If you’re looking for some growth shares to add to your portfolio this month, then the two listed below might be worth considering.

Here’s why these ASX growth shares have been rated as buys recently:

Breville Group Ltd (ASX: BRG)

The first ASX growth share to look at is this leading appliance manufacturer. Breville’s products have been resonating with consumers for decades and, positively, show no signs of stopping any time soon.

This is thanks to its continuous and growing investment in research and development (R&D), which has ensured that Breville has a pipeline of innovative new products.

In addition to this, the company has been expanding its footprint globally, which is increasing its addressable market and driving strong sales and profit growth.

For example, in FY 2021 Breville delivered a 24.7% increase in revenue to $1,187.7 million and a 39.6% jump in EBIT to $136.6 million.

Morgan Stanley remains bullish on the company’s future. It currently has an overweight rating and $36.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share to look at is Temple & Webster. It is Australia’s leading online furniture and homewares retailer.

Temple & Webster has been growing at a rapid rate in recent years but particularly during the pandemic thanks to the accelerating shift to online shopping.

This shift, a booming housing market, its strong market position, and a favourable redirection in consumer spending underpinned very strong sales and profit growth in FY 2021.

Temple & Webster reported an 85% increase in revenue to $326.3 million and a 165% jump in net profit after tax to $14 million. The company also finished the period with active customers of 778,000. This was up 62% year on year and gives its a firm foundation to build on in FY 2022 and beyond.

Credit Suisse believes the company is well-placed for growth over the long term. Last week it put an outperform rating and $15.73 price target on the company’s shares.

The post 2 fast-growing ASX shares named as buys appeared first on The Motley Fool Australia.

More reading

• How have ASX retail shares performed during the August 2021 earnings season?
• The Temple & Webster (ASX:TPW) share price is having a bad week but is up 3% today
• 3 top ASX growth shares for investors in September
• 2 leading e-commerce ASX shares that could be buys in September 2021
• 2 excellent ASX 200 shares named as buys for September

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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It was a day to forget for the S&P/ASX 200 Index (ASX: XJO) on Thursday. The benchmark index ended the day 1.9% lower at 7,369.5 points.

Four shares that fell more than most are listed below. Here’s why these ASX shares tumbled lower:

Afterpay Ltd (ASX: APT)

The Afterpay share price dropped 3% to $126.50. Investors were selling the payments company’s shares after the Square share price tumbled 4% during overnight trade on Wall Street. Given how Square is acquiring the buy now pay later (BNPL) provider in shares, any fluctuations in its share price impacts the takeover price. Square’s shares appear to have fallen in response to rival PayPal making a BNPL acquisition.

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price fell almost 2.5% to $100.55. Australia’s largest bank’s shares were caught up in the broad market selloff. This may have been triggered by concerns over the US economy and profit taking after a strong gain in 2021. In respect to the latter, the CBA share price is up 20% year to date despite this decline.

Omni Bridgeway Ltd (ASX: OBL)

The Omni Bridgeway share price tumbled 5.5% to $3.98. This follows the release of an update on the Brisbane Flood class action. Unfortunately for Omni Bridgeway, the Supreme Court of New South Wales Court of Appeal has found the remaining defendant, Seqwater, not liable to the group members in the Brisbane Floods Class Action. The company is considering an appeal.

South32 Ltd (ASX: S32)

The South32 share price fell almost 4% to $3.23. A good portion of this decline is attributable to the company’s shares going ex-dividend this morning for its fully franked 7.6 cents per share final dividend. Eligible shareholders can now look forward to being paid this dividend on 7 October.

The post Why Afterpay, CBA, Omni Bridgeway, & South32 shares tumbled lower today appeared first on The Motley Fool Australia.

More reading

• ASX 200 sinks, BHP and CBA fall
• Here are the 3 heaviest trading ASX 200 shares on Thursday
• Why is the ASX share market down today?
• The Macquarie (ASX:MQG) share price has gained 3 times that of CBA over 5 years
• ASX 200 (ASX:XJO) midday update: Tech shares fall, Fortescue upgraded

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 AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) fell 1.9% to 7,370 points. It was one of the worst days for the ASX 200 in 2021.

Here are some of the highlights from the ASX:

BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA)

The share prices of both BHP and Rio Tinto Limited (ASX: RIO) fell today, down 1.7% and 2.5% respectively. They were two of the biggest detractors for the ASX 200. The CBA share price also dropped 2.3%.

China continues to tell its steel-making regions to reduce the amount of steel production. This may be good for reducing emissions, but it is also is impacting the iron ore price and hurting investor sentiment about BHP and Rio Tinto.

In percentage terms, they weren’t among the worst performers though. Two of the worst declines were the Virgin Money UK (ASX: VUK) share price falling by 7.9% and the Orocobre Limited (ASX: ORE) share price dropping by 6.3%.

Doctor Care Anywhere Group PLC (ASX: DOC)

The market reaction was initially positive for the Doctor Care Anywhere share price after announcing an acquisition. However, it ended down 2%.

The UK-based telehealth business is buying GP2U Telehealth for a total of $11 million. It’s an Australian business, operating through both GP2U and Psych2U. The acquisition price represents 2.5x FY21 gross revenue.

GP2U Telehealth provides virtual GP services under the brand GP2U and tele-mental services under the brand Psych2U.

Psych2U actually represents 78% of the total revenue, with income streams coming from a mixed billing service, including a channel partnership with HCF, Australia’s largest not-for-profit health insurer.

The GP2U Telehealth business grew gross revenue by 54.8% in FY21.

Doctor Care Anywhere said that the acquisition provides the platform to build a market leading telehealth business in Australia in partnership with other Australian stakeholders. It sees “significant opportunities” to grow the business here.

The CEO of Doctor Care Anywhere, Dr Bayju Thakar, said:

This acquisition represents another important milestone for Doctor Care Anywhere, giving us a platform on which to build our presence in the Australian market and further expand our international business. It will give GP2U the support it needs to make a real difference in helping patients, particularly those in rural and remote regions, access high quality virtual GP care and, in-particular, support existing GP practices in the provision of tele-mental health.

RPMGlobal Holdings Ltd (ASX: RUL)

The RPMGlobal share price fell around 1% today after the tech business gave a software update.

It gave an update about both its IMAFS inventory optimisation and Shift Manager short-term planning solutions being made available in the cloud.

The business said the transition of IMAFS from a hosted solution in the cloud to a full software as a service (SaaS) model will provide users with greater flexibility in security and authentication and facilitates the ability for customers to continuously optimise their inventory management processes.

Shift Manager’s change to the cloud will allow users to collaborate and communicate through a single, integrated plan.

RPMGlobal CEO Richard Mathews said:

Cloud adoption will help the mining industry unlock additional productivity and sustainability improvements. Cloud applications facilitate remote collaboration and the scalability that mining organisations require while creating robust data storage solutions that are more cost-efficient when compared to outdated hardware.

The post ASX 200 sinks, BHP and CBA fall appeared first on The Motley Fool Australia.

More reading

• How does the A2 Milk (ASX:A2M) share price compare to the ASX 200 today?
• Rio Tinto (ASX:RIO) share price slides as iron ore value continues tumbling
• Here are the top 10 ASX 200 shares on Thursday – yes there were some
• Why is the ASX share market down today?
• Tech shares leading ASX 200 (ASX:XJO) losses on Thursday

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 shares of and has recommended Doctor Care Anywhere Group PLC and RPMGlobal Holdings. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC and RPMGlobal Holdings. 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 Woodside Petroleum Limited (ASX: WPL) share price slumped in afternoon trade. However, the downwards move is roughly in line with the steep selloff in the S&P/ASX 200 Index (ASX: XJO), which took a 1.91% tumble on Thursday.

Shares in the oil and gas giant finished 2.14% down to $19.20. Accounting for today’s move, the Woodside share price is almost flat from where it was a year ago.

On the other hand, a recent broker note portrays a positive outlook for the Woodside share price. The reasons are tied to the merger with the petroleum division of BHP Group Ltd (ASX: BHP).

Let’s take a closer inspection of these positive catalysts.

A winning combination for the Woodside share price

It has been shared that analysts from Bank of America have run the ruler over Woodside and crunched the numbers on its anticipated merger. While some shareholders have openly expressed concerns regarding the bold move, Bank of America analysts considered such worries to be blown out of proportion.

Instead, the broker detailed six reasons why the Woodside/BHP deal could be a positive:

• A doubling of production and reserves
• Higher cash flows
• Reduced gearing
• Merger synergies to the tune of $400 million per annum
• Enhanced growth options, and
• Potential for portfolio optimisation

In addressing clients, the analysts from Bank of America shared their perspective, stating:

WPL shares had previously underperformed due to concerns regarding a lack of attractive growth options and balance sheet concerns as it faced delays in farming down in Pluto Train 2 and Sangomar.

In our view, many issues facing WPL are mitigated by the proposed merger which should see WPL shares trade towards our DCF derived NPV/intrinsic valuation.

Considering all the factors, the analysts have revised their Woodside price target to $28 per share. This would suggest a potential upside of around 45%.

What’s next for the proposed merger?

In a presentation shared with investors on 17 August 2021, Woodside indicated it is aiming to sign the sales and purchase agreement (SPA) in October this year. Furthermore, the company plans to hold a shareholder vote in the second quarter of 2022.

From there, if all goes to plan, the transaction is expected to be completed in Q2 2022. Based on the current Woodside share price, the combined entity would fetch a market capitalisation of A$41 billion.

Finally, the combined company expects to produce 200 million barrels of oil equivalent. This would position it in the top 10 global independent oil producers in the world.

The post The Woodside (ASX:WPL) share price could be worth $28: broker appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• The Woodside Petroleum share price is up just 2.5% in a year. Here’s why
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 energy shares fell today – here’s why
• 5 things to watch on the ASX 200 on Monday

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 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 Crown Resorts Ltd (ASX: CWN) share price has outperformed the S&P/ASX 200 Index (ASX: XJO) today, despite the company’s auditor’s concerns over “material uncertainty”.

KPMG was charged with auditing Crown’s annual report and outlined its trepidation within it. The auditor’s partner, Rachel Milum, stated it considered the uncertainty surrounding Crown’s ongoing legal and regulatory issues to be “fundamental to readers of the group’s financial report”.

Milum also commented, “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business”.

Despite KPMG’s concerns, the Crown share price performed better than the broader market today.

While it was down 1.51% to $9.76 at the close of trading, the ASX 200 dropped a significant 1.9%.

Let’s take a closer look at how Crown performed over the 2021 financial year (FY21).

Crown share price slips on $261 million loss

Here are the key metrics for the gaming and entertainment group in FY21:

• Statutory revenue of $1,536 million;
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $114.1 million;
• After-tax loss of $261.6 million;
• No dividend.

Crown has stated it’s maintained a sound financial position with a well-invested asset base, significant tangible asset backing, and a low level of gearing in FY21.

However, due to the ongoing impacts of COVID-19 and the uncertainty associated with regulatory processes, Crown has engaged its lenders.

Its lenders have provided it with a package of amendments to its financing arrangements.

Crown also plans to sell apartments at Crown Sydney. It believes the sales will allow it to continue navigating its challenges.

As of 30 June 2021, Crown had $1,283 million of debt and $390 million of cash.

What happened in FY21 for Crown?

Here’s what drove the Crown share price in FY21:

The biggest news from Crown this year was likely the Bergin Report. The report found Crown unsuitable to run its Bangaroo Casino in Sydney.

The report also led to the Victorian Royal Commission into the suitability of Crown to hold a Victorian casino licence.

Crown’s former chair, Helen Coonan, and the former CEO of its Melbourne business, Xavier Walsh, both stepped down as a result of the commission.

Those interested can find the latest on the Victorian Royal Commission here.

Crown Melbourne was also closed for 160 days of FY21 as Melbourne battled its second wave of COVID-19.

When Crown Melbourne was open, it faced restrictions. These included capacity limits, restrictions on products, and physical distancing requirements.  

However, Crown Perth performed well during FY21. Crown Perth re-opened in late June 2020 and stayed open for the whole first half of FY21 before a series of short-term lockdowns hit in the second half.

Crown Perth’s gaming operations were closed for 27 days of FY21.

Finally, Crown Sydney opened to the public in late December 2020 for the first time. However, gaming operations haven’t began at the complex due to Crown’s ongoing consultation with the NSW Independent Liquor & Gaming Authority on its suitability to run the operation.

What did management say?

Crown’s interim chair Jane Halton AO PSM issued a statement alongside Crown’s non-executive directors, Toni Korsanos, Nigel Morrison, and Bruce Carter, commenting on the year that’s been for Crown and its share price. They said:

The 2021 financial year stands out as one of the most challenging in our history with unprecedented impacts on business operations from the COVID-19 pandemic and intense public and regulatory scrutiny.

Against the backdrop of a global pandemic, Crown continues to face additional uncertainty from ongoing regulatory investigations. Crown has apologised for the failings identified through these various regulatory processes and we are committed to doing everything in our power to redress them and earn back confidence and trust.

Our financial results for the year ended 30 June 2021 reflect the severe impact on operations from the COVID-19 pandemic.

What’s next for Crown?

Here’s what those interested in the Crown share price might want to keep an eye on in FY22:

The company is waiting to see the outcomes of the Victorian Royal Commission and the Perth Casino Royal Commission. They’ll be released on 15 October 2021 and 4 March 2022 respectively.

Additionally, it will be waiting to see if it can indeed run Sydney’s Barangaroo Casino.

Crown is also committing to continuing to work to repair its internal culture and the public’s opinion of its business in FY22.

Finally, Crown Melbourne and Crown Perth are both under investigation by AUSTRAC which is looking into potential non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act.

It likely comes as no surprise that Crown hasn’t provided guidance for FY22. Although, it did state it expects to get $500 million from the sale of Crown Sydney apartments during FY22.

Crown share price snapshot

Today’s fall included, the Crown share price is currently 1.4% lower than it was at the start of 2021. However, it is 6% higher than it was this time last year.

The post Crown (ASX:CWN) share price outperforms despite auditor concerns appeared first on The Motley Fool Australia.

More reading

• Crown (ASX:CWN) share price slumps as problem gambler lawsuit heats up
• How does the Crown Resorts (ASX:CWN) earnings result compare to Star Entertainment (ASX:SGR)?
• Crown Resorts (ASX:CWN) share price slumps amid dividend suspension
• Crown (ASX:CWN) share price wobbles as profit slumps 429%
• The Crown (ASX:CWN) share price lifted last time the company reported

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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You know it’s been a tough day on the market when shares in A2 Milk Company Ltd (ASX: A2M) are outperforming the broader index.

At market close, shares in the infant formula producer finished the day down 1.6% trading at $5.45 apiece.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has tanked 1.9% in today’s session.

Although the A2 Milk share price is beating the ASX 200 today, it has underperformed the index over the past year.

Let’s take a look.

Why is the A2 Milk share price underperforming in 2021?

The A2 milk share price has tanked more than 50% since the start of the year. By comparison, the ASX 200 has climbed more than 10% higher since the start of 2021.

In the last year, shares in A2 Milk have had a spectacular fall from grace.

The one-time market darling has faced unprecedented challenges and uncertainty as a result of the COVID-19 pandemic.

The closure of international borders has crippled the infant formula’s vital daigou channels. In addition, A2 Milk has also faced waning consumer demand and higher competition in China.

As a result of subdued demand, A2 Milk has also had to overcome excess inventory problems.

The full effect of these challenges was reflected in the company’s recent full-year report for FY21.

How did A2 Milk perform in FY21?

Late last month, shares in A2 Milk continued their decline following a dour FY21 result.

For the full year, the company reported a 30% decline in revenue to NZ$1.21 billion.

In addition, the former market darling noted a 77.6% reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$123 million.

Other key points from A2 Milk’s report included;

• Stock write-downs of NZ$109 million
• Net profit after tax down 79.1% to NZ$80.7 million
• Cash balance of NZ$875.2 million

A2 Milk advised investors that the company would review its growth strategy, given the rapid changes to its market.

Forecast for the A2 Milk share price

Unfortunately, A2 Milk has not painted a pretty picture of the company’s growth outlook.

These uncertainties were recently reflected in a bearish note from leading broker Credit Suisse.

According to the note, analysts retained an underperform rating on the infant formula giant with a $5.50 target for the A2 Milk share price.

Analysts noted that despite infant formula prices stabilising, slowing Chinese birth rates and other concerns could impact the company’s sales.

The post How does the A2 Milk (ASX:A2M) share price compare to the ASX 200 today? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares on Thursday – yes there were some
• Why is the ASX share market down today?
• Tech shares leading ASX 200 (ASX:XJO) losses on Thursday
• ASX 200 (ASX:XJO) midday update: Tech shares fall, Fortescue upgraded
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Nikhil Gangaram owns shares of A2 Milk. 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 A2 Milk. 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 Adherium Ltd (ASX: ADR) share price soared to dizzying heights today. This comes after the digital healthcare company announced it has received a 510(k) clearance from the United States Food and Drug Administration (FDA).

At the end of Thursday’s market close, Adherium shares finished up 53.33% to 2.3 cents.

Milestone achievement for Adherium

The Adherium share price surged today as investors were fighting to get a hold of the company’s shares.

According to its release, Adherium advised that the United States FDA has cleared the pathway for the company to begin commercialisation for Hailie Sensor.

The company’s next generation, Hailie Sensor are devices that attach to a patient’s Asthma or Chronic Obstructive Pulmonary Disease (COPD) medication inhaler. This allows caregivers to monitor medication use and capture clinical data whilst supporting the patient’s management and treatment journey.

Furthermore, the latest Hailie Sensor is designed for use with AstraZeneca’s Symbicort aerosol inhaler.

The total addressable market for treating Asthma and COPD patients in the United States is estimated to be around US$1.5 billion.

With the Hailie Sensor approved, this means that the FDA has granted 10 510(k) licences to Adherium for its devices. As such, the company has become a market leader in respiratory digital health.

Adherium stated that it intends to pursue multiple channels in order for Hailie Sensor to enter the market.

Adherium CEO, Rick Legleiter commented:

The FDA’s first clearance of our next generation Hailie sensors with physiological measures is a significant regulatory step for the business.

The stage is now set for physiological measures to be coupled with our existing adherence sensor capability giving us the total ‘one-two punch’ to deliver the best value proposition of any smart inhaler digital solution in the world.

…Adherium will expand its addressable respiratory medication market coverage and establish a preeminent business partnering position for providers, payors and digital health affiliates.

About the Adherium share price

Since this time last year, Adherium shares were mostly tracking lower until today, currently down 22%. Year-to-date, its shares are also in negative territory, down 14%.

Adherium presides a market capitalisation of roughly $54.3 million and has 2.1 billion shares on its registry.

The post Adherium (ASX:ADR) share price rockets 53% on US FDA clearance appeared first on The Motley Fool Australia.

More reading

• Here are the 3 heaviest trading ASX 200 shares on Thursday
• Rio Tinto (ASX:RIO) share price slides as iron ore value continues tumbling
• 2 buy-rated small cap ASX shares
• Here are the top 10 ASX 200 shares on Thursday – yes there were some
• Why is the ASX share market down today?

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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The S&P/ASX 200 Index (ASX: XJO) has had yet another pretty nasty day of trading this Thursday. The ASX 200 has finished the day 1.9% lower at 7,369 points. That’s a pretty depressing figure, so instead, let’s check out the heaviest trading ASX 200 shares today.

The 3 heaviest trading ASX 200 shares on Thursday

South32 Ltd (ASX: S32)

Diversified ASX 200 miner South32 is our first ASX 200 share to consider today. This mining company has seen a hefty 20 million of its shares swap hands today. That is almost certainly a consequence of what has happened to the South32 share price this Thursday.

South32 shares had a last minute spike in closing trade, finishing down 3.87% to $3.23 a share. There are no major news or announcements out of the company today that might explain such a move downwards.

However, South32 did trade ex-dividend today for its 5.5 US cents final dividend. It’s likely that this is why we are seeing so many shares change hands today.

Telstra Corporation Ltd (ASX: TLS)

ASX 200 telco Telstra is our next share up today. This telecommunications giant has seen a sizeable 25 million shares change owners on the ASX boards today.

With no news, announcements or ex-dividend days for Telstra today, this high volume of shares appears to be the pure result of the selloff in Telstra we see this Thursday. The telco was trading down by 1.52% to $3.88 a share at today’s market close.

Pilbara Minerals Ltd (ASX: PLS)

And our final ASX 200 share to check out this Thursday is lithium producer Pilbara Minerals, with a whopping 35 million shares bought and sold so far. Just like with Telstra, today’s big move appears to be the result of a big sell down in the Pilbara share price.

This company has lost a meaningful 5.55% today and is sitting at $2.05 a share at the close. It’s this relatively large decline in value that is likely behind all of those shares flying around the market today.

The post Here are the 3 heaviest trading ASX 200 shares on Thursday appeared first on The Motley Fool Australia.

More reading

• Is the Telstra (ASX:TLS) share price undervalued right now?
• Is the party only just getting started for ASX lithium shares?
• This has been a good week so far for the Telstra (ASX:TLS) share price
• Leading broker says Telstra (ASX:TLS) share price is a buy
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. 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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The Rio Tinto Limited (ASX: RIO) share price finished well in the red on Thursday. At the final bell, Rio Tinto shares were changing hands for $105.50 apiece, a fall of 2.47%.

In fact it’s been a difficult time for the Rio Tinto share price lately, having seen a number of headwinds from the commodity markets.

Whereas the S&P/ASX 200 Index (ASX: XJO) has slipped 2.3% into the red over the last month, Rio shares have tanked 19%.

What’s up with the Rio Tinto share price today?

The decline in the price of Rio Tinto shares is correlated to a decrease in the spot price of iron ore per tonne.

The spot price of iron ore peaked in May at around US$228/tonne, and roughly held that level until July.

However, since August, Iron Ore spot has made a significant downward move. It has given away US$96 a tonne (T) and now trades at US$132.50/T. This marks the lowest price level since December 2020.

One major reason for the significant price decrease is supply curbs that have been imposed on steel production in China.

For instance, the Chinese city of Handan recently implemented restrictions on steel production after seven other provinces were “told to limit their production to 2020 volumes” by Chinese authorities. These restrictions are apart of China’s efforts to control carbonisation and reduce carbon emissions.

Rio Tinto is also considered a “price-taker”, given that it is an ASX resource share that produces commodities.

As such, its share price can fluctuate with the volatility in the broader commodities markets. This relationship generally has a lag, usually of a few days to a few weeks.

The iron ore spot price started to trade down on July 2020. We can see the Rio Tinto shares started to decrease from 4 August, roughly 2 weeks afterwards.

Rio’s shares haven’t made a recovery since, and are down a further 3% on the week. This coincides with the price of iron ore/T.

What’s next for Rio Tinto?

We can also gauge some insight into the expectations of the price of iron ore in the future, by going to the futures markets. These are contracts on assets, such as commodities, that investors use to protect against price movements, or speculate on them.

Looking at the futures contract on iron ore expiring in October on the CME futures exchange, one sees they currently trade at $130/T, indicating the market expects the price of iron ore to decrease further in the near future.

This may be a point that continues to weigh on the Rio Tinto share price moving forward.

Foolish takeway

Rio Tinto shares are sliding today in continuation with a longer-term trend. This trend is associated with the market price of iron ore, which has been decreasing since July.

Rio’s share price has a unique relationship with the price of iron ore in that it is a commodity producer, and therefore it is associated with price fluctuations in these markets.

The post Rio Tinto (ASX:RIO) share price slides as iron ore value continues tumbling appeared first on The Motley Fool Australia.

More reading

• Why the Rio Tinto (ASX:RIO) share price is in the red on Tuesday
• Leading brokers name 3 ASX shares to sell today
• ASX 200 midday update: BHP & Fortescue fall, Flight Centre storms higher
• Why BHP, Fortescue, & Rio Tinto shares could tumble today
• Rio Tinto (ASX:RIO) share price stumbles on geopolitical instability

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 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 small end of the Australian share market is home to a number of companies with the potential to grow materially in the future.

Two investors might want to get better acquainted with are listed below. Here’s why they are highly rated:

Universal Store Holdings Limited (ASX: UNI)

The first small cap ASX share to look at is Universal Store. It is a fashion retailer delivering an ever-changing and carefully curated selection of on-trend products.

Thanks to its strong market position and a favourable shift in consumer spending, Universal Store was a very strong performer in FY 2021.

For example, for the 12 months ended 30 June, the company reported a 36.1% increase in sales to $210.8 million. And thanks to a 210 basis point increase in its gross margin, its profits grew even quicker over the year. Universal Store reported an 87.7% jump in underlying net profit after tax to $30.4 million.

In response to its full year results, the team at Morgans retained their add rating and lifted their price target to $8.72. While it acknowledges that lockdowns will impact trading in the short-term, it notes that demand quickly recovers in this category (and for the company in particular) once restrictions ease.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX share to look at is Volpara Health Technologies. It is a healthcare technology company with a focus on the early detection of breast cancer by improving quality of screening using artificial intelligence.

Volpara’s Oxford University-deveoped technology has been designed to provide objective data on breast tissue density. This is a key risk marker for breast cancer.

The company has been growing its market share in the United States at a strong rate and appears well-placed to continue this trend in the future. This is thanks to its quality, recent acquisitions, and the increasing awareness of the importance of breast tissue density.

Morgans is also very positive on Volpara. It currently has an add rating and $1.87 price target on the company’s shares.

The post 2 buy-rated small cap ASX shares 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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. 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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