A new month is here, so what better time for investors to look at making additions to their investment portfolios.

With that in mind, let’s take a look at three ASX 200 stocks that Morgans thinks are top buys in July.

It notes that these are stocks “offer superior forecast dividend yields and may be suitable investments for those seeking income.”

Here’s what its analysts are saying about them:

BHP Group Ltd (ASX: BHP)

Morgans is bullish on the Big Australian and sees it as an ASX 200 stock to buy this month.

It likes the mining giant due to its strong margins and attractive dividend yield. It explains:

BHP Group is the largest diversified mining company in the world. BHP has extensive iron ore, copper, nickel and coal operations, and will soon add potash to its portfolio once its massive Jansen project comes online in late 2026. Besides nickel, which has proven volatile, the rest of BHP’s basket of market exposures share the similar characteristic of typically boasting bumper margins throughout the cycle. Over the last decade BHP has shifted its corporate strategy toward streamlining its business, protecting its balance sheet, slowing its pace of investment and maximising shareholder returns. Despite an impressive shareholder performance over recent years, BHP’s dividend yield has remained above market.

Morgans has an add rating and $48.30 price target on its shares. The broker also expects fully franked dividends yields of ~5% this year and next.

Eagers Automotive Ltd (ASX: APE)

Another ASX 200 stock that Morgans is positive on its automotive retailer Eagers Automotive.

Although trading conditions are tough, the broker thinks it is worth sticking with the company due to its positive long term outlook. It said:

Eagers Automotive Ltd is the leading automotive retail group in Australia and New Zealand, operating for over 100 years and representing a diverse portfolio of OEM (original equipment manufacturer) brands. While current industry dynamics in the auto sector (margin pressure; cost of living impacts) are expected to persist in the near-term, we view the scale operators (such as APE) as best placed to navigate this challenging dynamic. Longer-term, we are positive on APE’s various strategic initiatives and expect it can continue to scale; and sustain a structurally higher return on sales through the cycle.

Morgans has an add rating and $14.35 price target on its shares. In respect to dividends, it is forecasting yields of approximately 7% in FY 2024 and FY 2025.

HomeCo Daily Needs REIT (ASX: HDN)

A third ASX 200 stock that could be a buy according to Morgans is the HomeCo Daily Needs REIT.

It likes the company due to its blue chip tenants, attractive dividend yield, and huge development pipeline. The broker said:

HomeCo Daily Needs REIT has a +$4.5bn real estate portfolio focused on daily needs retail (Large Format Retail; Neighbourhood; and Health Services) across +50 properties with the top five tenants being Woolworths, Coles, JB Hi-Fi, Bunnings and Spotlight. Most of leases are fixed. The portfolio has resilient cashflows, with the majority of tenants being national. Sites are in strategic locations with strong population growth. HDN offers an attractive distribution yield, with a +$600m development pipeline providing further growth.

Morgans has an add rating and $1.37 price target on its shares. As for income, it is forecasting 6%+ dividend yields this year and next.

The post Morgans names 3 ASX 200 stocks to buy in July appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• I’d buy BHP shares to generate $1,000 of monthly passive income
• 5 things to watch on the ASX 200 on Wednesday
• What is the outlook for ASX 200 dividend shares in FY25?
• 3 cheap ASX passive income shares I’d buy to target $1,000 a month

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 recommended Eagers Automotive Ltd and HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

CSL Ltd (ASX: CSL) shares have caught a bid lately and lifted almost 6% in the past month, outpacing the broader S&P/ASX 200 Health Care Index (ASX: XHJ), which is up 3.7% in the same period.

In mid-morning trade on Thursday, shares in the biotech giant are swapping hands 1.1% higher at $298.02 apiece.

Brokers are turning bullish on CSL shares, with the average analyst rating a buy, according to CommSec.

Citi has joined the club and revised its rating on the stock in a note on Thursday. Let’s take a look.

CSL shares revised higher

Citi upgraded its recommendation on CSL shares to a buy in a note today, setting an ambitious price target of $335 per share, according to The Australian.

If the investment bank’s 12-month projection is correct, a $1,000 investment in CSL shares today could be worth around $1,120 in a year. That’s around 12% upside potential.

Citi’s analysts might have been impressed by CSL’s growth trajectory. Profits grew 17% year over year to $1.9 billion in H1 FY24, with earnings per share (EPS) of $4.18. Management is calling for $3 billion at the bottom line for the full year.

Meanwhile, Baker Young analysts project CSL’s profits to compound by 21% annually in the coming three years.

Other expert opinions: The $500 club

This performance has attracted positive attention from several analysts. Macquarie also rates CSL shares a buy, with a similar price target of $330.

It highlights the strength of CSL’s Behring division and sees a potential $500 per share valuation by 2027. It, too, sees double-digit earnings growth as a catalyst for this valuation.

Similarly, Sam Byrnes from ECP Asset Management forecasts that CSL shares could reach $500 by 2027.

Morgans also sees more upside, giving CSL rating and a more modest 12-month price target of $315. Again, earnings growth is driving this view.

Finally, Wilsons Advisory recently noted that CSL’s earnings trajectory was stronger than the broader market, making its current valuation potentially attractive.

For reference, CSL trades on a forward price-to-earnings ratio (P/E) of around 38 times, so you decide that one.

Foolish takeout

Shares in the company have climbed by 7.7% over the past 12 months. With Citi’s upgraded rating and other positive broker views, the experts certainly think CSL shares are well-positioned for further growth.

However, as always, consider your financial circumstances and risk tolerance before making any investment decisions.

The post Broker upgrades CSL shares to ‘buy’ — could they hit $335? appeared first on The Motley Fool Australia.

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• Will CSL shares rise in value over the next 12 months? Here’s what the experts say

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 CSL and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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.

Investors that are on the lookout for great value ASX shares might want to check out supermarket leader Woolworths Group Ltd (ASX: WOW).

That is because one leading broker believes the retail giant could be undervalued by the market.

What is the broker saying about this ASX share?

According to a note from last week, Goldman Sachs thinks Woolworths shares are such good value that they are one of only four from the ASX that feature on its coveted Asia-Pacific conviction list.

This list contains only the crème de la crème of financial markets in the Asia-Pacific region and currently contains a total of 29 companies.

The note reveals that Goldman has a conviction buy rating and $40.20 price target on its shares. Based on the current Woolworths share price of $33.48, this implies sizeable potential upside of 20% for investors over the next 12 months.

The retail giant is also a keen dividend payer and Goldman expects a growing income stream from its shares in the coming years. After paying a $1.04 per share dividend in FY 2023, the broker is forecasting this to increase to $1.07 per share in FY 2024, $1.13 per share in FY 2025, and then $1.22 per share in FY 2026.

This equates to fully franked dividend yields of 3.2%, 3.4%, and 3.6%, respectively.

Why is Goldman so bullish?

Goldman is a big fan of this ASX share due to its strong market position and consumer stickiness and loyalty. It believes this leaves Woolworths well-positioned to grow its market share and pass through any cost inflation.

In addition, it highlights that despite these qualities and its positive outlook, the Woolworths share price is trading on lower than normal multiples. It feels that this makes now an opportune time to snap up its shares. Goldman summarises:

WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.

The post This retail giant could be one of the best ASX value shares around! appeared first on The Motley Fool Australia.

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• Supermarket concerns ‘overdone’: Buy Woolworths shares

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 gold sector is booming on Thursday with strong gains largely across the board.

For example, Evolution Mining Ltd (ASX: EVN) and Newmont Corporation (ASX: NEM) shares are both up over 3% at the time of writing. This has helped drive the S&P/ASX All Ordinaries Gold index 2% higher during morning trade.

Why are these ASX gold share racing higher?

Investors have been buying gold miners today after the spot gold price raced higher overnight.

According to CNBC, the gold price rose 1.3% to US$2,364.2 an ounce in response to softer than expected economic data out of the United States.

This has boosted hopes of interest rate cuts in the United States in the near future, which would increase the appeal of gold with investors.

Not all gold stocks are rising

One ASX gold share that is crashing today despite this good news is West African Resources Ltd (ASX: WAF). Its shares are down 13% to $1.38 at the time of writing.

This is because this morning, the Africa-focused gold miner announced that it has received firm commitments from institutional and sophisticated investors for a placement.

West African Resources is raising approximately $150 million through the issue of 109.5 million new shares at a discount of $1.37 per new share.

Management notes that there was strong support from both domestic and offshore institutions for the placement, which will support development activities at the Kiaka Gold Project.

The Kiaka Gold Project is expected to be a long-life, low-cost project averaging 234,000 ounces per annum for 20 years with an all-in sustaining cost of US$1,196 per ounce.

With an estimated pre-production capital cost of US$447 million, combined with existing cash at bank and unsold bullion, West African Resources believes that it now has sufficient financial flexibility to fund project construction and ramp-up, supporting the pathway to commencement of gold production. This is expected in third quarter of 2025.

The ASX gold share’s executive chairman and CEO, Richard Hyde, commented:

West African continues to make significant progress towards development of the Kiaka Gold Project with development 50% complete and 75% of capital costs fixed. Proceeds from the placement are expected to provide West African with proforma cash at bank and unsold bullion proceeds of A$604m, 5 positioning West African to continue to rapidly progress the development of the Kiaka Gold Project. West African is currently on schedule to be a +420,000 ozpa gold producer from 2025.

The post 2 ASX gold shares going gangbusters (and one crashing 11%!) appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday

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.

The Arafura Rare Earths Ltd (ASX: ARU) share price is flying higher today.

Shares in the S&P/ASX 300 Index (ASX: XKO) rare earths miner closed yesterday trading at 18 cents. In morning trade on Thursday shares are changing hands for 20 cents apiece, up 11.1%.

For some context, the ASX 300 is up 1.1% at this same time.

Investor interest appears to be stoked by another major funding announcement.

Arafura share price leaps on German funding news

The Arafura share price is soaring after the company announced that the German government has issued conditional approval for up to US$115 million (AU$173 million) in Untied Loan Guarantees from Euler Hermes.

The funds would support debt financing for Arafura’s rare earths Nolans Project.  

The agreement with Euler Hermes will secure neodymium and praseodymium (NdPr) supplies for German-based companies, including Siemens Gamesa. This further sets Arafura up as an important provider of rare earths outside of China.

The miner noted that the approval from Euler Hermes is the final German export credit agency (ECA) approval required to complete its senior debt structure. With this approval, Arafura can finalise its targeted US$775 million senior debt funding for the Nolans Project with commercial lenders.

Arafura must maintain ECA-linked offtake agreements for the term of the loan guarantee.

Commenting on the conditional funding approval sending the Arafura share price soaring today, managing director Darryl Cuzzubbo said, “Today Arafura reached another significant milestone in announcing conditional approval of US$115 million in untied loan guarantees from Euler Hermes.”

Cuzzubbo added:

We continue to demonstrate the increasing geostrategic importance of the Nolans Project and developing a diversified global NdPr supply chain, this time by securing German export credit agency support.

This agreement is linked to offtake with German-based companies, including our key customer Siemens Gamesa, who are global leaders in building wind turbines to advance the energy transition.

We look forward to working closely with Euler Hermes as we progress the Nolans Project.

Arafura said it has already completed an extensive legal, technical and financial due diligence program with financiers, adding that offtake discussions with potential counterparties are “well advanced”.

Arafura’s ore to oxide business model has enabled it to secure high-quality offtake counterparties.

The miner will update the market once the expected binding agreements are entered into.

How has the rare earths miner been tracking?

The Arafura share price has been recovering from a big sell-off in 2023. With today’s intraday gains factored in, shares in the ASX rare earths miner are up 17% so far in 2024.

The post Why did the Arafura share price just leap more than 11%? appeared first on The Motley Fool Australia.

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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.

I like buying ASX shares at really attractive prices. Some stocks are trading at levels that are currently undervalued, in my opinion, so I’m seeing appealing opportunities.

There are several different ways to spot good value in a company. These include whether it’s trading at a large discount to its underlying asset value, if it has a lower price/earnings (P/E) ratio, or if the market does not identify its growth potential.

One of the stocks below is valued at a big asset discount. The other ASX share has seen its share price decline, yet the earnings growth outlook is appealing to me.

Bailador Technology Investments Ltd (ASX: BTI)

This company invests in technology businesses seeking growth-stage investment. It usually invests in businesses run by the founders, with proven business models boasting attractive unit economics, international revenue generation, a huge market opportunity, and the ability to generate repeat revenue.

Every month, Bailador tells investors what the underlying value of its portfolio is, which includes a relatively conservative valuation of each investment and also the cash on the balance sheets.

The ASX share recently expanded its portfolio with two investments.

It invested $20 million in Venture Startups International, which owns Updoc, a digital healthcare platform that connects consumers who need medical services (advice, online prescriptions, referrals, etc.) with registered health practitioners through a telehealth offering.

The business also invested $20 million in financial advice and investment management platform DASH Technology Group.

At 31 May 2024 it had pre-tax net tangible assets (NTA) of $1.76, while the post-tax NTA was $1.61. The current Bailador share price is at a 26% discount to the post-tax NTA and a 32% discount to the pre-tax NTA. That’s an appealing discount for exciting technology businesses, in my opinion.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a large franchisee operator of KFC outlets in Australia and Europe (Germany and the Netherlands).

I think the Collins Foods share price looks good value after falling more than 20% over 2024 to date.

Inflation and a high cost of living are disrupting the ASX share, but I think the long-term prospects look very promising.

The company is growing the number of KFC locations across both continents, which can add scale benefits and boost revenue in the longer term.

During FY24, Collins Foods added seven new restaurants in Australia, taking its national footprint to 279 locations. KFC Europe saw its network reach 75 restaurants, with the Netherlands seeing an increase of 11 locations after eight acquisitions and three new builds.

The FY24 result showed exactly what I wanted to see – double-digit revenue growth of 10.4% to $1.49 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 12% to $230 million and underlying net profit after tax (NPAT) growth of 15.6% to $60 million.

I love it when profit rises faster than revenue, demonstrating strengthening profit margins. FY25 may not show as much earnings growth amid difficult economic conditions, but I think FY26 could be very promising.

The ASX share also grew its full-year dividend by 3.7% to 28 cents. The FY24 grossed-up dividend yield is 4.4%.

According to the estimate on Commsec, the Collins Foods share price is valued at 14x FY26’s estimated earnings.

The post 2 ASX shares to watch while they’re still dirt cheap appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments and Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments. The Motley Fool Australia has recommended Bailador Technology Investments and Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) shares have closed higher for six straight days, and a seventh looks likely after today’s market closes. The rally has boosted shares of the electric vehicle (EV) leader by almost 40% in just the last month. Shares were higher again today by 6% as of 12:05 p.m. ET.

The most recent surge comes after Tesla reported relatively strong vehicle delivery results from the second quarter yesterday. That led to widely followed Wedbush analyst Dan Ives lifting his already lofty price target on the stock to near a Wall Street high among analysts following the company. Ives bumped his price target from $275 to $300 per share today. That would represent a gain of another 30% from yesterday’s closing price.

EV demand is starting to look healthy again

Tesla delivered nearly 444,000 electric vehicles (EVs) in the second quarter. While that was a 4.8% decline compared to the prior-year period, it was higher than many analysts expected. And Ives thinks it’s just the start of an acceleration in EV sales for Tesla. In his report today, Ives wrote:

With the majority of price cuts in the rearview mirror and demand stabilization globally for EVs, especially in China, we believe Tesla’s march toward 2 million units annual trajectory should be reached over the coming quarters.

The optimism for Tesla stock isn’t just about EVs, either. The company reported record deployments of its energy storage products. Its 9.4 GWh (gigawatt hours) of energy storage products deployed outpaced the previous record in the prior quarter by 129%.

That could help boost earnings and sales when the company reports its full second-quarter results on July 23. Investors are also looking forward to a potential catalyst from Tesla’s robotaxi update coming on Aug. 8. Investors seem to want to be in the stock ahead of those updates.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares kept rallying today appeared first on The Motley Fool Australia.

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Howard Smith has positions in Tesla. 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.

Boss Energy Ltd (ASX: BOE) shares are catching the eye on Thursday morning.

At the time of writing, the ASX 200 uranium stock is up 3% to $4.32.

Why is this ASX 200 uranium stock pushing higher?

Investors have been buying the company’s shares today in response to the release of announcement.

According to the release, Boss Energy has been making strong progress in the commissioning and ramp up of its Honeymoon uranium mine in South Australia.

So much so, it notes that a total of 57,364lbs of U308 was produced by 30 June 2024.

This means that the ASX 200 uranium stock can now make its first delivery to European nuclear utilities under its existing sales contracts. As a result, revenue will be received in the current quarter.

What’s next?

It appears to be onwards and upwards from here for Boss Energy.

Management notes that with the NIMCIX Column 1 performing to expectations and the construction of Columns 2 and 3 on track for completion in the September and December quarters, respectively, it expects production to total at least ~850,000lbs of U308 by 30 June 2025. This is in line with its feasibility study schedule.

After which, the company is positioned to outperform feasibility study forecasts in FY 2026. Management expects production to be greater than 1.63Mlb. It then sees potential for capacity to increase to 2.45Mlb per annum the year after and onwards.

The ASX 200 uranium stock’s managing director, Duncan Craib, appeared to be pleased with the performance of the Honeymoon project. He said:

The start-up phase at Honeymoon is proceeding comfortably to plan, with all the key metrics running in line with, or exceeding, the forecasts contained in the Feasibility Study schedule. Construction of the second and third columns is also advancing well, ensuring we are on track to continue increasing our production rates.

Total production in FY26 is set to meet or exceed our feasibility study forecasts at 1.63Mlb. The addition of columns 4, 5 and 6 are forecast to further increase the production rate to nameplate capacity of 2.45Mlb/annum by year three.

Should you invest?

Bell Potter still sees a lot of value in the ASX 200 uranium stock at current levels. Last month, it put a buy rating and $6.35 price target on its shares.

This implies significant potential upside of 47% for investors over the next 12 months from where its shares trade today.

The post ASX 200 uranium stock storms higher on first shipment 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.

Pilbara Minerals Ltd (ASX: PLS) shares have been sold off over the last 12 months.

During this time, the lithium miner’s shares have crashed 42% and now trade at $3.00.

Are Pilbara Minerals shares in the buy zone?

While it could be tempting to jump in and snap up the company’s shares after such a sizeable decline, one leading broker thinks investors should hold fire for the time being.

According to a note out of Bell Potter, its analysts have reaffirmed their hold rating and trimmed their price target to $3.40 (from $3.60).

While this implies potential upside of 13% for investors from current levels, the broker doesn’t appear to believe this offers a good enough return to warrant a buy rating. Particularly given “weak near-term lithium market sentiment.”

What is the broker saying?

Bell Potter has been busy updating its lithium price forecasts to reflect weaker than expected demand. This has resulted in the broker cutting its earnings estimates for Pilbara Minerals. However, it remains positive on the long term. It said:

We have updated our lithium price outlook on a slower than anticipated price recovery due to short-term demand weakness and supply dynamics. We maintain a strong EV-led long term market outlook, with prices supported by delayed investment in new sources of lithium supply. For FY25, we estimate SC6% prices to average US$1,200/t (previously US$1,400/t) and lithium carbonate of US$16,500/t (previously US$20,000/t). Concurrently, we have marked-to-market our June 2024 quarter SC6% price (US$1,170/t, 17% higher than expected) and A$/US$ FX rate (US$0.66/A$, 1% higher than expected). EPS changes in this report are: FY24 unchanged; FY25 -19%; and FY26 -2%.

In light of the above, while the broker is a big fan of the company, it isn’t enough to justify a buy rating. It summarises:

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.

Overall, it could be worth keeping Pilbara Minerals shares on your watchlist and waiting for a better entry price or for sentiment and demand to shift in the industry.

The post Down 42%: Are Pilbara Minerals shares good value now? 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.

One of the sharpest changes in our financial landscape, and for anyone investing in ASX shares, has been the change in interest rates over the past two years or so.

This will come as no surprise for anyone carrying the burdens of a mortgage, of course.

But one of the upsides of the Reserve Bank of Australia (RBA) raising the cash rate from 0.1% in April 2022 to today’s 4.35% has been the steep rise in returns one can get from simply holding cash in the bank.

Prior to 2022, most Australians would have become used to getting a pittance from keeping their hard-earned dollars in a savings account or term deposit.

After all, the last time the cash rate was above 4.3% was late 2011. And that didn’t even last that long. Australians spent almost all of the 2010s with an interest rate below 3%. Between 2016 and 2022, it was under 2%.

But today, with the cash rate at 4.35%, Australians can expect to receive an interest rate of 5% or even higher if they put their money in a competitive savings account or term deposit.

A safe 5% return on your cash is nothing to turn one’s nose up against. After all, bank accounts with up to $250,000 are essentially risk-free, thanks to the Federal Government’s ‘Financial Claims Scheme’ banking guarantee.

But with the returns from cash investments at this historical high, are ASX shares still a better investment? That’s what we’ll be analysing today. And given we’ve recently bid an old financial year farewell and welcomed in a new one, it’s a great time to do just that.

How did cash compare to investing in shares in FY24?

Luckily, a recent edition of AMP chief economist Shane Oliver’s ‘Oliver’s Insights‘ reveals the answer.

According to the newsletter, Oliver estimated that “two years of rate hikes” resulted in cash investments returning an average of 4.4% over the 2024 financial year.

However, Oliver also estimated that the returns from the Australian share market came in at 12% for FY24. Oliver stated that ASX shares benefitted from “the positive global lead but were relative underperformers again on the back of China worries, the RBA lagging in moving to cut rates and the greater sensitivity of Australian households to higher rates”.

That “positive global lead” refers to the performance of international shares. Oliver noted, “Global shares returned 21% in local currency terms over 2023-24, with a slight rise in the $A cutting this to a still strong 20% in $A terms”.

So an unequivically spectacular year for Australian stock market investors. Someone with $100,000 in ASX shares would be richer to the tune of $7,600 than if they kept that $100,000 in cash investments over FY24. And that’s without taking into account the benefits of franking credits from ASX shares, either.

Still, it’s not all good news from Oliver. To conclude with, he noted that “The risks regarding equity markets are higher than a year ago”. That’s thanks to geopolitical risks, and dangers that the current high interest rate environment could trigger a recession.

Let’s hope FY2025 proves as lucrative for Australian investors as FY24 did.

The post Here’s how much cash returned in FY24 compared with investing in shares appeared first on The Motley Fool Australia.

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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 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.