This battered ASX media stock may finally be turning the page. After months of asset sales, cost cuts, and strategic resets, Nine Entertainment Co. Holdings Ltd (ASX: NEC) sparked fresh optimism on Friday and Monday.

The media group’s shares posted their strongest jump in months. It followed a decisive portfolio shake-up built around a major acquisition and a clean break from legacy assets.

The ASX media stock gained another 6.55% on Monday to finish the day at $1.22. Nine Entertainment is still 29% down over the last 6 months, though, trailing the S&P/ASX 200 Index (ASX: XJO), which is up 1.33% over the same period.

Slowing advertising, capital concerns

The ASX media stock has been under heavy pressure for much of the past year, sliding around 30% from mid-2025 levels. Slowing TV advertising, structural shifts in media consumption, and capital management concerns have weighed on sentiment of the Nine Entertainment share.

Despite cost discipline and occasional earnings resilience, Nine’s share price remained anchored well below its highs, reflecting deep caution toward traditional broadcasters.

That caution cracked when the ASX media stock unveiled plans to acquire QMS Media for roughly $850 million while exiting radio and reshaping its regional television footprint. QMS is expected to generate about $105 million in EBITDA in calendar year 2026, which would be a double-digit increase over the previous year, Nine said.

The merger should also deliver about $20 million in annual cost savings by FY29, according to the board of Nine Entertainment.

The market responded swiftly, pushing the stock sharply higher as investors reassessed the company’s direction.

Clear shift outdoor advertising

The QMS deal signals a clear pivot away from legacy broadcasting toward a broader, digitally driven advertising platform. Outdoor advertising — one of the faster-growing segments of the ad market — adds scale and diversification to Nine’s existing TV, streaming, and publishing assets.

Nine Entertainment thinks the takeover strengthens its “sofa-to-street” reach. Management of the ASX media stock expects digital-led businesses to generate more than 60% of revenue by FY27, underscoring the urgency of the transformation.

Exit radio, digital focus

Risks remain. Higher leverage, integration challenges, and pressure on dividend franking credits temper enthusiasm, while free-to-air advertising continues to face long-term headwinds. Still, the exit from radio and renewed focus on scalable digital assets highlight how aggressively Nine is repositioning itself.

For long-suffering shareholders, the recent rally offered something rare. It could be evidence that the ASX media share’s multi-year reset may finally be translating into market confidence, even if the hard work is far from over.

Most brokers continue to rate the media stock a buy following its sharp decline in the past 6 months. The average 12-month price target sits at $1.27, suggesting potential upside of 4%.

Nine was valued at $1.93 billion at the close of trade on Monday.

The post Is this battered ASX media stock turning the page after bold move? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Why 4DMedical, Appen, Nine Entertainment, and ResMed shares are storming higher today
• Nine Entertainment shares jump on major acquisition and strategic shift
• Nine Entertainment shakes up portfolio: QMS buy, radio sale, and digital focus

Motley Fool contributor Marc Van Dinther 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 recommended Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A new report from the team at Bell Potter has a mixed outlook for ASX 200 company SGH Ltd (ASX: SGH), but an optimistic price target. 

SGH is an Australian diversified operating and investment Group with market leading businesses and investments in Industrial Services, Energy and Media sectors.

This ASX 200 stock is well within Australia’s largest 50 companies by market capitalisation, but has faced some volatility over the last 12 months. 

Its stock price has fluctuated between $43 and $55 over the past year.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 4.76% in that same period. 

The ASX 200 stock closed yesterday at $45.78. 

The waiting game

A new report from Bell Potter yesterday has identified key cyclical drivers in the company’s mining and construction sectors. 

The broker said the read-through for WesTrac from OEM Dec’25 quarterly updates was generally positive. 

The WesTrac segment of the company provides heavy equipment sales and support to customers. 

Bell Potter said it remains constructive on the near-term outlook for WesTrac’s Product Support division. 

We anticipate greater demand for aftermarket services as iron ore Majors continue to deliver quarterly production records and as gold production lifts by a +12% CAGR over FY25-27 (Aus. Gov. estimate). 

The broker said execution of re-commissioning plans of idled hard rock lithium production would be a positive for WesTrac’s services and parts demand.

However, for the construction sector, Bell Potter said overall activity remains mixed. 

Roading work done fell -5% YoY in the Sep’25 quarter across the East Coast, with NSW and QLD suffering a -15% YoY decline while VIC grew 10% YoY. 

While booming infrastructure sub-sectors like electrical generation and transmission are anticipated to provide some demand reprieve, the lower consumption intensity of aggregates and concrete compared with Roading would not be a like-for-like demand replacement for Boral.

Ongoing inflationary trends in Concrete, Cement and Aggregate indices suggest normalising demand from construction markets and a deceleration in price-led EBIT margin expansion.

The report did note that positively, Australia Residential building approvals (R3M basis) continue to trend higher, breaking a 4-year high in Nov’25. Australia non-residential building approval value grew 20% YoY in Nov’25, the 13th consecutive month of positive growth. 

Short term headwinds for this ASX 200 stock

Based on this guidance, the broker has maintained its hold recommendation, and has an updated price target of $51.80. 

From yesterday’s closing price of $45.78, that indicates an upside of 13.16%. 

SGH is facing short-term cyclical headwinds in construction markets, offsetting generally healthy operating conditions in the mining sector. SGH will cycle tough comps in FY26 given strong margin expansion at Boral and robust Product Sales growth at WesTrac in FY25.

The post Bell Potter tips 13% upside for this ASX 200 industrials stock appeared first on The Motley Fool Australia.

More reading

• BlueScope shares slipping as new CEO backs rejection of $13.2 billion takeover offer
• SGH confirms $13.2 billion acquisition offer for BlueScope Steel
• BlueScope fields $30-per-share takeover bid from SGH, Steel Dynamics

Motley Fool contributor Aaron Bell 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.

Graincorp Ltd (ASX: GNC) shares are in focus this week after the stock plummeted 14% on Monday. 

It was a tumultuous start to the earnings season yesterday as the S&P/ASX 200 Index (ASX: XJO) lost more than 1%. 

Graincorp was heavily sold off after the company issued low FY26 earnings guidance. 

What did the company report?

Overall, the company released its FY26 earnings guidance, forecasting underlying EBITDA of $200–240 million and underlying NPAT between $20–50 million. 

These were both below the FY25 result.

Additionally, the company reported: 

• Export volumes expected: 5.5–6.5 million tonnes (FY25: 7.0mmt)
• Receival volumes anticipated: 11.0–12.0 million tonnes (FY25: 13.3mmt)
• Nutrition and Energy average crush margins steady with FY25
• Agri energy contribution expected to be lower due to US biofuels uncertainty

Investors react strongly

In yesterday’s report, management said that FY26 earnings will be under pressure due to lower margins across the business. 

This reflects ongoing oversupply in global grain markets and continued pressure on export spreads.

These headwinds identified by the company led Graincorp shares to fall more than 14% yesterday. 

In the last 12 months, Graincorp shares are down almost 17%. 

Bell Potter’s view on Graincorp shares

Following yesterday’s trade, the team at Bell Potter provided updated analysis on Graincorp shares. 

The broker downgraded its near-term outlook. 

Following the update we have downgraded FY26e NPAT by -58% in FY26e, -10% in FY27e and -4% in FY28e. Changes in outward years reflect lower carryout assumptions, with lower trading margins the main driver of changes in FY26e.

The broker said Graincorp does particularly well when east coast grain crops are large, global grain crops are small and EU/Canada oilseed planting are soft. 

For the last two seasons only one of these dynamics has been at play.

Bell Potter also cautioned the latest update for GNC, probably highlights how dependent GNC returns are to global grain fundamentals. 

With improved cropping conditions in the EU and North America and record crops in Brazil, Bell Potter said it is unlikely that the headwinds being seen are likely to ease over FY26e.

Price target adjustment

Based on this guidance, Bell Potter has reduced its price target on Graincorp shares to A$6.80 (prev. A$7.60). 

Graincorp shares closed yesterday at $6.19 per share after the big sell-off. 

Based on this analysis, it indicates that Graincorp shares are trading roughly 9.85% below fair value. 

The broker maintained its hold recommendation. 

The post Top broker weighs in after Graincorp shares plummet 14% appeared first on The Motley Fool Australia.

More reading

• Why Appen, Brightstar, Graincorp, and Northern Star shares are sinking today
• GrainCorp shares slide nearly 15%. Is this ASX 200 stock now oversold?
• GrainCorp shares: FY26 earnings guidance forecasts lower profits

Motley Fool contributor Aaron Bell 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 ASX lithium share Liontown Ltd (ASX: LTR) has been an incredible performer over the last 12 months, rising by more than 170%, as the chart below shows. This is a good time to ponder whether the business can continue rising from here.

I’m going to look at UBS’ view on the ASX lithium share and the lithium market as a whole. UBS describes Liontown as an emerging lithium producer in Western Australia, which owns 100% of the Kathleen Valley spodumene project.

Positive return possible for the Liontown share price

Some analysts like to put a price target on a business. A price target is where the broker thinks the share price of a business may be trading in a year from the time of the investment call.

UBS currently has a price target of $1.80 on the ASX lithium share, suggesting a possible rise of 1% over the next year from where it is at the time of writing. That’s not the most exciting price target around.

The broker notes that the business’ expansion plans, including Liontown’s 4mt per annum plan, make sense after it was deferred in the recent ‘downcycle’ for lithium.

While UBS isn’t (currently) suggesting that the Liontown share price could climb significantly from here over the next 12 months, it bodes well for shareholders who have seen major gains that analysts think the ASX lithium share will hang onto those gains.

Why is the outlook for lithium so much stronger?

In a note, UBS increased its estimate for the 2026 lithium price to US$1,800 per tonne, up from a previous estimate of US$1,100 per tonne. However, its long-term price estimate is still US$1,200 per tonne.

The broker said that there are ongoing supply disruptions, further anticipated disruptions to Chinese lepidolite producers (CATL) and resilient overall demand.

In the note, UBS said that the lithium demand is being driven by battery energy storage systems (BESS), which has seen an estimated increase in demand of up to 11% between 2025 to 2030. The broker is expecting the lithium market to move into a deficit from 2026 onwards.

On UBS’ numbers, BESS will account for around 31% (1.2TWh) of total battery demand by 2030 compared to around 20% today.

UBS is forecasting that the lithium price could climb to US$2,850 per tonne in 2027 and US$2,625 per tonne in 2028.

But, the broker is also expecting a supply response, so UBS upgraded its outlook production in the sector by up to approximately 5% through to 2028.

Time will tell how well UBS’s forecasts has captured the upswing in market conditions for lithium.

The post Liontown shares: After a year of outperformance, is it still a buy? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Buy, hold, sell: Life360, Liontown, and Mineral Resources shares
• Brokers name 3 ASX shares to buy today
• 4 ASX mining shares just re-rated by Morgans
• 5 things to watch on the ASX 200 on Friday

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.

Are you hunting for some ASX dividend shares to buy for your income portfolio in February?

If you are, then read on because listed below are three that brokers currently rate as top buys.

Here’s what you need to know about them:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share that has been tipped as a buy is HomeCo Daily Needs REIT.

It is a real estate investment trust that owns a diversified portfolio of convenience-based retail properties. This includes supermarkets, healthcare centres, and hardware stores. These are properties that tend to perform well regardless of economic conditions.

HomeCo Daily Needs REIT’s geographically diverse national footprint is 86% metro-located and exposed to markets with above average population growth. It has no exposure to department stores and minimal exposure to discretionary retail and fashion. Its three largest shareholders are Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), and Woolworths Group Ltd (ASX: WOW).

The team at UBS believes the company is positioned to pay dividends per share of 8.6 cents in FY 2026 and then 8.7 cents in FY 2027. Based on its current share price of $1.29, this would mean dividend yields of 6.7% and 6.75%, respectively.

UBS has a buy rating and $1.53 price target on its shares.

Sonic Healthcare Ltd (ASX: SHL)

Over at Bell Potter, its analysts have named Sonic Healthcare as an ASX dividend share to buy.

It is a medical diagnostics company that operates laboratories and collection centres across Australia, Europe, and the United States.

Bell Potter is positive on the company and believes it is positioned to return to consistent growth. It is expecting partially franked payouts of 109 cents per share in FY 2026 and then 111 cents per share in FY 2027. Based on its current share price of $22.79, this equates to dividend yields of 4.8% and 4.9%, respectively.

Bell Potter has a buy rating and $33.30 price target on its shares.

Universal Store Holdings Ltd (ASX: UNI)

A third ASX dividend share that could be a buy is youth fashion retailer Universal Store.

Bell Potter is a fan of the company. It believes its growth can continue thanks to its multi-brand strategy across Universal Store, Thrills, and Perfect Stranger and growing private-label penetration.

The broker expects this to support fully franked dividends of 37.3 cents per share in FY 2026 and 41.4 cents per share in FY 2027. Based on the current share price of $8.60, this implies yields of 4.3% and 4.8%, respectively.

Bell Potter has a buy rating and $10.50 price target on its shares.

The post These excellent ASX dividend shares offer 4% to 6.7% yields appeared first on The Motley Fool Australia.

More reading

• 3 high-yield ASX dividend shares that smash term deposits
• The smartest ASX dividend shares to buy with $1,000 right now
• Why analysts are recommending these ASX dividend stocks to their clients
• My 3 best ASX dividend-focused stocks to buy in February
• Here’s how you could turn the stock market into a $1,000 monthly passive income machine

Motley Fool contributor James Mickleboro has positions in Universal Store and Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool Australia has recommended HomeCo Daily Needs REIT, Sonic Healthcare, Universal Store, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One of the enduring appeals of using ASX exchange-traded funds (ETFs) to build an investing portfolio is an ETF’s hands-off nature.

Simple index funds like the Vanguard Australian Shares Index ETF (ASX: VAS) aim to always mirror the holdings of the index they are tracking. In VAS’s case, that’s the S&P/ASX 300 Index (ASX: XKO). This means that, at any given time, VAS represents an investment in the largest 300 shares on the ASX.

These are rebalanced every three months to ensure that these holdings are accurate. In this way, the ETF investor never has to worry about stock picking themselves. They can just forget about the ETF entirely if they so wish, safe in the knowledge that they are ensured the average return of the Australian stock market.

However, just buying an ASX ETF or index fund isn’t always the right move for an investor. After all, the Australian market is wonderful, but it only represents a minuscule sliver of what the global markets offer.

That’s why many passive ASX investors choose to hold a portfolio consisting of three, four or even more index funds, in order to achieve a truly diversified portfolio. That’s always an option, of course. But what if I told you there were funds out there that removed this additional step, and offered investors that true diversification through just one exchange-traded fund.

An all-in-one ASX ETF

There are indeed funds on the ASX that offer that kind of experience. One of the most popular is the Vanguard Diversified High Growth Index ETF (ASX: VDHG).

This ASX ETF can look a little complex at first glance. But the easiest way to understand its structure is to think of it as an ‘ETF of ETFs’. VDHG essentially represents an investment in around seven underlying Vanguard ETFs.

By allocating a percentage of investors’ capital to each fund, VDHG allows investors to build a highly diversified portfolio using just one overarching ETF.

This particular iteration is aimed towards investors who are looking for a high-growth investing strategy. Roughly 90% of the fund is allocated towards Australian and international shares .The remaining 10% invested in defensive assets like cash and bonds.

Breaking that down further, about 36% of VDHG’s portfolio is invested in a simple ASX index fund. Another 26.5% goes towards international shares from advanced economies (USA, Canada, Britain, Europe and Japan, amongst others), supplemented by another 16% that’s hedged against currency movements. Another 6.5% of the fund is allocated to international small companies, with a further 5% dedicated to shares from emerging markets (including India, China and Taiwan).

Australian and international fixed-interest investments make up the 10% allocated to defensive assets.

Foolish takeaway

I think this ASX ETF is a perfect fit for those (and there are many) looking for the easiest, most hassle-free path to building wealth using the share market. It offers inherent and wide diversification and exposure to some of the best companies in the world. Of course, this convenience doesn’t come free, though. The Vanguard Diversified High Growth Index ETF charges a management fee of 0.27% per annum.

The post This ASX ETF might be the only one you’ll ever need appeared first on The Motley Fool Australia.

More reading

• 10 most popular ASX ETFs on the market today
• VAS and IVV: 3 reasons these two ASX ETFs belong in a long-term portfolio
• 5 ASX ETFs to buy for passive income
• 3 Australian ETFS to buy and hold forever
• 3 excellent Vanguard ETFs I would buy with $3,000

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. 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.

Commonwealth Bank of Australia (ASX: CBA) shares trailed the big four S&P/ASX 200 Index (ASX: XJO) bank stocks in January.

In the first month of 2026, the ASX 200 gained a solid 1.8%. And only one of the big four Aussie banks managed to outpace those gains.

Here’s how their performances stack up.

CBA shares trail the big four pack in January

When the closing bell sounded on the shortened trading day of 31 December, CBA shares were trading for $160.57. At the end of the trading day on 30 January, shares were swapping hands for $149.36.

This saw CommBank stock down 7.0% over the month just past.

And with BHP Group Ltd (ASX: BHP) shares charging higher, January saw CBA lose its title as the biggest stock on the ASX to the Aussie mining giant. That crown was handed over on the 27th.

Meanwhile, Westpac Banking Corp (ASX: WBC) shares managed to end the month in the green. Barely.

Westpac shares closed out December trading for $38.60 and ended January at $38.82 each. This saw the Westpac share price up 0.6% for the month.

ANZ Group Holdings Ltd (ASX: ANZ) shares outpaced both Westpac and CBA shares but still fell short of the benchmark.

ANZ shares closed on 31 December at $36.34 each and ended January trading for $36.70, put the ANZ share price up 1.0% for the month.

Which brings us to the top performing big four bank stock last month, National Australia Bank Ltd (ASX: NAB).

NAB shares closed out December trading for $42.31and ended January swapping hands for $43.37 apiece. This put the NAB share price up 2.5% for the month.

What’s been happening with CBA shares?

After smashing the returns delivered by the other big four ASX 200 bank stocks from late 2023 until notching all-time highs on 25 June last year, CBA shares have come under selling pressure.

Most analysts have been cautioning that Australia’s biggest bank has been trading at a material premium to its peers for several years. And after CBA stock closed at $191.40 a share on 25 June, the market appears to finally have sat up and taken notice.

Mind you, it’s not that CBA is unprofitable.

At its September quarterly results, CBA reported that home loans grew by $9.3 billion over the three months. And the bank’s quarterly cash net profit after tax (NPAT) came in at some $2.6 billion, up 2% year-on-year.

The post What happened with the big four ASX 200 bank stocks like ANZ and CBA shares in January? appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 ASX shares to sell
• 3 ASX shares I’ll be watching like a hawke this earnings season
• Where I’d invest in ASX shares if the RBA increases the interest rate
• Here’s what Westpac says the RBA will do with interest rates next week
• Buying ASX shares for passive income? Here’s how Woodside, Fortescue and CBA shares stack up

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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a heavy decline. The benchmark index fell 1% to 8,778.6 points.

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

ASX 200 expected to rebound

The Australian share market looks set to rebound on Tuesday following a decent start to the week in Europe. According to the latest SPI futures, the ASX 200 is poised to open the day 81 points or 0.95% higher. In late trade on Wall Street, the Dow Jones is up 1.1%, the S&P 500 is up 0.65%, and the Nasdaq is up 0.7%.

Oil prices sink

It could be a tough session for ASX 200 energy shares such as Karoon Energy Ltd (ASX: KAR) and Santos Ltd (ASX: STO) after oil prices sank overnight. According to Bloomberg, the WTI crude oil price is down 4.9% to US$62.03 a barrel and the Brent crude oil price is down 4.4% to US$66.29 a barrel. Traders were selling oil in response to easing US-Iran tensions.

ResMed upgraded

The team at Bell Potter thinks that ResMed Inc. (ASX: RMD) shares are good value at current levels. The broker has upgraded the sleep disorder treatment company’s shares to a buy rating with a $47.73 target price. It said: “2Q beat across the board, with double-digit revenue and earnings growth, further gross margin expansion and solid cash generation. Sleep and respiratory sales were strong in both regions, with above-market growth in the Americas and ROW returning to market growth, while SaaS beat expectations, but remained subdued by residential care headwinds. Operating leverage improved again, with gross margin gains from manufacturing and logistics efficiencies, and FY26 guidance tightened to 62-63% (from 61-63%), reinforcing confidence in ongoing margin progression.”

Gold price falls again

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Ramelius Resources Ltd (ASX: RMS) could have another poor session on Tuesday after the gold price fell again overnight. According to CNBC, the gold futures price is down 1.85% to US$4,670 an ounce. The precious metal has been sold off since Donald Trump nominated his next US Federal Reserve chief.

Hold CSL shares

CSL Ltd (ASX: CSL) shares are a hold according to analysts at Bell Potter. This morning, the broker has reaffirmed its hold rating and $195.00 price target on the biotech giant’s shares. It said: “At 17x PE, CSL trades at a significant discount to its historical average and below domestic peers, however we consider this to be justified considering the low organic growth outlook, earnings growth below peers, and blows to credibility following the Seqirus de-merger pivot and recent downgrades to long-term guidance.”

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Leading brokers name 3 ASX shares to buy today
• Buy, hold, sell: BHP, CSL, and Endeavour shares
• Corporate Travel Management announces major leadership changes
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Motley Fool contributor James Mickleboro has positions in CSL and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Whenever markets get volatile or certain ASX shares fall out of favour, I find myself thinking about Warren Buffett and one of his most famous ideas: be greedy when others are fearful.

It sounds simple, but it’s surprisingly hard to do in practice. When share prices are falling, confidence is usually low, headlines are negative, and it feels far more comfortable to sit on the sidelines. 

Yet history shows that some of the best long-term returns are earned by buying quality businesses when sentiment is poor and prices are depressed.

That’s exactly the mindset I’m trying to apply when looking at cheap ASX shares today.

Why Buffett focuses on quality first

Buffett has never been interested in buying something just because it’s cheap. The price only matters once the quality box has been ticked.

He looks for businesses with competitive advantages, strong cash generation, and management teams that allocate capital sensibly. Once he finds those traits, he waits patiently for the market to offer them at attractive prices.

That’s an important distinction. Buying low-quality ASX shares at cheap prices can be a value trap. We want to avoid those at all costs. Buying high-quality shares at discounted prices is where long-term wealth is built.

Fear creates opportunity in the share market

Markets don’t move on fundamentals alone. They move on emotion, expectations, and narratives.

When fear takes hold, investors often extrapolate short-term problems far into the future. Earnings disappointments, temporary margin pressure, or macro headwinds can push share prices well below the underlying business’ long-run value.

I would point to WiseTech Global Ltd (ASX: WTC) and CSL Ltd (ASX: CSL) as prime examples of this.

This is where Buffett’s philosophy really resonates with me. He’s never tried to predict short-term market moves. Instead, he’s used periods of pessimism to accumulate stakes in great businesses at prices that improve future returns.

On the ASX, these opportunities often appear when entire sectors are out of favour, not because every company is broken, but because sentiment has turned. Take a look at the tech sector to see this happening right now. Countless ASX tech shares, such as Xero Ltd (ASX: XRO) and Pro Medicus Ltd (ASX: PME), are being sold off despite continuing to grow strongly.

Cheap doesn’t mean risk-free

Buying cheap ASX shares doesn’t guarantee success. Some businesses deserve to trade at lower prices, and not every sell-off is an overreaction.

However, paying less for quality assets stacks the odds in your favour. A lower entry price can provide a margin of safety. It gives earnings time to recover, dividends room to grow, and sentiment the chance to normalise.

Over long periods, returns are driven by what you pay and how the business performs, not by short-term price movements after you buy.

How to apply this with cheap ASX shares

When I look at the market now, I’m not trying to call the bottom or guess what happens next quarter. I’m asking a different question.

Would I be happy owning this business for the next 5 or 10 years if the share price didn’t move for a while?

If the answer is yes, and the valuation looks reasonable compared to its history and long-term potential, that’s when I start paying attention. That mindset has served Buffett well for decades, and I think it translates well to ASX investing.

Foolish Takeaway

Warren Buffett’s success wasn’t built on clever trading or perfect timing. It was built on patience, discipline, and a willingness to buy quality businesses when others were too fearful to do so.

By focusing on strong ASX shares and waiting for attractive prices, investors give themselves a far better chance of building wealth over time.

The post I’m listening to Warren Buffett and buying cheap ASX shares appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Silver plunges from record highs. What has caused the sudden crash?
• Analysts name 3 ASX shares to sell
• Xero shares hit a multi-year low. Is now the time to buy?
• 3 excellent Vanguard ETFs for ASX investors to buy in February

Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended CSL and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• Why 4DMedical, DroneShield, New Hope, and Zip shares are pushing higher today
• Why analysts say Hub24, New Hope, and Xero shares are buys
• Where I would invest $2,000 in ASX shares in February
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Motley Fool contributor Sebastian Bowen 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 ARB Corporation, DroneShield, and Temple & Webster Group. The Motley Fool Australia has recommended ARB Corporation, Nine Entertainment, and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.