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There are a few ASX stocks that make up a significant portion of my portfolio. The one that may give me the least stress of all is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), even though it has a 13% weighting at the moment.

I regularly write about this business as an option for ASX dividend share investors or retirees. However, I also think it makes a lot of sense for me, as someone in their younger 30s.

Everyone should aim to own investments that suit their preferred investment style and objectives. I’m looking for investments that can deliver long-term capital growth and long-term passive income growth. Ideally, my portfolio won’t be as volatile as the market during difficult times, but that can’t be guaranteed.

The investment conglomerate has been operating for over 120 years. It has shown an impressive ability to thrive through global pandemics, world wars, recessions, stock market crashes and various politicians. There’s more to it than just the age though.

There are three main reasons why I don’t lose any sleep at all owning this ASX stock.

Highly diversified

The S&P/ASX 200 Index (ASX: XJO) share isn’t just a single operating business like a bank or a supermarket – it owns a portfolio of assets.

It’s invested across assets like large-cap ASX shares, small-cap ASX shares, credit/loans, private equity and property.

In terms of sectors, it has exposure to areas like building products, financial services, telecommunications, resources, agriculture, electrification and swimming schools.

Looking at the individual businesses that it owns stakes in, Soul Patts owns part of ASX stocks like Brickworks Limited (ASX: BKW), New Hope Corporation Ltd (ASX: NHC), TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG) and Wesfarmers Ltd (ASX: WES).

By being so diversified, the business significantly lowers its risks compared to most other ASX 200 shares.  

Regularly investing in new opportunities

Soul Patts doesn’t just sit there with its portfolio and hope for the best. One of my main worries when committing to any ASX stock in the long term is its ability to adapt to a changing world and various economic conditions.

I don’t know what the Soul Patts portfolio will look like in 20 years, but I believe it will be future-focused with the potential to deliver good long-term returns.

The company is willing to sell existing holdings and make compelling new investors.

For example, in May 2022, Soul Patts acquired the rest of Ampcontrol it didn’t already own in its private equity portfolio. This business provides “electrical solutions for the energy, infrastructure and resource industries”. Ampcontrol’s earnings before interest and tax (EBIT) are forecast to have doubled between FY22 and FY24 to $37 million.

The business has also been investing in its agricultural portfolio and its credit portfolio, both of which could deliver good long-term returns for the ASX share.

Shareholder-focused

The impressive dividend record – the payout has grown every year since 2000 – shows me that the business wants to reward long-term shareholders with cash payouts.

I think it’s also a good sign that the business wants to send some of the cash to shareholders every year rather than trying to build an empire and potentially make too-risky moves.

I’m not expecting Soul Patts to grow its dividend every year – that can’t be certain. But, I think a growing dividend can provide a nice source of ‘real’ returns during investor ownership of the ASX stock.

I do want Soul Patts to make acquisitions every so often if the right deal comes along, as long as the investment team don’t overpay for it.

It’s not at a bargain price, but I think it can continue to perform over the long term.

The post This ASX stock is 13% of my portfolio and I don’t lose a second of sleep over it appeared first on The Motley Fool Australia.

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• Soul Patts shares had a lacklustre FY24. Here’s why I can’t wait to buy more
• ASX passive income: How to make $1,000 per month
• Beginner investors: I suggest you start with these 2 ASX dividend powerhouses for decades of income

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, CSL, Goodman Group, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended CSL and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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• How is the stock market reacting to yesterday’s attack on Trump?
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• Leading brokers name 3 ASX shares to buy today
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• Where to invest $10,000 into ASX 200 shares

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 Block, Nanosonics, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Block, Nanosonics, and WiseTech Global. The Motley Fool Australia has recommended Flight Centre Travel Group and Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There’s only one word that can describe the S&P/ASX 200 Index (ASX: XJO)’s performance this Monday: fire. ASX 200 shares, including CSL Ltd (ASX: CSL), were indeed on fire today.

Not only did the index add a healthy 0.73%, but it has also hit yet another new record high. Yep, the ASX 200 clocked a fresh record of 8,037.3 points this morning. That was shortly after blowing through the psychologically-important 8,000-point threshold for the first time ever as well.

But let’s talk about ASX 200 healthcare giant CSL.

New ASX 200 highs all around

It was a top day for CSL shares as well. The ASX’s third-largest stock also saw its shares at a fresh new high today, albeit a 52-week one. This morning, the CSL share price opened at $308.93 a share after closing at $306.60 last week. But soon after, those same shares climbed up to a flat $311, the new high watermark for CSL.

At market close, the company cooled off a little to end the day up a decent 0.64% at $308.56.

This share price puts CSL up by 7.03% in 2024 to date. This company is also sitting on a 12-month gain of 19.22%.

Saying that, CSL’s new 52-week high isn’t nearly as momentous as that of the broader ASX 200. The company has been here several times before. At least once a year since 2020, CSL shares have ascended above $310 a share. It happened in 2020, 2021, 2022 and 2023. But each time CSL hit this milestone in the past, investors got cold feet and subsequently sent the company lower.

So, while today marks the first time in 12 months that CSL shares have had ‘311’ at the front of their pricing, we have to go way back to early 2020 to find the last time CSL was at an all-time high. That occurred on 20 February 2020, when CSL hit $342.72 a share.

But it’s now more than four years later, and we still haven’t seen CSL get anywhere near that all-time record high.

Check all of this out for yourself here:

What’s next for CSL shares?

Fortunately for CSL investors, ASX brokers seem to be excited about what lies in store for the CSL share price.

Last week, my Fool colleague James covered broker Bell Potter’s bullish view of the healthcare stock.

Calling CSL “an attractive buying opportunity”, here’s some of what the broker said:

CSL has been in a holding pattern since 2020, and for good reason. COVID hit the business with higher collection costs for plasma, depressing margins. We anticipate the start of a margin recovery phase for CSL, driving above-market earnings growth over the next few years…

Given the company’s proven quality and growth prospects, we believe significant upside remains.

It’s not just Bell Potter though. We’ve recently covered the views of brokers at Macquarie. Macquarie is also bullish on CSL shares, giving the company a buy rating as well as a 12-month share price target of $330.

Like Bell Potter, Macquarie sees substantial potential for CSL to grow its earnings over the next few years, and as such, views the current CSL share price as undervalued.

No doubt these optimistic projections will be welcomed by CSL’s investors. But, as always, we’ll have to wait and see if today’s new 52-week high is a sign of things to come.

The post CSL shares hit new 52-week high! What’s next? appeared first on The Motley Fool Australia.

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• CSL shares: ‘Healthy growth at a reasonable price’
• 10 ASX shares to buy in FY25

Motley Fool contributor Sebastian Bowen has positions in CSL. 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.

ASX bank shares have been on a tear. Over the past year, the S&P/ASX 200 Banks Index (ASX: XBK) soared 30%, surpassing the S&P/ASX 100 Index (ASX: XTO), which rose shy of 10% during the same period.

Now, all eyes are on the upcoming reporting season to take cues for the next move from here.

Meanwhile, some US banks have already started reporting earnings, starting with Wells Fargo & Co (NYSE: WFC), Citigroup Inc (NYSE: C), and JP Morgan Chase & Co (NYSE: JPM).

Of particular interest were Wells Fargo shares, which plunged nearly 6% after reporting earnings last Friday.

What caused this drop, and can we take cues from the Wells Fargo earnings for ASX bank shares?

Weaker net interest income from Wells Fargo

In the second quarter, from April to June 2024, Wells Fargo recorded US$11.92 billion in net interest income, down 9% from a year ago. Noninterest income grew 19% to US$8.77 billion, leading to a revenue growth of 1% to US$20.53 billion. Net income decreased slightly by 1% from a year ago to US$4.91 billion. Wells Fargo CEO Charlie Scharf said:

We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income.

The bank explained that the lower net interest income was due to the impact of higher interest rates on funding costs and lower deposit balances. The surge in noninterest businesses was driven by higher trading revenue in its Markets division and higher fees in investment banking and wealth management services.

Looking ahead, Wells Fargo expects FY24 net interest income to fall 8% to 9%, compared to previous guidance of 7% to 9%. The bank expects higher expenses for the full year due to higher compensation expenses and a special assessment expense. Reflecting this, the bank guided for noninterest expense of US$54 billion, compared to the previous guidance of US$52.6 billion.

Wells Fargo shares had risen 32% over the past year before Friday’s 6% fall. The company’s results and weaker FY24 guidance were insufficient to meet the heightened market expectations. While total revenue and profits were in line with analysts’ expectations, the weaker performance in net interest income and FY24 guidance disappointed investors.

Wells Fargo’s rapid contraction in net interest income might be a good indication of what to look for when ASX banks report.

How did ASX bank shares perform so far?

Like US banks, ASX bank shares rose substantially in the past year. Share price performances and FY25 price-to-earnings (P/E) ratios based on S&P Capital IQ estimates are:

• Commonwealth Bank of Australia (ASX: CBA) shares rose 30% in a year and trade at FY25 P/E of 23x
• Westpac Banking Corp (ASX: WBC) shares rose 31% in a year and trade at FY25 P/E of 15x
• National Australia Bank Ltd (ASX: NAB) shares rose 37% in a year and trade at FY25 P/E of 16x
• ANZ Group Holdings Ltd (ASX: ANZ) shares rose 21% in a year and trade at FY25 P/E of 13x

ASX banks expect to report their earnings updates in August 2024, mostly between 14 and 20 August.

The post Prepare for earnings! What ASX bank share buyers can learn from Wells Fargo results? appeared first on The Motley Fool Australia.

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• It’s official, Aussies are getting richer! Here’s how
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• $20,000 stashed away? Here’s how I’d use it to target a $1,750-a-month passive income
• Top 4 reasons why more Aussies are managing their own superannuation

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Kate Lee 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 JPMorgan Chase. 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.

We won’t know how stock markets in the United States will respond to this weekend’s attempted assassination of former US President Donald Trump until US markets open on Monday morning (overnight Aussie time).

We do know that the S&P/ASX 200 Index (ASX: XJO) has just roared into new all-time high record territory, currently up 0.6% at 8,006 points.

And we know that S&P 500 Index (SP: .INX) futures are up 0.2%, indicating a likely positive start to the week in US stock markets.

This comes after Trump, who’s running against incumbent President Joe Biden in hopes of retaking the White House in November’s presidential elections, survived a sniper attack at a campaign rally on Saturday (Sunday morning in Australia).

A bullet grazed the former president’s ear, and a spectator was tragically killed in the attack, with several others wounded before police eliminated the 20-year-old shooter.

While our most ardent hope is that this heinous attack marks an end to escalating political tensions and violence, our beat is the stock markets.

With that in mind, here’s what investors might expect in the wake of the failed assassination attempt on Donald Trump.

How the Trump shooting could impact stock markets

Biden’s popularity was already plunging amid concerns over the 81-year-old’s potentially deteriorating mental faculties following the recent presidential debate. Now, Trump’s literal dodging of a bullet and subsequent defiant public appearances are widely seen to have boosted Trump’s election chances.

So, what does that mean for the ASX and global stock markets?

According to Nick Twidale, chief market analyst at ATFX Global Markets (quoted by The Australian Financial Review), “Undoubtedly, there’ll be some protectionist or haven flows in the Asia early morning. I’d suspect gold could test all-time highs, we will see the yen getting bought and the dollar and flows into Treasuries too.”

To date, we haven’t seen any major moves in the gold price, with the yellow metal trading near its Friday levels of US$2,411 per ounce.

Cryptocurrencies are another story.

Kyle Rodda, senior financial market analyst at Capital.com, said (quoted by Bloomberg), “This news marks a changing point in American political norms. For markets, it means haven trades but more skewed towards non-traditional havens.”

Rodda said he had noted more client flows into Bitcoin (CRYPTO: BTC) and gold after the shooting. Indeed, the Bitcoin price is up 6.5% since the Trump campaign rally attack, currently at US$62,486.

Stock market volatility likely to spike

Investors should also prepare for more stock market volatility, said Frank Monkam, senior portfolio manager at Antimo.

According to Monkam:

Yesterday’s assassination attempt of President Trump is likely to mark the ‘grand opening’ of an elevated period of volatility for risk assets. Trump trades are also poised to move on the high conviction list for investors, with a particular focus on rates markets where the re-pricing of fiscal profligacy will look to offset the prospects of imminent Fed cuts.

With Trump favouring tariffs and looser fiscal policies, analysts are also forecasting a stronger greenback and weaker US Treasuries.

“The bond market should at some point, become aware of President Trump’s higher odds of winning the White House than any of his rivals. And I continue to believe that as his odds rise, so should the probability of a bond market riot,” Marko Papic, chief strategist at BCA Research, said.

Traditional energy companies could benefit as part of the so-called Trump trade while renewable energy companies could see their stock market prices come under pressure.

According to Michael Purves, CEO of Tallbacken Capital Advisors, there’s also the potential that ASX and US stock market investors could now see the US Fed opt to hold interest rates higher for longer.

“Trump’s stated policies are (at least now) more inflationary than Biden’s, and we think the Fed will want to accumulate as much dry power as possible,” Purves said.

Foolish takeaway

While I generally like to craft my own Foolish takeaway on the stock markets, I don’t think I could put it any better than Oliver Pursche, senior vice president at Wealthspire Advisors.

According to Pursche (quoted by Bloomberg):

Regardless of what may or may happen Monday morning [US time], not reacting may prove to be the smartest thing you can do as a stock investor because generally people overreact in the wrong direction.

Markets will find their equilibrium and get back to the things that matter from an investment perspective, which are economic growth, monetary and fiscal policy and corporate earnings.

The post How is the stock market reacting to yesterday’s attack on Trump? appeared first on The Motley Fool Australia.

More reading

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• Here are the top 10 ASX 200 shares today

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

The NIB Holdings Limited (ASX: NHF) share price is up 0.5% amid a leading expert’s rating change on the ASX healthcare share. This coincides with the S&P/ASX 200 Index (ASX: XJO) rising by 0.6%, so the stock is not outperforming.

As we can see on the chart above, NIB shares are down by 7% in the last month. This sizeable decline in a relatively short amount of time has led one expert to think that the NIB share price is now good value.

Let’s have a look at how much upside broker Morgans thinks the ASX healthcare share has.

Buy rating on NIB shares

According to reporting by The Australian, Morgans Financial has decided to change its rating to add on NIB shares.

A price target on a business tells us where the broker thinks the share price will be in 12 months. Analysts don’t have a crystal ball, but it’s just their best guess about where the valuation will go. If they’re correct, some price targets can imply large shareholder gains.

As reported by The Australian, the price target on the ASX healthcare share is $7.92. That suggests a possible rise of 13%. Combine that with the potential dividends over the next 12 months, and we’re looking at a possible mid-to-high-teen return from NIB shares.

What has happened in recent times for the ASX healthcare share?

The company’s last price-sensitive announcement was in March 2024. It revealed that its health insurance premiums would increase by an average of 4.1%. Its previous two increases, in 2023 and 2024, were the two lowest increases of the past 20 years.

At the time, NIB acknowledged that many household budgets were strained, but spending was growing across healthcare, driven by “an ageing population, the rise of chronic conditions and the cost of new technologies.”

NIB’s management noted that it aspires to be a health management and health insurance company.

The company also recently presented at the Macquarie conference in May. In that presentation, it showed that its revenue had grown every single year since FY05 and its underlying operating profit has been growing over the long term as well, aside from the COVID-hit years.

One of NIB’s successes in recent years has been expanding into adjacent markets such as New Zealand, international workers and students, travel insurance, disability ‘navigation’, and more. The business has also been growing its market share in the core Australian private health insurance market.

NIB aims to become the disability sector’s leading navigator by supporting NDIS participants and others with identified disabilities. It aims to reach around 50,000 participants by the end of FY25.

Outlook for NIB shares

In FY24, the business is expecting to achieve net policyholder growth of between 3% and 4% while maintaining stable underlying margins, before gradually returning to the target of between 6% and 7%.

Morgans seems confident on the company’s outlook.

The post NIB shares rise as top broker calls the stock a buy appeared first on The Motley Fool Australia.

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

Investing in ASX small-cap shares has its risks, but it can also yield outsized gains.

One example is Smart Parking Ltd (ASX: SPZ), whose share price has doubled over the past year. For context, the S&P/ASX Small Ordinaries Index (ASX: XSO) and the All Ordinaries Index (ASX: XAO) have advanced by approximately 6% during the same period.

Can Smart Parking keep doing its smart magic?

Why did Smart Parking shares soar?

As the company name implies, it specialises in cutting-edge parking technology. It provides real-time space availability, efficient space management, and seamless payment solutions.

Smart Parking’s stock has been rising due to the company’s strong business performance. The provider of car parking technology has been rapidly expanding its presence in Australia, New Zealand, and Europe. The number of parking sites under management has increased from 286 in June 2018 to 1,219 in December 2023.

Such rapid expansion of its car parks under management led to strong financial results. In 1H FY24, which ended on 31 December 2023, the company delivered a 20% revenue growth to $26.6 million and a 26% growth in its earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $6.7 million.

The company has been rapidly expanding its presence in Europe. Smart Parking initially focused on growth in the UK, then expanded to New Zealand in FY21, Australia and Germany in FY22, and most recently Denmark.

The company’s total addressable market is growing as the overall market expands. There are 45,000 parking sites in the UK, 90,000 in Germany, and 10,000 in Denmark, totaling 145,000 in these three countries. Smart Parking currently holds less than 1% market share in these areas.

Business outlook

Smart Parking’s growth comes from its operations’ scalability and the ongoing expansion. In March 2024, the company acquired Local Parking Security in the UK, adding 126 new parking management sites.

Management is optimistic about the future. In the 1H FY24 update, the company reaffirmed its target to reach 1,500 sites under management by December 2024, marking a 25% increase from its December 2023 figure.

The company also sees “significant new interest and investment from private equity in the UK private parking management market.” Two transactions in 1H FY24 demonstrate the attractive growth opportunity in the UK, the company added.

How expensive are Smart Parking shares?

Smart Parking shares are valued at a price-to-earnings (P/E) ratio of 28x based on its trailing 12 months’ earnings and 22x based on FY25 earnings estimates by S&P Capital IQ. Compared with a few other ASX technology small-cap shares, using S&P Capital IQ estimates:

• VEEM Ltd (ASX: VEE) shares are valued at 31x FY25 earnings estimates
• DUG Technology Ltd (ASX: DUG) shares are valued at 36x FY25 earnings estimates
• IPD Group Ltd (ASX: IPG) shares are valued at 17x FY25 earnings estimates

The Smart Parking share price is down 1% at $0.54 at the time of writing.

The post Up 102% in a year, can this ASX small-cap technology company keep on rising? appeared first on The Motley Fool Australia.

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• 3 ASX small-cap shares I think have explosive growth potential

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

Last week, the S&P/ASX 200 Index (ASX: XJO) and ASX 200 shares ended the week with a momentous session. After the ASX 200 crossed over 7,900 points on Thursday, last Friday saw the Index hit a fresh new record high of 7,969.1 points.

Well, today, the records have just kept on coming.

After opening at 7,959.3 points this morning, the ASX 200 quickly lept into uncharted territory once again. First, the index crossed the 8,000-point threshold for the first time in history. Then, it climbed all the way up to 8,037.3 points – the ASX 200’s new record high.

Today’s gains are just the latest in what has been an incredibly lucrative run for ASX 200 shares over the past few months. It was only back in late October last year that the ASX 200 was under 6,800 points. From that point to today, the Index has now enjoyed a whopping 18.5% surge.

As we went through last week, ASX investors mostly have the big four bank stocks to thank for this latest high for the Australian share market. All four of the big banks have surged in recent months, and hit new 52-week highs.

But it has been Commonwealth Bank of Australia (ASX: CBA) shares that have shone the brightest. Over the past week alone, CBA has hit a series of new record highs. Just today, it clocked yet another one, topping out at $133.30 a share.

As it stands today, the ASX 200 is now up 5.27% year to date in 2024 so far. The index is also up 9.98% over the past 12 months.

Check all of that out for yourself below:

Is it too late to buy ASX 200 shares?

With the brisk and rather unusual rally the ASX 200 has been enjoying in recent months, particularly after today’s new record high, many investors might be wondering whether they should keep buying ASX shares or wait for the inevitable pullback.

Well, one ASX expert is decidedly of the former opinion.

David Bassanese, chief economist at exchange-traded fund (ETF) provider BetaShares, still reckons there’s plenty of value in ASX shares.

Here’s some of what he wrote in an insight this morning before market open:

Local economic concerns however did not stop the S&P/ASX 200 rising by an encouraging 1.8% last week, bringing it close to the 8,000 level – and to my year end target of 8,250. Following Wall Street’s good close on Friday, the futures market is suggesting our market will crack the 8,000 market this morning!

Being relatively cheap and unloved, the Australian market could become part of the ‘great rotation’ if global investors start to seek opportunities outside of the high priced and over loved US large cap technology stocks such as Nvidia.

It’s not hard to see where Bassanese is coming from. Yes, the ASX is at a new record high today. But its 2024 performance actually looks rather muted when compared to other global markets.

For example, while the ASX 200 might be up just over 5% in 2024 to date, the American S&P 500 Index (SP: .INX) is up a far more impressive 18.4% over the same period. Japan’s Nikkei 225 has done even better, rising 23.7% in 2024 so far.

So, it will be very interesting to see what happens to the ASX 200 Index after this momentous Monday. If Bassanese is on the money, we could well see even more new highs.

The post ASX 200 shatters record. Why it could still be ‘relatively cheap’ to invest appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• $20,000 stashed away? Here’s how I’d use it to target a $1,750-a-month passive income
• Here’s how the ASX 200 market sectors stacked up last week
• Top 4 reasons why more Aussies are managing their own superannuation
• Investing in ASX shares? Why CEO pay DOES matter when misaligned

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

The Qantas Airways Limited (ASX: QAN) share price has seen plenty of volatility over the past five years, as the chart below shows. With COVID-19’s effects in the rearview mirror, some investors may wonder whether the ASX travel share is a bargain.

Airlines normally trade on a much lower valuation than other sectors, as measured by the price-to-earnings (P/E) ratio. If the earnings of a low P/E stock can grow, then the business could be an undervalued opportunity.

Now that the travel industry has returned to a new normal let’s examine where its earnings may go and whether, in the eyes of one expert, it’s an opportunity.

Stronger case for the airline

A lot has happened in the last five to ten years, but UBS thinks Qantas is in a better position than before COVID-19 for a few different reasons.

First, the domestic market is “less competitive”.

Second, Qantas’ loyalty division is contributing more earnings before interest and tax (EBIT).

Third, gearing (debt on the balance sheet) is lower.

Fourth, Qantas is ramping up its fleet renewal, whereas in the last cycle, it spent less on capital expenditures.

The first three UBS arguments suggest an improvement in earnings stability. The fourth point is “double-edged” — profit before tax growth may be damped by higher depreciation and financing (with higher interest rates), but the investment in the air fleet “improves the competitive resilience of the cost base and customer experience.”

Is the Qantas share price a buy?

UBS noted that earnings hardly changed in the three years before COVID-19, with forward underlying profit before tax steady at around $1.4 billion. Meanwhile, the enterprise valuation to earnings before interest, tax, depreciation, and amortisation (EBITDA) ratio multiple doubled from 2.5x to 5x, and the Qantas share price lifted by 143%.

The broker thinks that if Qantas’ earnings can remain stable during this cycle, then there could be a positive re-rating for Qantas shares again.

What catalyst would cause this?

UBS suggests it doesn’t need a catalyst, just as long as no negative catalysts could hold it back. For example, Qantas has “strong exposure to consumer and business travel demand”. However, UBS believes investors are already compensated for that with a single-digit earnings multiple.

According to the UBS estimates, the Qantas share price is valued at 6.75 times FY24’s estimated earnings. It’s also valued at 6 times FY27’s estimated earnings and 5.5 times FY28’s estimated earnings.

UBS rates it as a buy, with a price target of $7.50. That implies a rise of around 20% in the next 12 months, though that return is not guaranteed.

The post Is the Qantas share price too low to ignore? appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy today
• Why did ASIC take a look when Qantas shares fell last year?
• 10 ASX shares to buy in FY25
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) real estate share Lifestyle Communities Ltd (ASX: LIC) is under heavy selling pressure today.

Lifestyle Communities shares closed Friday trading for $12.57. In early afternoon trade on Monday, shares in the retirement communities company are changing hands for $10.44, down 17.0%.

For some context, the ASX 200 is up 0.9% at this time and hitting new record highs.

Here’s what investors are mulling over today.

ASX 200 real estate share catching legal headwinds

The Lifestyle Communities share price is tanking today following media accounts that some residents are taking legal action involving allegedly misleading marketing practices and questionable exit fees charged when residents sell their homes.

Retired policeman Geoff Gauci bought a Lifestyle Communities development at Wollert, in Melbourne, where owners buy the dwelling and lease the land.

According to Gauci (quoted by ABC News):

The way it was presented to me and my wife, I expected everything to be above board, knowing that I’m dealing with Lifestyle, a publicly listed company. I did my homework, and I checked on them. And I would have assumed that everything was kosher.

18 months later, he had a decidedly different take on the ASX 200 real estate share.

“To me, it’s like I’m in a financial prison. I’ve got to bail myself out in order to get out, and it’s just wrong,” he said.

And Gauci is not alone.

As ABC News reports:

80 residents at the Wollert Lifestyle Community have quietly lodged a claim against Lifestyle Communities in the Victorian Civil and Administrative Tribunal (VCAT) over fees they believe are excessive and in breach of the law.

The ASX 200 real estate share earns roughly $13 million a year from exit fees.

Lifestyle Communities responds

This morning, Lifestyle Communities responded to ABC’s coverage.

Management said they’ve been engaging with the group of homeowners since February 2024. However, those homeowners have not been satisfied with the company’s responses and have commenced legal proceedings.

The company said it “respects the rights of homeowners to pursue the VCAT pathway and believes this is the appropriate forum for resolution of the matter”.

Noting that its policies are consistent with other industry operators, the ASX 200 real estate share said it rejects the allegations made in the VCAT applications and will defend them accordingly.

“Deferred management fees are permissible in all states except for South Australia. In Victoria, most land lease operators charge a deferred management fee,” the company stated.

Additionally, Lifestyle Communities highlighted that, “All fees clearly articulated and explained on our website and in our marketing materials.”

Homeowners sign off on fee acknowledgements at each stage of the sales process.

With today’s intraday losses factored in, the ASX 200 real estate share is down a painful 42% over 12 months.

The post Why this ASX 200 real estate share is plunging 17% today appeared first on The Motley Fool Australia.

More reading

• Why Aussie Broadband, Bellevue Gold, Lifestyle Communities, and Star shares are falling

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.