other medicines, via their community pharmacy, regardless of where they live.

We are strongly committed to supporting the community pharmacy model including pharmacy ownership and location rules to ensure pharmacies are well represented in all communities, especially in regional and remote parts of Australia.

The post Could this tasty morsel be next on the acquisition menu for Woolworths (ASX:WOW)? appeared first on The Motley Fool Australia.

More reading

• Woolworths (ASX:WOW) starts construction of project to double online fulfilment capacity
• Why did the Woolworths (ASX:WOW) share price have such a great month in November?
• Drinking and gambling: 3 ASX shares to buy now
• Top brokers name 3 ASX shares to sell next week
• Could this be a fly in the ointment for Woolworths’ (ASX:WOW) push into healthcare?

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 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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The Tyro Payments Ltd (ASX: TYR) share price has had a tough time in recent months. But could the payments business be a buy?

Since the start of 2021, Tyro shares have fallen around 14%. But over the last six months it has actually dropped by 25%.

Why is the Tyro share price suffering?

Whilst only the sellers of Tyro shares know why they sold at the price they did, Jun Bei Liu from Tribeca had a go at explaining what might be going on in an episode of Livewire.

She put the blame on a recent update, with management not giving enough details about the contract with Bendigo and Adelaide Bank Ltd (ASX: BEN) regarding the margins and so on.

Jun Bei Liu also noted that numerous unprofitable technology businesses have been sold off in recent times, with Tyro getting caught up in that. Other payment companies like Zip Co Ltd (ASX: Z1P) have dropped, it’s down 33% over the last six months and Afterpay Ltd (ASX: APT) is down 28% over the last four months.

However, she decided to say that Tyro was a ‘hold’, rather than a buy or a sell, because earnings are still doing “well”, it’s recovering from lockdowns and there are expectations for significant growth.

James Gerrish from Market Matters was more optimistic, saying the Tyro Payments share price was a buy, saying that the current issues are only short-term. He pointed out that the total transaction value is still increasing at a fast rate. Looking ahead for the next year, he sees potential.

How fast is the company growing?

As mentioned by Mr Gerrish, the business is still growing at a quick double digit pace.

Tyro’s latest weekly update showed that December transaction value growth to 10 December 2021 was 40% to $1.17 billion. The FY22 year to date growth had been 30%, with the transaction value in the financial year so far being $13.5 billion.

In a recent presentation, the business said it’s growing its annual transaction value at five times the speed of the total card payments in Australia.

The payments business said it’s well positioned to continue to accelerate growth. Tailored payment solutions are attractive for merchants according to the business and drives transaction value growth.

Looking at new merchant applications, each month between July 2021 to October 2021 showed at least 1,100 merchant applications.

Management said that it has multiple growth levers to materially increase its market share over the medium-term. This may end up helping the Tyro share price in time as well.

Tyro says that future growth drivers includes adding new verticals, increasing its share in existing verticals and increasing the share of its total addressable market. Operating leverage is expected to improve as the platform continues to scale, which will assist and underpin earnings before interest, tax, depreciation and amortisation (EBITDA) growth and margin expansion.

The post Down 25% in six months, is the Tyro (ASX:TYR) share price now a bargain buy? appeared first on The Motley Fool Australia.

More reading

• Here are 6 of the worst performing ASX shares of November

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 AFTERPAY T FPO, Tyro Payments, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Tyro Payments. 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 this edition, Eley Griffiths portfolio manager Nick Guidera reveals the 2 ASX shares that currently dominate his fund.

Biggest convictions

The Motley Fool: What are your two biggest holdings?

Nick Guidera: Well, since we last spoke, Aussie Broadband Ltd (ASX: ABB) is actually still one of our largest holdings, 6 or 7 months later.

There’s a number of reasons for that. One has been the stock has performed well during that time on the investment thesis that we had, which is this is a small, or probably a medium size telco now, that is taking a significant amount of share from other participants in the NBN world. 

It’s now the 5th largest retailer, having grown substantially and holding around 5% market share. Given this run rate and the ability that it is attracting customers due to its superior customer service offering, that market share will probably continue to grow. 

Probably more interesting for your readers is the recent announcement of an acquisition of Over The Wire Holdings (ASX: OTW), which was another listed company. That allows Aussie Broadband to move out of the retail space, into the business space.

They’ve had a business broadband offering, but this allows them to offer far more comprehensive [services] to businesses seeking voice and data and other technologies that Aussie has historically steered away from. 

The market is interested in this acquisition because there are significant synergies that will come out over time. It’s been flagged somewhere in the vicinity of $8 to $12 million, and they are going to come from things like network costs, improved margins, obviously not having two ASX boards and the costs that come with being a listed company. 

A lot of these synergies look particularly achievable and putting the two businesses together, you are close to a $70 to $80 million EBITDA business heading north of that. Growing at a really impressive rate — 20% to 30% — means that the runway for this business has probably got some way to go. 

MF: It’s dropped a little bit this month. Do you feel like this is a buying opportunity?

NG: I think so. I think it’s actually dropped pretty much in line with a lot of the higher-growth, more expensive stocks in the emerging end of the market, just on this correction that we’ve seen in the last 2 to 3 weeks where investors, having made [a] significant amount of money in this, and many others are taking some profits and reallocating some of that capital into other stocks. 

Since the actual confirmation of the [Over The Wire] deal, the stock has de-rated — so yeah, I would be comfortable buying on the pullback.

MF: Great. And the other largest holding?

NG: The other one is a mining stock. And it’s a stock that we have been on for a very long time. The stock is Capricorn Metals Ltd (ASX: CMM). It is a gold stock. The 3 reasons why it’s in our top 2 holdings is it has the best management track record in the industry, probably for the last 20 years. They have an increasingly large production profile. And we are confident they can double production from here.

They’ve been very good stewards of capital, and in both the development of this mine and further expansionary opportunities, we believe that should there be limited options for them to do with the capital that they have, or the cash that they’re generating, that capital will be returned to shareholders. 

Their gold price is starting to move. More recently I suppose some concerns over both inflation, a higher rate cycle [has led to] the correction we’ve seen in markets in the last 2 or 3 weeks. 

This stock’s been in the portfolio for a long time. It’s not a gold price proxy, but I think that that could draw attention to the name as people look for gold exposure if they’re rotating out of other resource names.

MF: Do you ever worry about the cyclical nature of mining companies?

NG: I think gold typically bucks the cyclical trend. Gold can be out of fashion if the cyclical rotation is ongoing. And I think that’s what you’ve seen in the last probably 18 months… It’s often flocked to for its defensive characteristics. It’s often used as an inflation hedge. 

In the past, in 2018, it was seen as the barbell portfolio that you needed. You needed gold stocks, and you needed tech stocks because growth was hard to come by and people were questioning whether… the market was going to roll over at that point. 

I think mining stocks, as a whole, certainly have a cyclical bend to them. There are some question marks right now as to how elongated this cycle will be.

As a rule, you do need to be careful about investing in mining stocks… You need the expertise from people like Tim Sergeant, who I work with, who spends days looking at mining stocks to make sure you pick the right ones. 

Because at the end of the day, mining stocks are just like an industrial. You need to understand management, you need to understand their strategic plan, how they allocate capital. They just happen to be digging things out of the ground or processing material. Those things are just as important, but the overarching thing you need to consider obviously is the outlet for the commodity.

The post Why these 2 ASX shares are top dogs in our fund: expert appeared first on The Motley Fool Australia.

More reading

• 5 ASX telco shares this expert loves right now
• 3 bargain ASX tech shares to buy right now: expert
• Aussie Broadband (ASX:ABB) share price slumps as it closes in on OTW
• Why is the Aussie Broadband (ASX:ABB) share price soaring today?
• Why did the Aussie Broadband (ASX:ABB) share price speed 7% higher today?

Motley Fool contributor Tony Yoo owns Aussie Broadband Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Aussie Broadband Limited and Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Aussie Broadband 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 wanting to boost your income with some dividend shares? If you are, then you may want to consider the ones listed below.

Both dividend shares are expected to provide investors with attractive yields that are vastly superior to those on offer with term deposits. Here’s what you need to know about them:

Centuria Industrial Reit (ASX: CIP)

The first ASX dividend share to look at is Centuria Industrial. It is focused on building a portfolio of high quality industrial assets to deliver income and capital growth to investors.

This week the company released a trading update which revealed strong nationwide demand for industrial space, particularly from ecommerce-related tenant customers. This resulted in Centirua Industrial reporting 10% rental growth year to date in FY 2022.

This strong form bodes well for dividends this year. Centuria Industrial REIT is targeting funds from operations (FFO) of at least 18.1 cents per share and a distribution of 17.3 cents per share in FY 2021. Based on the current Centuria Industrial REIT share price of $3.95, the latter will mean a 4.4% dividend yield for investors.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to look at is Rural Funds. It is an Australian property company that owns a diversified portfolio of agricultural assets valued at $1.5 billion across a number of sectors including almond and macadamia orchards, premium vineyards, cattle, and cropping.

Thanks to its ultra long leases and periodic rental increase, Rural Funds has been growing its distribution at a solid rate for many years. The good news is that management is aiming to continue this trend long into the future and is targeting distribution growth of 4% per annum.

This is expected to be the case again in FY 2022, with the company guiding to a distribution of 11.73 cents per share. Based on the current Rural Funds share price of $3.05, this will mean a yield of 3.9%.

The post 2 ASX dividend shares with better yields than term deposits appeared first on The Motley Fool Australia.

More reading

• 2 leading ASX dividend shares for compelling income
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• Investing in ASX office, industrial and healthcare shares? Here’s the outlook for 2022

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 RURALFUNDS STAPLED. 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) started the week on a positive note. The benchmark index rose 0.35% to 7,379.3 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 give back its gains on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 30 points or 0.4% lower this morning. This follows a poor start to the week on Wall Street, which in late trade sees the Dow Jones down 0.7%, the S&P 500 down 0.6%, and the Nasdaq trading 0.9% lower.

Afterpay shareholders to vote on takeover

The Afterpay Ltd (ASX: APT) share price will be one to watch today when its shareholders vote on the Square takeover. Since the offer was made in August, the Square share price has collapsed. This means the value of the transaction is now less than where Afterpay shares were trading prior to the offer being made. This should make for an interesting vote today.

Oil prices fall

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a difficult day after oil prices tumbled. According to Bloomberg, the WTI crude oil price is down 0.6% to US$71.26 a barrel and the Brent crude oil price has fallen 1% to US$74.38 a barrel. Oil prices fell amid Omicron concerns.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a decent day after the gold price edged higher. According to CNBC, the spot gold price is up 0.2% to US$1,787.80 an ounce. The precious metal rose amid increased demand for safe haven assets.

Altium shares downgraded

The Altium Limited (ASX: ALU) share price could come under pressure today after being downgraded by a leading broker. A note out of Bell Potter reveals that its analysts have downgraded the electronic design software company’s shares to a hold rating with an improved price target of $45.00. Bell Potter made the move on valuation grounds after a strong gain over the last couple of months.

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

More reading

• What is the outlook for the ANZ (ASX:ANZ) share price in 2022?
• Here are the top 10 ASX shares today
• Could 2022 be a bumper year for the Woodside (ASX:WPL) share price?
• Experts tip 2 beaten up ASX shares for gains in 2022
• These 3 ASX 200 shares are topping the volume charts this Monday

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 AFTERPAY T FPO and Altium. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. 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 EML Payments Ltd (ASX: EML) share price has been put through the wringer this year. Fears of regulatory intervention from the Central Bank of Ireland (CBI) plagued the business for much of the calendar year.

Fortunately, shareholders have enjoyed a rebound in the payment solutions company’s share value in the last month. Yet, the EML share price remains a considerable 41% off its 52-week high of $5.89.

For this reason, some experts have high hopes for the future of EML Payments.

EML’s regulatory ball and chain

It is no secret that investors have been wary of the EML Payments share price since the CBI swept in with regulatory concerns for the company’s PFS Card Services (Ireland) Limited (PCSIL) business.

However, EML has since worked with CBI to reach a number of items. Namely, the payments company will be allowed to continue signing new customers and launch new programs within material growth restrictions.

For portfolio manager, Dominic Rose, this materially de-risks the investment case for EML Payments. Rose is portfolio manager of the Montgomery Small Companies Fund and sees potential upside in the EML Payments share price following the clarity around CBI’s imposed conditions.

What’s important to Rose is that the approximate costs of CBI’s requirements are now accounted for. In addition, the regulator has not implemented a broad-brush approach to setting limits on the company’s various programs.

Even better, the growth limitations agreed upon are set to be in place for only 12 months or less. Which, all things considered, is a good outcome compared to what was initially feared.

Based on this, the portfolio manager sees an opportunity for the EML Payments share price to undergo a re-rate.

Backing the EML Payments share price

While Rose doesn’t specify a definitive price target for EML, the team at UBS does.

Much like Rose, the broker considers the risks to be less than what is being reflected in the company’s current value. With the costs now a known factor, the broker is optimistic of further upside from here.

In a recent note, UBS assigned a price target of $4.40. This would suggest a potential gain of 27.5% in the EML Payments share price, based on its current price.

The post Could the best be yet to come for the EML Payments (ASX:EML) share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. 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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