The S&P/ASX All Ordinaries Index (ASX: XAO) stock GQG Partners Inc (ASX: GQG) has been an exceptional performer in recent times. It’s up around 60% this year and has nearly doubled over the past year, as shown on the chart below. And one fund manager is still very positive about the company.

GQG is a large fund manager based in the US but listed on the ASX. It has four main investment strategies: US shares, international shares, global shares and emerging markets.

GQG has managed to deliver long-term outperformance with each of its strategies compared to their respective benchmarks, which is helping to attract and grow funds under management (FUM). This is one of the things that the fund manager Blackwattle is attracted to about the company.

Ongoing growth

Blackwattle noted in its May 2024 fund commentary that GQG continued its strong inflows momentum with $1.7 billion of net inflows in April.

The fund manager said the leading indicators for inflows are “excellent”, noting the strong investment returns and the re-opening of GQG’s emerging markets fund.

Blackwattle said GQG is trading on a price/earnings (P/E) ratio of 12, and it’s paying a dividend yield of over 7%.

The investment team at Blackwattle believes that the ASX All Ords stock “still screens cheaply” compared to the market and other funds management peers. Blackwattle pointed out that the 10-year average P/E multiple of comparable listed asset managers is 16x.

Recent update

The most recent FUM update from GQG was its monthly FUM to 31 May 2024.

This showed that GQG experienced net inflows of US$2.8 billion during the month of May, with a total FUM increase of around US$8 billion over the month thanks to the investment performance of the ASX All Ords stock’s funds.

GQG finished May 2024 with US$150.1 billion of FUM.

Outlook for markets

Within its fund commentary update, Blackwattle provided some commentary on its outlook for the market. The fund manager said:

As investors digest the likelihood of fewer (if any) rate cuts in 2024, we expect equity markets to remain choppy. Many cyclical sectors have already seen meaningful corrections from the very elevated valuations at the end of February.

We are now seeing opportunities to selectively increase exposure to good quality industrial businesses that are performing well. The portfolio maintains an overweight in Resources, however following a strong share price performance from sectors such and gold and copper we have taken the opportunity to bank some profits. As such, we would expect the portfolio settings to move towards a more balanced position.

The post Up 57% in 2024, this ASX All Ords stock ‘still screens cheaply vs the market’ appeared first on The Motley Fool Australia.

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• This low-profile $7.8 billion ASX share has risen 70% in 6 months. I’d still buy it!
• About to retire? I’d buy these ASX dividend shares for income
• Here’s how I’d target a $2,000 second income by investing $35 a week

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.

It’s been a pretty horrible day for most ASX 300 shares so far this Wednesday. At the time of writing, the S&P/ASX 300 Index (ASX: XKO) has plunged by a depressing 0.82%, leaving the index at just over 7,710 points.

But even though most ASX 300 shares have followed the index and are having a day to forget, most is not all. In fact, there are no fewer than five ASX 300 shares that have just smashed new 52-week highs this Wednesday. Let’s check them out.

5 ASX 300 shares smashing new 52-week highs today

First up, we have tech stock Altium Ltd (ASX: ALU). Altium shares closed at $67.88 each yesterday afternoon. But this morning, those same shares opened at $67.90 before climbing up to $68.03 just after market open. That’s not just a new 52-week high for Altium, but a new record high. At the time of writing, this ASX 300 share has cooled off a little, but is still going for $67.95 a share, up 0.1% for the day thus far.

This rise today comes after Altium released an update regarding its potential takeover by Renesas Electronics. This confirmed that most regulatory approvals for the takeover have now got the green light.

Next up, we have mining equipment manufacturer Codan Ltd (ASX: CDA). Codan shares closed at $11.66 each yesterday but opened at $11.72 this morning before rising to $11.80 just after midday. That’s this ASX 300 share’s new 52-week high.

At present, Codan stock is trading at its $11.80 peak, up 1.2% for the day thus far. This rise (and new high) comes despite no fresh news or announcements out of the company today.

ASX 300 bank share Bendigo and Adelaide Bank Ltd (ASX: BEN) is our next high flyer. Bendigo shares closed at $11.55 each yesterday evening and opened at $11.57 today before rising up to a new 52-week high of $11.63 mid-morning. Right now, those shares are trading at $11.61 each, up 0.48% for the day.

Again, this comes despite no fresh news or developments out of this bank. Perhaps investors are being spurred on by Commonwealth Bank of Australia (ASX: CBA)’s recent all-time highs here.

New highs for HUB24 and News Corp

ASX 300 tech share HUB24 Ltd (ASX: HUB) has also had a day to remember. HUB24 shares closed at $46.21 each yesterday before opening at $46.34 this morning. Subsequently, this stock rose as high as $46.63 a share, which is a new 52-week — and all-time record — high. At the time of writing, HUB24 has risen 0.26% for the day at $46.33 a share.

There has been no news from HUB24 today, but this company has been up almost 80% over the past 12 months.

Our final ASX 300 share worth checking out this Wednesday is News Corporation (ASX: NWS). News Corp shares finished up at $42.60 each yesterday, but opened at $43.07 this morning before rising as high as $43.37. That’s a new all-time record.

Right now, those shares are trading at $43.14 each, up a hefty 1.26%. Again, there has been no new ASX news from News Corp today. Saying that, this company’s US stock also rose by 1.31% overnight, so it’s not too surprising to see its ASX-listed stock follow suit today.

The post 5 ASX 300 shares smashing new highs while the market sinks appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• 2 ASX 200 bank shares smashing new multi-year highs today
• CBA, DroneShield, and these ASX stocks just hit 52-week highs
• Why Bubs, Codan, Life360, and Sayona Mining shares are charging higher

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 Altium and Hub24. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Everything there is to know about Guzman Y Gomez Ltd (ASX: GYG) is out of the bag following its ASX debut. Having leapt from its initial public offering (IPO) price of $22 to $29.29, are Guzman Y Gomez shares a worthy addition to the portfolio or a skippable meal?

The Mexican-inspired fast-food company unquestionably made a splash in the Australian share market last week. A strong appetite among investors for GYG shares has pinned a $2.9 billion market capitalisation to the newcomer. Is all the excitement backed up by the numbers?

Let’s unwrap this burrito.

Bull case for Guzman Y Gomez shares

The argument for investing in GYG is dominated by the company’s growth story.

It is indisputable that the quick-service restaurant (QSR) brand has exploded in popularity since opening its first store in 2006. Today, GYG has 210 stores across Australia, the United States, Singapore, and Japan, with the majority located down under.

At a price-to-earnings (P/E) ratio of approximately 744 times 12-month trailing earnings, GYG is hardly cheap by this measure. However, an earnings multiple is usually unhelpful in valuing high-growth businesses — and if you believe the GYG story, high growth is what we have on the table.

As outlined in the prospectus for the Guzman Y Gomez shares, the company plans to execute a significant expansion, reaching 1,000 GYG stores. This would roughly equate to a fivefold increase in its store network.

Another big factor in the bullish camp for GYG is its royalty potential. As the company’s franchised stores increase, GYG’s margins could improve dramatically.

Franchise fees, which are royalties derived from monetising the brand, are highly profitable.

Hard to stomach valuation

The investment case for Guzman Y Gomez shares is not all sunshine and churros. Indeed, the elephant in the room is the company’s high valuation.

As shown below, GYG already has a market capitalisation of more than twice that of KFC operator Collins Foods Ltd (ASX: CKF) and about 85% of Domino’s Pizza Enterprises Ltd (ASX: DMP). Notably, GYG operates about half as many stores as Collins Foods and approximately 5% of Domino’s footprint.

Parameter	Guzman Y Gomez	Domino’s Pizza	Collins Foods
Store count	210	3,837	381
Sales (million)	$869.5	$4,179.1	$1,500.0
Sales growth (YoY)	50.8%*	-0.2%*	10.4%
NPAT (million)	$3.9	$113.3	$76.7
Market cap (billion)	$2.90	$3.42	$1.13

To be fair, Guzman Y Gomez is growing much faster than its peers. However, as Ben Williamson of InvestorHub notes, the next chapter of growth is somewhat uncertain. He said:

GYG’s high valuation, coupled with significant challenges in international markets, such as competition from the likes of Chipotle in the US and reliance on rapid expansion for growth, poses risks.

The share price could remain stable if the company meets its aggressive growth targets and successfully navigates competitive pressures, yet if these targets are not met or if international operations continue to struggle, the share price may face downward pressure.

Likewise, IG market analyst Hebe Chen highlights an absence of proven economies of scale from the company’s recent growth:

It’s notable that [Guzman Y Gomez’s] recent growth hasn’t yielded much in terms of economies of scale; operating profit remains low, even in the industry’s standard, as expenses rise in line with income.

Taking a bite?

GYG wields a strong brand in Australia, painstakingly constructed over the past 18 years. In my view, leveraging this asset through growth in franchised stores is necessary for Guzman Y Gomez shares to grow into their current valuation.

Still, a lot must go right for the company to achieve its ambitions. Moreover, if growth in the US plays a major role in its expansion, then there’s the consideration of a formidable competitor in Chipotle Mexican Grill Inc (NYSE: CMG).

Ultimately, this newly listed ASX share is a little too spicy for my current taste.

The post Should I buy Guzman Y Gomez shares on the ASX? appeared first on The Motley Fool Australia.

More reading

• Over $100 million of GYG shares sold by insiders on day one. Should investors be worried?
• How rich are the Guzman Y Gomez founders following the company’s IPO?
• How does the Guzman Y Gomez ASX valuation compare to Domino’s?
• Why Guzman y Gomez, KMD, Mineral Resources, and Pilbara Minerals shares are sinking
• Nuclear power, debt and burritos

Motley Fool contributor Mitchell Lawler 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 Chipotle Mexican Grill and Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Chipotle Mexican Grill, Collins Foods, and Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares have been a standout performer on the ASX this year, surging 13% since January. They have surged 33.5% in the past 12 months and currently trade at $64.80 apiece at the time of writing.

Investors pushed Wesfarmers shares to five-year highs of $70 in May. This was a continuation of a longer-term uptrend that had been in situ since June 2022, where they lifted from lows of around $41 apiece.

The trend has shown some short-term relief, with shares down nearly 7.5% since then. Here are three compelling reasons to consider adding Wesfarmers shares to your portfolio in my best estimation.

Wesfarmers shares: Diversification in one stock

In my view, a major driver of Wesfarmers’ business growth is its highly diversified operations. When you invest in Wesfarmers shares, you’re gaining exposure to a portfolio of some of Australia’s strongest retail, healthcare, and chemicals brands.

These include Bunnings, Kmart/Target, Officeworks, Priceline Pharmacy, and Flybuys, among others. Not only are these low-cost offerings in many instances, but brands such as Flybuys have consumer advantages.

Diversification in Wesfarmers’ portfolio doesn’t just spread risk; it also opens multiple avenues for value creation.

The company operates a total of 37 portfolio brands, ensuring its tentacles are wrapped firmly around the Australian retail sector.

According to Goldman Sachs, many of Wesfarmers’ divisions remain “under-appreciated by the market,” including digital, retail media, and the WES health platform.

In a May note, Goldman also projects 6% and 11% growth in sales and earnings before interest and tax (EBIT) for the Bunnings franchise in FY 2025/2026.

This could generate strong annual free cash flow of $2.5 billion–$3 billion, the broker says. In my opinion, these cash flows could fund more high-growth and high-return platforms, which the company is currently exploring in domains such as health and lithium.

Strong performance from Bunnings and Kmart

Wesfarmers’ portfolio is filled with companies reporting low profit margins but boasting tremendously high sales volumes. The high volumes ultimately lead to wide consumer penetration. This is a positive for the outlook of Wesfarmers shares in my view.

Bunnings and Kmart are prime examples. Combined, these two companies made up around 66% of the Group’s H1 FY 2024 revenues and around 80% of its EBIT.

Both companies booked rather thin pre-tax margins in H1 FY 2024—12.9% for Bunnings and 10% for Kmart—but their sales volumes were enormous, with $9.9 billion and $5.9 billion respectively.

As a result, both companies produced excellent returns on capital, with Bunnings delivering 66% and Kmart a 59% return on all the money injected into their franchises. Return on capital measures how efficiently a company produces earnings on its investments.

For instance a 66% return on capital means that Bunnings produces 66 cents for every $1 of funds that has been invested into the business. How many fund managers can boast that kind of return?

In my view, these figures underscore Wesfarmers’ competitive advantage against other players in the Australian retail market.

Increasing dividends

Aside from capital appreciation, Wesfarmers’ dividend policy could add another attractive layer for investors.

The trailing dividend is a fully franked dividend of $1.94 per share, meaning the yield stands at around 2.9% at the time of writing.

The recent increase in dividends is particularly noteworthy, in my estimation. Despite flat half-year sales growth of 0.5%, Wesfarmers grew its net profit after tax (NPAT) by 3%, resulting in a dividend increase of 3.4% to 91 cents per share.

Goldman Sachs anticipates this trend will continue through FY2025/FY2026, driven by cost optimisation and digitalisation initiatives that could expand Wesfarmers’ margins.

It’s worth noting UBS projects dividends of $2.16 per share in FY 2024 from Wesfarmers.

This could place Wesfarmers on the mantlepiece for investors seeking reliable income alongside potential growth.

Wesfarmers shares – a good long-term investment?

Wesfarmers shares have proven themselves as a long-term investment in the last year, consistently outperforming the S&P/ASX 200 Index (ASX: XJO), which is up 2% in the past year.

The company’s diversified portfolio, strong performance from key divisions like Bunnings and Kmart, and increasing dividends could make it a compelling choice for investors.

Always remember three things however: past performance is no guarantee of future results; always remember to conduct your own due diligence; and consider your own personal financial circumstances.

The post 3 reasons to buy Wesfarmers shares like there’s no tomorrow appeared first on The Motley Fool Australia.

More reading

• Is the FY25 outlook compelling for Wesfarmers shares?
• Are BHP or Wesfarmers shares a better buy?
• Here’s how the ASX 200 market sectors stacked up last week
• Where Aussies are spending their money, and the ASX shares that could benefit
• Did you catch the latest rumour about Wesfarmers shares?

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

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and on course to record a disappointing decline. At the time of writing, the benchmark index is down 1.05% to 7,755.6 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Cettire Ltd (ASX: CTT)

The Cettire share price is down 4% to $1.07. Investors continue to sell this online luxury products retailer after it warned that “the operating environment within global online luxury has become more challenging” with heightened levels of discounting. Not even a bullish broker note out of Bell Potter has been able to stop Cettire’s shares from hitting a new 52-week low today. Its analysts have retained their buy rating with a reduced price target of $2.60. This is more than double where the embattled company’s shares are currently trading.

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price is down 7% to $9.27. This morning, analysts at Citi responded to the quick service restaurant operator’s FY 2024 results by retaining their sell rating and $10.60 price target. Its analysts highlight that the company is currently battling with some challenging market conditions. It was also disappointed to see that management no longer expects margin improvements in the new financial year. Instead, its margins are likely to soften.

Liontown Resources Ltd (ASX: LTR)

The Liontown Resources share price is down 5% to 85.2 cents. This appears to have been driven by broad weakness in the lithium industry today. Investors have been selling lithium stocks after the price of the battery making ingredient continued to fall. In addition, analysts at Barrenjoey are feeling bearish about Liontown Resources. According to a note, this morning the broker has downgraded the lithium developer’s shares to an underweight rating. Liontown Resources’ shares hit a multi-year low today.

Northern Star Resources Ltd (ASX: NST)

The Northern Star Resources share price is down 3% to $12.97. This may have been driven by the release of inflation data in Australia and Canada. Locally, our inflation was stronger than expected in May. Whereas over in Canada, it reported an increase in inflation after cutting interest rates. Investors may believe this is going to lead to the Reserve Bank of Australia and the US Federal Reserve pushing back their interest rate cut plans. This could be bad news for the gold price.

The post Why Cettire, Collins Foods, Liontown, and Northern Star shares are dropping today appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 mining shares just downgraded by top brokers
• This smashed up ASX tech stock could rebound 100%+!
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• Buy these ASX dividend shares with ~5% to 8% yields
• 5 things to watch on the ASX 200 on Wednesday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Collins Foods. 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 Cettire and Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is having a tough time on Wednesday after a stronger than expected inflation reading. In afternoon trade, the benchmark index is down 1% to 7,758.4 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up over 2% to $6.66. This appears to have been driven by a broker note out of Citi this morning. In response to very positive industry data, the broker is feeling confident about the company’s outlook. Particularly given the improving birth rate outlook in China and its belief that domestic brands are not going to limit its growth. As a result, it has reaffirmed its buy rating and $7.85 price target on its shares. This implies potential upside of almost 18% for investors over the next 12 months.

Actinogen Medical Ltd (ASX: ACW)

The Actinogen Medical share price is up 19% to 3.7 cents. This morning, this biotech announced that positive trial data relating to its Xanamem product in patients with elevated blood pTau. The company’s chief medical officer, Dr Dana Hilt, said: “To our knowledge Xanamem is the first drug of this class to have such compelling data. The previously published PET study highlighted just how effective Xanamem is at reaching its target enzyme in the brain at safe and well tolerated doses of 5 and 10 mg/day. No other inhibitor of 11β-HSD1 has ever demonstrated robust central nervous system target engagement in this direct way.”

Karoon Energy Ltd (ASX: KAR)

The Karoon Energy share price is up 2% to $1.80. This may be a delayed reaction to the energy company’s drilling and operational update yesterday. That update confirmed that the Bauna Project restarted production on 11 June as scheduled. In addition, it advised that Who Dat production is currently averaging over 40,000 barrels of oil equivalent (boe) per day on a gross basis. As a result, Karoon Energy expects Who Dat production for the quarter ended 30 June 2024 to be approximately 0.8 million boe.

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price is up 6% to $1.81. Investors have been buying this clinical stage biopharmaceutical company’s shares following the release of a positive announcement relating to its RC220 bisantrene formulation. The company is advancing RC220 to address the high unmet needs of patients across multiple oncology indications. According to the release, toxicology and safety pharmacology studies showed no unexpected or unacceptable toxicities. This means that the completed data package supports the use of RC220 bisantrene in human clinical trials.

The post Why A2 Milk, Actinogen Medical, Karoon Energy, and Race Oncology shares are rising appeared first on The Motley Fool Australia.

More reading

• Guess which ASX healthcare stock is surging 15% on a ‘major milestone’
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

After closing up 1.4% on Tuesday, the S&P/ASX 200 Index (ASX: XJO) looks ready to give back most of those gains today.

The benchmark index was down 0.5% at 11.30am AEST.

Then, the Australian Bureau of Statistics (ABS) released May’s Australian inflation data.

In the minutes after the latest consumer price index (CPI) figures hit the wires, the ASX 200 tumbled another 0.6% to be down 1.1% in intraday trading at the time of writing.

Here’s why investors just got a case of the jitters.

What’s pressuring the ASX 200?

Investors, mortgage holders, and many other Aussies have been holding their breath in hopes that the Reserve Bank of Australia (RBA) will cut the official interest rate from the current 4.35% after hiking 13 times since May 2022.

But May’s inflation print looks to have not only pushed any potential interest rate cuts into 2025 but also may have opened the door to another RBA rate hike. And that’s not what ASX 200 investors were hoping to hear.

Consensus forecasts were for Aussie inflation to reach 3.8% on an annualised basis, up from 3.6% in April.

National Australia Bank Ltd (ASX: NAB) was slightly more optimistic, earlier this week forecasting a 3.6% year-on-year inflation increase.

Unfortunately, as you can guess by the big drop in the ASX 200, the data surprised to the upside.

According to the latest data from the ABS, the monthly CPI indicator rose 4.0% in the 12 months to May.

Commenting on the uptick in inflation, Michelle Marquardt, ABS head of prices statistics, noted that underlying inflation, which takes out volatile items, edged lower.

According to Marquardt:

CPI inflation is often impacted by items with volatile price changes like automotive fuel, fruit and vegetables, and holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation, which was 4.0% in May, down from 4.1 per cent in April.

The biggest contributors to the increase in CPI inflation in May were housing (up 5.2%), food and non-alcoholic beverages (up 3.3%), transport (up 4.9%), and alcohol and tobacco (up 6.7%).

And inflation might have run even higher if not for government energy rebates.

“The introduction of the Energy Bill Relief Fund rebates from July 2023 has mostly offset electricity price rises from annual price reviews in the same month,” Marquardt said. “Excluding the rebates, electricity prices would have risen 14.5% in the 12 months to May 2024.”

With those rebates factored in electricity prices rose 6.5% in the 12 months to May, up from 4.2% in April.

But don’t go selling all your stocks just yet!

Despite sticky inflation and interest rates at levels not seen since 2011, the ASX 200 has gained 10% over the past 12 months. If you’re not sure which ASX stocks have the best potential in the current economic environment, be sure to get some expert advice.

The post The ASX 200 just plummeted on May’s inflation figures. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why Cettire, Collins Foods, Liontown, and Northern Star shares are dropping today
• Why A2 Milk, Actinogen Medical, Karoon Energy, and Race Oncology shares are rising
• I think this ASX 200 stock is a tremendous bargain today
• 3 ASX 200 mining shares just downgraded by top brokers
• Where to invest your Westpac dividends

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

The S&P/ASX 200 Index (ASX: XJO) stock Brickworks Limited (ASX: BKW) looks like a great opportunity in my opinion.

Not only is it a wonderful business with excellent assets, but it’s trading at a large discount to those assets.

When you can buy a good company at an appealing price-to-book ratio, it can lead to pleasing investment returns over time if the business keeps growing its underlying value. On top of that, I believe Brickworks is a solid ASX 200 dividend stock as well.

Brickworks’ excellent assets

The company has three areas – investments, property and building products.

In the investments segment, the key asset is 26.1% of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts is a large investment house that’s invested in sectors like telecommunications, resources, financial services, swimming schools and agriculture. Brickworks also owns 14.8% of bricklaying robot company FBR Ltd (ASX: FBR).

Brickworks owns various property assets, including land and manufacturing property, in its own name. It also owns half of a manufacturing property trust that owns some of the buildings used by Brickworks’ building products businesses and 50% of an industrial property trust.

The ASX 200 stock occasionally sells excess land into the industrial property trust, where partner Goodman Group (ASX: GMG) builds large, advanced warehouses on the land. This improves the value of the land and unlocks excellent rental income for Brickworks and Goodman. The property portfolio within the joint venture trust is steadily growing.

The industrial property trust is benefiting from tailwinds, including online shopping’s increasing demand for ‘list-mile’ logistics and warehousing. There’s also growing demand for sophisticated and higher-value facilities (including robotics and multi-storey).

Brickworks has building product operations in Australia and the US. In Australia, it’s the biggest brickmaker and is also involved with roofing, masonry and stone, specialised building systems, cement, and timber battens. In the US, it’s the largest brickmaker in the northeast of the country. Brickworks has assets related to those operations in both countries.

Large discount with the ASX 200 stock

At 31 January, the business reported it had $1.95 billion of net tangible assets (NTA) relating to the property trusts, $608 million of NTA relating to building products, $615 million of net debt and $384 million of 100%-owned development land, with an ‘as is’ market value.

Currently, 26.1% of Soul Patts’ market capitalisation is $3.1 billion.

Therefore, the latest known inferred value of those assets, excluding deferred tax liabilities, is around $5.4 billion, so Brickworks shares are trading at roughly a 23% discount to this at its current market capitalisation.

With the high-quality nature of the underlying assets, particularly the property and investments, I think the size of the discount is unwarranted and presents compelling value. Brickworks can grow its value further as the development land is utilised for more industrial properties, it improves its building product operations, and it benefits from the compounding of Soul Patts’ investment portfolio.

The ASX 200 stock can work as a buy-and-hold investment with its impressive dividend, which hasn’t been cut for almost 50 years. Brickworks currently has a grossed-up dividend yield of 3.5%.

The post I think this ASX 200 stock is a tremendous bargain today appeared first on The Motley Fool Australia.

More reading

• Are ASX real estate shares building towards a better FY25?
• Are Brickworks shares about to benefit from an industrial property boom?
• Should you buy Brickworks or Soul Patts shares today?
• How to invest for retirement in an inflationary environment
• 10 ASX shares that have raised dividends for a decade

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

Three S&P/ASX 200 Index (ASX: XJO) mining shares just had their outlooks cut by leading brokers.

All three have a primary focus on different metals.

Namely gold, lithium and iron ore.

Yet the brokers expect all three could face some headwinds in the year ahead.

Which stocks are we on about?

Read on!

(Broker data courtesy of The Australian.)

Three ASX 200 mining shares with reduced outlooks

Gold miner Northern Star Resources Ltd (ASX: NST) is the first ASX 200 mining share to get hit with a broker downgrade.

The Northern Star share price is down 2.7% today, with shares trading for $13.05 apiece. Despite coming under selling pressure since late April, shares in the ASX 200 gold miner remain up 4% over a year. Northern Star shares also trade on a fully franked trailing dividend yield of 2.3%.

Now Barrenjoey has reduced its outlook for the big Aussie gold miner, cutting it to a neutral rating. However, with a $14.50 price target, the broker still foresees a potential upside of more than 11% from current levels.

This brings us to the second ASX 200 mining share to be downgraded by a broker: iron ore giant Fortescue Ltd (ASX: FMG).

The Fortescue share price is down 1.5% today at $21.33 a share. That sees the share price just about flat over the past 12 months, with the share price now having tumbled more than 27% in 2024. That pressure has largely come amid a big retrace in iron ore prices. The industrial metal kicked off 2024 trading above US$140 per tonne. Today, that same tonne is trading for around US$103.

With dividends holding up and the share price dropping, Fortescue shares trade on a juicy, fully franked trailing dividend yield of 9.8%.

Despite the big year-to-date fall, Barrenjoey believes the iron ore miner could continue to edge lower. The broker cut Fortescue’s share to an underweight rating with a $21.00 price target, about 1.5% below the current level.

Liontown Resources Ltd (ASX: LTR) rounds off the list of ASX 200 mining shares getting socked with a broker downgrade.

Shares in the lithium miner are taking a beating today, down 4.8% at 86 cents apiece. That sees the Liontown share price down a painful 70% since this time last year.

And Barrenjoey isn’t forecasting any big turnaround in the year ahead. The broker cut Liontown shares to an underweight rating.

The post 3 ASX 200 mining shares just downgraded by top brokers appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Are Fortescue shares a contrarian buy after falling 20% in a month?
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• Is the FY25 outlook for Fortescue shares compelling?

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.

Yesterday was a good day for Westpac Banking Corp (ASX: WBC) shareholders.

That’s because it was pay day!

The banking giant rewarded its loyal shareholders with a fully franked 90 cents per share interim dividend.

And while some shareholders may have opted to use the bank’s dividend reinvestment program, others may now be looking for somewhere to invest these dividends.

Let’s look at two buy-rated ASX shares to consider snapping up:

NextDC Ltd (ASX: NXT)

The first option for your Westpac dividends could be NextDC. Morgans thinks that investors should snap up this data centre operator’s shares. So much so, it has the company on its best ideas list with an add rating and $19.00 price target. It commented:

NXT should deliver another good set of results in FY24 with some upside risk to guidance, in our view. Structural demand for cloud and colocation remains incredibly strong. NXT’s new S3 and M3 data centres are now open. Consequently, we expect significant new customer wins over the next six-to-twelve months (including CSP options being exercised). Sales should drive the share price higher. NXT looks comfortably on-track to generate over $300m of EBITDA in the next three to five years.

Woolworths Group Ltd (ASX: WOW)

If you are on the lookout for defensive options and a source of income, then it could be worth taking a closer look at Woolworths. It is of course one of the big two supermarket operators in Australia.

It could be a good option for those Westpac dividends based on what analysts at Goldman Sachs are saying. They currently have a conviction buy rating and $39.40 price target on its shares. The broker said:

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.

As for income, Goldman is expecting fully franked dividend yields in the region of 3% through to at least FY 2026.

The post Where to invest your Westpac dividends appeared first on The Motley Fool Australia.

More reading

• 2 ASX 200 retirement shares to buy in July
• 3 ASX shares that could create lasting generational wealth
• 2 ASX 200 compounding machines to buy and hold forever
• Overinvested in Westpac shares? Here are two alternative ASX dividend stocks
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro has positions in Nextdc and Westpac Banking Corporation. 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.