There are a few really compelling shares in the S&P/ASX 200 Index (ASX: XJO). They might be worth a spot in your portfolio.

Shares in the ASX 200 might be large enough that they can get through rocky times, whilst also having good growth potential.

These two could well be worth thinking about:

Bapcor Ltd (ASX: BAP)

Bapcor describes itself as the leading auto parts business in Australasia. It has over 1,000 locations across Australia, New Zealand and Thailand.

The driving force of profit for the company is its Bapcor Trade business, which is predominately Burson. That’s the business that provides high quality service for mechanics. It has been generating pleasing same store sales growth for years. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin was 14.9% two years ago, it was up to 18.3% in the FY21 half-year result.

Bapcor also has a large retail business called Autobarn. This is seeing strong growth during these unprecedented COVID-19 times.

It also has a specialist wholesale division with multiple businesses, with some being industry leaders in their categories.

There are a number of growth areas for the business. It’s growing its existing network footprint. The ASX 200 share is optimising its supply chain. Bapcor is investing in new and upgraded technology. A key part of future growth is that it’s expanding into Asia.

One way it’s getting more exposure to Asia is an investment in Tye Soon. Bapcor now owns 25% of the Singapore-listed business. It’s the most prominent auto parts distributor in South East Asia and North East Asia. It operates 60 locations which, in FY19, generated SG$222 million of revenue.

In a FY21 trading update for March 2021, the ASX 200 share said that business performance has continued at similar levels to the first six months. Trade same store sales went up 13%, Autobarn same store sales were up 35% and specialist revenue excluding acquisitions was up 17%.

The fundamentals of the vehicle aftermarket remain strong, with an increase in second hand car sales, continued preference for cars over public transport and more domestic holidays where people use their cars.  

EML Payments Ltd (ASX: EML)

EML has a payment solutions platform that provides the technology to power the payment process so money can be moved quickly and securely. It connects its customers to their customers.

It offers various products like virtual account numbers, gift cards, salary packaging, gaming payouts and so much more.

One of the main segments of EML’s business is its general purpose reloadable (GPR). In FY21, it has become the largest and fastest growing segment. In the first half of FY21, more than 70% of deals won were in the GPR segment.

The ASX 200 share recently entered the opening banking sector (through an acquisition) which enables consumers and businesses to share banking data and initiative real time payments securely between two accounts.

The primary objective of open banking, according to EML, is to enable faster competition and innovation in banking and payments, improving the user experience for consumers and merchants.

EML says that combining its account to account services and opening banking with existing prepaid and banking as a service capabilities expands the addressable market and deepens existing relationships.

In FY21, EML is expecting revenue to grow by 45% to 56%, EBITDA to be up between 54% to 66% and underlying net profit to be up between 25% to 40% to a range of $30 million to $33.5 million.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 drops, Challenger plummets, Lynas falls
• Aussie dollar shoots higher! Here are some ASX winners
• ASX stock of the day: AnteoTech (ASX:ADO) shares top ASX
• Why the Magellan (ASX:MFG) share price has lost its magic

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended EML Payments. 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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More reading

• Broker tips REA Group (ASX:REA) share price to shoot higher from here
• 2 compelling ASX 200 shares that should be in your portfolio
• Is the Woolworths (ASX:WOW) share price in the buy zone?
• Top broker thinks Wesfarmers (ASX:WES) share price is good value
• 2 ASX dividend shares with fully franked yields of almost 5%

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 Wesfarmers Limited (ASX: WES) share price is one to watch this morning after an after-market update from the Aussie conglomerate.

Why is the Wesfarmers share price on watch?

Wesfarmers last night provided an update on its Kmart Group plans. Kmart is one of the three key retail brands under the Wesfarmers banner, alongside Target and Catch.com.au.

The Aussie conglomerate is pushing to make Kmart a focal point of its brands. Key highlights cited by Wesfarmers include a large and growing addressable market, competitive advantages driven by scale and technology-enabled growth.

The Wesfarmers share price will be one to watch this morning as investors take in the latest update and vision for the group’s retail arm.

Kmart recorded $6.1 billion in annual sales through to 30 June 2020. That came from nearly 1 billion units sold in ~190 million transactions. The group’s online retail recorded more than 250 million website sessions during the year.

The Wesfarmers share price has been performing strongly to start the year. That includes a 7.8% gain in 2021 compared to a 5.0% gain for the S&P/ASX 200 Index (ASX: XJO).

Kmart is focused on a few things to drive lower costs and higher margins. Those include lower production costs, lower price, higher volume and stronger sourcing and product development.

The group is also expecting strong brand recognition and engagement to help drive sales. 10 years ago, the Kmart network had 187 stores across Australia and New Zealand. Now,  the company is hoping to have 271 Kmart stores with 57 “K Hubs” by December 2021.

Wesfarmers is hoping the restructure of its retail arm can kickstart a new phase of growth. That makes the Wesfarmers share price worth watching in today’s trade.

Foolish takeaway

The Wesfarmers share price is on watch after the latest update on the Kmart transformation. Shares in the Aussie conglomerate are up 10 per cent in the last month in a positive start to the quarter.

More reading

• Top broker thinks Wesfarmers (ASX:WES) share price is good value
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 drops, Challenger plummets, Lynas falls
• Latitude (ASX:LFS) makes a splash on its ASX debut
• Aussie dollar shoots higher! Here are some ASX winners

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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The Woolworths Group Ltd (ASX: WOW) share price was out of form on Tuesday despite the release of an announcement.

The retail conglomerate’s shares edged 1% lower to $41.63.

What did Woolworths announce?

On Tuesday Woolworths announced that it is investing $223 million to increase its stake in data science and advanced analytics business Quantium from 47% to 75%.

Woolworths notes that the two parties have been working together closely since 2013 following an original investment of $20 million for a 50% stake.

Since then, the partnership has enabled Woolworths and its supplier partners to make customer-first decisions across pricing, ranging, and promotions.

What’s next?

Following the completion of the transaction, Quantium will form part of Woolworths Group, and a new business unit called Q-Retail will be established.

Q-Retail will bring together Quantium and Woolworths Group’s collective data science and advanced analytics capabilities with a focus on delivering against the company’s advanced analytics aspirations.

Is the Woolworths share price in the buy zone?

One leading broker that has responded positively to the news is Goldman Sachs.

It commented: “The transaction is expected to complete prior to the end of the financial year. Upon completion, a new business unit Q-Retail is expected to be established focusing on advanced analytics for the Retail arms. No further details have been disclosed regarding the ambitions and objectives of this business unit, however we believe this will satisfy internal demands on data lead management as well as leveraging data IP through revenues to external parties.”

“We view this investment as a strategically aligned development in view of the increasing importance for data analytics and digital retailing in the industry. We make no changes to our estimates pending completion of the transaction,” Goldman added.

The broker has retained its buy rating and $43.60 price target on its shares. Based on the current Woolworths share price, this implies a potential total return of ~6.5% over the next 12 months including dividends.

More reading

• ASX 200 down 0.4%: Afterpay delivers stellar Q3 growth, Rio Tinto Q1 update
• Woolworths (ASX:WOW) share price lower despite announcing $223m investment
• Wesfarmers (ASX:WES) share price climbs 10% in a month amid ‘favourable momentum’
• Top broker picks ASX shares next in line for a profit upgrade
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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 Wesfarmers Ltd (ASX: WES) share price has been a positive performer in 2021.

Since the start of the year, the conglomerate’s shares have risen approximately 8%.

This leaves the Wesfarmers share price trading within a whisker of its record high of $56.40.

Can the Wesfarmers share price keep on climbing?

According to one leading broker, the Wesfarmers share price can still go higher from here.

A note out of Goldman Sachs this morning reveals that its analysts have retained their buy rating and $59.70 price target on the company’s shares.

This price target implies potential upside of 6% for its shares over the next 12 months excluding dividends. If you include them, the potential return for investors stretches to just over 9%.

What did Goldman Sachs say?

Goldman Sachs notes that yesterday morning Wesfarmers released an update on its Kmart business.

And while there was a muted response to it from the market, leading to the Wesfarmers share price edging lower, the broker saw positives in the release.

Goldman commented: “Wesfarmers hosted an investor presentation focused on the Kmart business today. While there were no major strategic redirections or investments announced, it offered a reassurance of ongoing strategy implementation, maintaining industry leadership and an update of early signs of trading from converted Target stores.”

Some key takeaways from the update that Goldman highlighted include:

“Scale of sourcing and offer across Australia is seen as a key advantage that Kmart has vs. similar operators. Management believes that scale is likely to improve further as Target stores are converted across.”

“The aspirational target first introduced in 2017 (A$10bn in sales, A$1bn in EBIT and 6 stock turns per annum) has been maintained, along with indications of addressable market opportunities across a range of categories.”

“90% of the stores have been converted into the Plan C format which includes mobile fixtures and dynamic space allotment based on demand. These formats help Kmart evolve without need for significant refurbishments.”

Overall, the broker was happy with the update and continues to see the Wesfarmers share price as good value at the current level.

More reading

• Latitude (ASX:LFS) makes a splash on its ASX debut
• 2 of the best ASX dividend shares to buy
• Wesfarmers (ASX:WES) share price climbs 10% in a month amid ‘favourable momentum’
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• Is the Klarna / Flybuys partnership the future for ASX BNPL providers?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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With interest rates likely to remain at very low levels for some time to come, it looks like dividend shares will be the best place to generate a passive income for a while yet.

But which ASX dividend shares should you look at? Here are two to consider:

Accent Group Ltd (ASX: AX1)

The first dividend share to look at is Accent. It is a footwear-focused retailer which owns a collection of popular store brands. These include HypeDC, Platypus, and The Athlete’s Foot.

Accent has been growing at a consistently solid rate over the last few years. This strong form has been driven by new store brand launches, the expansion of its existing footprint, and growing demand in-store and online.

Pleasingly, FY 2021 has been no different, with Accent on course to deliver a stellar profit result in August. During the first half, the company achieved a 6.6% increase in total sales to $541.3 million and a 57.3% increase in net profit after tax to $52.8 million.

Bell Potter is confident on Accent’s outlook and has put a buy rating and $2.65 price target on its shares.

The broker is also forecasting an 11.9 cents per share dividend in FY 2021. Based on the current Accent share price, this will mean a fully franked 4.7% yield.

Telstra Corporation Ltd (ASX: TLS)

A second ASX dividend share to look at is Telstra. While the telco giant has been a disaster for income investors over the last five years, it finally appears to have turned a corner.

This is thanks to its T22 strategy which is creating a much leaner business and one which is expected to return to growth as soon as next year.

Telstra’s CEO, Andy Penn, explained: “I am confident the many initiatives we have taken under our T22 program, particularly in simplifying the business and the digitisation program, will further improve customer experience.”

“To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused,” he added.

Goldman Sachs is a fan and feels the Telstra share price is good value. It currently has a buy rating and $4.00 price target on its shares.

The broker also believes that its dividend cuts are over and is forecasting a 16 cents per share dividend for the foreseeable future. Based on the latest Telstra share price, this represents a fully franked 4.7% dividend yield.

More reading

• Why the Telstra (ASX:TLS) share price is a buy today
• Why Accent, Bank of Queensland, Freelancer, & Zip shares are pushing higher
• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
• 2 ASX dividend shares with generous yields in 2021
• Rates could be on hold for years so buy these excellent ASX dividend shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Accent 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) was out of form and sank lower. The benchmark index dropped 0.7% to 7,017.8 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to sink

It looks set to be a tough day of trade for the Australian share market on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day a sizeable 78 points or 1.1% lower this morning. This follows a poor night of trade on Wall Street, which saw the Dow Jones fall 0.75%, the S&P 500 drop 0.7%, and the Nasdaq tumble 0.9%.

Oil prices fall

It could be a difficult day for energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices pulled back. According to Bloomberg, the WTI crude oil price is down 1.2% to US$62.61 a barrel and the Brent crude oil price has fallen 0.8% to US$66.50 a barrel. This decline was driven by demand concerns.

BHP third quarter update

The BHP Group Ltd (ASX: BHP) share price will be one to watch this morning when it hands in its third quarter update. Investors will be keen to see if the mining giant is on course to achieve its guidance for FY 2021. BHP is aiming for full year iron ore production of 245 – 255Mt, copper production of 1,510-1,645kt, and petroleum production of 95-102 MMboe.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) could be on the rise after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.45% to US$1,778.80 an ounce. Demand for safe haven assets appears to have driven the precious metal higher.

Trans-Tasman travel bubble concerns

Travel shares such as Qantas Airways Limited (ASX: QAN) and Webjet Limited (ASX: WEB) will be on watch today amid concerns over the Trans-Tasman travel bubble. This follows news that a border worker in Auckland has tested positive for COVID-19 and is now quarantining.

More reading

• ASX 200 drops, Challenger plummets, Lynas falls
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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 S&P/ASX 200 Index (ASX: XJO) fell by 0.7% today to 7,018 points.

Here are some of the highlights from the ASX:

Challenger Ltd (ASX: CGF)

The Challenger share price was the worst performer in the ASX 200 today, falling by around 16% after releasing its quarterly update for the period to 31 March 2021.

The annuity business reported that its group assets under management (AUM) went up 8% for the quarter and went above $100 billion.

Life investment assets went up 6% for the quarter. This benefited from record quarterly annuity sales of $1.6 billion and record quarterly life book growth of 9.2% for the quarter.

Funds under management (FUM) went up 9% for the quarter, including $7 billion of net flows.

However, the company said that normalised net profit before tax is expected to be at the bottom end of its guidance range of $390 million to $440 million.

The ASX 200 company said that the earnings guidance reflects the sharp decline in credit spreads over the year, which were not fully reflected in customer pricing. Challenger is responding to the investment conditions by significantly adjusting annuity pricing.

Challenger’s managing director and CEO Richard Howes said:

Sales of our institutional term annuity and Challenger Index Plus have been very strong, reflecting the investment we are making to build relationships with new institutional clients.

Annuity sales also benefited from stabilisation in the retail adviser market, with domestic retail term sales up 32%. As previously flagged, Japanese annuity sales moderated following the strong start to the year.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price was another of the worst performers in the ASX 200. It fell around 8%.

Today, Lynas revealed its quarterly report for the period ending 31 March 2021. It said that total rare earth production was 4,463 tonnes. NdPr (neodymium-praseodymium) production was 1,359 tonnes.

Quarterly sales revenue was $110 million, whilst quarterly sales receipts were $133 million. The miner finished with a closing cash balance of $568.5 million.

Lynas said that favourable market conditions continued through the quarter. Demand for NdPr remained robust accompanied by higher prices for both NdPr and SEG, leading to another strong quarterly result for the period ending 30 March 2021.

Demand for dysprosium increased and terbium stabilised during the quarter. NdPr and SEG selling prices reached new records and the average selling price across the full range was A$35.5 per kilo during the quarter.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price fell 0.5% today after reporting its quarterly update to investors.

The ASX 200 share said that Pilbara iron ore shipments were up 7% year on year to 77.8 million tonnes. Pilbara iron ore production was down 2% year on year to 76.4 million tonnes.

Production was lower due to above average wet weather in the mines through February and fixed plant reliability.

Rio Tinto chief executive Jakob Stausholm said:

We achieved an overall solid operating performance in the first quarter. We have maintained guidance ranges in all our products, with site teams successfully managing the effects of significant rainfall, in particularly at our Australian iron ore assets.

It has been a period of deep reflection for the company, and I have personally spent a significant amount of time listening, learning and taking actions, in particular to better manage traditional owner partnerships and cultural heritage. I have appointed a new leadership team and the transition is progressing well. We have set out clear priorities to develop a stronger Rio Tinto. Our focus is to become the best operator, strive for impeccable ESG credentials, excel in development and secure a strong social licence.  

More reading

• Aussie dollar shoots higher! Here are some ASX winners
• ASX stock of the day: AnteoTech (ASX:ADO) shares top ASX
• Why Altium, Challenger, Lynas, & Sydney Airport shares are sinking
• Why the Magellan (ASX:MFG) share price has lost its magic
• ASX 200 down 0.4%: Afterpay delivers stellar Q3 growth, Rio Tinto Q1 update

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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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If you’re looking for some quality additions to your portfolio this month, then the two ASX shares listed below could be worth considering.

They have been tipped as shares that could generate strong returns for investors in the future. Here’s why they are rated very highly:

NEXTDC Ltd (ASX: NXT)

NEXTDC is Australia’s leading data centre operator with a total of nine centres located across Australia. It has also recently opened up offices in Singapore and Tokyo and is looking to expand into these markets in the near future.

This could be a great move by NEXTDC given the size of these markets. If it is able to replicate its success in the Australian market, then it would have a very long runway for growth. It could also be a steppingstone into other markets in the future.

For now, though, the company is generating strong earnings growth in the local market and appears well-placed to continue doing so in the future thanks to the seismic shift to the cloud. With more infrastructure moving to the cloud and increasing amounts of data being generated by businesses and consumers, demand for data centre capacity is expected to grow materially over the 2020s and beyond.

Goldman Sachs is a big fan of the company and believes it is well-positioned to continue its strong growth for some time to come. As a result, it recently put a conviction buy rating and $15.00 price target on its shares.

Xero Limited (ASX: XRO)

Another highly rated ASX 200 share to consider buying is Xero. It is a fast-growing provider of a cloud-based business and accounting solution to small and medium sized businesses.

Xero’s rapid growth in recent years has been driven by the aforementioned shift to the cloud, its global expansion, and a series of bolt-on acquisitions.

Positively, these acquisitions are continuing, with a couple being made recently (Planday and Tickstar) that strengthen its app ecosystem meaningfully.

This is a bigger deal than you might think, as Goldman Sachs believes the monetisation of this app ecosystem could be the key to multi-decade strong revenue growth.

The broker currently has a buy rating and $153.00 price target on Xero’s shares.

More reading

• 2 highly rated ASX growth shares
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• ASX 200 Weekly Wrap: ASX 200 hits new post-COVID high
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• 2 of the best ASX 200 blue chip shares to buy

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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 wanting to construct a balanced portfolio, owning a few blue chip ASX 200 shares could be a smart move.

But which blue chip ASX 200 shares should you buy? Two that could be in the buy zone are listed below:

Goodman Group (ASX: GMG)

The first blue chip ASX 200 share to consider is Goodman Group. It is a global property group that owns, develops and manages industrial real estate including logistics and industrial facilities, warehouses, and business parks.

It focuses on high-quality properties in key locations that will benefit its customers now, and in the future, and to deliver sustainable returns for investors.

This strategy has been working wonders. Goodman has been growing at a consistently strong rate over the last decade and looks well-positioned to continue this trend for some time to come. Particularly given its current portfolio and burgeoning development pipeline.

In fact, Macquarie recently suggested that Goodman could achieve double digit earnings growth through until at least FY 2024. As a result, the broker has put an outperform rating and $20.39 price target on its shares.

ResMed Inc. (ASX: RMD)

Another blue chip ASX 200 share to look at is ResMed. It is a leading medical device company with a focus on sleep disorders.

ResMed has a portfolio of industry-leading products and cloud-based solutions that have significant market opportunities. This is being underpinned by the growing awareness of sleep disorders and particularly sleep apnoea.

The company is also well-placed to benefit from the shift to home healthcare thanks to its investments in out-of-hospital platforms in recent years. 

Analysts at Credit Suisse are positive on ResMed. They believe the company can also achieve double-digit earnings growth over the medium term. The broker currently has an outperform rating and $29.50 price target on its shares.

More reading

• The latest 3 ASX shares leading brokers are urging you to buy now
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• 3 ASX shares to buy for the real estate explosion

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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