The Insurance Australia Group Ltd (ASX: IAG) share price has moved in circles over the past year. This comes as the insurance giant has faced challenging trading conditions caused by the COVID-19 pandemic.

At yesterday’s market close, IAG shares finished the day down 0.55% to $5.39 apiece.

What’s going on with IAG shares?

There are a couple of possible catalysts as to why the IAG share price has failed to produce decent gains over the last 12 months.

In mid-August, the company released its full-year results, revealing mostly a good performance.

Gross written premium (GWP) lifted 3.8% over the prior corresponding period to $12,135 million. This predominately was rate-driven along with customer growth across Australia and New Zealand.

Insurance profit jumped 35.9% to a total of $1,007 million due to further net reserve strengthening and a positive credit spread impact.

Cash earnings also increased 170% to $747 million, excluding unusual items.

However, IAG’s bottom line came to a reported net loss after tax of $427 million. This was blamed on significant one-off corporate expenses mainly relating to business interruption, customer refunds, and payroll remediation.

In addition, IAG recently announced that CMC Hospitality has filed an application starting a representative proceeding in the Federal Court.

The company has not been served with the application and isn’t aware of the detailed nature of the application. Although, it appears to relate to insureds who hold policies with CGU and business interruption losses related to COVID-19.

How does the IAG share price compare to the ASX 200?

Over the last 12 months, the IAG share price has gained 10%, with year-to-date up around 14%. The company’s shares have lost almost 40% of its wealth since July 2019, particularly when COVID-19 hit.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has gained 25% from this time last year and is up 14% year-to-date. The ASX 200 also reached a record high of 7,632 points in mid-August.

Based on today’s price, IAG presides a market capitalisation of roughly $13.2 billion, with approximately 2.4 billion shares on issue.

The post Why the IAG (ASX:IAG) share price has underperformed the ASX 200 in the last year appeared first on The Motley Fool Australia.

More reading

• How have ASX financial shares performed during the August 2021 earnings season?
• Here’s why the IAG (ASX:IAG) share price is slumping today
• Here’s why the IAG (ASX:IAG) share price is up 10% in a month
• Here’s why the IAG (ASX:IAG) share price is down 3% in a week
• Here’s why the IAG (ASX:IAG) share price is up 6% in the last 3 months

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

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BHP Group Ltd (ASX: BHP) shares were one of the most popular traded stocks amongst Saxo Capital Markets’ Australian clients in August 2021.

Shares in the iron ore major came in at number three, trailing behind Amazon.com, Inc. (NASDAQ: AMZN) and Fortescue Metals Group Limited (ASX: FMG).

What did Saxo say about BHP shares?

August proved to be a challenging month for the BHP share price and broader resources sector.

Besides the company’s FY21 full-year results, BHP made a number of headlines including plans to cease its dual listing on the London Stock Exchange and confirming its merger with Woodside Petroleum Limited (ASX: WPL).

Saxo commented that:

Client attention shifted to BHP Group in mid-August when the global mining giant announced plans to cease its dual listing on the London Stock Exchange and move its entire shares onto the ASX, where 50% of its stock has long been traded.

Looking over at BHP’s FY21 results, Saxo analysts said:

Like FMG, BHP Group posted a 42% rise in profits for the year to the end of June 2021. Much of which was derived by record-breaking profit margins of 64% from its Pilbara-based mines. There was further positivity on the BHP Group share price when it revealed plans to amalgamate its gas and oil assets within Woodside Petroleum, making Woodside one of the ten leading producers of oil and gas in the world. BHP shareholders will also receive shares in the reformed Woodside Petroleum stock.

Popular, but for the wrong reasons

BHP shares tumbled 14.7% in August, largely triggered by a sudden collapse in iron ore prices.

Approximately 196 million BHP shares traded hands in August, with just over a quarter of its monthly volume taking place the days after its FY21 results announcement.

On 18 August, the BHP share price tumbled 7.07% to $47.70 as investors digested its financial performance and outlook for iron ore. The sharp selloff was met with a significant uptick in volume, with ~25.99 million shares trading hands compared to its 20-day moving average volume of just ~6.09 million.

BHP continued to crater the next day, sliding another 6.35% to $44.67. Volume continued to climb with ~26.38 million shares trading hands compared to a 20-day moving average of ~7.17 million.

Foolish Takeaway

BHP’s volume profile is suggestive that investors might have taken reporting season and the recent weakness in iron ore as an opportunity to sell.

August proved to be a very challenging month for BHP shares, as its year-to-date return shrunk from 26.5% at the beginning to a mere 7.5% by the end.

The post Why BHP (ASX:BHP) shares have been getting these investors excited appeared first on The Motley Fool Australia.

More reading

• Leading broker reveals why these 10 big-name shares have been firing up its clients
• The BHP (ASX:BHP) share price is flat in 2021. But how much has the company contributed to the Australian economy?
• Materials sector lagged the ASX 200 on Tuesday
• Why the Rio Tinto (ASX:RIO) share price is in the red on Tuesday
• Why the BHP (ASX:BHP) share price is slumping 1% today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Kerry Sun 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 Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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Its certainly been a great week for the Telstra Corporation Ltd (ASX: TLS) share price.

Whereas the S&P/ASX 200 index (ASX: XJO) has slipped 0.13% in the red since Monday, Telstra shares have climbed 2.3% into the green.

Why is the Telstra share price up 2.3% this week?

The Telstra share price has been on the move since the company reported its FY21 results last month.

In its report, Telstra recognised an approximate 12% decrease in total income of $23 billion and a 9.7% decline in underlying EBITDA from FY20. Both of these results were consistent with management’s guidance.

As a result, the company maintained its dividend of 16 cents per share, payable to shareholders on 23 September.

As such, the company sees a period of “mid to high single digit growth” in FY22, forecasting EBITDA of $7 billion to $7.3 billion. This calls for a 9% year on year growth pattern.

Telstra has also jumped on the COVID-19 vaccination bandwagon, pushing a campaign to encourage all of its customers to go out and get vaccinated against the virus.

For instance, the telco giant has put a message of “#LetsVaxx” on every customer’s mobile phone and is offering “fully vaccinated” customers bonus Telstra points. It is also offering to pay its employees $200 to receive the jab.

The campaign has received mixed reviews, but the support appears to be overwhelmingly positive for Australia’s largest telecommunications provider.

What other tailwinds are behind Telstra shares this week?

In addition to these company-specific drivers to the Telstra share price, several brokers also remain bullish on Telstra shares.

Investment bank Goldman Sachs and stockbroker Morgans believe there is more growth to come for Telstra from FY22, which could positively impact its share price. Each has reiterated their buy/add rating on Telstra shares.

Goldman has set a price target of $4.30 on the Telstra share price, and have forecasted a fully franked dividend of 16 cents per share until FY23, and 18 cents per share from FY24.

Morgans is equally as bullish and has assigned a price target of $4.34 for the Telstra share price. The broker is bullish for reasons of valuation and market dynamics.

As such, the broker’s price targets imply an upside potential of 9.1% and 10.2% from the current market price, respectively.

Given these tailwinds over the last week, it starts to make sense as to why Telstra shares have walked through this week in the green.

Telstra share price snapshot

The Telstra share price has climbed 32% this year to date, extending the previous 12 month’s return of 38%.

Both of these results have outpaced the broad index’s return of around 25% over the past year.

The post This has been a good week so far for the Telstra (ASX:TLS) share price appeared first on The Motley Fool Australia.

More reading

• Leading broker says Telstra (ASX:TLS) share price is a buy
• Here are the 3 heaviest trading ASX 200 shares today
• ASX 200 midday update: BHP & Fortescue fall, Flight Centre storms higher
• Telstra (ASX:TLS) share price struggles amid possible union action
• 3 buy-rated ASX dividend shares with big yields

The author Zach Bristow has no positions 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. 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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Due to ageing populations and improving technologies and treatments, demand for healthcare services is expected to grow strongly over the next few decades.

As a result, the healthcare sector could be a good place to consider investing with a long term view.

But which shares should you consider buying? Two highly rated ASX healthcare shares to consider are listed below:

Healius Ltd (ASX: HLS)

The first healthcare ASX share to look at is Healius. It is one of Australia’s largest pathology and diagnostic imaging providers offering services via a number of brands. These include Dorevitch Pathology, QML Pathology, Laverty Pathology, and Healthcare Imaging Services.

Healius was a very positive performer in FY 2021. For the 12 months ended 30 June, the company reported a 22% increase in revenue to $1,913.1 million and the doubling of its underlying EBIT to $266.5 million.

The standout performer during the year was its key Pathology business. It reported revenue growth of 25% to $1,452.1 million and EBIT growth of 103% to $252.8 million. This reflects strong demand for community and commercial COVID-19 testing.

One broker that believes there’s more to come in FY 2022 is Credit Suisse. Earlier this week the broker retained its outperform rating and lifted its price target to $5.50.

Credit Suisse is positive on the company due to its belief that COVID testing volumes will remain strong for some time to come.

Ramsay Health Care Limited (ASX: RHC)

Another ASX healthcare share to look at is Ramsay Health Care. It provides quality healthcare services to over 8 million patients each year through a network of facilities across 10 countries and over 500 locations.

Although trading conditions have been tough over the last 18 months and recent lockdowns are likely weighing on its performance, the company has been tipped to bounce back strongly. Particularly given the pent-up demand for healthcare services.

Goldman Sachs is a fan of Ramsay. It currently has a buy rating and $74.00 price target on the company’s shares.

The broker believes its valuation is undemanding for a defensive asset leveraged to improving vaccine rates and a favourable growth profile. It also notes that it has material balance sheet optionality. This could support acquisitions or share buybacks.

The post Why analysts rate these ASX healthcare shares highly appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
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• The latest ASX shares to be hit by a broker downgrade
• Why Altium, BlueBet, Healius, & HUB24 shares are tumbling lower
• Healius (ASX:HLS) share price sinks 10% despite 179% profit surge in FY21

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 Ramsay Health Care 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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Despite the woes of the last 18 months, the Qantas Airways Limited (ASX: QAN) share price is a winner for this financial institution’s retail investors.

Saxo Capital Markets has listed Qantas as one of its Australian retail investors’ top 10 most traded stocks for the month of August.

Interestingly, the enthusiasm for Qantas’ shares continued past the release of its financial year 2021 earnings, in which it posted a statutory loss of $2.35 billion.

Let’s take a closer look at what got Saxo’s retail investors excited about Australia’s largest airline.

Qantas one of August’s top retail shares

The Qantas share price gained 10.8% over the course of August. At the same time, it was one of Saxo’s Australian retail investors’ most traded stocks.

According to Saxo, it was the airline’s massive liquidity that caught the eyes of its clients.

Within its FY21 results, Qantas noted it had liquidity totalling $3.8 billion. The airline’s liquidity was made of $2.2 billion of cash and $1.6 billion worth of undrawn debt facilities.

Additionally, 95% of its domestic operations were still bringing in coin despite a seemingly continuous wave of border closures.

The Qantas share price took off 3.5% after the airline released its FY21 earnings.

The financial institution also made a note of Qantas’ plans to continue delivering cost saving measures over FY22.

Additionally, while Saxo didn’t mention Qantas’ debt reduction strategy, it’s also well underway.

The Motley Fool Australia recently reported that Qantas has received interest from 18 potential buyers of its land in Sydney. Qantas expects the sale to see hundreds of millions of dollars wiped from its borrowings.

However, Saxo warns that, while Qantas has managed to survive the pandemic so far, its future is still uncertain.

Qantas has predicted its earnings before interest, tax, depreciation, and amortisation (EBITDA) for the first half of FY22 will include a $1.4 billion impact from the current COVID-19 outbreaks in Australia.

The post With liquidity of $3.8b, Qantas (ASX:QAN) shares are still exciting these retail investors appeared first on The Motley Fool Australia.

More reading

• Leading broker reveals why these 10 big-name shares have been firing up its clients
• Qantas (ASX:QAN) share price slips despite data showing Aussies keen to fly
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• Why the Qantas (ASX:QAN) share price is in focus on Tuesday
• The Qantas (ASX:QAN) share price is having a great start to the week

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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The ASX financial sector includes insurers, banks, wealth management companies, and fintechs. August 2021 delivered a unique reporting season for ASX financial shares after an extraordinary trading year.

For wealth management group IOOF Holdings Limited (ASX: IFL), it has been a “transformational” year that culminated in the $1.4 billion acquisition of MLC.

Fellow wealth manager AMP Ltd (ASX: AMP) is also going through a transformative period, planning a demerger of part of its business. Insurance Australia Group Ltd (ASX: IAG) says its FY21 business performance was sound, reflecting the strength of its core insurance business. 

How have ASX financial shares performed against the market?

ASX financial shares have had a mixed performance over 2021. The IAG share price is up 13%, and the IOOF share price has gained 33%. In comparison, the All Ordinaries Index (ASX: XAO) has gained 11% over the year.

The AMP share price, on the other hand, is down 29% over the same period.

Investors had mixed reactions to the release of results last month, sending IOOF shares tumbling 10% in a day but pushing the AMP share price up slightly before backing away the following week. IAG shares also dipped slightly on the release of its results before recovering. 

Who are the winners this earnings season? 

IAG announced a 35.9% increase in insurance profit, which grew to $1.007 billion from $741 million in FY20. This was due to lower natural perils costs, favourable credit spreads, and a first-half COVID-19 benefit mainly from lower motor vehicle claims. It translates to an improved reported insurance margin of 13.5% compared to 10.1% in FY20.

Gross written premium increased 3.8%, mainly rate-driven, but IAG also reported promising new business growth and stronger customer retention. 

Despite the positive news, the insurer recorded a net loss of $427 million, compared to a $435 million profit in FY20. This resulted from significant one-off corporate expenses relating to business interruption, customer refunds, and payroll remediation.

IAG’s cash earnings, which exclude one-off items, increased to $747 million compared to $279 million in FY20. The company announced a dividend of 13 cents a share, giving IAG a payout ratio of 66% based on full-year cash earnings. 

IOOF reported an underlying profit of $147.8 million but a statutory loss of $143.5 million. The company attributed the loss to non-recurring costs such as goodwill write-downs and the costs of the MLC acquisition. IOOF completed the acquisition of MLC from National Australia Bank Ltd. (ASX: NAB) on 31 May 2021.

The acquisition effectively doubled the size of IOOF’s business to $494 billion in funds and management administration and advice. Plans for integration remain on track, with IOOF CEO Renato Mota expressing excitement about the future potential of the combined group. 

IOOF reported revenues of $770 million for FY21 (up 31%), including one month’s contribution from MLC. IOOF’s earnings before interest, tax, depreciation and amortisation (EBITDA) were $221.5 million (excluding MLC), an increase of 19% on FY20. The company declared a final franked dividend of 11.5 cents per share. This comprised 9.5 cents per share in ordinary interim dividends and 2.5 cents per share special dividends. It brings total FY21 dividends to 23 cents per share.

And the losers? 

AMP shareholders were pleased by the advised increase in the wealth manager’s earnings this reporting season but less happy about the lack of dividends on offer.

AMP’s earnings increased 57% thanks to the recovery in economic and market conditions. AMP Bank benefited from the release of credit loss provisions, and investment income was higher, up $48 million on 1H 20 to $57 million. Net profit after tax increased to $118 million, compared to $115 million in the prior corresponding period.

A conservative approach to capital management is, however, being maintained. While AMP is in a strong capital position with $452 million in surplus capital, no interim dividend was declared. 

AMP is in the process of finalising requirements for the demerger of AMP Capital’s private markets investment management business. The demerger is intended to unlock further value in the private markets business by simplifying its structure and providing operational independence.

AMP says the demerger is on track, with an ASX listing to occur in 1H 22. The board intends to review its capital management strategy and the payment of dividends following the demerger completion. 

Looking ahead

IAG reinstated guidance for FY22 in August, reflecting its confidence in the business and economic outlook. Low single digit growth in gross written premiums is predicted, with a 13.5% – 15% reported insurance margin. This aligns with the insurer’s goal to achieve a 15% – 17% insurance margin over the medium term.

IAG seeks to deliver an insurance profit of at least $250 million per year and is creating value by scaling up the use of artificial intelligence and automation. The company expects modest growth in customer numbers in FY22. This, combined with rate increases, will contribute to increases in gross written premium. 

AMP’s primary focus is on the delivery of its demerger and assessment of post-demerger operating models.

The company reports it is starting to see some positive signs of growth and innovation, particularly in its bank and platforms business, where new services are being introduced. There is also a focus on rebuilding the brand and culture.

AMP is still in the process of remediating customers for issues brought to light in the Banking Royal Commission four years ago. The total cost of the remediation program is expected to be $823 million, of which approximately $596 million represents payments to customers. 

IOOF is also transforming its business and expects to deliver synergy benefits during FY22 and beyond.

Priorities for the next financial year include decommissioning additional legacy platforms and delivering annualised run rate synergies of $80 – $100 million. The combination of MLC and IOOF is expected to provide scale and growth opportunities through wide-ranging capabilities and technical expertise. 

The post How have ASX financial shares performed during the August 2021 earnings season? appeared first on The Motley Fool Australia.

More reading

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• 2 ASX shares rated as strong buys by brokers
• 5 things to watch on the ASX 200 on Tuesday
• Here’s why the IAG (ASX:IAG) share price is slumping today
• When was the best day ever on the AMP share price chart?

Motley Fool contributor Katherine O’Brien 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 Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The National Australia Bank Ltd (ASX: NAB) share price is up an impressive 26% in 2021.

This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.

Can the NAB share price keep climbing?

The good news is that it may not be too late to buy the banking giant’s shares.

According to a note out of Goldman Sachs, its analysts continue to see value in the NAB share price even after its meteoric rise this year.

The note reveals that the broker has a conviction buy rating and $30.62 price target on the bank’s shares.

Based on the current NAB share price of $28.85, this implies potential upside of 6% over the next 12 months before dividends.

And with Goldman forecasting fully franked dividends per share of 140 cents in FY 2022 and 145 in FY 2023, the potential return on offer stretches to 11% if you include FY 2022’s dividend.

Why does the broker like NAB?

There are a few reasons that Goldman is so positive on the NAB share price.

It explained: “We reiterate our Buy (on CL) on NAB and it remains our preferred sector exposure given: i) NAB’s cost management initiatives, which seem further progressed relative to most of its peers, should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure (3Q21 update shows NAB is tracking well against this).”

“ii) given NAB’s position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes (3Q21 update showed continued volume momentum); iii) NAB continues to effectively manage the balance between volumes and margins as well as any peer,” it added.

All in all, the NAB share price may be on fire this year, but this broker doesn’t believe that fire is running out of fuel just yet.

The post Top broker says NAB (ASX:NAB) share price is a buy appeared first on The Motley Fool Australia.

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• Analysts name 2 ASX dividend shares to buy
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• The Macquarie (ASX:MQG) share price is outperforming the ASX big 4 in the past month
• 3 buy-rated ASX dividend shares with big 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 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 Macquarie Group Ltd (ASX: MQG) share price was a strong performer on Thursday following the release of a trading update.

The investment bank’s shares rose as much as 7% at one stage to a record high of $182.66.

The Macquarie share price ultimately ended the day 4.5% higher at $179.13.

Can the Macquarie share price keep rising?

One leading broker has given its verdict on the Macquarie share price. And while it is a fan of the company, it unfortunately isn’t a fan of its valuation.

According to a note out of Goldman Sachs, its analysts have retained their neutral rating and lifted their price target by 9% to $170.62.

Based on the current Macquarie share price, this implies potential downside of almost 5% over the next 12 months.

What did the broker say?

Goldman was pleased with Macquarie’s trading update and has upgraded its earnings estimates to reflect a significantly better than expected start to FY 2022.

It commented: “MQG has provided updated guidance in which it now expects 1H22 NPAT to be slightly down on 2H21. We take this to mean down c.5% and note this compared to previous GSe of 1H22 NPAT down 17%.”

However, this isn’t enough for a more bullish rating due to valuation reasons.

Goldman explained: “The earnings upgrade cycle continues for MQG and since troughing in May-20, its 12-mo forward EPS has risen 52%, and sits within 2% of its Apr-19 peak. However, since Apr-19, its share price is nearly one-third higher. Therefore, with MQG currently trading on a 12-mo forward P/E of 20.5x, with incremental earnings upgrades still coming largely from investment income and trading, we stay Neutral. We also highlight that our revised TP offers -2% 12-mo TSR.”

All in all, the broker appears to believe the Macquarie share price may have peaked for the time being. This could make it worth looking elsewhere in the sector.

The post Top broker gives its verdict on the Macquarie (ASX:MQG) share price 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 Macquarie 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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There are a select group of ASX shares that could provide a good combination of both growth and dividends over time.

These are businesses that may be able to grow earnings over the long-term, increase the dividend over the years and start with a solid starting yield today.

Here are two that might fit the bill:

Amcor CDI (ASX: AMC)

Amcor is a global packaging businesses. It provides packaging for a wide range of industries including drinks, food, healthcare, home care, personal care, pet care, technical applications and tobacco.

Examples would include things like the packaging you’d find on cheese or meat at the supermarket. Items like toilet paper packaging or wipes packaging are examples of packaging for home products.

Despite all the impacts of COVID-19, Amcor said that FY21 was an outstanding year, exceeding expectations. Net sales increased by 3% to $12.86 billion, adjusted earnings before interest and tax (EBIT) rose 8% to 1.6 billion and adjusted net income rose 13% to $1.16 billion.

The FY21 adjusted earnings per share (EPS) increased even faster thanks to the ongoing share buy-backs. The ASX share’s EPS rose 16% to 74.4 cents. It repurchased $350 million of shares in FY21, equating to 2% of shares outstanding.

In FY22, the business is expecting adjusted EPS to increase by a range of between 7% to 11% on a constant currency basis. It’s also expecting adjusted free cashflow to be between $1.1 billion to $1.2 billion. FY21 free cashflow was $1.1 billion. Management plan to repurchase another $400 million of shares.

In FY22, Commsec numbers suggest Amcor is going to pay a 4% dividend yield and then there could be a slight dividend increase in FY23.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is one of the world leading pathology businesses. The ASX share has operations in North America, Europe and ANZ.

It is playing a key role in doing millions of COVID tests around the world. These tests are being done using existing infrastructure. It had done around 30 million COVID tests globally at the time of the FY21 result. Sonic is also Australia’s largest non-government COVID vaccination provider.

FY21 saw a lot of operating leverage. Whilst revenue increased by 28% to $8.8 billion, net profit soared 149% to $1.3 billion.

That profit growth allowed Sonic to grow the final dividend by 8% to 55 cents per share. The total dividend was up 7% over FY21. The ASX share has also announced the acquisition of Canberra Imaging Group and moved to the majority ownership of Epworth Medical Imaging.

It’s looking for further acquisition opportunities. Sonic is also bidding on a number of outsourcing contracts.

Commsec forecasts suggest Sonic Healthcare will grow its annual dividend to $1 per share in FY22, which would be a yield of 2.4%. It’s valued at 20x FY22’s estimated earnings.

The post 2 ASX shares that could be buys for both growth and dividends appeared first on The Motley Fool Australia.

More reading

• These ASX 200 shares are trading ex-dividend today
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• Sonic Healthcare (ASX:SHL) share price struggles despite COVID passport positioning

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 shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended Sonic Healthcare 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 TechnologyOne Ltd (ASX: TNE) share price was on form on Wednesday.

The enterprise software company’s shares stormed 5% higher to reach a record high of $11.77.

This means the TechnologyOne share price is now up over 42% since the start of the year.

Why did the TechnologyOne share price storm higher?

The catalyst for the rise in the TechnologyOne share price was a bullish broker note out of Bell Potter.

According to the note, the broker has upgraded the company’s shares to a buy rating and lifted its price target on them by 28% to $12.50.

Based on the current TechnologyOne share price, this price target still implies potential upside of 6.2% over the next 12 months even after yesterday’s gain.

What did the broker say?

Bell Potter notes that last month the company announced the progressive cessation of support from October for customers who use its on-premise solution.

The broker believes this move will accelerate the rate of customers switching to its software-as-a-service (SaaS) offering. And with support ending in October 2024, the broker highlights that this gives a clearer indication of when TechnologyOne will become pure SaaS company.

It believes this transition will make TechnologyOne a closer comparable to other pure SaaS companies listed on the ASX like WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO).

What else?

Bell Potter also notes that many of its peers have seen their respective share prices rise strongly recently. This has led to changes in the multiples it feels the TechnologyOne share price should trade at.

In light of this, the broker has updated each valuation used in the determination of its price target for market movements and also for time creep.

Its analysts explained: “The net result is a 28% increase in our PT to $12.50 which has largely been driven by an increase in the relative valuations due to the recent share price rally in some of the comps.”

“A potential catalyst for the share price is the release of the FY21 result in November where we expect the guidance to be met which would imply a strong 2HFY21 result and importantly strong SaaS ARR growth of 35% or more,” it added.

The post TechnologyOne (ASX:TNE) share price hits record high on broker upgrade 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 WiseTech Global and Xero. The Motley Fool Australia owns shares of and has recommended WiseTech Global and Xero. 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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