These ASX shares could be facing come profit taking as we head to the financial year close after brokers downgraded their recommendation on the stocks.

Investors could also be tempted to lock in some gains with the S&P/ASX 200 Index (Index:^AXJO) hitting a record high yesterday.

Less hopeful outlook for this ASX share

One of these candidates could be the New Hope Corporation Limited (ASX: NHC) share price.

It’s raced up to a more than one-year high of $1.83 on Thursday and Macquarie Group Ltd (ASX: MQG) has just cut its rating to “neutral” from “outperform”.

The downgrade comes even as the broker increased its coal price forecast. The problem for the New Hope share price is that Macquarie upgraded the “wrong” type of coal.

Wrong coal feeds broker downgrade

Macquarie is feeling more upbeat about “met” coal, which is used to produce steel. It isn’t that taken with thermal coal (used in power plants) and has left its price estimates unchanged. No prizes for guessing which coal New Hope produces.

This might surprise some as the price of thermal coal has really fired up. But as reported, China is trying to impose price controls on this commodity to cap its rise. I don’t think the move will succeed but it does introduce a potential headwind for thermal coal.

Macquarie’s 12-month price target on the New Hope share price is $1.70 a share.

Upgrade can’t save a downgrade

Another outperformer that could be facing some pressure today is the Johns Lyng Group Ltd (ASX: JLG) share price.

The building construction group’s shares have surged by two thirds over the past year and Bell Potter reckons its time it took a breather.

The broker downgraded the Johns Lyng share price to “hold” from “buy” even after management upgraded its FY21 guidance.

Shooting past fundamentals

The company increased its revenue guidance by around 6.5% to $558.2 million. It also upgraded its earnings before interest, tax, depreciation and amortisation (EBITDA) by circa 10% to $52.1 million.

That is above Bell Potter’s estimates of $541.4 million and $48.9 million, respectively.

Bell Potter acknowledges that the group is in a “solid position” to deliver growth and has a strong pipeline of work.

What is the Johns Lyng share price worth?

“The company continues to be a catalyst rich and we remain optimistic about the company’s cross sell opportunity into the strata management, as well as the potential for accretive acquisitions,” said Bell Potter.

“However, following strong trading in the stock, JLG is now trading on a P/E of 49x FY21e and 44x FY22e.”

Bell Potter’s 12-month price target on the Johns Lyng share price is $4.40 a share.

The post These ASX shares just got hit by broker downgrades appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops, Brickworks soars, Woolworths falls

Brendon Lau owns shares of Macquarie Group Ltd. Connect with me on Twitter @brenlau.

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’s an ASX sector that’s run hot the past few months but is set to continue the party for a while yet.

That’s according to WAM Leaders Ltd (ASX: WLE) portfolio manager Matthew Haupt, who is “still very pretty positive” on Australian banks.

After 6 months of gains, Haupt admitted the value isn’t as obvious. But forthcoming capital management looks like low-hanging fruit for investors.

“We actually haven’t seen them enact capital management,” he told a Wilson Asset Management video briefing.

“[But] we will see them over the next 3 to 6 months really start to give back some of that excess capital.”

Haupt forecast that Commonwealth Bank of Australia (ASX: CBA) would launch an off-market share buyback with “a large franking component”.

“National Australia Bank Ltd (ASX: NAB), I think, will do smaller, bite-sized buybacks over the next few years.”

Another positive for the banks is that provisions taken on during the COVID-19 downturn will wind back as the Australian economy roars back.

“There’s still legs in the financial trade,” said Haupt.

“It’s probably done most of its work but you can easily see another 10% to 15% upside from here — all else being equal in the current environment.”

CBA shares were up 0.76% to close Thursday at $101.85. The NAB share price ascended 0.23% to finish the day at $26.62.

Which bank?

However, with valuations stretched, caution should be exercised with which bank shares investors now plough into.

In the latest Ask A Fund Manager, Sage Capital portfolio manager Sean Fenton picked CBA as the most overrated stock on the ASX currently.

He said that Commonwealth is “the highest quality bank in Australia, they’re the best long-term earnings track record, probably the best technology platform and systems and some of the best growth”.

But the share price has run up too much, for his liking.

“It’s not often you see a bank trading over 20 times earnings,” he told The Motley Fool.

“There is nothing wrong with the way they’re running their business. But it’s the premium to the rest of the sector… The market’s fallen a little bit too much in love with that quality at the moment, and it’s very hard to be sustained, particularly if you do see a bit of inflation and rate tightening down the track.”

WAM Leaders is Wilson Asset Management’s large-cap listed investment company. Its shares ran up 0.32% on Thursday to close the session at $1.54.

The post Hot ASX sector with ‘easily’ 10% to 15% upside in coming months: analyst appeared first on The Motley Fool Australia.

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Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Those who started buying shares for the first time in the heady days of 2020 might have received a rude shock this year.

For many, it will have been the first time they saw their investments fall significantly. Some of their stocks might even be in the red.

This can be unsettling for rookies, but experts warn this is all part of investing.

In fact, if a person can’t handle that some of their holdings might lose value then, arguably, they should examine whether they have the stomach for investing.

The world’s most famous stock investor, Warren Buffett, warned last year that “some people are more subject to fear than others”.

“If you can’t handle it psychologically then you really shouldn’t own stocks, because you are going to buy and sell them at the wrong time,” he told the 2020 Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) annual general meeting.

Forget 100%, a 60% win rate is excellent

So how do the professionals avoid losing?

The short answer is they don’t.

Professional fund managers know better than anyone that they can’t pick all winners. They realise that the most one can lose on each share is the invested amount, but the most one can gain is infinite.

So they’ll settle for just getting it right the majority of the time. 

“To be perfectly honest, we target getting 60% of our decisions correct,” Sage Capital portfolio manager Sean Fenton told Ask A Fund Manager this week.

“I don’t think a lot of people realise because everyone does have a bit of a hindsight bias. You always think that knowing things is easier than it actually was.”

Does it seem like 60% is a low goal? Well, it’s not just Fenton that thinks this is an appropriate bar.

Famous US fund manager Peter Lynch once also declared “6 out of 10” to be an excellent strike rate.

“You’re never going to be right 9 times out of 10.”

Investors love remembering their wins and forgetting their losses

Fenton told The Motley Fool the trouble is that investors have “very selective memories” — remembering their wins and forgetting about their losses.

After all, when’s the last time you heard at a barbecue a friend talk about their 30% loss?

But every share portfolio contains negative returns, like it or not.

“If you don’t do the hard accounting and actually track your investment decisions and work out your wins and losses, people tend to overestimate their skill,” said Fenton.

“But we do do that and if we can get 60% of our investment decisions right, it means we’re absolutely knocking it out of the park.”

The post How many of your shares should make money? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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This year has been rough for Coles Group Ltd (ASX: COL) shares, which have fallen 9.78% since 2021 began. At Thursday’s close, the Coles share price was trading at $16.69 after falling 0.42% for the day.

Let’s take a look at what Coles has been up to in 2021.

Coles’ 2021 so far

The first news we heard out of Coles this year – its half-year results – seemed to be the catalyst for its share price troubles in 2021.

Over the 6 months ending 3 January, the company brought in 8% more revenue and increased its net profits by 14.5%. Its gains were driven by solid growth across all of Coles’ segments. Though, it wasn’t all good news.

The company warned that depending on many factors, one being the vaccine rollout, it was likely it wouldn’t be able to replicate the half-year’s performance.

According to Coles, the six month period saw Australians panic-buying as COVID-19 left the nation facing both long-term and sporadic lockdowns. It said such a retail environment was unlikely to occur again.

The release of Coles’ half-year results saw its share price fall 10.73% over the following 2 days.

Luckily, the market reacted positively to Coles’ third-quarter update, released on 28 April.

The company announced a quarterly decline in sales, which was expected following its half-year results. However, in positive news, Coles’ sales were 7.2% higher than the same period of 2019.

While Coles’ quarterly update didn’t give any guidance for the company’s future earnings, it did state the supermarket giant was beginning to see normal consumer behaviour return.

The 2 trading sessions following Coles’ quarterly release saw its share price gain 4.87%.

The supermarket’s most recent news

Yesterday, Coles announced its online supermarket will now be accepting flypay as a payment method. Previously, flypay has only been available to customers of Coles liquor and selected retailers.

According to Coles, flypay is a digital wallet that also lets users collect and pay for goods with Flybuys points. Additionally, Coles says using flypay makes for a faster and easier checkout. This is due to flypay storing a customer’s payment details and their address for deliveries.

Flypay was developed in collaboration with Flybuys – owned by Coles and Wesfarmers Ltd (ASX: WES) – and Visa Inc (NYSE: V)’s Token ID. Whilst the news may have been positive for consumers, it did little to inspire investors, who sent the Coles share price lower in Thursday’s session.

Coles share price snapshot

It’s safe to say this year has been a challenging one for Coles shares on the ASX.

However, the Coles share price has gained 5.43% since this time last year.

The company has a market capitalisation of around $22.3 billion, with approximately 1.3 billion shares outstanding.

The post The Coles (ASX:COL) share price is down 10% this year appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Visa. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET 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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Ask A Fund Manager

In part 1 of our interview, Sage Capital portfolio manager Sean Fenton gave his thoughts on the inflation outlook. Now in part 2, he reveals what he regrets about his Afterpay experience.

Overrated and underrated shares

The Motley Fool: What’s your most underrated stock at the moment?

Sean Fenton: I was having a think about that one — it’s always a little bit tricky because underrated can often mean it’s got a few fleas attached to it. 

But one that fits into that camp was QBE Insurance Group Ltd (ASX: QBE), which has been a bit of a perennial disappointer in recent times. 

As you’ve seen, a lot of liquidity around the world, a lot of money chasing insurance premiums down, and it hasn’t been a great environment. Falling interest rates meant less and less of an income and they take more risk. And it’s as if their business hadn’t been focused and they under-provided for things and generally disappointed [investors].

But one of the things that we are seeing at the moment, with low rates across the insurance industry as a whole, [is] a little bit more rationality coming back into it. You’re seeing a very strong price cycle. Global insurance companies have under-earned and they’re looking to re-establish their insurance margins. And that has created a very strong global cycle for insurance premiums, which QBE does benefit from.

At the moment, as we’re talking about inflation and potentially higher volumes, they’ve got a bit of a natural hedge there — because they’ve got a very, very short duration investment portfolio and as yields split up, they’ve got a bit of carrying investment yield there. 

One of the aspects driving that inflation is insurance premiums. So they’re actually got strong pricing power and pass-through at the moment. Whilst it started to bounce at its lowest we do see more upside in that cycle it should be in.

MF: What do you think is the most overrated stock at the moment?

SF: Commonwealth Bank of Australia (ASX: CBA) must be the most overrated at the moment. It’s not often you see a bank trading over 20 times earnings. 

It’s clear they’re the highest quality bank in Australia, they’re the best long-term earnings track record, probably the best technology platform and systems and some of the best growth. So you give it a tick all around. Well capitalised, so there is nothing wrong with the way they’re running their business.

But it’s the premium to the rest of the sector… The market’s fallen a little bit too much in love with that quality at the moment, and it’s very hard to be sustained, particularly if you do see a bit of inflation and rate tightening down the track.

MF: If the market closed tomorrow for 5 years, which stock would you want to hold?

SF: That’s really difficult because I’m thinking ‘what can happen over the next 5 years?’. As we said, inflation could go up, interest rates could be structurally higher, it might get lower or could be all great. 

I don’t think you want to go for a stock that’s got too much growth, that would be pressured by rising yields. And you don’t want to go for something that’s too cheap… or too cyclical because the cycle could have turned within 5 years.

So I see in the middle of the road, we quite like Metcash Limited (ASX: MTS). We were talking about Coles Group Ltd (ASX: COL) before, but that’s one where we see some operational improvement come into the business. 

[Metcash] has been pressured for quite a while from Aldi moving into the supermarket space. But they’ve been a bit of a beneficiary of COVID and I think, as opposed to Coles and Woolworths Group Ltd (ASX: WOW), some of that might persist for longer as we do expect to see a lot of working from home and even working [from] more regional areas, being a more permanent trend. We don’t see people coming back to CBDs to the extent that they were pre-COVID. And that benefits Metcash and their IGA network being more exposed to suburban regional areas, less CBD-style areas. So they’ve got a bit of benefit there.

With that competition from Aldi, they’ve been forced to become more efficient themselves and become more competitive in terms of price. And franchisees [are] reinvesting to improve the format in a lot of those stores as well and make it a more compelling offering. So we do see them improving their business. 

And they’ve also been moving more into hardware — so from Mitre 10 to buying Home Timber & Hardware from Woolworths and Total Tools recently, that’s an area that’s really benefitting.

We’ve seen obviously detached housing approvals get very strong with COVID, but in parts we’ve seen there’s also a real surge in renovations. It’s probably going to persist longer than the housing cycle. And that’s what we noticed, even the last down cycle, with low affordability, people spend more time renovating their homes and there was certainly an uplift in people spending more time at home through COVID. 

So they’re well-positioned there, and trading around 15 times [earnings] and the 5% fully franked yield and, of course, their valuation support as well. So that’s not a bad one for the bottom drawer for 5 years.

Looking back

MF: Which stock are you most proud of from a past purchase?

SF: You make so many good and bad decisions as a fund manager — to have a single point of pride or regret is often tricky. But one that has done very well for us over a long time would be ResMed CDI (ASX: RMD). 

In various guises, we’ve owned [it] for well over a decade… It had a few blips here and there from quarter to quarter. But generally did very well and continued to grow and lead its segment — invested more and more in informatics and getting closer to the customer, and they really embedded themselves into having insurance payers and employing technology and improving their product and rolling it out. So there’s still growth in their target market of sleep apnea and improving sleep outcome.

I remember owning it around $3 on the other side of the GFC, but to be honest, I can’t remember if I owned it before then or not. It’s going back too far in time.

Most recently when we [purchased] it, it’d been trading at around $20.

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

SF: Not holding Afterpay Ltd (ASX: APT). 

It’s one where we actually like the business model, see the benefits that it brings and millennials love using it. And the network effects of being able to bring a cohort of shoppers to retailers and help drive their sales… Their first major advantage in terms of buy now, pay later as well. So [we] certainly don’t see its effect going away.

We owned it in the fund before COVID — then this economic Armageddon was before us, we sold out of it, which is the right thing to do because [of] the potential credit risk and everything else.

But the regret’s not buying back into it early enough, when it’s trading sub-$10. So it’s a real missed opportunity — but you can’t get them all right.

The truest thing about investing is everything’s easy with hindsight.

MF: Retail investors need to be aware that even professionals don’t get it 100% correct either.

SF: No, to be perfectly honest, we target getting 60% of our decisions correct. 

I don’t think a lot of people realise because everyone does have a bit of a hindsight bias. You always think that knowing things is easier than it actually was. And people also have very selective memories in terms of remembering their wins and forgetting their losses. 

If you don’t do the hard accounting and actually track your investment decisions and work out your wins and losses, people tend to overestimate their skill. 

But we do do that and if we can get 60% of our investment decisions right, it means we’re absolutely knocking it out of the park.

The post What I regret about my Afterpay (ASX:APT) shares: analyst appeared first on The Motley Fool Australia.

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Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended ResMed Inc. 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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S&P/ASX 200 Index (ASX: XJO) shares could be the place to find high-quality businesses.

Businesses further down the market capitalisation list might be opportunities that are able to deliver profit growth.

Here are two ASX 200 shares that could be long-term ideas:

Webjet Limited (ASX: WEB)

Webjet is one of the ASX travel shares that has suffered as a result of all of the COVID-19 impacts.

Both the domestic and international travel completely dropped off in 2020. That’s why the Webjet share price plunged to under $3 at the bottom of the crash.

But, now Webjet is reporting a recovery.

One of the brokers that likes Webjet is Macquarie Group Ltd (ASX: MQG), which has a price target of $6.35. That suggests a potential upside of more than 25% over the next 12 months.

The ASX 200 company recently released its FY21 result which showed revenue of $38.5 million and an underlying net loss after tax of $88.8 million. The statutory net loss was $156.6 million.

Webjet said that its online travel agency (OTA) profitability continues to improve. Management said that this underscored its brand strength as the number one OTA and scalability of the business model. Its market share continues to increase. The FY21 second half earnings before interest, tax, depreciation and amortisation (EBITDA) margin has gone back above 30%.

It also revealed that WebBeds is committed to emerging as the number one global business to business provider, taking advantage of new revenue opportunities and transformation initiatives on track to reduce costs by at least 20% when back at scale. WebBeds is now targeting an EBITDA margin of 62.5%.

Webjet said that as markets reopen, businesses are rebounding quickly. As at April 2021, Webjet OTA Australian domestic bookings were 95% compared to April 2019 levels. The WebBeds USA total transaction value (TTV) was at 83% of April 2019 levels and Online Republic bookings were 48% of April 2019 levels.

According to Macquarie, the Webjet share price is valued at 27x FY22’s estimated earnings.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX 200 share that is seeing stronger demand for its building products and assets.

In a recent trading update, Brickworks highlighted that in Australia, the significant uptick in housing approvals is now translating to increased building activity. Its sales are particularly strong in Queensland and Western Australia over recent months. However, the availability of some materials, such as timber for house trusses, is an issue in some areas. The resultant delays are likely to flatten and extend the duration of the existing pipeline of work, according to Brickworks.

It’s expecting FY21 local currency earnings before interest and tax (EBIT) to be stronger in both the Australian and US divisions.

Operations in the US have been harder hit by the pandemic, particularly in the first half. However, with the vaccine program in the US well advanced, building activity in the US is now ramping up.

The ASX 200 business also reported a revaluation profit with its joint venture industrial property, with Brickworks’ share expected to be around $100 million. Brickworks expects this will contribute to record property underlying EBIT of around $240 million to $260 million for FY21, up from $129 million in FY20.

Brickworks managing director Mr Lindsay Partridge said:

We have seen strong demand and sustained growth in the value of our property trust over a number of years. The COVID-19 pandemic has only fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions.

Practical completion of the Amazon facility at Oakdale West is expected to occur in the first half of FY22. The even larger Coles Group Ltd (ASX: COL) distribution warehouse is now under construction, with completion of this facility scheduled in early FY23.

The post 2 high-quality ASX 200 shares that could be buys 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 owns shares of and has recommended Brickworks, COLESGROUP DEF SET, Macquarie 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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The post LIVE COVERAGE: ASX expected to climb; AMP Capital appoints new CEO appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Apple and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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 SKYCITY Entertainment Group Limited (ASX: SKC) share price will be one to watch on Friday.

This follows the release of an update in relation to the casino and resort operator’s earnings guidance for FY 2021.

What did SkyCity announce?

This morning SkyCity revealed that trading has been stronger than it was expecting recently and is now in a position to provide detailed guidance for the year.

According to the release, SkyCity has continued to see strong performance from its local gaming businesses in New Zealand, particularly from electronic gaming machines. It has also experienced consistent performances from both SkyCity Adelaide (post-opening of the expansion from December 2020) and the offshore online casino SkyCity Malta.

However, the company’s tourism-related businesses in New Zealand and South Australia continue to be impacted by ongoing international border closures. Though, positively, they are benefitting from positive domestic tourism, particularly on weekend and holiday peaks.

What is SkyCity expecting to report in FY 2021?

The release explains that subject to no property closures prior to 30 June 2021, management expects the company to deliver FY 2021 normalised EBITDA of between NZ$247 million to NZ$253 million.

And on the bottom line, a normalised net profit after tax of between NZ$84 million to NZ$88 million is expected. This represents a 26.7% to 32.7% increase on FY 2020’s normalised net profit after tax of NZ66.3 million.

In light of this solid profit growth, SkyCity expects to comfortably meet its financial covenants for the 30 June 2021 testing period, allowing it to pay a final dividend in September. This will be consistent with the revised dividend policy announced with its half year results. That policy will see SkyCity pay 60% to 90% of normalised profit out to shareholders each year.

The SkyCity share price is up 11% since the start of the year.

The post SkyCity (ASX:SKC) share price on watch after FY 2021 guidance update appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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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If you’re on the lookout for some dividend shares, then you might want to consider the ones listed below.

Here’s what you need to need to know about them:

National Storage REIT (ASX: NSR)

National Storage is one of the ANZ region’s largest self-storage operators. It currently tailors self-storage solutions to residential and commercial customers from its network of over 200 centres.

But it may not stop there. Earlier this week the company launched a $325 million capital raising. The proceeds will be used to strengthen its balance sheet, replenish its investment capacity, and provide additional funding flexibility going forward. The company made the move after completing acquisitions totalling $373 million to date in FY 2021.

As well as announcing the capital raising, the company upgraded its FY 2021 earnings guidance from between 7.7 cents and 8.3 cents per share to between 8.5 cents and 8.6 cents per share. From this, it plans to 90% to 100% out to shareholders as distributions.

Based on the middle of both ranges, this will mean a distribution of 8.12 cents per share. This equates to a yield of just under 4%.

On Wednesday, Ord Minnett upgraded the company’s shares to an accumulate rating with a $2.20 price target.

Transurban Group (ASX: TCL)

Transurban is one of the world’s leading toll road operators. It owns a number of key roads across Australia and North America.

While traffic volumes have been down because of the pandemic, they have been improving. This bodes well for its distributions in the coming years after a recent period of lower than normal payouts due to COVID-19.

Ord Minnett expects the company’s distribution to rebound strongly in FY 2022. It is forecasting dividends of 37 cents per share in FY 2021 and then 58 cents per share in FY 2022.

Based on the latest Transurban share price of $14.45, this will mean forward yields of 2.55% and 4.05%, respectively. Ord Minnett has a buy rating and $16.00 price target on the company’s shares.

The post 2 ASX dividend shares this broker likes appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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 Transurban Group. 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 Pointsbet Holdings Ltd (ASX: PBH) share price was a reasonably positive performer on Thursday.

The sports betting company’s shares rose slightly to end the day at $13.50.

This means the PointsBet share price is now up 14% since the start of the year and has more than doubled over the last 12 months.

Why did the PointsBet share price pushing higher?

Investors were buying the company’s shares yesterday after it announced a 10-year agreement with The Riverboat on-the-Potomac to provide online and retail sports wagering in the state of Maryland.

PointsBet USA CEO, Johnny Aitken, commented: “With terrific partners in The Riverboat on-the-Potomac, PointsBet is thrilled to begin the process toward offering the passionate, sports-loving community of Maryland with the fastest and most differentiated sports betting product across every customer touchpoint.”

Is this good news?

According to a note out of Goldman Sachs, its analysts were pleased with the news and have reiterated their buy rating and $17.20 price target on the company’s shares.

Based on the current PointsBet share price, this implies potential upside of 17.5% over the next 12 months.

What did Goldman say?

Goldman Sachs commented: “We see today’s announcement as another incremental positive for PBH and continue to see it as well positioned to carve out a slice of the burgeoning US sports betting market, and highlight its recent achievement of being named the US Sports Betting Operator of the year.”

“With the addition of Maryland, PBH now has direct market access to 15 states in the US (17 including untethered states), placing it on track for its target of being operational in 18 US states by the end of CY22. With respect to the State of Maryland, we note that the government has noted that in-person betting should be up and running in a few months, whilst online sports betting is estimated to commence around Feb 2022. Sports betting revenues are expected to be taxed at 15%.”

The broker believes the company has a billion-dollar (A$) opportunity in the state, making this a material new addition to its network.

It explained: “We highlight that Maryland is the 19th most populous state in the US, and as presented in our US sports betting TAM model, makes up c. 1.8% of the US population and c. 2% of US PCE. Within the context of our TAM model, the state is currently modeled as a Tier 2 State and accounts for ~US$ 900 mn at maturity towards our TAM.”

The post How high can the PointsBet (ASX:PBH) share price climb? appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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