Stock Pick

  • Can things get better for BOQ shares in FY25?

    A man looking at his laptop and thinking.

    The Bank of Queensland Ltd (ASX: BOQ) share price underperformed the S&P/ASX 200 Index (ASX: XJO) during the last year. In the 12 months to 30 June 2024, the BOQ share price rose 5.8% while the ASX 200 went up 7.8%.

    BOQ has a different financial year from the regular Australian tax year. The Bank of Queensland’s financial year runs to 31 August each year, so there are still a couple of months left to run.

    We recently heard from the bank about how it performed in the six months to February 2024, which saw a number of financial measures go the wrong way. The market also heard several interesting comments about the bank’s outlook.

    Earnings recap

    BOQ reported that its HY24 cash earnings after tax fell 33% to $172 million. The ASX bank share reported its housing loan portfolio saw a 1% decline in the second half of FY23 or $411 million in dollar terms. It said a continued focus on economic return resulted in a contraction of the housing portfolio.

    The company said its net interest margin (NIM) dropped by 3 basis points (0.03%) – compared to the second half of FY23 – to 1.55%. That means it’s making a smaller amount of profit on each dollar it lends.

    BOQ blamed “competitive pressures” for its lower margins and the weak lending growth performance. Cash operating expenses also grew by 6% year over year to $524 million.

    BOQ also reported that its cash return on equity (ROE) dropped to 5.8%, down from 8.4% in the first half of FY23.

    Thankfully, asset quality remains “sound”, despite the higher interest rate environment.

    The managing director and CEO Patrick Allaway said at the time of the result announcement:

    This result has been impacted by continuing industry headwinds, with heightened competition for lending and deposits and higher funding costs. Pleasingly, in a reduced revenue and high inflation environment, we have held BAU [business as usual] cost growth at just 1.2% in the half.

    Outlook for BOQ shares

    When the bank announced its HY24 first-half result, it also provided some outlook commentary that could apply to the rest of FY24 and FY25.

    BOQ said its loan impairment expense is expected to remain below long run averages, which sounds positive. The bank said it remains “optimistic on the long-term view”.

    However, the regional bank said it expects revenue and margin pressures “to moderate” in the second half of 2024, though deposit competition “to continue.” It’s also expecting the home lending decline “to moderate”, and that business banking growth can increase.

    The bank’s costs are expected to keep increasing due to inflation and continued investment in the business. BOQ said it’s on track to deliver single-digit business as usual (BAU) expense growth in the second half of FY24.

    In terms of analyst expectations, the broker UBS is expecting BOQ’s cash earnings to drop from $450 million in FY23 to $294 million in FY24. However, the ASX bank share could then see cash profit recover to $320 million, though it would still be lower than FY23.

    In fact, while UBS has pencilled in a steady recovery of profit in the coming financial years, FY28 is still only expected to show a cash profit of $406 million – lower than FY23.

    The broker suggested a higher return on equity (ROE) and BOQ share price re-rating are dependent on improving the NIM and costs.

    According to UBS, the BOQ share price is valued at 14x FY25’s estimated earnings.

    The post Can things get better for BOQ shares in FY25? appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Bank Of Queensland right now?

    Before you buy Bank Of Queensland shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bank Of Queensland wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    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.

  • YouTuber helps researchers solve the mystery of a 2,000-year-old ‘computer’

    antikythera mechanism
    A fragment of the 2,200-year-old Antikythera Mechanism, believed to be the earliest surviving mechanical computing device, is seen at the National Archaeological Museum in Athens.

    Associated Press/Thanassis Stavrakis

    • Researchers think they've solved the 2,200-year-old mystery of the Antikythera mechanism.
    • The ancient device, found in a shipwreck, likely followed a Greek lunar calendar.
    • They used statistical modeling techniques typically used to study ripples in space-time.

    Last year, Graham Woan knew just how he wanted to spend his Christmas break: trying to solve the 2,200-year-old mystery of the oldest known "computer" in the world.

    Known as the Antikythera mechanism, the bronze device is a mechanical computer with interlocking gears. In the second century BCE, a user would have used its rings and evenly spaced holes to chart future celestial events, such as eclipses.

    But how many of those evenly spaced holes existed has been a mystery and holds the key to determining exactly how the computer functioned.

    YouTuber Chris Budiselic has long been fascinated by the mechanism and started creating his own version seven years ago but wasn't sure how many holes to include.

    Based on some of Budisic's published research, University of Glasgow astronomers, including Woan, turned to statistical modeling techniques to find the answer.

    "It struck me as an interesting problem, and one that I thought I might be able to solve in a different way during the Christmas holidays, so I set about using some statistical techniques to answer the question," Woan said in a university press release.

    Based on the number of holes, the researchers found, the device follows a lunar calendar instead of an Egyptian one, as some previous research suggested.

    A shipwreck full of ancient treasures

    antikythera mechanism analog ancient greece
    The Antikythera mechanism is broken and eroded, making it difficult to know exactly how it worked.

    Associated Press/Petros Giannakouris

    The Antikythera mechanism is just one intriguing finding from a 2,000-year-old shipwreck that divers first discovered in 1900. Divers waiting out a storm found the remains near the Greek island of Antikythera.

    Excavations have uncovered three life-size marble horse statues, coins, jewelry, and other treasures, according to the Woods Hole Oceanographic Institute. But the Antikythera mechanism is perhaps the most unique discovery of them all.

    It's about the size of a shoebox, is broken into six pieces, and has eroded from its time underwater. The mechanism is so sophisticated that some thought it had to be a modern device that got mixed in with the ancient artifacts, according to Derek John de Solla Price. He helped discover the device's function in the 1970s.

    X-ray images from 2005 gave researchers new details about the device. And in 2020, Budiselic and his colleagues used the images to measure the positions of the holes and proposed the mechanism had between 347 and 367 holes. If it had closer to 350 holes, it would have followed the lunar calendar. If it had 365, it would have been modeled on the Egyptian calendar.

    But it was difficult to nail down an exact number because of the device's diminished condition.

    After learning about Budiselic's research, Woan first used Bayesian analysis, calculating different probabilities of the total number of holes based on the position and number of holes in the remaining pieces of bronze. He learned that it was hundreds of times more likely that the device had 354 holes than 360 holes.

    Woan's colleague Joseph Bayley followed up the research by modifying techniques used to study gravitational waves, which are ripples in space-time. His results agreed with Woan's; there were likely either 354 or 355 holes in the ring.

    In other words, there's a much higher probability that the mechanism tracked the Greek lunar year instead of the Egyptian one. It was capable of calculating planets' positions incredibly accurately for its time.

    The finding reinforces the impressive craftsmanship and knowledge it took to create the device. "The precision of the holes' positioning would have required highly accurate measurement techniques and an incredibly steady hand to punch them," Bayley said in the press release.

    The two have published their research in the peer-reviewed Horological Journal.

    Read the original article on Business Insider

  • Hippos can launch themselves airborne for split seconds at a time, surprising scientists

    A hippo stands on the grass
    When hippos run, they become airborne for a split second, lifting all their feet off the ground.

    Picture Alliance/Getty Images

    • Researchers discover hippos briefly lift all their feet off the ground when trotting.
    • The Royal Veterinary College team made the discovery based on footage of hippos at a theme park.
    • This gait is rare for large animals and is similar to the way horses run.

    Back in 1878, photographer Eadweard Muybridge helped solve a debate about how horses gallop.

    Using cutting-edge technology for the time, he captured a series of images that showed they simultaneously lift all four feet off the ground.

    It was something many had suspected of the graceful animal, and Muybridge's footage offered definitive proof. Nearly 150 years later, modern video footage has shown that hippos run in a similar way, and it's something no one expected.

    Like horses, hippos also get a bit of air when they trot. There's a split second when the quickest animals fully leave the ground.

    Researchers from the Royal Veterinary College made the discovery when viewing video footage of hippos romping around a theme park in North Yorkshire, England.

    "We were pleasantly surprised to see how hippos get airborne when they move quickly," John Hutchinson, an RVC professor of evolutionary biomechanics, said in a statement. "It's really impressive!"

    Hippos move more like horses than elephants

    A blurry image of a hippo running
    For a glorious 0.3 seconds, some hippos lift all four feet off the ground.

    Johan Vermeulen/Royal Veterinary College

    When elephants walk, they move their back left leg, front left leg, back right leg, then front right leg, according to The BBC. Scientists thought hippos moved in a similar way because of their enormous size.

    However, when Hutchinson and RVC undergraduate student Emily Pringle watched footage of two hippos at Flamingo Land, the theme park, they saw something different. While it only lasted an instant — about 0.3 seconds — all four of the animals' feet did leave the ground at once.

    [youtube https://www.youtube.com/watch?v=RgRXmlvHn-k?feature=oembed&w=560&h=315]

    To verify what they'd seen from the theme park, the researchers looked at more videos of hippos on the internet. Based on the movements of 32 hippos, they concluded that their trot is similar to horses.

    Horses raise all their hooves during their faster strides, though not when walking. It's an uncommon gait for larger animals such as hippos, which can weigh over 4,000 pounds.

    Knowing how the animals move could help veterinarians better diagnose hippos with mobility issues, the researchers said.

    Why are we only just learning how hippos trot?

    Hutchinson noted that while the hippos' gliding trot is impressive, it's not all that surprising that this is the first time it was documented.

    The animals spend most of their time in the water and can be aggressive. "That's part of the reason why science knew little about how hippos move before our research," Hutchinson said.

    The researchers published their findings in the peer-reviewed PeerJ journal. It remains to be seen whether the footage of the airborne hippos becomes as iconic as Muybridge's horse photos.

    Read the original article on Business Insider

  • Fortescue shares: Here are the must-know highlights from FY24

    Miner looking at a tablet.

    To say that Fortescue Ltd (ASX: FMG) shares had a turbulent ride in FY24 would be an understatement.

    The stock whipsawed from lows of $19.40 per share in September last year to highs of $29.88 by the end of January. With a large consolidation in the iron ore price, the mining giant’s shares are now fetching $22.62 apiece.

    In other words, shareholders watched their Fortescue stock move a total of $17.74 per share in that time, including both up and down moves.

    The mining stock is now valued at a price-to-earnings ratio (P/E) ratio of 7.7 times, with a trailing dividend yield of 9.64%.

    Let’s dive into the key highlights from FY24 that you need to know.

    Strong first half for Fortescue shares

    A strong iron ore price kept Fortescue shares buoyant in the first half of the financial year.

    Currently, iron ore is priced at US$113 per tonne. This is after it peaked at US$144 per tonne in January, finishing an 8 %rally starting in August 2023.

    This strength inflected positively on Fortescue’s H1 FY24 results. It clipped a 24% rise in the average revenue per dry metric tonne (dmt) of iron ore sold.

    This translated to a 21% increase in revenue to US$9.5 billion, while net profit after tax (NPAT) surged by 41%.

    That means that for every new $1 in revenues, Fortescue produced $1.95 in NPAT, which is quite the result.

    Consequently, free cash flow increased by 68% year over year to US$2.66 billion, while net debt was reduced by almost half.

    The company also rewarded shareholders with a 44% increase in the interim dividend, which is now at A$1.08 per share.

    As a result, Fortescue shares were a winner in the first half of FY24. They saw a roughly 33% rise in that period.

    But the second half, though? Almost a complete reversal.

    Challenges arose from Q3

    Despite the strong first half, Fortescue faced some hurdles in Q3 FY24. Not least, the pricing of iron ore weakened significantly and hit a low of around US$100 per ton in April.

    Unsurprisingly, the company reported an average revenue per dmt of US$104 per tonne, down almost 4% from its first-half results.

    Fortescue reported that iron ore shipments for the three months ended 31 March were 43.3 million tonnes (Mt), down 6% from the previous year. It was also below consensus estimates.

    Some of the shortfall was attributed to an ore car derailment and some to weather disruptions. Thankfully, a record shipment month in March helped mitigate the impact. The stock consequently finished the financial year roughly in line with where it started.

    Future prospects and iron ore prices

    Fortescue shares are highly sensitive to iron ore prices. Looking ahead, the iron ore market remains volatile.

    UBS forecasts an average iron ore price of US$113 per tonne for the rest of 2024 – flat with today’s price.

    But predicting future iron ore prices is challenging, given commodity markets’ cyclical and unpredictable nature.

    While Trading Economics forecasts a potential rebound to US$126 per tonne in the next 12 months, much will depend on economic conditions in China, a major consumer of iron ore.

    According to my colleague Tristan, the recent economic data from China has shown a decline in house prices and reduced industrial demand, which could impact future prices.

    Goldman Sachs sees further risks for Fortescue shares in FY25. In a July note, the broker reiterated its sell rating on Fortescue, stating that its upcoming guidance “will disappoint.”

    It said:

    We maintain Sell rating on: (1) Relative valuation vs. BHP & RIO, (2) Widening of low grade 58% Fe product realisations over the medium to long term, (3) Execution and ramp-up risks on Iron Bridge and Gabon, (4) Uncertainties around Fortescue Energy diversification (such as the recent approval of the Phoenix hydrogen hub) and Pilbara decarbonisation and impact on dividend and balance sheet.

    The stock is also rated a sell by consensus, according to CommSec. No brokers rate it a buy.

    Fortescue shares’ FY24 wrap

    Fortescue shares were volatile in FY24, but that’s the risk of owning an ASX mining stock. They are price takers on the commodities they sell – not price setters. Fluctuations in the price of iron ore are likely to strongly influence Fortescue shares.

    This year to date, Fortescue is down 22%, having slid 7% into the red in the past month.

    The post Fortescue shares: Here are the must-know highlights from FY24 appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Fortescue Metals Group right now?

    Before you buy Fortescue Metals Group shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Fortescue Metals Group wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    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 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.

  • If I’d invested $5,000 in Pilbara Minerals in FY24 what would I have now?

    It was a difficult 12 months for Pilbara Minerals Ltd (ASX: PLS) shares in the last financial year.

    During the period, the lithium miner’s shares lost 37% of their value.

    This means that a $5,000 investment in the company’s shares at the start of FY 2024 would have turned into approximately $3,150.

    Whereas the same investment in the Vanguard Australian Shares Index ETF (ASX: VAS) would have become $5,375. And that’s not including the dividends the ETF paid out over the 12 months.

    What happened to Pilbara Minerals shares in FY 2024?

    Investors were selling ASX lithium stocks in the last financial year after battery materials prices continued to fall.

    In 2022, the lithium carbonate price averaged US$63,232 a tonne and the lithium spodumene (6%) price averaged US$4,368 a tonne. These high prices were underpinned by insatiable demand and supply shortages.

    Cracks started to form in 2023, which led to these battery making ingredients averaging US$32,694 a tonne and US$3,712 a tonne, respectively.

    Since then, prices have been in free fall. So much so, spot prices (in China) were US$11,167 a tonne for lithium carbonate and US$1,060 a tonne for spodumene 6% this month.

    And while the company’s operations remain profitable at these levels thanks to their low costs of A$900 per tonne (CIF), the amount of profit Pilbara Minerals is likely to make this year is now nowhere near the levels that the market was forecasting 12 months ago. And hopes of a generous dividend this year have been wiped out.

    Making things worse, and putting more pressure on Pilbara Minerals shares, is that analysts believe a lithium surplus will keep prices at these low levels for several years. This could mean a tough few years for the company and its shareholders.

    Should you buy the dip?

    While analysts at Bell Potter see value emerging, there’s not enough on the table to justify a buy rating at this point. The broker has a hold rating and $3.40 price target on its shares. It commented:

    PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($1.8b net cash at 31 March 2024) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. However, weak near-term lithium market sentiment results in us retaining our Hold recommendation.

    The post If I’d invested $5,000 in Pilbara Minerals in FY24 what would I have now? appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Pilbara Minerals Limited right now?

    Before you buy Pilbara Minerals Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pilbara Minerals Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    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.

  • Soul Patts shares had a lacklustre FY24. Here’s why I can’t wait to buy more

    In the 2024 financial year that has just passed us by, ASX shares had an uncommonly good time. The shares of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short? Not so much.

    Between 1 July 2023 and 30 June 2024, the S&P/ASX 200 Index (ASX: XJO) rose by a healthy 7.3%. Factoring in dividend returns, anyone who owned an ASX 200 index fund would have banked roughly 12% last financial year. Not bad for an index that typically returns 7-8% per annum.

    But Soul Patts shares couldn’t quite match that performance. This ASX 200 investing house started July 2023 going for $31.78 each. Last week, those same shares wrapped up FY24 at a price of $32.82.

    Sure, that 3.27% gain over FY24 is better than a poke in the eye with a blunt stick. But it falls far short of being a market-matching (let alone beating) investment – a typical criterion we use for assessing the quality of ASX shares as investments.

    Soul Patts’ dividends do narrow that gap a little. The company forked out 91 cents per share in fully-franked dividends last financial year. At the company’s starting FY24 price, that adds a yield worth another 2.86% to Soul Patts’ FY24 total return.

    Even so, we can conclude that FY24 was a lacklustre one for Soul Patts shares and their owners.

    As an owner myself, this doesn’t bother me though. In fact, I think it’s a great opportunity to pick up some more.

    Buying Soul Patts shares when they’re ‘marked down’

    Why? Well, the legendary Warren Buffett once said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”.

    Soul Patts is a company that usually delivers market-beating returns, not market-trailing ones. Back in May, the company affirmed that its shares had averaged a total return of 12% per annum (share price growth plus dividends) over the 20 years to 30 April 2024. That beat the ASX market by 3.3% per annum on average.

    But not this year. So, by definition, that makes Soul Patts’ stock ‘marked down’, as Buffett would say.

    Say Soul Patts blew the lights out with a 20% rise in FY24. If that were the case, I wouldn’t be in a rush to buy more shares today. However, as the company had a lacklustre year, it is now high on my buy list for FY25.

    If the company sticks to its historical average and delivers a 12% return over the coming 12 months (which I think is very possible, but not guaranteed), I’ll be glad to have bought shares.

    The post Soul Patts shares had a lacklustre FY24. Here’s why I can’t wait to buy more appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Washington H. Soul Pattinson And Company Limited right now?

    Before you buy Washington H. Soul Pattinson And Company Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Washington H. Soul Pattinson And Company Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Eating less bacon and other processed meat may reduce the risk of diabetes, heart disease, and certain cancers, study shows

    a close up of a grill with several strips of bacon, next to a plate of burgers
    Cutting back on processed meat could reduce rates of cancer, diabetes and heart disease. As little as 10 slices of bacon per week could make a difference.

    Vera Vita/Getty Images

    • Reducing processed meat intake by 30% could lower diabetes, heart disease, and cancer rates, data shows.
    • Eating less processed meat could prevent about 500,000 disease cases in the US over the next decade.
    • A researcher said cutting back on meat may help protect the environment, too, making it a 'win-win.'

    Cutting back on processed meat in your diet may reduce the risk of serious diseases, including some cancers, a new research analysis predicts.

    By eating 30% less processed meat alone, the US could reduce the rate of diabetes, heart disease, and colon cancer by as many as hundreds of thousands of cases, according to the study published in The Lancet Planetary Health.

    Researchers from the University of Edinburgh and the University of North Carolina, Chapel Hill, developed a simulation tool based on CDC health data to estimate how a simple dietary change might affect disease rates in the US.

    Processed meat has long been thought to be a culprit in chronic illnesses like heart disease. Bacon, sausage, and ham contain preservatives called nitrates, which previous evidence has linked to higher odds of developing certain cancers. Red meat and processed meats have also been linked to a higher risk of diabetes.

    The recent study could help researchers understand the potential benefits of cutting back on processed meat and how much it would take to make a difference.

    The researchers calculated that if Americans reduced their processed meat consumption by about a third (the equivalent of about 10 slices of bacon a week), there would be significantly fewer cases of some of the leading causes of death over the next decade. Specifically, there would be about 352,900 fewer cases of diabetes, 92,500 fewer cases of heart disease, and 53,300 fewer cases of colorectal cancer, according to the estimate.

    The study also found that eating less red meat could reduce rates of illness even more. However, more research is needed on unprocessed red meat like steak, as some studies have suggested that, in moderation, it may be less harmful than processed meat.

    One important caveat to the study is that the potential health benefits of cutting out processed meat also depend on what you replace it with. Some evidence suggests plant-based processed foods, including meat substitutes, are also linked to a higher risk of illness and early death.

    In contrast, diets high in unprocessed whole foods such as grains, vegetables, legumes, fruits, nuts, and seeds have been linked to a longer, healthier life.

    Our food choices also matter for the environment, according to Lindsay Jaacks, coauthor of the study and a professor at the University of Edinburgh.

    Meat production is a notorious contributor to greenhouse gases and uses a huge amount of natural resources, such as land and water.

    The findings of the latest study add to a growing body of evidence that eating more sustainably is also good for our human health.

    "This is a clear win-win for people and planet," Jaacks said in a press release.

    Read the original article on Business Insider

  • Morgans names the best ASX stocks to buy in July

    A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate

    Every month, analysts at Morgans pick out their best ASX stock ideas.

    These are the ASX stocks that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe. Morgans notes that they are supported by a higher-than-average level of confidence.

    Among its best ideas for July are the three ASX stocks listed below. Here’s what the broker is saying about them:

    Clearview Wealth Ltd (ASX: CVW)

    Morgans thinks that Clearview Wealth could be an ASX stock to buy. It is an Australian financial services company offering life insurance, superannuation and investment products and services.

    The broker is feeling very positive about the company’s outlook. Particularly given its business transformation program, which it expects to support strong earnings. In addition, it highlights Clearview’s solid balance sheet and undemanding valuation. It said:

    CVW is a challenger brand in the Australian retail life insurance market (market size = ~A$10bn of in-force premiums). CVW sees its key points of differentiation as its: 1) reliable/trusted brand; 2) operational excellence (in product development, underwriting and claims management); and 3) diversified distributing network. CVW’s significant multiyear Business Transformation Program has, in our view, shown clear signs of driving improved growth and profitability in recent years. We expect further benefits to flow from this program in the near term, and we see CVW’s FY26 key business targets as achievable. With a robust balance sheet, and with our expectations for ~21% EPS CAGR over the next three years, we see CVW’s current ~11x FY25F PE multiple as undemanding.

    Morgans has an add rating and 78 cents price target on it shares.

    Elders Ltd (ASX: ELD)

    Another ASX stock that Morgans is bullish on in July is Elders. It is a leading agribusiness company.

    Morgans believes that FY 2025 could be the start of a good run of earnings growth for Elders and sees now as the time to buy. It said:

    ELD is one of Australia’s leading agribusinesses. It has an iconic brand, 185 years of history and a national distribution network throughout Australia. With the outlook for FY25 looking more positive and many growth projects in place to drive strong earnings growth over the next few years, ELD is a key pick for us. It is also trading on undemanding multiples and offers an attractive dividend yield.

    The broker has an add rating and $9.00 price target on its shares.

    TechnologyOne Ltd (ASX: TNE)

    A third ASX stock that Morgans thinks could be a buy is enterprise software provider TechnologyOne.

    Its likes the company due partly to its large cash balance and impressive track record of earnings growth. In addition, it suspects that the latter could be about to accelerate. Its analysts said:

    TNE is an Enterprise Resource Planning (aka Accounting) company. It’s one of the highest quality companies on the ASX with an impressive ROE, nearly $200m of net cash and a 30-year history of growing its earnings by ~15% and its dividend ~10% per annum. As a result of its impeccable track record TNE trades on high PE. With earnings growth looking likely to accelerate towards 20% pa, we think TNE’s trading multiple is likely to expand from here.

    Morgans has an add rating and $20.50 price target on its shares.

    The post Morgans names the best ASX stocks to buy in July appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Clearview Wealth Limited right now?

    Before you buy Clearview Wealth Limited shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Clearview Wealth Limited wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    Motley Fool contributor James Mickleboro has positions in Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Elders and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Buy BHP and these ASX dividend shares

    Smiling couple looking at a phone at a bargain opportunity.

    Income investors certainly are a lucky bunch. The Australian share market is filled to the brim with dividend-paying shares.

    But which ones could be buys right now for income investors? Let’s take a quick look at three ASX dividend shares that have been given the thumbs up by analysts. They are as follows:

    BHP Group Ltd (ASX: BHP)

    The Big Australian could be a top option for income investors this month according to analysts at Morgans.

    Its analysts highlight that the mining giant’s “basket of market exposures share the similar characteristic of typically boasting bumper margins throughout the cycle.” This means that BHP consistently generates large amounts of free cash flow, which is supportive of big dividend payments.

    Morgans expects this trend to continue in the near term and is forecasting fully franked dividends of approximately ~$2.42 per share in FY 2024 and then ~$2.17 per share in FY 2025. Based on the current BHP share price of $44.77, this equates to dividend yields of 5.4% and 4.85%, respectively.

    The broker has an add rating and $48.30 price target on the miner’s shares.

    Inghams Group Ltd (ASX: ING)

    Morgans is also tipping Inghams as an ASX dividend share to buy this month. It is Australia’s leading poultry producer and supplier.

    The broker has described Ingham’s shares as “undervalued” at current levels. Particularly given its market leadership and favourable consumer trends.

    Its analysts expect this to underpin some generous dividend yields in the near term. They are forecasting fully franked dividends of 22 cents per share in FY 2024 and then 23 cents per share in FY 2025. Based on the current Inghams share price of $3.72, this equates to dividend yields of 5.9% and 6.2%, respectively.

    Morgans has an add rating and $4.40 price target on its shares.

    Orora Ltd (ASX: ORA)

    Over at Goldman Sachs, its analysts think income investors should buy Orora shares.

    They believe the packaging company’s shares could be cheap after crashing deep into the red over the past 12 months.

    In addition, Goldman expects some good yields from its shares. It is forecasting dividends per share of 12 cents in FY 2024 and 13 cents in FY 2025. Based on the current Orora share price of $1.98, this will mean yields of 6.1% and 6.55%, respectively.

    The broker also sees major upside potential for its shares. It has a buy rating and $3.00 price target on them.

    The post Buy BHP and these ASX dividend shares appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Bhp Group right now?

    Before you buy Bhp Group shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bhp Group wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

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

  • ASX lithium shares: Screaming bargains or falling knives?

    The torso view of a man dressed in black sharpening a knife.

    ASX lithium shares counted among the worst stock market performers in the year just past.

    Taking a look at the share prices over the past 12 months, the All Ordinaries Index (ASX: XAO) has gained a respectable 8%. And that’s not including the dividends a number of those stocks pay out.

    As for ASX lithium shares, here’s how some of the top names performed over this same period:

    • Pilbara Minerals Ltd (ASX: PLS) shares are down 41%
    • Core Lithium Ltd (ASX: CXO) shares are down 91%
    • IGO Ltd (ASX: IGO) shares are down 62%
    • Liontown Resources Ltd (ASX: LTR) shares are down 67%
    • Sayona Mining Ltd (ASX: SYA) shares are down 83%
    • Lake Resources (ASX: LKE) shares are down 87%

    I think we can all agree these are some fast falling knives.

    What’s happening with lithium prices?

    As you’re likely aware, lithium producers and explorers across the globe have come under heavy selling pressure as the price of the battery critical metal crashed from all-time highs of more than US$8,000 per tonne in November 2022 to just under US$1,000 a tonne this week.

    The massive retrace that’s been pressuring ASX lithium shares came as rapid global supply growth outpaced slower than expected demand growth.

    On the demand side, EV growth rates in the EU and US have dropped markedly as electric vehicles struggle to compete with cheaper combustion powered rivals.

    What’s next for ASX lithium shares?

    Whether ASX lithium shares represent screaming bargains after the past year’s dismal performance or remain falling knives hinges on what we can expect for lithium prices.

    And on that front, the medium-term outlook looks grim, with most analysts forecasting subdued prices for several years to come.

    According to UBS analyst Levi Spry (quoted by The Australian Financial Review), “With a view that lithium markets remain well to over-supplied, we expect prices to stay lower for longer.”

    UBS rates lithium producers a sell “where valuations still appear stretched”. The broker estimates that markets are still pricing lithium in the range of US$1,200 to US$1,480 per tonne.

    Commenting on what drove the boom in ASX lithium shares, NabTrade’s head of investor behaviour Gemma Dale said (quoted by ABC News):

    Seeing Tesla Motors (NASDAQ: TSLA) go to the Moon, there was just a lot of heat in that sector. And what it meant was that investors were chasing a lot of companies that were not hyper viable. There was a lot of hype.

    Falling knives or screaming bargains?

    Over the short to medium-term, then, ASX lithium shares look more like falling knives that could pare down your initial investment.

    However, long-term investors may well look back at today’s beaten-down prices as screaming bargains.

    “Those [lithium stocks] who have sort of strong, viable business models will perform in the long run. The ones that were a little bit more speculative might not play out quite so well,” Dale said.

    Earlier this week, Richard Coppleson, director of institutional sales and trading at Bell Potter, labelled ASX lithium share Pilbara Minerals “a super buy at these levels”.

    Coppleson said, “When lithium does recover, this is back to $5; only question is when will that be?”

    Pilbara Minerals shares are currently trading for $3.05 apiece.

    Now, whether you’re looking to buy ASX lithium shares or any other stocks, be sure to do your own research first. If you’re not comfortable with that or don’t have the time, just reach out for some expert advice.

    The post ASX lithium shares: Screaming bargains or falling knives? appeared first on The Motley Fool Australia.

    Should you invest $1,000 in Core Lithium Ltd right now?

    Before you buy Core Lithium Ltd shares, consider this:

    Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Core Lithium Ltd wasn’t one of them.

    The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    And right now, Scott thinks there are 5 stocks that may be better buys…

    See The 5 Stocks
    *Returns as of 24 June 2024

    More reading

    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 positions in and has recommended Tesla. 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.