The Amcor (ASX: AMC) share price is falling following the release of its half year update.

At the time of writing, the packaging company’s shares are down 1.5% to $16.75.

Amcor share price falls despite reporting solid growth

• Net sales up 12% to US$6,927 million
• Adjusted earnings before interest and tax (EBIT) up 5% to US$769 million
• Adjusted earnings per share (EPS) up 9% to 35.8 US cents
• Quarterly dividend of 12 US cents declared
• Additional US$200 million share buyback announced, bringing total to US$600 million in FY 2022
• Full year guidance for adjusted EPS growth of 7% to 11% in constant currency reaffirmed

What happened during the first half?

For the six months ended 31 December, Amcor delivered a 12% increase in sales to US$6,927 million. This reflects Flexibles sales growth of 10% to US$5,347 million and Rigid Packaging sales growth of 17% to US$1,580 million. Management advised that the majority of its sales growth was driven by price increases, which related to the pass through of higher raw material costs.

As for its earnings, Amcor’s EBIT rose 5% to US$769 million. This reflects Flexibles EBIT growth of 6% to US$691 million, which offset a 13% decline in Rigid Packaging EBIT to US$117 million. The latter was caused by supply chain disruptions and raw material shortages.

In light of its positive form, management has increased its FY 2022 share buyback by US$200 million to US$600 million. However, it advised that the additional share repurchases are not expected to benefit EPS growth until FY 2023 as there will be no material impact on the weighted average number of shares outstanding in FY 2022.

Management commentary

Amcor’s CEO, Ron Delia, was pleased with the company’s performance given the challenging operating environment.

He said: “Amcor delivered a solid first half result as our teams continue to successfully navigate a persistently challenging and dynamic operating environment. Across the business we continued to prioritize our customers and our scale and operational agility enabled us to service demand in key segments, driving growth and sales mix improvements.”

“At the same time, we implemented a broad range of actions to recover higher input costs and manage through general inflation. As a result, sales grew 12% and we delivered 9 percent adjusted EPS growth year to date. We remain confident in the outlook for fiscal year 2022, enabling us to reaffirm guidance and increase cash returns to shareholders.”

Outlook

Although Mr Delia acknowledges that operating conditions remain volatile, he remains confident on the future.

He said: “While the external environment will continue to evolve, we remain focused on executing our strategy for long-term value creation from the strong foundation established over the last several years. The Amcor investment case has never been stronger and we are increasing investments in premium segments like healthcare and protein, in emerging markets and in our innovation capabilities to drive growth and margin expansion.”

The company has reaffirmed its FY 2022 guidance for earnings per share growth in the range of 7% to 11% and adjusted free cash flow of US$1.1 billion to US$1.2 billion.

The post Amcor (ASX:AMC) share price falls despite reaffirming earnings guidance and US$200m buyback expansion appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX 200 blue chip shares with 30% upside
• Broker names 2 ASX 200 dividend shares to buy in February
• These 2 impressive ASX shares are buys in February 2022: experts
• 2 great value ASX dividend shares that brokers love
• 3 buy-rated ASX growth shares

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

from The Motley Fool Australia https://ift.tt/cSE0Q4R9X

If you want to build a strong portfolio, then owning a few blue chips could be a good starting point.

Blue chips are generally large companies that have been operating for a long period, have stable cash flows, and experienced management teams. This makes blue chips lower risk options and a good foundation to build a portfolio from.

But which blue chip shares should you consider buying? Two that analysts rate highly are listed below:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to look at is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring plasma therapies business and the Seqirus vaccine business. The company is also in the process of acquiring Vifor Pharma for $7 billion. Vifor Pharma has a focus on iron deficiency, nephrology, and cardio-renal therapies. It also has a burgeoning research and development (R&D) pipeline that complements CSL’s existing R&D activities and should be supportive of long term growth.

Citi is bullish on the company and has a buy rating and $340.00 price target on its shares. This implies 30% upside from the current CSL share price of $261.55.

It was a fan of the Vifor Pharma acquisition. Citi recently commented: “The key positive from the transaction is that it expands the CSL late stage R&D pipeline, which we have noted for some time was limited for a company the size of CSL.”

Treasury Wine Estates (ASX: TWE)

Another blue chip ASX 200 share to consider is Treasury Wine. It is one of the world’s largest wine companies and the owner of a number of popular brands such as 19 Crimes and Penfolds. While times have been hard over the last couple of years due to being effectively kicked out of China, Treasury Wine is bouncing back thanks largely to growing demand in the US.

Morgans is positive on Treasury Wine’s long term outlook. So much so, it has an add rating and lofty $14.06 price target on its shares. This suggests the Treasury Wine share price could rise 30% from its current level of $10.81.

The broker commented: “The new business units centred around the brands, are now fully in place and we are excited to see what they can earn with TWE effectively creating the benefits of a demerger without the extra costs. It also demonstrates that the SOTP is worth materially more than the whole.”

The post Analysts name 2 ASX 200 blue chip shares with 30% upside appeared first on The Motley Fool Australia.

More reading

• Treasury Wine (ASX:TWE) share price lifts amid latest tariff battle
• Top broker says latest CSL (ASX:CSL) acquisition will boost more than its bottom line. Here’s why
• The Treasury Wine (ASX:TWE) share price has plunged 25% from its 2021 highs. What’s next?
• 3 ‘champion stocks’ for ASX investors in 2022
• 3 blue chip ASX 200 shares to buy after the selloff

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 CSL Ltd. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/SfD3JkrcT

If you’re wanting to add some ASX dividend shares to your portfolio, then it could be worth considering the two listed below.

Here’s why analysts at Morgans think they could be top options for income investors in February:

Telstra Corporation Ltd (ASX: TLS)

The first ASX dividend share to look at is Telstra. It could be a dividend share to buy due to its outlook being the best it has been in over a decade. This is being underpinned by the successful execution of its transformative T22 strategy and the growth targets included in its new T25 strategy.

Morgans is very positive on the company and sees a lot of value in its shares at the current level. It has an add rating and $4.55 price target on them.

The broker commented: “The SOTP [sum of the part] for TLS is worth more than the current share price (and steps to release this value are underway; albeit timing is unclear).”

As for dividends, Morgans continues to expect fully franked dividends per share of 16 cents for FY 2022 and FY 2023. Based on the current Telstra share price of $3.94, this implies yields of 4% for investors.

Transurban Group (ASX: TCL)

Another ASX dividend share that the broker is positive on is toll road operator Transurban. It has an add rating and $14.57 price target on its shares.

Morgans notes that Transurban’s performance has been improving, with traffic volumes recovering nicely from the pandemic.

It commented: “A recovery trend is evident in Melbourne (TCL’s single largest asset), Sydney is exceeding 2019, while Brisbane remains broadly in-line with 2019. TCL expects traffic to return to long-term trend by 2023.”

In addition, the broker is positive on the future due to its exposure to a number of growth drivers.

Morgans explained: “We view TCL as a high quality pure-play toll road infrastructure portfolio benefitting from employment and population growth, urbanisation, and the value of time, with particular exposure to the east coast capital cities in Australia.”

As for dividends, the broker is forecasting dividends per share of 35 cents in FY 2022 and then 55.3 cents in FY 2023. Based on the current Transurban share price of $12.72, this implies yields of 2.75% and 4.35%, respectively.

The post Broker names 2 ASX 200 dividend shares to buy in February appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Tuesday
• These 3 ASX 200 shares are topping the volume charts on Monday
• Telstra (ASX:TLS) boosts IoT cred with new acquisitions
• Here’s why the Telstra (ASX:TLS) share price could be an opportunity: analysts
• 2 ASX dividend shares with 4%+ yields

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

from The Motley Fool Australia https://ift.tt/JUS0gW7IM

Key points

• Brokers have outlined that the two ASX shares in this article look like attractive opportunities
• Retailer Baby Bunting is growing profit margins, increasing its store count, improving its e-commerce offering and expanding into New Zealand
• ASX tech share Xero is still winning accounting subscribers at a fast pace, whilst growing its gross profit margin

---

Last month was a very volatile start to the year. Lower share prices could mean that February 2022 is a great time to go bargain shopping for some of the most impressive ASX shares.

The businesses that the experts rate as buys in this article are ones that have been growing for a number of years and plans to add even more value for shareholders into the future, including international growth.

These two ASX shares are ones to take a look at:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is by far the largest baby and infant product retailer in Australia and New Zealand.

Its main growth strategy is to grow its market share. Baby Bunting is investing in its digital store and capabilities to deliver the best possible customer experience across the channels. For example, in FY21 it opened a new 22,000 sqm distribution centre.

It’s also looking to grow its market share by expanding its store network. In FY21 it grew its store network by four stores. In FY22 it is expecting to open six to eight new stores in Australia, open two new stores in New Zealand and ‘localise’ the NZ digital experience.

The company has been managing to grow its profit margins with improvements in its retail store efficiencies and increasing the amount of private label and exclusive product sales (which made up 41.4% of total sales and comes with a higher gross profit margin).

The ASX share’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin was 9.3% in FY21 – the goal is 10% and this was achieved in the second half of FY21.

Morgan Stanley rates it as a buy with a price target of $6.90 – that’s more than 30% higher than today. It noted that in FY22 to 3 October 2021, sales had done well. Total sales managed to grow another 1.5%.

Xero Limited (ASX: XRO)

Xero is one of the largest cloud accounting providers in the world. It has a significant presence in countries like Australia, New Zealand, the UK and Australia. At the last count, it had reached 3 million subscribers as at 30 September 2021, which was a 23% increase from the prior corresponding period.

Since the start of the year, the Xero share price has dropped 22%.

The ASX share has renewed its investment into customer growth opportunities again after temporarily slowing the growth spending due to the COVID pandemic. The increased re-investment includes growing spending on subscriber addition initiatives and ‘innovative’ brand awareness campaigns in a number of markets.

Xero’s goal is to be the world’s most insightful and trusted small business platform to make life better for people in small businesses, their advisors and communities.

Management says that there are multiple drivers for cloud-based software adoption, including digitisation of tax compliance, innovation of financial services and an imperative for small businesses to prepare for the future.

Xero has a very high gross profit margin, but it continues to grow. In HY22, the gross profit margin increased from 85.7% to 87.1%.

Morgan Stanley also rates Xero as a buy, with a price target of $137 – that implies a potential upside of around 20% at the current Xero share price. The broker is encouraged by a number of metrics doing well like the average revenue per user (ARPU) rising and customer retention staying high.

The post These 2 impressive ASX shares are buys in February 2022: experts appeared first on The Motley Fool Australia.

More reading

• 3 fantastic ASX shares to buy this month
• Are these beaten down ASX 200 shares now too cheap to ignore?
• From hero to Xero (ASX:XRO): share price tumbles 8% to hit 52-week low
• 2 ASX growth shares analysts love
• Are these 2 high-growth ASX shares now beaten-up opportunities?

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 Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/E0fxjYgVT

Key points

• The two ASX dividend shares in this article have attractive prospective dividend yields and potential share price growth on the cards
• Healius continues to offer essential healthcare services and COVID testing, whilst adding to its business operations with acquisitions
• JB Hi-Fi continues to see elevated sales and profitability, helping the bottom line and underpin solid dividend expectations

---

Brokers are always on the lookout for ASX shares that they think look good value. Sometimes, they find ASX dividend shares that may also offer attractive share price upside.

Businesses that are good value and have solid dividend yields may be able to provide investors with attractive total returns over the next 12 months and beyond.

With that in mind, here are two potential options:

Healius Ltd (ASX: HLS)

Healius is one of the larger healthcare businesses on the ASX with a market capitalisation of $2.8 billion according to the ASX.

What does Healius do? It has three divisions – pathology, imaging and day hospitals.

It’s currently rated as a buy by at least four different brokers including Macquarie. The broker has a price rating on the business of $5.45. That implies a potential rise of the Healius share price of more than 20% over the next year.

The broker thinks that Healius can continue to benefit from COVID-19 testing for a couple of years.

In terms of the dividend, Macquarie thinks that Healius could pay a grossed-up dividend yield of 9.5% in FY22 and 5.1% in FY23 (as earnings normalise).

Healius recently announced a sizeable acquisition to bolster its earnings. It’s buying leading bioanalytical laboratory, Agilex Biolabs for an enterprise value of $301.3 million. This business provides bioanalysis to meet the clinical trial needs of biotech and pharmaceutical companies.

The ASX dividend share thinks of this as a long-term acquisition, giving it a platform for growth into the global clinical trials sector and a structurally attractive, higher growth, higher margin healthcare sector.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is one of the largest retailers in Australia (and New Zealand) specialising in the sale of electronics and home appliances.

It’s currently rated as a buy by at least four brokers including Credit Suisse, which has a price target of $58.80 on the business. That suggests a potential upside of more than 20% over the next year, if the broker is right.

In terms of dividend expectations, Credit Suisse reckons that the ASX dividend share is going to pay a grossed-up dividend yield of 7.8% in FY22 and 6.2% in FY23.

The broker reckons that JB Hi-Fi’s sales are going to be stronger for longer.

The business recently revealed its FY22 half-year update, showing that sales were only down by 1.6% to $4.86 billion year on year. There was continued heightened demand for both consumer electronics and home appliance products. Online sales were $1.1 billion, up 62.6% on last year, representing 22.7% of total sales.

However, net profit after tax (NPAT) was down 9.4% year on year to $287.9 million. But compared to the first half of FY20, net profit was up 68.8% thanks to significant operating leverage driven by the elevated sales growth, management of gross margins and disciplined cost control.

The post 2 great value ASX dividend shares that brokers love appeared first on The Motley Fool Australia.

More reading

• ASX shares set to conquer the carnage: expert
• 3 ASX shares to buy right now that are famous Aussie brands
• These were the best performing ASX 200 shares last week
• These 3 ASX retail shares have grossed-up dividend yields over 8% right now
• Top brokers name 3 ASX shares to buy today

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

from The Motley Fool Australia https://ift.tt/Eq5CVDsxH

If you have room for some new portfolio additions, then it could be worth considering the three ASX growth shares listed below.

Here’s what you need to know about these buy-rated shares:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX growth share to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies. Aristocrat has bounced back strongly from the pandemic and its pokie machines appears to be winning market share again. Furthermore, its digital business continues to grow strongly and is generating significant recurring revenues thanks to the success of games such as RAID. In addition, the company is in the process of acquiring real money gaming giant Playtech for $5 billion. If this deal gets over the line it could give its growth an extra boost.

Morgans is a fan of the company. It has an add rating and $52.00 price target on its shares.

Lovisa Holdings Limited (ASX: LOV)

Another ASX growth share to look at is Lovisa. It is a fast-fashion jewellery retailer with a growing store network. It could be a top long term option due to its bold global expansion plans, which will be overseen by its new CEO, Victor Herrero. He previously led Inditex (Zara, Pull & Bear and Massimo Dutti) in China, which could be a key market for the company in the future.

It is largely for this reason that the team at Macquarie currently has an outperform rating and $25.00 price target on its shares.

Megaport Ltd (ASX: MP1)

A final growth share to look at is this global leading provider of elastic interconnection services. Using software defined networking (SDN), Megaport’s global platform allows users to rapidly connect their network to other services across the Megaport Network. Services can then be directly controlled by customers via mobile devices, their computer, or its open API.

Goldman Sachs is very bullish on Megaport and estimates that it has an “immense” $129 billion market opportunity. The broker recently initiated coverage on the company with a buy rating and $20.00 price target on its shares.

The post 3 buy-rated ASX growth shares appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares in January
• 2 compelling ASX growth shares that are now great value: brokers
• 2 exciting ASX growth shares tipped as buys
• 2 strong blue chip ASX shares rated as buys
• What happened to ASX tech shares today?

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

from The Motley Fool Australia https://ift.tt/rvq3QXzCT

Flagship cryptocurrency Bitcoin (CRYPTO: BTC) has plunged 44.6% in value since its all-time high in November.

Such stomach-churning volatility would understandably test the faith of even the most ardent crypto fan.

But according to BetaShares digital assets head Justin Arzadon, nothing intrinsically has changed within Bitcoin.

“The current driver of price has been the hawkish stance of the Federal Reserve and the threat of aggressive interest rate tightening over the course of the year, which will impact US and global economies,” he wrote on the BetaShares blog. 

“The outlook has affected not just the crypto market, but also other risk assets such as high growth equities.”

Tailwinds from 6 months ago are still there

Arzadon explained how all the factors pushing up Bitcoin 6 months ago still apply now.

“Although still in its infancy, hyperbitcoinisation has continued to take place. With more regulated products over bitcoin — such as ETFs — being introduced to the market, adoption by institutions and corporations has continued to grow,” he said.

“A wave of banks around the world already offer, or intend to offer, the ability to access bitcoin straight from client bank accounts.”

He admitted a 45% devaluation is “discouraging”. But “large drawdowns” are part and parcel of owning crypto.

“Taking a look at the 10 worst drawdowns for bitcoin since 2011, Bitcoin has experienced pull-backs of over 50% six times, and over 40% four times — the worst being -93.7% over a duration of 163 days from peak to trough in 2011,” said Arzadon.

“Each time, Bitcoin has rallied to eventually make new highs.”

He added that historically the crypto market has been 5 to 7 times more volatile than the share market.

Bitcoin’s journey to mainstream adoption

The rise of shares that are linked to the crypto world, Arzadon suspects, means digital currencies are more vulnerable to corrections in equities markets.

“Investors and institutions who may not have direct access to crypto or may not be allowed to invest directly tend to get exposure via crypto equities,” he said.

“Unfortunately, these companies have borne the brunt of the sell-off in both crypto and the wider equities market.”

One nation, El Salvador, made Bitcoin legal tender last year. Arzadon reckons other countries will follow.

“In El Salvador, there already are more people with bitcoin wallets (46%) than with bank accounts (29%),” he said.

“There are rumours that other South American countries will follow suit, so it would not be surprising to see additional nation-state adoption over the next few years.”

Arzadon forecasts that the rise of non-fungible tokens (NFTs) and the metaverse would strongly promote the real-life value of crypto in 2022.

He noted NFT prices have not plummeted this year in line with shares and cryptocurrencies.

“Large corporates such as Adidas AG (ETR: ADS) and Nike Inc (NYSE: NKE) have continued to announce their involvement on a regular basis,” Arzadon said.

“OpenSea, one of the largest NFT trading platforms in the world, set a new record in sales volume, having already surpassed $3.5 billion in sales — recorded in the value of Ethereum (CRYPTO: ETH) — from 1 January to 17 January.”

The post Bitcoin has crashed 45%: but its fundamentals remain the same appeared first on The Motley Fool Australia.

More reading

• Why investing in Bitcoin today is a much trickier environment: expert
• ASX shares have had a shaky start to 2022. Here’s what investors are planning: survey
• Bitcoin price sinks again. Here’s where it could find support: expert
• Has the case for Bitcoin as an inflation hedge crumbled?
• Thank Bitcoin for making this stock so cheap in 2022

Motley Fool contributor Tony Yoo owns Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Bitcoin and Ethereum. The Motley Fool Australia has recommended Nike, Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/Wg45XKjom

Key points

• Cettire and the ESPO ETF are both benefiting from digital tailwinds
• Cettire is a rapidly-growing luxury online retailer, which just announced it’s expanding into the luxury beauty world
• The ESPO ETF is invested in two dozen gaming businesses which are exposed to the growing digital gaming and audience population

---

February 2022 might be the month to jump on some of the ASX growth shares that have been sold during recent volatility.

Lower prices give investors the opportunity to buy shares at potentially better value.

If there are businesses are able to achieve strong operational growth, then they may be able to do well for shareholders as well, over time.

Here are two potential opportunities:

Cettire Ltd (ASX: CTT)

Cettire is one of the fastest-growing global online retailers, which offers a large selection of luxury goods through its website. It has 1,700 luxury brands and 200,000 products across clothing, shoes, bags and accessories.

The company recently announced it was expanding into the global luxury beauty category through a new website vertical.

Cettire said that the beauty category represents a global market opportunity of around of $100 billion within the broader personal luxury goods market.

The ASX growth share has a strategy of growing its addressable market by entering adjacent luxury retail categories that are logical extensions for Cettire’s technology and distribution capabilities.

Broadening the product range and selection provides opportunities for its rapidly growing customer base to purchase multiple high value items across different categories at a single online destination. It also gives the company the opportunity to win new customers to the site.

Cettire has access to more than 25,000 beauty products from more than 600 brands.

In the company’s latest update, for the four months to 31 October 2021, it said that sales revenue had grown by 172% to $57.8 million, the number of orders increased 209% to 107,676 and the number of active customers increased 220%.

VanEck Video Gaming and Esports ETF (ASX: EPSO)

This exchange-traded fund (ETF) is exposed to a strong, global tailwind of the increase in interest in video gaming and e-sports.

According to Newzoo, there are now more than 2.7 billion active gamers worldwide. The video gaming business is now larger than both the movie and music industries combined, making it a major industry in entertainment. It’s considered the fastest-growing sport in the world. The biggest e-sports tournaments are drawing crowds rivaling the World Cup football and the Olympic Games.

Video gaming has seen 12% average annual growth since 2015 according to VanEck. The Asia-Pacific region was expected to reach US$78.4 billion of gaming revenue in 2020, accounting for around half of the global games market.

The Middle East and Africa was expected to be the fastest-growing games market in 2020, growing 14.5% year on year to reach US$5.4 billion.

E-sports is creating several new revenue streams for the businesses within this ASX growth share’s portfolio including game publisher fees, media rights, merchandise, ticket sales and advertising.

Within the ESPO ETF portfolio are some of the world’s most biggest and recognisble gaming companies including: Tencent, Nvidia, Advanced Micro Devices, Nintendo, Activision Blizzard, Sea, Netease, Electronic Arts, Take-Two Interactive and Bandai Namco.

The post 2 ASX growth shares that could be buys in February 2022 appeared first on The Motley Fool Australia.

More reading

• 2 popular ETFs for ASX investors to buy this week
• Why Evolution, Cettire, Hipages, and Kogan shares are sinking
• Cettire (ASX:CTT) share price gains on new $100b potential market
• Why Vanguard MSCI Index International Shares and this ETF could give your portfolio a boost
• 2 ASX ETFs with strong growth potential

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 Cettire Limited. The Motley Fool Australia has recommended Cettire Limited and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/FJN7V52CS

Key points

• The LIC AFIC has said it aims to grow the dividend over time faster than inflation. Will this help the AFIC share price?
• AFIC’s portfolio has been outperforming the ASX 200 recently
• Its profit and cashflow are benefiting from the strengthening of dividends from the ASX’s blue chips

---

Since the start of the calendar year, the Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC) share price has risen 2%, outperforming the S&P/ASX 200 Index (ASX: XJO) by approximately 10%.

The old listed investment company (LIC) has a few different goals for the business. One of the key aims of the business is to provide a consistent stream of dividends for shareholders.

HY22 result

AFIC was one of the first ASX shares to report its result for the six months to December 2021.

In terms of its own investment income, AFIC said that for the six months to 31 December, it was $159.4 million, an increase from $93.8 million last year. The LIC attributed this strong dividend recovery to a few different blue chips: the major banks, Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG). A number of companies also re-instated their dividends during the half-year.

AFIC has reported that its investment returns have been outperforming in the shorter-term. The six-month portfolio return including franking was 6.9%, compared with the S&P/ASX 200 Inx return of 4.6%.

It was a similar story of outperformance over the past 12 months where AFIC’s portfolio return including franking was 22.4% and the index’s accumulation index over the year including franking was 18.7%.

AFIC’s dividend intentions

AFIC has said that its investment focus is on a diversified portfolio of Australian equities.

Its primary objectives are to pay dividends which, over time, will grow at a faster rate than inflation, and to generate attractive total returns in terms of growth in net asset backing plus dividends.

It declared an HY22 interim dividend of $0.10 per share. That means the overall trailing grossed-up dividend yield is 4%. 

Outlook for the AFIC share price and profit

When delivering its FY22 half-year report, the LIC said:

Our strategy of owning a diversified portfolio of quality companies that are well placed to deliver earnings growth over the medium to long term remains appropriate. While market volatility may emerge, short term periods of uncertainty often present good buying opportunities for investors focused on a company’s long-term prospects. The portfolio is soundly positioned despite the spectre of rising interest rates and heightened global uncertainty.

Some recent investments for the portfolio includes JB Hi-Fi Limited (ASX: JBH), WiseTech Global Ltd (ASX: WTC), Coles Group Ltd (ASX: COL), Transurban Group (ASX: TCL), BHP Group Ltd (ASX: BHP) and CSL Limited (ASX:CSL).  

AFIC share price snapshot

Over the last year, the AFIC share price has climbed around 15%.

The post Will a growing dividend help the AFIC (ASX:AFI) share price? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• Why did the ASX 200 lift on the latest RBA rate decision?
• This top ASX broker tips Coles (ASX:COL) shares for 20% upside
• ASX 200 lifts off on RBA interest rate decision

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. and WiseTech Global. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET and WiseTech Global. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/VfntCTkmi

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, Forager Funds Management senior analyst Gaston Amoros reveals 2 ASX shares that are currently selling for excellent value.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now? Are there a lot of bargains out there?

Gaston Amoros: Absolutely. So this is interesting. We were having that conversation yesterday and we ended up in a bit of a conundrum. You can either buy a real economy company, but it’s going to report [unfavourably] if it’s getting disrupted by Omicron and people are not leaving their houses. People are not going to the office. Warehouses are getting disrupted and supply chain costs are going up. 

So you can either buy a cheap real economy company at an occasion … when analysts downgrade numbers. Or you can buy a technology business, particularly more on the software side than on the hardware side, and then expose yourself to software from compressing multiples, compressing evaluations, right? 

There’s nowhere to hide.

Now, to your question… I think one that I think your readers should focus on, maybe is Integral Diagnostics Ltd (ASX: IDX).

Integral is the largest publicly listed operator of imaging centres in Australia. They have 67 clinics. And it’s a very defensive business. If you need an MRI of the knee or the brain, you will need to have it. So if you are staying at home because of Omicron or you’re scared to go out, then it doesn’t matter. At some point you’ll need to have your MRI, or you’ll need to have your CT scan or PET scan. 

It’s currently suffering from markets just carrying the numbers for FY22 on the basis of lower mobility. Elective surgeries have been postponed in many states. 

They have a big presence in New Zealand — 15% of the business — and New Zealand is also having a softer lockdown. Omicron is raging, so the revenue line is coming down. And at the same time, you are having cost issues because the employee base needs to use more protective equipment. And just like everyone else, they have wages going up and a bunch of other cost increases. 

So at the moment, the margins are getting crunched and the numbers for FY22 are going down, but the numbers in FY23 should not change. And the value of the company should not be down 20% in the span of a couple of months purely because of this — that’s an exaggeration. 

Clearly, it’s a more defensive proposition. It’s a very high-quality business. It’s a good price. And it’s not as high a return as the other ones that we mentioned, but it’s one that deserves a place in the portfolio.

MF: And your second ASX share?

The other one that might make sense, a little bit lower risk profile, is Downer EDI Limited (ASX: DOW). Downer is a large company. I think it’s $5 billion market cap and it’s more on the high-quality value side. I think it trades at 12 times [price to] EV [ratio]. And the management has done a great job of simplifying the business and disposing of the capital-intensive and volatile businesses which were mining and laundries. 

What’s left is basically a business that runs maintenance of roads, utilities, and facilities, mostly for governments, be it federal, state or local. Say 80% of the business is in Australia, 20% is in New Zealand. So you have little to no foreign exchange risk.

The stock market is punishing Downer for their sins of the past. It’s trading at 12 times EV for a business which should be very reliable in terms of execution and in terms of financial performance. So to the extent that they deliver lower volatility of earnings compared to the past. This is a business that should be trading more like 16 times EV or higher. And it’s kind of trading very, very cheap for what it is, for the quality of the asset and for the reliability of the execution in the new Downer.

MF: It gives out a nice dividend yield as well.

The post 2 ASX shares to buy for dirt cheap right now: expert appeared first on The Motley Fool Australia.

More reading

• Here are the latest broker updates from Macquarie. It’s not all pretty for ASX shares.

Motley Fool contributor Tony Yoo 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 Integral Diagnostics Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/J7P0QFtvS