Gold prices have been catching bids this month, climbing from a bottom of US$1,763 an ounce in early November to now trade at US$1,845 an ounce.

The opinion is mixed among commodities exerts on what direction the yellow metal will head next. As is usually the case with this precious metal, there are many players on both sides of the fence.

But, make no mistake, the allure of owning physical gold bullion or even shares in ASX gold miners continues bringing investors to the table.

Let’s take a closer look at what the experts have to say about investing in gold.

What’s the deal with gold?

The age-old debate for gold is how to invest in it. Legendary hedge fund manager Ray Dalio reckons keeping a 2% weight of gold in one’s portfolio is prudent for diversification. Many others also suggest that gold is a staple in any portfolio as an inflation hedge.

Turns out that both angles are mostly correct — but only over the long term. In fact, gold has done pretty well on most fronts over the long term.

When looking at an inflation hedge, experts analyse how an asset correlates or moves with inflation over time.

Research from Reuters shows that over the last 30 years, gold has increased with little-to-no relationship to inflation data. That’s important – an inflation hedge should continue growing regardless of whether inflation is high or low.

Secondly, it is necessary to think about how to invest in gold in the first place. There are 3 ways retail investors can gain access. Buying gold bullion involves seeking out a broker and purchasing tangible gold in person, or online. Investors can also purchase shares in gold miners or gold-related companies. Finally, there are exchange traded funds (ETFs) that track the performance of gold and gold miners.

Looking at past returns of gold and its offshoots shows promising results. According to analysis from the ABC Bullion Company and Chant West, gold was the top performer across all Australian listed assets over the past 15 years, compounding 10.6% on average each year in that time.

This result also outpaces the annualised rate of inflation over the same period, according to statistics obtained from the RBA. The benchmark S&P/ASX 200 index (ASX: XJO) has climbed at a compound annual growth rate (CAGR) of less than 4% in that time.

So gold has remained in fashion regardless of the economic environment — over the last 15-25 years at least. Now let’s see what the brokers are saying about gold.

What are experts saying about the price of gold?

A note from Goldman Sachs back in July said the broker is bullish on the price of gold. It reckons the metal could reach US$2,000/oz amid fluctuations in US Treasury bonds and a rebound in the global economy.

The firm said gold was pricing a “goldilocks scenario of moderate inflation and continued global recovery”. The broker reckons the recent upswing can continue.

Investment commentary on gold has fluctuated from Swiss bank UBS Group AG over the last 2 years. Its sentiment has morphed from “gold as a safe haven asset” in 2019 to urging investors to rethink their gold bullion holdings in the last few months.

Curiously, the bank asked why investors would “hold so much insurance asset” in a “world that looks better” regarding COVID-19.

UBS warns investors that gold may lose popularity amid a strengthening US dollar and the global economy’s rapid recovery. It isn’t as rosy on the price of gold and says the metal could reach as low as US$1,600 an ounce.

Meantime, Morgan Stanley recently updated its decision guide on investing in gold. The report suggests silver may be a better inflation hedge but that gold is historically less volatile.

It likens gold to an inflation hedge nonetheless and offers a rundown of each investment route. The firm’s CIO of wealth management, Lisa Shalett, says that “when the dollar weakens, it may be a good time for investors to consider adding some gold to their portfolios”.

Specialist in precious metals at Morgan Stanley, Nicholas Thompson also reckons that “gold bars and coins often trade at a slight premium over the spot price”.

The bank also argued investors should get more defensive and focus on quality over growth in their shareholdings in a recent note, citing gold shares and/or bullion as examples.

What’s the verdict?

There is ample research supporting the idea that investing in gold is a reasonable hedge against inflation in the long term. Most experts also agree that gold is also a reasonable holding in one’s portfolio for growth prospects.

Gold has also performed well in the past 10-15 years and maintained its value against the level of inflation and Australian dollars, that is cash, in that time.

In the short term, the opinion is mixed. UBS reckons gold investors will have a rough time in the next few periods, but Morgan Stanley and Goldman Sachs each are bullish on gold’s price direction over the next 12 months.

Nonetheless, the argument is consistent amongst each expert firm — that gold is an investment offering low volatility and a return that could outpace inflation over the long term.

The post Here’s what these top brokers think of gold as an investment in 2021 appeared first on The Motley Fool Australia.

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• 2 quality ASX dividend shares with attractive yields
• 5 things to watch on the ASX 200 on Tuesday
• 2 top ASX shares to buy right now
• Here’s why the Webjet (ASX:WEB) share price is having a lousy start to the week

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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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Are you looking for some small cap shares to add to your watchlist? Then have a look at the ones listed below.

Here’s why they could be worth getting better acquainted with:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap to watch is Bigtincan. It is a growing sales enablement platform provider that allows users to drive the sales process with high quality sales content anywhere, anytime, and on any device. Demand has been growing strongly for its offering, underpinning strong recurring revenue growth in recent years. Looking ahead, thanks to a combination of organic growth and the recent acquisition of Brainshark, management is guiding to a 124% year on year increase in annualised recurring revenue in FY 2022.

Catapult Group International Ltd (ASX: CAT)

Catapult is a global sports analytics company that provides elite sporting organisations and athletes with real time data and analytics to monitor and measure athletes. The company’s products are used by many of the biggest and most successful sports teams and organisations across the world. And while demand softened at the height of the pandemic, it has rebounded strongly since then. This led to Catapult reporting a 13% increase in revenue to $37.5 million during the first half of FY 2022. This was driven by 29% growth in subscription revenue, which reflects Catapult’s strategic shift to a focus on high quality recurring revenue SaaS deals.

ELMO Software Ltd (ASX: ELO)

Another small cap to look at is ELMO. It is a cloud-based human resources and payroll software company. ELMO provides a unified platform to streamline processes for employee administration, recruitment, on-boarding, learning, performance, remuneration, compliance training and payroll. This has proven very popular with SMEs and has led to ELMO growing at a consistently strong rate in recent years.

MNF Group Ltd (ASX: MNF)

A final small cap to watch is MNF. It specialises in the Voice over Internet Protocol (VoIP) technology which is used to support services like teleconferencing, online business meetings, and digital data transfers. It appears well-placed for growth due to increasing demand for VoIP technology, its expansion into Asia, and its strong balance sheet. The latter gives management opportunities to bolster its growth with M&A.

The post 4 small cap ASX shares to watch in 2022 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. owns shares of and has recommended BIGTINCAN FPO, Catapult Group International Ltd, Elmo Software, and MNF Group Limited. The Motley Fool Australia owns shares of and has recommended Catapult Group International Ltd, Elmo Software, and MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN 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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Are you looking for a source of income in this low interest environment? If you are, then you may want to check out the ASX dividend shares listed below.

Both dividend shares offer investors generous yields that smash the interest rates on offer with term deposits. Here’s what you need to know about them:

Rural Funds Group (ASX: RFF)

The first dividend share to look at is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets across five sectors. These comprise almonds, cattle, vineyards, cropping, and macadamias.

These properties are rented to some of the biggest players in the sector on very long leases. Combined with built in rental increases, this gives Rural Funds great visibility on its future earnings. As a result, it is able to confidently target distribution growth of 4% each year.

In FY 2022, management intends to increase its dividend by this amount once again to 11.73 cents per share. Based on the current Rural Funds share price of $2.97, this will mean a yield of just under 4%.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to look at is Australia’s largest telco, Telstra. It could be a good option due to its attractive yield and improving outlook.

The latter is being underpinned by the success of its T22 strategy and the recent announcement of the T25 strategy that will replace it. While T22 was based on transforming the company, T25 will be about driving growth.

This will see Telstra aim to achieve sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share (EPS) compound annual growth rates (CAGR) from FY 2021 to FY 2025.

All in all, this has many analysts believing that Telstra will soon be able to increase its dividend for the first time in a decade. For now, though, Telstra expects to pay a 16 cents per share dividend in FY 2022. Based on the current Telstra share price, this will mean a fully franked yield of almost 4%.

The post 2 quality ASX dividend shares with attractive yields 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 owns shares of and has recommended RURALFUNDS STAPLED and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week in a disappointing fashion. The benchmark index fell 0.6% to 7,353.1 points.

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

ASX 200 expected to edge higher

The Australian share market looks set to return to form on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 7 points or 0.1% higher this morning. This follows a decent start to the week on Wall Street, which in late trades sees the Dow Jones up 0.6%, the S&P 500 up 0.4%, but the Nasdaq trading 0.4% lower.

TechnologyOne results

The TechnologyOne Ltd (ASX: TNE) share price will be on watch today when it releases its full year results. The team at Bell Potter is expecting a strong result in line with guidance. It commented: “Guidance is 35%+ growth, a higher number will signal strong conversion of on premise customers to SaaS; 2. On premise – initial licenses: Guidance is $20m, a lower number will increase the quality of the result; and 3. Cash flow: Guidance is cash flow generation will equate to c.80% of NPAT and we forecast 82%, an even higher number will increase the quality of the result.”

Oil prices rises

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) will be on watch after oil prices rebounded. According to Bloomberg, the WTI crude oil price is up 0.9% to US$76.62 a barrel and the Brent crude oil price has risen 0.9% to US$79.62 a barrel. Traders were buying oil despite concerns of potential releases from Indian and Japanese oil reserves.

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult day after the gold price sank. According to CNBC, the spot gold price is down 2.6% to US$1,803.4 an ounce. The gold price fell after US President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second term. Traders had been hoping for a more dovish appointment.

Annual general meetings

A number of annual general meetings are taking place today and could see the release of trading updates at the events. This includes Brickworks Limited (ASX: BKW), Link Administration Holdings Ltd (ASX: LNK), Monadelphous Group Limited (ASX: MND), and Pro Medicus Limited (ASX: PME).

The post 5 things to watch on the ASX 200 on Tuesday 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. owns shares of and has recommended Brickworks, Link Administration Holdings Ltd, and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks and Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you are looking for some quality shares to add to your portfolio, then the two listed below could be worth considering. 

Here’s why analysts are tipping these shares as buys right now:

BHP Group Ltd (ASX: BHP)

BHP could be a top option for ASX investors that are looking for exposure to the mining sector. 

While the well-documented weakness in iron ore prices has been weighing heavily on its shares, it is worth remembering that BHP has exposure to a range of commodities. Some of which are commanding strong prices and supporting high levels of free cash flow generation.

This could make the pullback in the BHP share price a buying opportunity for investors. The team at Morgans certainly appears to believe this is the case. The broker recently reaffirmed its add rating and $46.05 price target on BHP’s shares.

Nitro Software Ltd (ASX: NTO)

If you’re more interested in the tech sector, then Nitro could be a share to consider.

Nitro is a fast-growing global document productivity software company aiming to accelerate digital transformation in a world that demands the ability to work from anywhere, anytime, on any device.

Its increasingly popular Nitro Productivity Platform offers comprehensive business solutions. These include powerful PDF productivity, eSigning, and industry-leading analytics.

At the last count, Nitro had over 2.8 million licensed users and 12,000+ business customers in 155 countries. Impressively, this includes over 68% of the Fortune 500 and three of the Fortune 10.

This has underpinned strong recurring revenue growth in recent years and this trend continues today. During the third quarter, Nitro reported a 50% increase in its ARR. This puts it on course to achieve its ARR guidance of US$39 million to US$42 million in FY 2021. And while this is a big number, it’s still only a fraction of its estimated total addressable market of $28 billion.

Nitro is one of Bell Potter’s favourite options in the tech sector. The broker currently has a buy rating and $4.50 price target on its shares.

The post 2 top ASX shares to buy right now appeared first on The Motley Fool Australia.

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• Could the BHP (ASX:BHP) share price be a big dividend income opportunity?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software 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 Webjet Limited (ASX: WEB) share price failed to take off on Monday as travel shares received a clobbering.

By the end of the day, shares in the digital travel business were 3.72% worse off than yesterday, fetching $5.69 apiece.

Today’s shift drop in travel shares comes as COVID-19 brandishes its capricious nature. There’s been a sudden and sharp rise in cases across the United States and Europe in the last fortnight.

Risk of a new COVID-19 wave hits Webjet share price

With the northern hemisphere entering the icy months of winter, cases of COVID-19 have jumped. In fact, some countries across Europe are witnessing their highest number of cases on record, triggering the re-introduction of restrictions and lockdowns.

This development in the northern hemisphere follows Australia passing 85% of people over 16 years old being fully vaccinated. As the number of double-vaxed Aussies has climbed, so too has the share price of Webjet, Flight Centre Travel Group Ltd (ASX: FLT), and many others.

This daily infographic provides the total number of vaccine doses administered in Australia as of 21 November 2021

Stay up to date with COVID-19 vaccine information here: https://t.co/lsM33j9wMW pic.twitter.com/JPVCYlKsCd

— Australian Government Department of Health (@healthgovau) November 22, 2021

https://platform.twitter.com/widgets.js

However, today’s news has put a dent in the travel optimism that had been built over recent months. As my Fool colleague Tristan covered earlier today, some affected countries have reimposed mask mandates while others, such as Austria, have gone into a full lockdown.

In the US, efforts to combat the rising numbers has led to an uptick in the number of vaccine doses being administered per day. According to The Guardian, approximately 1.5 million doses are being delivered daily. In comparison, this figure was around 1.3 million two weeks ago.

The shifting COVID-19 landscape presents increased uncertainty. In August, Webjet had highlighted the strong travel demand and easing restrictions across North America and Europe. However, now the future looks less clear for Webjet and its share price.

Shares in Webjet are up 12% since the beginning of the year. This is mostly in line with the S&P/ASX 200 Index (ASX: XJO) which is up by just under 12%.

The post Here’s why the Webjet (ASX:WEB) share price is having a lousy start to the week appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Scentre Group (ASX: SCG) is the latest addition to an exclusive group of S&P/ASX 200 Index (ASX: XJO) companies.

The real estate investment trust (REIT) has completed the White Ribbon Australia Workplace Accreditation Program.

The accreditation signifies that Scentre has committed its entire organisation to address the issues of gendered violence and sexual harassment of women.

Let’s take a closer look at Scentre’s latest accomplishment and the other ASX 200 shares that can also boast the achievement.

Scentre joins ASX 200 companies tackling big issues

Scentre has joined ASX 200 giants including Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS) in being crowned a White Ribbon workplace.

Other ASX 200 companies tied with the white bow include Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).

The above-mentioned companies are just a few of more than 240 workplaces that have been accredited by White Ribbon.

They have each committed to doing their bit to reduce the number of women facing violence and abuse, both in the workplace and at home.

Scentre CEO Peter Allen commented on the company’s newest honour, saying:

We sought accreditation because we wanted to make a public statement about our commitment to creating a safe, inclusive, and respectful workplace, which is fundamental to the way we operate as a responsible, sustainable business. 

We all have a responsibility to stand up and speak out against behaviours that contribute to gendered violence, support women affected by it, and hold perpetrators accountable.  

According to White Ribbon Australia, one in four women have experienced sexual harassment at work. Additionally, 60% of women experiencing violence at home have a workplace.

On top of those potentially astounding figures, KPMG found that men’s violence, harassment, and abuse cost the Australian economy $22 billion in 2015-2016.

Scentre provides employees who are victims and survivors of domestic and family violence with an extra 10 days of paid leave. They are also given access to legal assistance, financial advice, and funds for emergencies, temporary housing, and medical support.

The company also provides its staff with tools and education to increase their awareness of domestic and family violence, as well as how to find support for themselves, victims, or survivors.

Scentre states that these measures help to remove the stigma victims and survivors sometimes face when speaking up.

The post Only a few ASX 200 companies have received this honour and Scentre (ASX:SCG) just joined them appeared first on The Motley Fool Australia.

More reading

• Why this mining analyst is upbeat on the iron ore price forecast
• Fortescue’s push to axe diesel subsidies could cost ASX miners billions
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• Top brokers name 3 ASX shares to buy next week
• Own Fortescue (ASX:FMG) shares? Here’s the latest threat to Twiggy’s $100b hydrogen plans

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 owns shares of and has recommended Telstra Corporation Limited and 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 E2 Metals Ltd (ASX: E2M) share price entered the stratosphere today. This comes after the company discovered significant gold and silver mineralisation at the company’s Conserrat project in Argentina.

At Monday’s closing bell, the Australian exploration and development company’s shares finished 47.92% higher to 35.5 cents.

E2 Metals locates new gold

According to its statement, E2 Metals reported gold and silver assay results at Andrea Sur, the western extension of Conserrat in Argentina’s Santa Cruz province.

Two shallow Reverse Circulation (RC) drill holes were completed on two sections spaced 120 metres apart. The results included the following:

• 16 metres at 15 grams per tonne (gpt) of gold (Au) and 22gpt of silver (Ag) from 31 metres (drill hole CORC-183); and
• 4 metres at 3gpt Au and 11gpt Ag from 29 metres (drill hole CORC-190).

The drilling was designed to test beneath a float train of epithermal vein boulders extending for over a 150-metre strike.

Notably, mineralisation is open in all directions and can be traced over 1200 metres in gradient array induced polarization (IP) geophysical images. This is a geophysical method used in mineral exploration and mine operations in a bid to find new discoveries throughout the resource area.

E2 Metals will prioritise follow-up drilling along the strike range of drill hole CORC-183. In addition, scout drilling will commence along the host structure on sections spaced 100 metres away from each other.

E2 Metals managing director Todd Williams commented:

The discovery of high-grade mineralisation at Andrea Sur is important for two reasons:

Firstly, it is the westernmost discovery made to date at the Conserrat project, significantly expanding the footprint of this emerging gold and silver district.

Secondly, it turns a spotlight on adjacent structures that have never been drill tested, such as Andrea, a prospect that is host to a prominent silica alteration cap geologically similar to those that overly mineralised epithermal veins elsewhere in the Deseado Massif, such as Newmont’s Silica Cap deposit at Cerro Negro.

About the E2 Metals

Despite today’s gains, E2 Metals shares have tracked almost 60% lower over the past 12 months. When looking at year-to-date, its shares have given up around 40%.

On valuation grounds, E2 Metals commands a market capitalisation of roughly $53.42 million, with approximately 150.47 million shares on issue.

The post Here’s why the E2 Metals (ASX:E2M) share price exploded 48% today appeared first on The Motley Fool Australia.

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

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Shares in rare earths company RareX Ltd (ASX: REE) charged higher today, finishing 21% in the green. Investors were piling into RareX shares following a company announcement on its Cummins rare earths project.

RareX advised of results from a recent drilling program at the Cummins site where it is exploring for rare earths minerals.

The RareX share price traded as high as 12.5 cents today before cooling off in afternoon trading to finish at 11.5 cents.

Here are the details out of the rare earth miner’s camp.

What did RareX announce?

The company advised it had come into “exceptional high-grade intercepts of up to 10.6% TREO [total rare earth oxides] in [the] primary zone at Cummins Range Rare Earths Project”.

These assays include a “world-class intercept of 102.9m at 1.6% TREO with more assays to come”.

Results were received from RareX’s diamond drilling program at the Cummins Project, located in the Kimberly region in WA.

The results provide evidence the primary zone potentially contains high-grade mineralisation “reinforcing the opportunity to substantially increase the current mineral resource at the site”.

RareX notes that diamond core drilling has significantly advanced the geological understanding of the Cummins Range deposit and continues to deliver high-grade rare earths and niobium mineralisation.

The drilling of multiple new zones in the hanging wall and footwall to new depths is “very exciting”, according to the company, and “shallow wide rare earths and niobium intercepts in the breccia zone is even better”.

This breccia zone has consistent wide intervals of 1% to 2% TREO and strong niobium mineralisation as shown in other drill holes in this zone.

Speaking on the announcement, RareX managing director Jeremy Robinson said:

These exceptional results are a game-changer for Cummins Range. The diamond drilling completed towards the end of the year has been geared towards unlocking the potential of the primary zone and showing that we have a potentially much larger and higher grade project on our hands here. These results strongly vindicate that belief.

Robinson continued:

Partial assays from CDX0011 have returned some of the highest grades ever recorded at Cummins Range, including a fantastically high-grade zone grading 10.6% TREO – rarely seen in deposits like this. Plus, we have a world-class 103 metre intercept in hole CDX0004, in an area where previous explorers believed the mineralization had been upgraded by weathering processes. Instead, we have a very large zone of primary mineralization, which is a very exciting development for the Project.

RareX share price snapshot

In the past 12 months, the RareX share price has fallen 8% into the red, underperforming the benchmark index.

Looking year to date, RareX shares are flat. However, they have climbed 15% in the last month.

The post RareX (ASX:REE) share price bounds 21% on “world-class” intercept appeared first on The Motley Fool Australia.

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• Nuix (ASX:NXL)’s own shareholders are suing it
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• Here are the top 10 ASX shares today
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The author Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lovisa Holdings Ltd (ASX: LOV) share price is down around 3% after the affordable jewellery business announced a trading update to the market.

It gave this update before its annual general meeting (AGM).

This announcement focused on the company’s store network and current trading conditions.

Lovisa’s sales recovery

Lovisa said that its global comparable store sales for the first 20 weeks of FY22, which continued its strong trajectory and were up 25.2% on FY21, with total sales for the period up 46.1% on FY21 despite the impacts of the lockdowns in Australia, Malaysia and New Zealand.

The comparable store sales are measured based on stores open and able to trade. Ones that are closed because of the government restrictions are not included.

The strength of the sales growth could be an important factor for the Lovisa share price.

Store count and status

Lovisa said that there are currently 570 stores in the global store network, with 31 new stores opened since the end of FY21 and five closures.

It has now been able to open all the stores in its network and have been able to re-open all stores in its network that had been temporarily closed in Victoria, New South Wales, Malaysia and New Zealand back to trading.

However, stores in Austria have now moved into lockdown and the three stores there have been closed.

Lovisa also noted that it has two new franchise stores in Cyprus, bringing its geographical coverage to 21 countries globally.

Outlook for Lovisa

Management’s outlook can have an impact on investor thoughts on the valuation and Lovisa share price.

Lovisa said that despite the disruptions that the business continues to face globally, management are pleased with the way the business has performed and remain focused on continuing to drive it store rollout.

However, the company did have a somewhat negative comment regarding its store rollout. Lovisa said:

Whilst we are pleased with the pipeline of opportunities we have available, our store rollout for the year to date has been slower than we would like as a result of logistics delays and shortages of store build contractors in key growth markets.

Whilst we are managing this closely, it may continue to cause rollout delays in the short term as well as increases in the cost of store builds. We also continue to face the same challenges in relation to freight costs that we have previously noted, with reduced global freight capacity still impacting on pricing.

Victor Herrero has now formally commenced the role of CEO and has previous experience in growing businesses into countries like China and India, which are large markets that Lovisa might be interested about growing in.

The post Why is the Lovisa (ASX:LOV) share price tarnishing today? appeared first on The Motley Fool Australia.

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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 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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