AGL Energy Ltd (ASX: AGL) shares faced a fairly turbulent run in FY24, only just finishing the year out of the red.

In the 12 months to June 28 2024, the energy stock gained just 0.18%, closing the year at $10.83 per share.

The saving grace came in February, when the broader resources and energy sectors began to rally, supported by strengthening commodity prices.

But will FY25 bring a change in fortune for AGL shares? Here’s a look at the year in review and what the experts say about FY25.

AGL shares FY24 review

AGL shares came back stronger in the second half of the financial year following a series of company-specific announcements.

The company boosted its FY24 earnings guidance in May. According to my colleague James, management now expects its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $2.1 and $2.2 billion.

This is above the previously forecasted range of $2 to $2.17 billion. If AGL hits this target range, it represents a 56% to 61.5% increase compared to the company’s FY23 EBITDA.

Additionally, AGL anticipates its underlying net profit after tax (NPAT) to be between $760 million and $810 million, a 2.9-fold increase over the FY23 result.

In June, the company announced a $150 million deal to partner with UK-based Kaluza to digitise and simplify energy billing as part of its Retail Transformation Program (RTP). Once settled, AGL will own 20% of Kaluza.

As my colleague Bernd reported, the RTP initiative aimed to reduce operating expenses and capital expenditure, with the benefits expected to be realised in FY28.

However, the program entails significant upfront costs, estimated at $300 million over four years, which may or may not pressure the AGL share price in the short term.

Investment potential

Fund managers have recently highlighted AGL’s investment potential. L1 Capital, in its recent investor presentation, said AGL was well-positioned to benefit from surging electricity demand.

L1 said AGL was the lowest-cost baseload generator in Victoria and New South Wales. With rising electricity demand stemming from data centres, electric vehicles, and artificial intelligence (AI), the energy giant could benefit from these tailwinds.

The fund expects AGL to generate strong free cash flows, which “can fund high dividends and substantial investment in transition in areas such as batteries with solid returns”.

Valued at an enterprise value to EBITDA ratio (EV/EBITDA) of 4.5 times, AGL shares are “well below historical range” of around 6 times, according to L1. This ratio is similar to the price-to-earnings ratio (P/E).

Future outlook for AGL shares

The energy company is currently trading at $10.52 per share, with a trailing dividend yield of 4.64% and a P/E ratio of 18.4 times.

Despite the challenges faced in FY24, AGL’s strategic initiatives and upgraded earnings guidance could offer a positive outlook for FY25. As a reminder, always consider the risks involved and conduct your own due diligence.

The post AGL shares struggled in FY24. Will FY25 be different? appeared first on The Motley Fool Australia.

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• What’s put the wind up AGL shares on Friday?

Motley Fool contributor Zach Bristow 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 Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) stock Incitec Pivot Ltd (ASX: IPL) is taking a tumble today.

Shares in the company – which manufactures explosives, chemicals and fertilisers – closed yesterday trading for $2.90. In morning trade on Wednesday, shares are swapping hands for $2.79 apiece, down 3.8%.

For some context, the ASX 200 is down 0.6% at this same time.

Here’s what’s happening.

Why is the ASX 200 stock under pressure?

The Incitec Pivot share price is sliding after the company announced it had ended negotiations with PT Pupuk Kalimantan Timur for the sale of its fertilisers business, Incitec Pivot Fertilisers, a deal estimated to be valued at over $1 billion.

The ASX 200 stock highlighted the advanced stage of these negotiations in its half-year results, released on 16 May.

At the time, CEO Mauro Neves said:

We are in advanced negotiations for a potential sale of our fertilisers business to PT Pupuk Kalimantan Timur, who are a major fertilisers producer in Asia and current supplier of urea to Australia…

With negotiations for the sale of IPF not yet concluded, our on-market share buyback of up to $900 million remains on hold.

Today Incitec Pivot said that after carefully considering how to maximise shareholder value while balancing the risks of completing the sale within a reasonable timeframe, management had opted to pull the plug.

On the plus side, with the sale off the table, the ASX 200 stock will now commence its suspended on-market share buyback program of up to $900 million. Management said the company will prioritise the buyback for the benefit of its shareholders.

Incitec Pivot will continue to manage its Dyno Nobel and Incitec Pivot Fertilisers businesses separately.

Commenting on the ceased sale negotiations, Neves said:

Throughout the sale negotiations with PKT, we were focused on completing a sale transaction in a timely manner to allow us to commence our on-market buyback of up to $900 million. We have determined we are unlikely to achieve this outcome with PKT in an acceptable timeframe, and as a result we made the decision to cease negotiations with them.

Neves said the ASX 200 stock will continue to assess options “for the structural separation of the two businesses”, while the immediate focus will be the share buyback program.

As for Dyno Nobel and Incitec Pivot Fertilisers, Neves added:

Led by a talented global executive leadership team, our Dyno Nobel business is being transformed into a global operation which is expected to substantially improve its financial performance.

Our IPF business remains focused on value accretive market share growth and is in a strong position for the agricultural season ahead.

Incitec Pivot reconfirmed the FY 2024 earnings guidance reported in its half-year results for its Dyno Nobel and IPF businesses.

The post ASX 200 stock tumbles as $1 billion deal goes south appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben 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 Scott Phillips.

The market may have run out of steam on Wednesday, but not all ASX shares are falling.

Two that are catching the eye of investors and roaring higher this morning are listed below.

Here’s why investors have been buying their shares today:

DUG Technology Ltd (ASX: DUG)

The DUG Technology share price is up 7% to $2.67 after investors responded positively to an announcement out of the analytical software developer.

DUG Technology delivers innovative software products and cost-effective, cloud-based high-performance (HPC) computing as a service backed by tailored support for technology onboarding. Its expertise in algorithm development and code optimisation allows its clients to leverage big data and solve complex problems.

According to the announcement, the company has received delivery of the 1,500 AMD EPYC Genoa machines announced in February. As a result of the RAM upgrades to its existing machines and other purchases, DUG is no longer incurring third-party compute costs.

The ASX tech share’s managing director, Dr Matthew Lamont, was pleased with the news. He said:

I am pleased to see our HPC capabilities grow in response to the demand we see moving forward. These are good times!

In February, Dr Lamont noted that the “AMD machines are needed to accelerate delivery of both current and imminent projects, and to support the unprecedented demand we continue to see moving forward.”

Imugene Ltd (ASX: IMU)

The Imugene share price is up almost 8% to 5.5 cents. This morning, this clinical stage immune-oncology company announced that the first patient has been dosed in its trial for bile tract cancer (cholangiocarcinoma) patients.

This trial is an expansion of the MAST (Metastatic Advanced Solid Tumours) Phase 1 trial after early responses were observed in gastrointestinal cancers, and particularly cholangiocarcinoma, using Imugene’s cancer-killing virus CF33 (Vaxinia).

Bile tract cancer is a rare disease in which malignant cancer cells form in the bile ducts. It is known to be difficult to treat and responds poorly to immunotherapy drugs. A total of 10 patients will be enrolled in the trial.

The ASX share’s managing director and CEO, Leslie Chong, appears optimistic that Vaxinia could be effective in treating bile tract cancer. She said:

Given the results we’ve seen to date we are eager to see the potential of VAXINIA in bile tract cancer. We look forward to now advancing to the higher doses in the trial to gather further key data and make a genuine difference to patients in need of innovative treatment options.

The post 2 ASX shares roaring higher on big news appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dug Technology. The Motley Fool Australia has recommended Dug Technology. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Accepting the market return from the S&P/ASX 200 Index (ASX: XJO) rather than trying to beat it can generate substantial wealth for long-term investors. This strategy has become increasingly common in the last decade with the rise of exchange-traded funds (ETFs) on the ASX.

For some, owning a stake in the biggest names on the Australian Securities Exchange via an ETF is regarded as a pillar to achieving their financial goals. For this reason, ETFs are fast becoming a cornerstone in many Australian portfolios.

The simplicity of the investment, its diversification, and relatively low fees are all drawcards for investors. However, would-be passive investors now must choose from multiple offerings as ETF providers tap into the expanding market.

Fortunately, analysts at Morgan Stanley have already compared the most popular ASX 200 ETFs across various factors. The outcome? One Australian index-tracking fund to rule them all.

Which ASX 200 ETF takes the cake?

Three ETFs tracking the pre-eminent Australian index were evaluated by the team at Morgan Stanley:

• SPDR S&P/ASX 200 ETF (ASX: STW) — the first ETF listed in Australia
• iShares Core S&P/ASX 200 ETF (ASX: IOZ), BlackRock’s answer for low-cost access to the ASX 200
• BetaShares Australia 200 ETF (ASX: A200) — the new kid on the block

To properly assess the options, Morgan Stanley divided the comparison into six areas: exposure, product structure, risk metrics, fees and liquidity, product profitability, and return performance. Finally, an overall ranking is appended to each ETF.

Measure	SPDR S&P/ASX 200 ETF (STW)	iShares Core S&P/ASX 200 ETF (IOZ)	BetaShares Australia 200 ETF (A200)
Exposure	First	First	Third
Product structure	Second	First	Third
Risk metrics	Second	Third	First
Fees and liquidity	Third	Second	First
Product profitability	Third	Second	First
Return performance	Third	Second	First
Overall	Third	Second	First

As shown above, the BetaShares option trails behind its more tenured opponents in only two qualities: exposure and product structure.

Regarding exposure, all three ETFs look alike, with Morgan Stanley noting their differences as “negligible”. Each offering sports the same top 10 holdings, including the usual ASX 200 suspects: the big four banks, BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES), Goodman Group (ASX: GMG) and Woodside Energy Group Ltd (ASX: WDS).

Based on Morgan Stanley’s evaluation, the BetaShares Australia 200 ETF loses out to the iShares option on structure. The latter allows redemptions (the sale of ETF units) to be conducted without liquidating the underlying holdings for cash in the fund, mitigating capital gains tax at a fund level.

However, when it comes to fees, BetaShares is the clear winner. BlackRock’s iShares and State Street’s SPDR ETFs charge a 0.05% management fee, whereas BetaShares charges 0.04% — the lowest-cost Australian shares index ETF on the ASX.

Let’s talk returns

Each of the ASX 200 ETFs assessed by Morgan Stanley tries to replicate the index’s performance, so there shouldn’t be too much variation. Nevertheless, there are differences between the three.

When the broker conducted its analysis, BetaShares touted the best performance over the past one, two, three, and five-year periods and the highest year-to-date return. Unfortunately, the BetaShares Australia 200 ETF hasn’t been around long enough for a 10-year comparison.

According to its website, Morgan Stanley’s top ASX 200 ETF pick has returned 7.43% per annum (after fees) for the past five years. Meanwhile, iShares’ and SPDR’s five-year total returns are 7.17% and 7.19% respectively.

The post Want the best ASX 200 ETF? Look no further: Morgan Stanley appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, Macquarie Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended CSL and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I think investors should always focus on ASX shares that can grow operationally and improve their profit over the long term. Sometimes, stocks can be good buys even if they’re trading at close to 52-week highs.

Businesses that are increasing their underlying value can help deliver shareholder returns. ASX shares with a history of winning can keep winning, as long as the valuation doesn’t become too extreme.

It’s important to remember that as a business grows, its growth rate will likely slow down sooner rather than later. But with the two stocks below, I think there’s still plenty of growth to come over the long term.

Tuas Ltd (ASX: TUA)

This is an ASX telco share that operates in Singapore and it’s growing at an impressive pace. As shown on the chart below, the Tuas share price has rocketed upwards almost 50% this year to $4.66, which is near its 52-week high.

I think there are two key reasons why the company is so exciting: its ongoing subscriber growth and operating leverage.

If the subscriber numbers are growing, it means the ASX share is gaining market share and growing revenue. In the FY24 first-half result, its active mobile services increased year over year from 35.7% to 938,000, marking a 14.5% rise since the second half of FY23.

When profit margins increase, it means that the bottom line can increase faster than revenue. HY24 saw revenue increase 38% to $54.7 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) jump 56% to $22.4 million. The EBITDA margin improved from 36% to 41%.

If Tuas can keep growing subscribers, then I expect its profit will accelerate. It’s targeting full-year positive net cash flow in FY24. The business expects subscriber numbers to keep rising in the second half of FY24, which can enable it to keep investing in its business.

REA Group Ltd (ASX: REA)

REA Group is the business that owns realestate.com.au, the leading property portal in Australia. The REA Group share price has risen more than 6% this year to around $195.40, close to its 52-week high, as shown on the chart below.

According to REA Group, it receives 130 million average realestate.com.au monthly visits, 4.1 times more visits than the nearest competitors each month on average. Its strong market position allows the business to implement sizeable price increases with little detrimental effects. The company has implemented an average 10% price increase on the product with the highest penetration, Premiere+.

With the digital infrastructure already designed, the increased revenue can help drive the ASX share’s profit higher at a faster pace. For the nine months to 31 March 2024, revenue rose 20% to $1.06 billion, EBITDA increased 23% to $594 million, and free cash flow jumped 39% to $322 million.

I’m also excited by the company’s potential in India, a country with a huge population steadily adopting digital services. In the FY24 third quarter, REA India’s revenue increased 31% year over year.

If REA’s primary businesses can continue to grow revenue, then I believe the profit and share price can also increase over time despite the current high valuation.

The post 2 ASX shares close to 52-week highs I’m thinking about buying 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 positions in and has recommended REA Group. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The market may be under pressure today but one ASX uranium stock isn’t letting that hold it back.

In early trade, Infini Resources Ltd (ASX: I88) shares are 84% to a new record high of 90 cents.

Why is this ASX uranium stock rocketing today?

Investors have been fighting to get hold of this small cap ASX uranium stock today after it released an update on the Portland Creek project in the uranium-friendly jurisdiction of Newfoundland, Canada.

According to the release, the re-assaying of 17 soil samples above laboratory limit of detection reveals outstanding surface geochemistry. In fact, it highlights a peak assay result of 74,997 ppm U3O8. This peak result is “9,375 times background.”

Management notes that the exceptionally high-grade uranium soil assays confirmed within the ~235 metre x 100 metre zone coincide with a historic radon gas anomaly. And pleasing, the zone remains open to the east and west.

It believes these results validate the initial soil assay results received, with all values exceeding the previous limit of detection of >11,792 ppm U3O8. It highlights that this confirms the soil geochemistry results at Portland Creek as some of the highest recorded globally.

Geochemical pathfinder studies have now commenced to identify any vectors that may point towards a primary uranium source proximal to the anomaly.

The good news is that there are numerous large historical radon gas anomaly contours at the project. This could indicate the potential for multiple areas of undercover uranium mineralisation to exist within the ~3.2km radiometric corridor.

Unmanned aerial vehicle magnetic survey data processing is underway to assess any structural controls tied to the “extraordinary soil geochemistry,” with results expected in the coming weeks.

‘World class grades of uranium’

The ASX uranium stock’s CEO, Charles Armstrong, was delighted with the results and believes it could be the first of its kind for a maiden program. He commented:

These follow-up assay results confirm that the Company has encountered world class grades of uranium in soil samples at Portland Creek. I am not aware of any other explorers that have returned results close to what we are seeing here in our maiden fieldwork program. We now eagerly wait for processing of the UAV drone magnetic survey that was flown over Talus to see what potential structural controls exist linked to this special anomaly.

Infini Resources’ shares are now up over 450% since this time last month.

The post Guess which ASX uranium stock is rocketing 80% on ‘world class grades’ appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

If you want to bolster your portfolio with some blue chip ASX 200 stocks in FY 2025, then you’re in luck!

Listed below are two high-quality blue chips that analysts have rated as buys. Here’s what they are saying about them:

Challenger Ltd (ASX: CGF)

Goldman Sachs thinks that this annuities company could be a blue chip ASX 200 stock to buy this financial year.

The broker currently has a buy rating and $7.50 price target on its shares, which implies potential upside of 11% for investors. It is also expecting dividend yields of 3.7%+ through to at least FY 2026.

Goldman likes the company due to its exposure to the growing superannuation market and its belief that higher yields will support sales of retail annuities and boost its margins. The broker commented:

CGF is Australia’s largest retail and institutional annuity provider across Term and Lifetime annuities with a funds management business. We are Buy rated on the stock. We like CGF because: 1) it has exposure to the growing superannuation market across Life and Funds Management; 2) higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins; 3) its annuity book growth looks well supported through a diversified distribution strategy.

Coles Group Ltd (ASX: COL)

Analysts at Bell Potter think that this supermarket giant could be a great option for investors in the new financial year.

The broker currently has a buy rating and $19.00 price target on its shares. This implies potential upside of 11.5% for investors from current levels. In addition, its analysts are expecting Coles’ shares to provide investors with 4%+ dividend yields in the coming years.

Bell Potter believes the blue chip ASX 200 stock could be well-placed for growth as inflation pressures ease and its supply chain modernisation starts to pay off. It said:

Coles Group is a diversified company with operations in food, liquor, petrol retailing and financial services. Coles also retains a 50% ownership interest in Flybuys. Costs are expected to remain elevated but should moderate through FY24 and FY25 as general inflation tapers off. In the medium term, 1) higher immigration should support grocery spending, and 2) Coles is entering a period of elevated capex intensity as it reinvests to modernise its supply chain and to catch up to competitors on online and digital offerings, which should help Coles maintain its market position.

The post 2 outstanding blue chip ASX 200 stocks to buy for FY25 appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

So you want to build a second income but don’t currently have any money invested in ASX shares? Well, you’ve come to the right place.

ASX shares provide one of the best and easiest paths to a source of secondary, passive income.

Dividends are passive income in the purest sense of the word. The paycheques that dividend shares send us every few months arrive regardless of whether we are working or retired, young or old, healthy or sick.

The only variable in this equation is the ASX dividend share itself  – whether the company is financially capable of funding its next dividend.

So today, let’s map out how a would-be ASX investor starting from scratch can build up a meaty second stream of income to supplement their day job.

How to build a second income with ASX shares from scratch

The first step in building up a stream of secondary dividend income from ASX shares is to get your financial house in order. There is little benefit in investing in shares if you already have significant debts.

A mortgage is fine, but if you have personal or car loans or outstanding credit card accounts, you’d almost certainly get a better bang for your buck by paying these off as soon as possible before you start deploying cash into the stock market.

Provided your debts are under control, the next step is to budget for investing. There’s no way around this one: building wealth and passive income in the stock market requires regular, meaningful investments of money.

So, before you get started, take a look at your income and expenses. You’ll need to be in a position where you habitually spend less than you’re earning and invest the difference.

If you do manage to get yourself into a position where you can reasonably rely on some surplus cash flow every pay cycle, you’re ready to invest for a second income.

The next task to tick off is picking the dividend shares to buy. The ASX is full of dividend payers, but new investors should start simple, in my view. Picking a mature, dividend-paying blue chip stock like one of the big four ASX banks, Telstra Group Ltd (ASX: TLS) or Woolworths Group Ltd (ASX: WOW), would be a fine start.

But I think an even better option is to go with an investment that takes care of portfolio management for you, at least until you gain some confidence in how the markets work.

Choosing the right dividend shares

A great choice would be a simple index fund like the BetaShares Australia 200 ETF (ASX: A200) or the Vanguard Australian Shares High Yield ETF (ASX: VHY).

Both of these exchange-traded funds (ETFs) invest in a basket of dozens of the largest stocks on the ASX. They are inherently diversified and require little effort after you buy them. And they’ll typically pay you a generous stream of secondary income to boot.

You could also go a different route and pick a listed investment company (LIC) like Argo Investments Ltd (ASX: ARG). A LIC like Argo specialises in providing investors with an underlying portfolio of blue chip stocks, which are conservatively managed for solid returns and hefty dividend income.

Make sure to accelerate this process by reinvesting your dividends at first as well. Secondary income is great. But using it to buy even more income-producing shares will get you to your passive income goals faster than taking the cash and blowing it on a night out.

Once you make your first investment, try and invest what you can, when you can, going forward. It will take some time. But if you follow a regular investing plan religiously, and put as much of your spare cash into your investments as possible, you’ll be able to build up a substantial stream of second income before you know it.

The post Here’s how ASX investors can build a meaty second income starting from scratch appeared first on The Motley Fool Australia.

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• Should you buy the cheapest ASX share ETF?

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you own Rio Tinto Ltd (ASX: RIO) shares, then you will no doubt be aware that it won’t be long until the mining giant releases its highly anticipated quarterly update.

Ahead of the release on Tuesday 16 July, let’s take a look at what the market is expecting from the miner’s second quarter update.

Rio Tinto Q2 preview

According to a note out of Goldman Sachs, its analysts believe that Rio Tinto will fall short of expectation for iron ore shipments during the quarter.

This is because of a train derailment early in the quarter. However, the good news is that it thinks the company will be able to make up for this in the second half and achieve its guidance. It explains:

[W]e expect RIO’s 2Q Pilbara iron ore shipments of 79Mt vs Consensus 82Mt as a result of train derailment early in the Q. However, we think RIO can make up the lost shipments in 2H, and we model 330Mt (vs. 332Mt in 2023), in the middle of the 323-338Mt guidance range. We expect realised prices of US$107/dmt for 1H24. RIO will provide 2025 guidance for all commodities in Jan 2025.

For copper, Goldman Sachs is forecasting production of 180kt for the three months. This is ahead of the consensus estimate of 175kt. In addition, the broker expects that Rio Tinto’s realised copper price will be higher than the market thinks at US$412 per pound (compared to US$395 per pound).

It is a similar story for aluminium, with Goldman expecting Rio Tinto to report production of 832kt (cons. 829kt) and a realised price of US$2,818 per tonne (cons. US$2,770 per tonne).

At the end of the period, the broker expects this to leave the mining giant with a net debt position of US$4.9 billion versus the consensus estimate of US$4.5 billion.

Should you buy Rio Tinto shares?

Goldman continues to see value in Rio Tinto shares at current levels. It has a buy rating and $137.00 price target on them, which implies potential upside of almost 14% from current levels.

Commenting on its bullish view, the broker said:

We remain Buy rated on: (1) compelling relative valuation vs. peers, (2) attractive FCF and Div yield, (3) strong production growth in 2024-2025E of ~5% CuEq driven by the ramp-up of the Oyu Tolgoi UG copper mine & a recovery at Escondida and Bingham, higher Pilbara Fe shipments with the ramp-up of new mines, (4) potential for FCF/t improvement in the Pilbara, and (5) high margin low emission aluminium business.

The post Own Rio Tinto shares? Here’s your Q2 preview appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

The ASX lithium share Pilbara Minerals Ltd (ASX: PLS) share price has been through enormous pain in the last year. As shown in the chart below, it’s down close to 40% over the past 12 months.

Brokers, such as UBS, have been worrying about the company’s valuation in recent times. The latest UBS notes suggest that the Pilbara Minerals share price implied a higher lithium price than the broker thought was possible for the foreseeable future.

Since 20 May 2024, the Pilbara Minerals share price has dropped close to 30%. Shareholders may be worrying about whether the ASX lithium share will keep on sinking. But there may be some light at the end of the tunnel.

Broker upgrade on Pilbara Minerals shares

According to reporting by The Australian, JPMorgan analyst Al Harvey upgraded the rating on Pilbara Minerals shares to neutral from underweight. In other words, it’s gone from a sell to a neutral rating in the minds of JPMorgan’s analysts.

The Australian said JPMorgan’s 12-month Pilbara Minerals share price target on the ASX lithium share was $2.95. Since that is virtually where it is today, JPMorgan is essentially suggesting that the Pilbara Minerals share price has finished falling.

Of course, a price target is just a broker’s best guess of where the share price is going to be in 12 months from now. The share price could be better – or worse – than what the broker expects.

Are any brokers optimistic about the ASX lithium miner?

According to Factset, seven analysts currently rate Pilbara Minerals as a buy, six have neutral ratings, and seven have sell ratings.

That’s a very mixed group of ratings on the company. While the consensus/average rating is a hold, there are more buy ratings and sell ratings than hold ratings.

Forecast for FY24 results

Regarding the lithium price, the broker UBS thinks “continued downside risk remains while supply out of Africa is strong and demand for PHEV [plug-in hybrid electric vehicles] stagnates”.

According to UBS numbers, Pilbara Minerals is still pricing in a rebound in the lithium price. However, UBS suggests it may take a while before the price returns to its long-term forecast of US$1,400 per tonne.

Increasing supply could keep the lithium price near current marginal cost support levels, according to UBS.

The broker thinks that in FY24, Pilbara Minerals could generate revenue of $1.27 billion, $525 million of earnings before interest and tax (EBIT) and $359 million of net profit after tax (NPAT). After a year of investing in growing its production, the balance sheet could see net cash decline to $942 million.

The post This top broker thinks Pilbara Minerals shares are done falling appeared first on The Motley Fool Australia.

More reading

• Why Bowen Coking Coal, Clinuvel, Meteoric Resources, and Pilbara Minerals shares are falling
• These are the 10 most shorted ASX shares
• If I’d invested $5,000 in Pilbara Minerals shares in FY24 what would I have now?
• ASX lithium shares: Screaming bargains or falling knives?
• Down 42%: Are Pilbara Minerals shares good value now?

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 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 Scott Phillips.