You might have noticed recent downward pressure on equity markets. One step further, you may have picked up on the downright obliteration of many riskier growth shares, such as the technology sector.

The S&P/ASX All Technology Index (ASX: XTX) has fallen over 13% in the last month. No doubt interest is increasing in the classic Ben Graham/Warren Buffett ‘value investing‘ approach.

Due to bond yields rising (which if you’re interested in that – have a look at this article), the market is beginning to make the cyclical shift into value. The reason partly being high risk just isn’t as appealing in a high-interest rate environment.

A word of warning – This is often when investors give up potential high growth investments for wealth eroding value traps.

What is a value trap?

Have you ever come across a company that has a ridiculously low price-to-earnings (P/E) ratio and a juicy high yield dividend? The share price has retreated, and it looks like it’s prime for an entry point. It all seems too good to be true, right?

Well, you know what they say – if it seems too good to be true, it probably is.

Not every ‘cheap’ share with a high yield will be a dud, but I’m not afraid to admit that I’ve succumbed to this trap. In one case I’m still expecting a turnaround, but in the other, I’m considering cutting my losses.

So, in order for me to help you have the best shot avoiding making the same mistakes when ‘value investing‘ – I’ll run through a handful of past value traps. From there, I’ll explain my approach towards value in this market.

Past performance of some value traps

Now, this is by no means stating the following shares are poor investments looking forward. As always, past performance is not an indicator of future performance. However, these shares are fairly good examples of what a value trap can look like and how it can turn out.

Vita Group Limited (ASX: VTG) operates 104 Telstra retail stores. Not exactly a huge growth avenue, but it could be considered a fairly steady business.

Three years ago, Vita had a P/E of roughly 7. At that time, the company was also offering a dividend yield of 11.7%. Now that sounds phenomenal, doesn’t it? A cheap steady business, with a hefty dividend. Well, three years later, shareholders have lost 27.5% even when including dividends.

To put salt in the wound – Vita is now expected to lose its biggest revenue stream, as Telstra shifts to a full ownership model.

Another example is Abacus Property Group (ASX: ABP). This is a diversified Australian real estate investment trust (REIT). They own Storage King storage assets, along with 24 office space assets.

Glancing into the past, three years ago it was trading on a reasonable earnings multiple of 13. Meanwhile, the dividend yield was at an attractive 5.2%. Considering the high returns on offer for the fairly stable business – you’d be forgiven for wanting in.

However, at present, the shareholder returns for the past three years have been a loss of 6.7% including dividends.

Striking a balance when investing in value

The point being of this article is not to say don’t invest in ‘value’ plays. Instead, it’s to emphasise that value without growth is just expensive in disguise.

The takeaway is to not jump blindly into an investment based on metrics that change at the drop of a hat. Ensure that the business still has a plan for improving and expanding into the future.

Matured companies can make fantastic investments, but a business cannot rest on its laurels. Sure, earnings might be steady now, but without the ambition to improve those earnings will be diminished by competition.

Lastly, earnings multiples can be extremely deceiving. Once upon a time in 2015, Amazon.com Inc (NASDAQ: AMZN) had an earnings multiple of 720. At the time the share price was US$512. At present, Amazon’s share price is US$2978 with a P/E of 71.

My thinking is to focus on where the company could be 3, 5, even 10 years from now based on what it does, more so than what it’s valued at now. Value traps tend to disappear when thinking in broader terms like that.

More reading

• This was the week that ASX dividend shares proved their worth
• Why is everyone talking about bond yields?
• Nasdaq slumps overnight, ASX 200 shares to open weaker
• Takeaways from Bell Asset’s post-COVID investment webinar
• Why this ASX tech ETF is in the buy zone

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Mitchell Lawler owns shares of Vita Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 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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The Ramsay Health Care Limited (ASX: RHC) share price was out of form again on Friday following the market volatility.

The private healthcare company’s shares fell 1% to $64.23. This meant the Ramsay Health Care share price lost 4% for the week.

While this is disappointing, it may have created a buying opportunity for investors.

According to a note out of Goldman Sachs, its analysts have a conviction buy rating and $75.00 price target on its shares.

Based on the current Ramsay Health Care share price, this price target implies potential upside of almost 17%.

Why is Goldman Sachs positive on the Ramsay Health Care share price?

While there are a number of reasons that the broker thinks the Ramsay Health Care share price is good value, I have picked out three key reasons below.

They are as follows:

European business is improving

Goldman notes that the performance of its European business is improving and sees limited downside risk in near term.

“Whilst uncertainty persists in Europe (35% of EBIT), much of the downside risk is limited by existing government support, and we see clear scope for improving near-term trends. Mid-term, we see a greater need/urgency for the private sector to command a larger share of public sector work (across all markets).”

Asia-Pacific margin resilience

The broker has been pleased how well Ramsay’s margins have held up despite the tough operating environment.

“Despite numerous challenges, we estimate the comparable APAC margin declined only -20bps in the period. Following an encouraging start to CY21, we expect to see positive trends continue into FY22: 1) elevated utilisation profile: 2) improving cost absorption; 3) tapering of cash ‘covid costs’; 4) improving sales mix (non-surgical); and 5) improving surgical mix (higher-acuity).”

Good value for money

A final reason Goldman believes the Ramsay Health Care share price can go higher is its current valuation. The broker doesn’t believe the market is valuing it correctly given its positive outlook.

“The stock is trading at 8.7x EBITDA for a 7% EBITDA CAGR (FY21-24E), towards the bottom of its 5-year range. We believe the improvement in near-term fundamentals is still not reflected in consensus forecasts or current trading multiples. We raise our 12-month TP to $75 and reiterate our Buy (on CL).”

More reading

• 2 high quality ASX shares to buy for your retirement portfolio
• Why investors are cheering for the Ramsay Health Care (ASX:RHC) dividend
• Is it time to buy these 2 hot ASX healthcare shares?
• Top ASX shares to buy in March 2021
• Why the Ramsay Health (ASX:RHC) share price is up 8% today

Motley Fool contributor James Mickleboro 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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It was an interesting week on the S&P/ASX 200 Index (ASX: XJO) and the ASX boards this week.

We started on Monday at 6,673 points, got all the way up to 6,854 points on Tuesday, and as of today (at the time of writing), we’re back down to 6,699 points, close to where we started. The more things change, the more they stay the same, I guess.

But one of the biggest movers and shakers on the ASX this week was ASX tech shares. Well, they certainly moved, and those moves had investors shaking in their boots. Take Afterpay Ltd (ASX: APT). The buy now, pay later (BNPL) pioneer was trading at $133.68 a share on Tuesday. Right now it’s $114.48 – a drop of more than 14% in just 3 days.

Zip Co Ltd (ASX: Z1P) fared even worse, down 17% over the same timeframe. Xero Limited (ASX: XRO) has seen an 11% drop since Tuesday. You get the idea.

Tech wrecked

It’s not hard to see where this is coming from. Over in the US, tech shares have also had a terrible week. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) Index has lost more than 6% this week since Tuesday (we’ll have to see what happens tonight). That includes some big moves down for stocks like Amazon.com Inc (NASDAQ: AMZN) and Tesla Inc (NASDAQ: TSLA).

As we’ve discussed a few times this week, the primary driver of these concerns appears to be rising long-term interest rates for government bonds. Since many tech stocks are valued by what investors expect these companies to earn in the future (as opposed to what they earn today), they are especially sensitive to longer-term interest rates.

But contrast the moves we have seen in ASX tech shares this week against some of the ASX’s dividend heavyweights. Commonwealth Bank of Australia (ASX: CBA) shares are up more than 5% this week. Australia and New Zealand Banking GrpLtd (ASX: ANZ) has made a new 52-week high. And Woodside Petroleum Ltd (ASX: WPL) is up around 3%.

Tech shares down, ‘tired old blue chips‘ up. That’s not what investors have become used to seeing, I’d wager!

It just goes to prove that sometimes Aesop’s old parable of ‘a bird in the hand is worth two in the bush’ rings true. No wonder Warren Buffett loves quoting that line.

To illustrate, here’s a snippet of Buffett’s annual letter to shareholders in 2000:

Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.). The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.”

To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)?

If you can answer these three questions, you will know the maximum value of the bush, and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.

In an environment of rising interest rates, investors seem to have decided they would rather have strong cash flows and a hefty dividend right now (a bird in the hand) than wait for the possibility of said cash down the road (two in the bush). Suddenly, Afterpay, who has yet to make a statutory profit, isn’t as exciting, it seems.

When the winds of sentiment change, they can change quickly. This week has been a stark reminder of that.

More reading

• ASX energy shares are booming as OPEC cuts production
• Crown (ASX:CWN) share price facing double Royal Commission trouble
• Tilt Renewables (ASX:TLT) share price falls despite wind farm news
• Why is everyone talking about bond yields?
• Why Tesla stock is stuck in reverse

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. 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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The Nickel Mines Ltd (ASX: NIC) share price took a rapid leap higher just before 2pm AEST today. Less than 20 minutes later, shares in the S&P/ASX 200 Index nickel miner had gained 7%.

Now even that spike wasn’t enough to put shares back in the black for the day. With the Nickel Mines share price having opened the day sharply lower, the share price remains down 4% in late afternoon trading.

What drove Nickel Mines 7% share price spike this afternoon?

Nickel Mines shares surged within moments of its ASX release announcing the company’s potential to diversify into the electric vehicle battery supply chain.

Earlier this week, the Nickel Mines share price fell almost 19% from market close on Wednesday through to midday today.

That came after Tsingshan Holding Group reported it had signed a 1-year contract “to supply 60,000 tonnes of nickel matte to Huayou Cobalt and 40,000 tonnes to CNGR Advanced Material Co. Ltd”.

Tsingshan said it had successfully concluded trial production of the high-grade nickel matte in Rotary Kiln Electric Furnace (RKEF) facilities in the Indonesia Morowali Industrial Park at the end of 2020 (IMIP).

Initially, Nickel Mines management was unsure how this development would impact its own operations in the Indonesia Morowali Industrial Park.

In today, ASX release, the company’s directors dispelled any concerns, writing, “The ability for Tsingshan to produce a high-quality nickel matte within the IMIP suitable for use in the EV battery supply chain is an overwhelmingly positive development for Nickel Mines.”

Nickel Mines highlighted the potential for it to sell high-grade nickel matte into the global battery nickel supply chain.

What did management say?

Commenting on the developments, Nickel Mines’ managing director Justin Werner said:

The potential for RKEFs to produce a nickel matte for use in the rapidly growing battery supply chain has long been spoken about so it comes as no surprise to us that Tsingshan is now set to establish this as a commercially viable option.

For Nickel Mines to potentially be part of this evolution in the nickel market is an exciting development for the company and our shareholders and will further enhance our standing as a globally significant nickel producer with a unique capability of delivering nickel units for use across a broad spectrum of nickel markets.

Werner added that this is all still playing out and there won’t be any immediate change in Nickel Mines’ operations.

Nickel Mines share price snapshot

Despite this week’s selloff, the Nickel Mines shares have been a star performer over the past 12 months, up 160%. That compares to a 5% gain from the ASX 200.

Year-to-date the Nickel Mines share price is up 13%.

More reading

• Why these 3 ASX mining shares are crashing today

Motley Fool contributor Bernd Struben 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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There are a lot of options at the small end of the market for investors to choose from.

Two small caps that could be worth getting better acquainted with are listed below. Here’s what you need to know about them:

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software platform company. The company’s increasingly popular platform streamlines a number of processes such as employee administration, recruitment, on-boarding, learning, performance, remuneration, compliance training, and payroll.

It recently released its half year results and revealed further strong growth in its annualised recurring revenue (ARR). At the end of December, ELMO’s ARR reached a record $74.2 million. This was an increase of 42.8%. Management advised that this was underpinned by a combination of organic growth and the benefits of acquisitions.

Pleasingly, it still has a long runway for growth in the ANZ and UK markets. Furthermore, thanks to its jurisdiction agnostic platform, it has the option to expand internationally in the future.

Morgan Stanley is positive on the company. It currently has an overweight rating and $9.70 price target on its shares.

Mach7 Technologies Ltd (ASX: M7T)

Another small cap to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient.

In addition, management notes that Mach7’s award-winning enterprise imaging platform provides a vendor neutral foundation for unstructured data consolidation and communication to power interoperability. This enables healthcare enterprises to build their best-of-breed clinical ecosystems.

Last month the company released its half year results and revealed that its ARR had grown to $10.2 million at the end of the period. This was up 88% on the prior corresponding period and provides 64% coverage of its operating expenses.

Analysts at Morgans appeared to be happy with its performance. In response, they retained their add rating and lifted their price target to $1.68.

More reading

• Here are 4 ASX shares that insiders have been buying recently
• 2 quality SaaS ASX shares to buy
• Here’s why the Mach7 (ASX:M7T) share price is down 6% today
• 2 exciting ASX growth shares to buy this month
• Top brokers name 3 ASX shares to buy today

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 recommends Elmo Software and MACH7 FPO. The Motley Fool Australia has recommended Elmo Software and MACH7 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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South32 Ltd (ASX: S32), IGO Ltd (ASX: IGO), and Nickel Mines Ltd (ASX: NIC) share prices are all crashing today.

At the time of writing, South32’s share price is $2.835, down 1.9%. IGO’s share price is currently trading at $6.26, down 3.9%. And Nickel Mines comes in at $1.25, down $4.60. These falls are greater than the S&P/ASX All Ordinaries Index lag of 1.14%.

Nickel Mines has made a slight recovery this afternoon as the company announced it may enter the electric vehicle battery market. Its current share price is $1.265.

Let’s take a closer look at why these ASX mining companies are all tumbling today.

ASX mining shares rise and fall with commodity prices

As previously reported, the share price of ASX mining companies rises and falls with fluctuations in the commodities market. Today nickel enters the spotlight as its price takes a turn for the worse.

Currently, nickel is trading at US$16,088.50 a tonne. Yesterday, the metal was selling at approximately US$17,370 and last week it swapped hands for around US$19,160. A fall of more than US$3,000 (16%) in the space of a week!

In fact, nickel is one of the few minerals that is priced lower now (10% down) than this time last year.

The Australian Financial Review (AFR) reports that the price of nickel is sliding, and will continue to fall, as the nickel supply increases.

In economic theory – as supply increases, the price will decrease. This does not bode well for investors in nickel extraction companies.

South32’s share price is not falling as steeply as the other 2 ASX mining companies, possibly because it is not as reliant on nickel as IGO and Nickel Mines.

Share price snapshots

While South32’s share price is down today, it’s coming off a 52-week high of $2.90 from yesterday. In fact, if you had bought shares in the company during the COVID-19 market rout in March last year, you would be looking at a 70.7% return on investment.

IGO share price is much the same. While it has been falling since hitting its 52-week high at the beginning of 2021, its share price is 92% higher than at the end of March last year.

Nickel Mines is no exception to the trend. The company did hit its 52-week high 2 weeks ago. Even still, if an investor bought shares in the company at its low of 29 cents (again, at the height of COVID), they would be sitting on a whopping a 320.7% uplift.

The market capitalisations of South32, IGO, and Nickel Mines are $13.6 billion, $4.7 billion, and $3.1 billion respectively.

More reading

• ASX lithium shares to get price shock as commodities supercycle charges up
• These ASX silver shares fell today, along with the price of silver
• Sandfire (ASX:SFR) share price hits year high on profit result and supercycle hopes
• South32 (ASX:S32) posts 46% drop of HY21 profit
• Will ASX silver shares ride the commodity super cycle to new highs?

Motley Fool contributor Marc Sidarous 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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Chalice Mining Ltd (ASX: CHN) shares have tanked 6.25% at the time of writing to presently sit at $4.05.

Furthermore, since Wednesday’s close, the Chalice share price has fallen by around 11%, significantly more than the 1.7% fall seen in the All Ordinaries Index (ASX: XAO) over the past two days.

Let’s take a look at what the company has been up to.

Chalice Mining share price falls after latest presentation

On Monday, the Chalice Mining share price fell by nearly 4% after the miner released its latest investor presentation.

The ASX miner lists its Julimar site as Australia’s first “major” palladium discovery.

Palladium is used to create catalytic converters that are said to be more environmentally friendly than other types of converters. In February 2020, palladium reached its record price of US$2,856 per ounce.

Chalice believes that the heavy transport industry and energy storage sectors are rapidly growing areas but future palladium demand will increase even more.

According to Chalice, the palladium market has been in deficit for nine consecutive years.

The presentation draws further attention to some of the company’s gold operations and the Hawkstone nickel-copper project, noting that each of these areas has delivered compelling results.

What’s ahead for Chalice?

Chalice Mining continues to progress the Julimar Project, specifically, the major PGE-NI- Cu-Co-Au discovery.

In 2020, the ASX miner raised approximately $130 million to move the Julimar Project forward.

The miner also highlighted in its presentation that it is building trust with the key stakeholders of the Julimar Project, including indigenous and local communities, landowners and government parties.

The company plans to continue progressing with building its team and maintaining a pipeline of discoveries. Chalice will also continue pursuing its other projects including the Pyramid Hill Gold Project, Hawkstone Nickel-Copper-Cobalt Project, South West Nickel-Copper-PGE Project, and Viking Gold Project, among others. 

Chalice Mining share price snapshot

Over the past year, the Chalice Mining share price has exploded more than 1,500% higher. Year to date, Chalice shares have fallen by around 6%.

The ASX miner has a market capitalisation of $1.5 billion and 341.8 million shares outstanding.

More reading

• Why these 3 ASX mining shares are crashing today
• Why ASX uranium shares could run even hotter in 2021
• Why it could be a good time to buy Domino’s (ASX:DMP) shares
• Brokers name 3 ASX shares to buy right now
• Why the Nova Eye (ASX:EYE) share price is surging 7% higher

Motley Fool contributor Gretchen Kennedy 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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There’s no arguing with the numbers.

The past year (and then some) has seen the leading ASX uranium shares truly light up.

The Paladin Energy Ltd (ASX: PDN) share price, for example, is up 415% over the past 12 months. ASX uranium miner Deep Yellow Ltd (ASX: DYL)’s share price is up 246% over that same time.

Things have continued apace in 2021, with Deep Yellow shares up 24% in the calendar year and Paladin shares up 54%.

That more than handily outpaces the one-year 7% gains posted by the broader All Ordinaries Index (ASX: XAO), not to mention the 0.4% loss on the All Ords so far in 2021.

But the run higher for ASX uranium shares like these could only just be getting started.

Why ASX uranium shares may have a bright future

Australia may not opt to use uranium for its own power sources. Though Australia – both fortuitously and somewhat ironically – has among the world’s largest accessible uranium deposits buried beneath its soil.

And demand for uranium in other parts of the world is picking up as the globe attempts to wean itself away from carbon-based fuels. This is an increasingly important focus for environmental, social and governance (ESG) investments.

As Bloomberg reports, “Uranium producers are reaping rewards from the flood of money pouring into electrification and environmental, social and governance investing themes”. That’s seeing demand begin to outpace supply for the first time in a decade.

According to GJL Research analyst Gordon Johnson, “Uranium sector supply/demand balance is the tightest we’ve seen since pre-Fukushima.” Fukushima was the site of the post earthquake nuclear meltdown in Japan in 2011.

Pointing to the rising importance of ESG, Johnson says:

When you add to this, uranium stocks are now gaining attention from ESG investors due to their low GHG [greenhouse gas emissions] footprint and quintessential role as a clean energy alternative, we see the set-up for incremental/new Uranium investments as opportune.

Johnson said another potential tailwind for uranium shares is that institutional funds may be looking to increase their exposure to the sector. “If true, this could go on for a long time as they build significant positions ahead of the inevitable price rise in the commodity.”

Today’s share price moves

Both Paladin and Deep Yellow shares are selling off today. While the All Ords is down 1.1% in late afternoon trading, the Paladin share price has fallen 4.1% and the Deep Yellow share price is down 7% at the time of writing.

More reading

• Why is the Paladin Energy (ASX:PDN) share price heating up today?

Motley Fool contributor Bernd Struben 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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While the recent volatility has been disappointing, one positive is that it has dragged a number of growth shares down meaningfully from their recent highs.

One ASX growth share that could be in the buy zone now is Domino’s Pizza Enterprises Ltd (ASX: DMP).

Why Domino’s?

This pizza chain operator could be a great option for growth investors. Since the Domino’s share price hit a record high of $115.97 in February, it has pulled back by approximately 25%.

This appears to have left its shares trading at an attractive level for long term focused investors. This is due to its bold expansion plans, strong market position, and long track record of same store sales growth.

In respect to its expansion plans, at the end of the first half of FY 2021, Domino’s operated a total of ~2,800 stores across the ANZ, European, and Japanese markets.

It is aiming to grow its network to ~5,500 stores in these markets alone in the coming years. There’s also a reasonably high chance that the company could expand into other markets, giving it an even larger runway for growth. In fact, with its half year results, management stated that it “remains active in pursuing suitable Domino’s acquisitions.”

One broker that is positive on the company is Goldman Sachs. A recent note out of the investment bank reveals that its analysts have put a buy rating and $112.60 price target on its shares.

Based on the current Domino’s share price, this implies potential upside of over 30%.

Why does Goldman think the Domino’s share price is good value?

There are a number of reasons the broker is a fan of Domino’s. One of those is its growth potential in the European and Japan markets.

It commented: “Although short term performance has been positively impacted by the pandemic, DMP is in an increasingly strong position as it builds on recent momentum and takes advantage of opportunities in the market. We forecast both Japan and Europe to deliver significant store and earnings growth over the next three years, amounting to 24% and 23% EBITDA CAGR to FY23.”

Goldman expects this to lead to net profit after tax of $197.5 million in FY 2021, $241.8 million in FY 2022, and $284.6 million in FY 2023.

Based on this, the Domino’s share price is changing hands for 26x FY 2023 earnings. Goldman believes this represents good value given its current growth profile.

More reading

• The Domino’s (ASX:DMP) share price gave back all its gains in February
• Leading brokers name 3 ASX shares to sell today
• Will Wall Street’s overnight tumble send ASX 200 shares down today?
• What’s happening with ASX 200 tech shares today?
• ASX 200 goes higher, Afterpay sinks, Adbri impresses

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Nextdc Ltd (ASX: NXT)

According to a note out of Citi, its analysts have retained their buy rating but trimmed the price target on this data centre operator’s shares slightly to $14.45. The broker was pleased with NEXTDC’s half year results last month. Looking ahead, Citi notes that a good portion of its future earnings are already contracted. Furthermore, with the shift to the cloud accelerating, demand looks set to continue to grow in the coming years. The NEXTDC share price is fetching $10.51 on Friday afternoon.

Wesfarmers Ltd (ASX: WES)

A note out of Macquarie reveals that its analysts have retained their outperform rating but cut the price target on this conglomerate’s shares to $56.60. The broker has been looking at recent sales data and notes that the household goods sector continues to perform very strongly. In addition to this, the broker points out that with household savings at a record high, strong retail spending should be sustainable over the medium term. The Wesfarmers share price is trading at $49.45.

Westpac Banking Corp (ASX: WBC)

Analysts at Citi have also retained their buy rating and $26.00 price target on this banking giant’s shares. According to the note, after speaking with management, the broker believes Westpac’s Institutional Bank business is well-placed to overcome cost pressures and a moderation in volumes thanks to its asset quality. Outside this, the broker is positive on the company due to its balance sheet and expects this to underpin solid returns in the future. The Westpac share price is trading at $24.73 on Friday afternoon.

More reading

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• ANZ (ASX:ANZ) share price outperforms on broker “buy” upgrade
• What do big brokers think about the Afterpay (ASX:APT) share price this week?
• The ANZ (ASX:ANZ) share price just hit a 52-week high

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited and Westpac Banking. The Motley Fool Australia owns shares of 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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