Motley Fool Australia Chief Investment Officer Scott Phillips joined Peter Stefanovic on Sky News First Edition this morning for the key economic news of the day: This evening’s federal budget, and yesterday’s record close for the ASX 200.

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More reading

• ASX shares that will benefit from the upcoming index changes
• ASX 200 shares hit all-time high! How did we get here?
• This little ASX telco’s picking customers off the big boys: fundie
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Boral (ASX:BLD) share price in focus as it rejects Seven Group (ASX:SVW) takeover bid

Motley Fool contributor Scott Phillips 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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Earlier today the Suncorp Group Ltd (ASX: SUN) share price briefly touched on a 52-week high of $11.18 before market weakness dragged it lower.

When the insurance and banking giant’s shares hit that level, it meant they were up a sizeable 12% since the start of the year.

Can the Suncorp share price keep on climbing?

Despite the strong form of the Suncorp share price in 2021, one leading broker believes it still has plenty of gas in the tank.

According to a note out of Goldman Sachs this morning, its analysts have retained their buy rating and $12.05 price target on the company’s shares.

Based on the current Suncorp share price of $10.98, this price target implies potential upside of approximately 10% over the next 12 months.

And if you include the 5.4% fully franked dividend yield the broker is forecasting over the next 12 months, this potential return stretches beyond 15%.

What did Goldman say?

Goldman Sachs has responded to the release of Suncorp’s general insurance investor day update this morning.

It commented: “A very brief 3Q21 update suggests improved rate/volume trends in Australian personal lines have carried from 1H21 into 3Q21, reinvigorated broker originations have supported a return to growth in the bank from February, digital interactions have continued to increase (1H21 home/motor digital sales +10%) and SUN has strong reinsurance cover for the remainder of the year (we estimate SUN is on the cusp of its FY21 aggregate cover).”

The broker notes that Suncorp’s insurance business and efficiency targets remain the same, which bodes well for the future.

Goldman explained: “SUN’s three year targets for the insurance business remain unchanged, calibrated to a GI underlying margin of 10-12% by FY23 (GSe 10.0%), while efficiency targets also remain unchanged, where SUN is targeting a group cost base of A$2.8bn over FY21/FY22, before reverting to A$2.7bn in FY23. SUN has however provided more colour around the drivers of margin expansion plus source of cost savings to FY23.”

Overall, the broker was pleased with the update and believes its investment thesis remains intact.

It concluded: “On balance, our first take of material released this morning suggests no immediate risks to our FY21 estimates. In FY23 we forecast an underlying margin of 10.0%, where we appear to be slightly ahead of VA consensus at 9.7%. A shift to the mid-point of SUN’s margin target would represent around 6% upside to our cash EPS, and on balance with claims management optimisation the most meaningful driver of SUN’s expected margin trajectory, we expect any outer year upside to consensus margin expectations today will be dependent on how convincing, clear and tangible SUN frames opportunities in this morning’s presentation. Maintain Buy.”

More reading

• 7 ASX 200 shares with emission reduction strategies
• Suncorp (ASX:SUN) share price on watch after news its ditching super
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• Why the Suncorp (ASX:SUN) share price is on watch
• Credit Clear (ASX:CCR) share price jumps 10% on Q3 update and Suncorp contract win

Motley Fool contributor James Mickleboro 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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Although the Australian share market has climbed to a new high this week, not all shares are performing as positively.

Two ASX shares that are trading significantly lower than their 52-week highs are listed below. Here’s why now could be a good time to invest:

Bravura Solutions Ltd (ASX: BVS)

The Bravura share price has underperformed over the last 12 months. It is down a disappointing 39% from its 52-week high.

The provider of software products and services to the wealth management and funds administration industries has had a difficult time over the last two years. This has been driven by Brexit and COVID-19 uncertainty.

The good news, though, is that trading conditions appear to be improving. For example, last week the company was able to reaffirm its guidance for FY 2021 net profit after tax of $32 million to $35 million and second half revenue growth of 10% half on half.

This went down well with Goldman Sachs. In response to its update, the broker retained its buy rating and lifted its price target on the company’s shares to $3.90.

Goldman Sachs believes the opportunity for Bravura remains compelling in the UK and Australia. It also expects its emerging microservices ecosystem strategy to transform the business to a subscription-based model and drive growth.

Kogan.com Ltd (ASX: KGN)

This ecommerce company’s shares have also fallen heavily from their highs. The Kogan share price is down 60% from its 52-week high.

Investors have been selling Kogan’s shares due to concerns over its valuation and outlook. In respect to the latter, the company’s recent trading update revealed a sharp slowdown in its revenue growth and a reversal in its profit growth. This was driven by COVID-19 tailwinds easing and inventory issues.

However, this could be a buying opportunity for long-term focused investors. Credit Suisse recently retained its outperform rating and trimmed its price target to $17.93.

The broker believes the issues it is facing are only temporary and remains positive on its long term growth potential. And with Credit Suisse forecasting earnings per share of 46.4 cents in FY 2022, Kogan’s shares are changing hands for a respectable 22x FY 2022 earnings now.

More reading

• Down 9% today, why the Redbubble (ASX:RBL) share price continues to tumble
• These are the 10 most shorted shares on the ASX
• 3 quality mid cap ASX shares rated as buys
• Are there buying opportunities among ASX COVID fallen stars?
• Broker tips Bravura (ASX:BVS) share price to storm 20% higher

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and Kogan.com ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd and Kogan.com 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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Vitalharvest Freehold Trust (ASX: VTH) shares were on the rise today. By the market’s close, the Vitalharvest share price was trading 2.38% higher at $1.29. This came after the company announced it has accepted the latest buyout offer from Macquarie Group Ltd (ASX: MQG) subsidiary Macquarie Agricultural Funds Management. 

Vitalharvest is an investment trust. The company’s objective is to provide unitholders with exposure to real agricultural property assets with earnings profiles exposed to the growing global demand for nutritious, healthy food.

Takeover background

Macquarie Agricultural Funds Management (MAFM) has been in a tug-of-war over Vitalharvest shares with private equity firm Roc since earlier this year. 

The tussle has now reached its eighth offer, with Vitalharvest accepting Macquarie’s revised offer of $1.28 per Vitalharvest share. It’s still possible, however, that Roc may submit yet another offer, further impacting the Vitalharvest share price.

For what it’s worth, the Vitalharvest board has once again determined that it is in the best interests of its shareholders to accept the Macquarie proposal. Vitalharvest has already agreed to amend the scheme implementation deed – the original of which is now more than a month old – to reflect the terms of the eighth Macquarie proposal.

Other than price, this latest deal is on substantially the same terms as the existing scheme implementation. 

Vitalharvest wants to wrap this up

While some long-term investors may be enjoying this unfolding story, and the rising Vitalharvest share price, the company appears to be anxious to end the stalemate, according to its release:

Consistent with maximising unitholder value and unitholders receiving any consideration on a timely basis, Vitalharvest is seeking to bring this process to a conclusion as quickly as possible in the best interests of unitholders and is conscious that any further meeting deferrals could cause implementation to be delayed past the end of the financial year.

Vitalharvest will update unitholders on the new meeting date which Vitalharvest is looking to hold as soon as possible and is anticipated to be held by early June. Vitalharvest will provide a revised date for the meeting and any further supplementary disclosure as soon as possible.

Vitalharvest share price snapshot

The Vitalharvest share price has been riding the wave of increasing takeover offers this past month, rising by almost 8%. More broadly, the company’s share price has risen by around 75% over the past 12 months. 

Based on its current valuation, the company has a market capitalisation of around $233 million.

More reading

• Leading brokers name 3 ASX shares to sell today
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• 2 impressive ASX shares to buy in May 2021
• Is the Macquarie (ASX:MQG) share price in the buy zone after its FY21 results?
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high

Motley Fool contributor Lucas Radbourne-Pugh 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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The Podium Minerals Ltd (ASX: POD) share price is wobbly today after the company revealed two new drilling targets at Parks Reef Deeps.

It’s been a bumpy ride for Podium shares today after gaining more than 16% yesterday. In late afternoon trade, the Podium share price has plunged from trading 6% higher at 53 cents to land right back where it started at 50 cents apiece. 

Podium is an exploration and resources development company focused on platinum group metals, gold, and nickel-copper sulphides. The company’s project profile includes its Parks Reef project in Western Australia, the WRC nickel and copper sulphide project, and various others.

Podium gets government backing

Podium has secured permission and funding from the West Australian government’s infrastructure and exploration fund to drill two diamond drilling holes in Parks Reef, part of the Murchison pastoral land in rural WA. 

Under the deal, the state government will pay 50% of the drilling costs (around $150,000) in boring the two 750m deep holes. This will allow Podium to test potential mineral deposits in Parks that run down more than 500 metres beneath the surface.

The company noted that recent successful drilling programs have identified “high-grade zones” hosting platinum, palladium and rhodium and iridium.

The Podium share price rocketed at the beginning of last week after the company revealed high-grade rhodium and iridium was intersected in Park. Podium’s next two holes will dive twice as deep, and a third hole is planned further outside of the area.

Management comments

Podium executive chair Clayton Dodd noted the government’s support, saying:

The company would like to express its gratitude to the State Government… for selecting Podium as a suitable applicant and for the financial assistance to drill an exciting new dimension to the Parks Reef PGM project.

By successfully intersecting the reef at such depths would clearly demonstrate the vast dimensions of the mineralised horizon and any variability in PGM grades and may provide invaluable vectors toward higher grade sectors along the extensive 15km PGM strike length of the reef.

Podium share price snapshot

The Podium share price has been a big performer of late, rising more than 35 cents in the past 6 weeks, a quadrupling in value. The Podium share price has risen 2,375% in the past 12 months.

More reading

• Why the Podium Minerals (ASX:POD) share price soared 27% today

Motley Fool contributor Lucas Radbourne-Pugh 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 for investors on the Australian share market. To narrow things down, I have picked out two ASX shares that have been tipped as buys this month.

Here’s what you need to know about them:

Adore Beauty Group Limited (ASX: ABY)

With the shares of Australia’s leading online beauty retailer losing half of their value since their IPO, they could be well worth a closer look today.

That decline has been driven by a selloff of ecommerce shares, weakness in the tech sector, and concerns over the valuations of high PE stocks.

A note out of Morgan Stanley last week reveals that its analysts believe the selloff has created a buying opportunity. The broker has an overweight rating and $5.00 price target on its shares.

While it acknowledges that the next six months could be tough due to the cycling of significant sales growth from a year earlier, it remains positive on the long term. Particularly given how Adore Beauty is the leader in a structural growth market.

ResMed Inc. (ASX: RMD)

Another ASX share to look at is ResMed. It is a sleep treatment-focused medical device company that has been growing at a consistently strong rate for years.

This has been driven by its industry-leading products, growing software business, and the increasing awareness of sleep disorders. Pleasingly, the company is just about to release a new CPAP device, AirSense 11.

It has been tipped as a key driver of growth in the coming years and is expected to lead to users of older devices upgrading for better outcomes.

One broker that is a fan of the company is Credit Suisse. Earlier this week it retained its outperform rating and $29.00 price target on the company’s shares.

It has suggested that around a fifth of machines bought between FY 2015 and FY 2019 could be upgraded to the new technology.

More reading

• Why Adore Beauty, APN Property, Boral, & Calix shares are pushing higher
• Here’s why the Adore Beauty (ASX:ABY) share price is tumbling 9% today
• Leading brokers name 3 ASX shares to buy today
• Are there buying opportunities among ASX COVID fallen stars?
• Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Adore Beauty Group Limited. The Motley Fool Australia has recommended ResMed. 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 Tietto Minerals Ltd (ASX: TIE) share price is in the green today. At the time of writing, shares in the gold-focused company are trading at 31 cents each – up 6.9%. At one point during intraday trading, the Tietto share price surged by as much as 12.06% before partially retreating.

By comparison, the All Ordinaries Index (ASX: XAO) is currently trading 1.23% lower for the day.

Today’s price rise comes after the company announced “multiple shallow high-grade gold” results from a recent drill at its Côte d’Ivoire gold mine.

Let’s take a closer look at today’s news.

What’s boosting the Tietto share price?

In a statement to the ASX, Tietto Minerals says initial drill results at its Abujar Gold Project are promising.

Highlights from the results include a:

• 5-metre-wide ore with 109g per tonne of gold.
• 4-metre-wide ore with 26g per tonne of gold.
• 12-metre-wide ore with 3.3g per tonne of gold.
• 3-metre-wide ore with 8.4g per tonne of gold.

The company claims drilling results show a “contiguous zone of shallow ultra-high-grade” gold with a 200m strike.

Tietto says it had $52 million of cash on hand at the end of March and, as such, is “very well positioned” to fast-track and pursue further development of the Abujar Gold Project.

Management commentary

Tietto managing director Dr Caigen Wang said:

Our infill drilling program at AG South has again exceeded our expectations with multiple ultra-high grade gold hits, including a project best intercept of just over 1m at 0.53kg/t gold in the holes reported today.

These high impact holes have potential to add material shallow high‐grade ounces early in the mine schedule, which we expect to be positive for our open pit optimisation. 

Once the infill program is completed, we intend to use our diamond drill rigs to test the multitude of exploration targets around our proposed mill at Abujar to drive future resource growth.

Gold commodity pricing

Presently, gold is trading on the commodities market at US$1,836 per troy ounce. It’s up 3.24% this week and 5.98% this month, but down 3.18% since the beginning of the year.

The website Trading Economics expects the price of gold to continue to slide over the next 12 months. It tips the precious metal to be around US$1,700 in one year’s time. Moving forward, the gold price could have a material effect on the Tietto share price, as most commodity prices do for mineral explorers.

Tietto share price snapshot

Over the past 12 months, the Tietto share price has fallen by 18.4%. The company hit its 12-month low of 28.5 cents only last week.

Tietto Minerals has a market capitalisation of $141.4 million.

More reading

• Why a2 Milk, Afterpay, Nearmap, & REA Group shares are sinking
• ASX shares that will benefit from the upcoming index changes
• Magnum (ASX:MGU) share price plummets 9% despite business update
• Leading brokers name 3 ASX shares to sell today
• Here are the US shares ASX investors were buying last week

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a very disappointing decline. At the time of writing, the benchmark index is down 1.05% to 7,097.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is down a 5.5% to $5.75. Investors have been selling the infant formula company’s shares after it downgraded its FY 2021 guidance for the fourth time on Monday. Adding to the selling pressure were a number of bearish broker notes this morning. One of those came from Credit Suisse, which has retained its underperform rating and slashed its price target on the company’s shares to just $5.00.

Afterpay Ltd (ASX: APT)

The Afterpay share price is down a disappointing 9% to $88.92. Investors have been selling Afterpay and other tech shares on Tuesday after the tech-focused Nasdaq index sank lower during overnight trade. The Nasdaq index ended the session with a 2.55% decline. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down 3.8%.

Nearmap Ltd (ASX: NEA)

The Nearmap share price has fallen 7.5% to $1.69. As well as coming under pressure by the tech selloff, legal issues are weighing on the aerial imagery technology and location data company’s shares. Nearmap was hit with legal proceedings from rival Eagle View last week. It alleges patent infringement in relation to its roof estimation technology.

REA Group Limited (ASX: REA)

The REA Group share price is down 4% to $153.93. Profit taking appears to be weighing on this property listings company’s shares this morning. Not even a bullish broker note out of Macquarie has been able to stop the decline. Its analysts have retained their outperform rating and lifted their price target to $179.10.

More reading

• Leading brokers name 3 ASX shares to sell today
• Flight Centre and Zip were among the most traded ASX shares last week
• ASX 200 shares hit all-time high! How did we get here?
• Afterpay (ASX:APT) share price dives 7% despite US-listed rival surging on results
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink

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 Nearmap Ltd. The Motley Fool Australia has recommended Afterpay, Nearmap Ltd., and REA 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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We are fast approaching the time when the market indices get rejigged and new ASX share entrants could outperform.

History has shown that the share prices of ASX companies that are put on the benchmarks tend to beat the market in the weeks prior to their inclusion.

This means there could be a buying opportunity for nimble-footed ASX investors.

S&P rebalancing of the ASX indices

Standard and Poor’s (S&P) rebalances the key indices every quarter. This includes the S&P/ASX 200 Index (Index:^AXJO), along with its sister indices like the S&P/ASX 100.

ASX shares that have lagged are usually dropped and replaced by those that have performed well.

This isn’t the only criteria for inclusion or exclusion. But you can see why the market tends to watch this event closely.

ASX shares outperform ahead of inclusion

“Our analysis shows that companies that are included in the ASX 200 can generate alpha prior to their inclusion,” said Morgan Stanley.

“Since March 2007, inclusions outperformed the market by +7.5% for the period from 20 days prior to announcement up to implementation.”

High probability outcomes from ASX index changes

If you also shorted the ASX shares that are booted from the top 200 benchmark, the returns jump to 13.7% on average.

What’s more, the chance of success appears high if history repeats. The success rate for outperforming the market is 81% over the 53 rebalance periods that Morgan Stanley measured.

ASX shares to watch ahead of the rebalance

The question is which ASX shares are the likely new members to the club. The broker reckons the Orocobre Limited (ASX: ORE) share price has a good chance.

This isn’t necessarily because of its proposed merger with the Galaxy Resources Limited (ASX: GXY) share price.

No doubt the transaction will create a much larger lithium mining group. But even without the merger, both ASX shares (particularly Orocobre) would qualify to be added to the ASX 200, according to Morgan Stanley.

Just as well given the marriage isn’t expected to be consummated before August.

“We think that ORE will be added to the 200, as it will have less impact than if GXY were to go in and subsequently be removed post merger,” said the broker.

Other potential ASX winners and losers

Other ASX shares that it believes are likely to be added to the index include the Chalice Mining Ltd (ASX: CHN) share price and Uniti Group Ltd (ASX: UWL) share price.

On the flipside, the Appen Ltd (ASX: APX) share price could be the first in the coveted WAAAX group of tech darlings to be unceremoniously dumped.

“APX was the largest to join its affiliated members within the 100 and could be the first to drop out,” explained Morgan Stanley.

“APX float-adjusted market cap has fallen to A$1,398mn, well below its 6-month average of A$2,544mn – the value on which its rank is based.”

The good news for Appen shareholders is that the broker doesn’t rate this as a high probability event.

More reading

• ASX 200 shares hit all-time high! How did we get here?
• This little ASX telco’s picking customers off the big boys: fundie
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Boral (ASX:BLD) share price in focus as it rejects Seven Group (ASX:SVW) takeover bid
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brendon Lau owns shares of Galaxy Resources Limited, and Orocobre Limited. Connect with me on Twitter @brenlau.

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The Magnum Mining and Exploration Ltd. (ASX: MGU) share price is in reverse during late afternoon trade. This comes despite the company providing a positive update to the market on its operations.

At the time of writing, the mineral miner’s shares are fetching 15 cents, down 9.09%.

Magnum operations fast-tracked

Investors are hitting the sell button on Magnum shares following the company’s update and amid a broader sell-off on the ASX today.

In its announcement, Magnum provided a number of updates regarding the progress of its “shovel ready” magnetite project in Nevada, United States.

The first piece of news related to the relocation of the company’s managing director, Mr Dano Chan, to Nevada from this week. The move will allow Mr Chan to oversee the project’s development and aligns with Magnum’s efforts to speed up works onsite.

Magnum also stated that it’s currently in talks with port authorities in the United States. It is working with contractors and logistics firms to fast-track its first iron ore shipments to international markets.

In addition, the company plans to open an office in Salt Lake City at the end of this month. Discussions with several tier-1 steel mills are taking place along with commodity buyers for the purchase of its iron ore.

Lastly, Magnum noted it is sending a second set of iron ore samples for lab testing. It hopes that it will be able to finalise a design and determine costings for producing hot briquetted iron (HBI) and pig iron.

Judging by today’s Magnum share price action, investors are not overly excited by the company’s updates.

Magnum managing director Dano Chan commented:

We are initially focusing on mining the high-grade pods which allow Magnum to start generating cash flow quickly and accelerate the development, size and scale of the mine to take advantage of the record iron ore prices.

We expect this fast-track DSO strategy to bring value to our shareholders, limit shareholder dilution and also help fund the expansion of the mine and growth plans for future HBI Green Steel product.

Magnum share price review

A strong 12 months hyped up by positive investor sentiment has led the Magnum share price to jump by over 260%. Year to date performance is just as impressive, with Magnum shares posting gains of more than 170%.

Based on valuation metrics, Magnum commands a market capitalisation of around $76 million, with approximately 465 million shares outstanding.

More reading

• Why the Magnum (ASX:MGU) share price is soaring 12% today
• Here’s why the Magnum (ASX:MGU) share price is rising 6% today
• Why the Magnum (ASX:MGU) share price soared 16% today

Motley Fool contributor Aaron Teboneras 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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