Tag: Fool

On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped into the red. The benchmark index fell 0.5% to 7,715.5 points.

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

ASX 200 expected to jump

The Australian share market looks set to jump on Thursday following a strong night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 53 points or 0.7% higher this morning. In the United States, the Dow Jones was down 0.1%, but the S&P 500 rose 0.85% and the Nasdaq jumped 1.5%. The S&P 500 and Nasdaq indices both climbed to new record highs overnight.

Oil prices rise

ASX 200 energy shares including Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good session after oil prices rebounded overnight. According to Bloomberg, the WTI crude oil price is up 0.85% to US$78.57 a barrel and the Brent crude oil price is up 0.8% to US$82.60 a barrel. Summer fuel demand optimism has given oil a boost this week.

US inflation report

Investors were celebrating on Wall Street overnight after US inflation came in softer than expected. According to CNBC, the consumer price index (CPI) showed no increase in May. This compares to expectations of a 0.1% increase according to economists surveyed by Dow Jones. Following the release of the CPI data, futures traders lifted the chances of the US Federal Reserve cutting interest rates in September. This would be the first move lower since the early days of the pandemic.

Gold price rises

It could be a positive session for ASX 200 gold miners such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) today after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 1.2% to US$2,353.9 an ounce. The precious metal rose after the US inflation report sparked hopes that interest rates could fall this year.

WiseTech rated as a hold

The WiseTech Global Ltd (ASX: WTC) share price could be almost fully valued according to analysts at Bell Potter. This morning, the broker has reaffirmed its hold rating on the logistics solutions company’s shares with an improved price target of $100.00. This implies just 3.2% upside from current levels. It said that the price target “is a modest premium to the share price so we maintain the HOLD. Potential catalysts for the stock include a beat in the FY24 result – most likely at EBITDA – and strong guidance for FY25 consistent with or ahead of consensus.”

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

More reading

• Woodside shares hit a multi-year low this week, should you buy?
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• These 3 ASX 200 shares were just rerated by top brokers

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

The Japanese share market has generated significant returns over the past year. The Betashares Japan-Currency Hedged ETF (ASX: HJPN) is an exciting investment to consider.

On the Tokyo Stock Exchange, we can find some of the leading Asian companies, including Toyota, Sony, Mitsubishi, Hitachi, Nintendo, Honda, Daikin Industries, Canon and Bridgestone.

I think there are a few good reasons to consider the HJPN ETF beyond just its past performance.

Diversification

The Japanese share market can provide exposure to under-represented sectors in the ASX share market.

Looking at the sector allocation, five industries have a weighting of more than 10% in the HJPN ETF: consumer discretionary (24.3%), industrials (23.4%), IT (17.9%), financials (10.4%), and healthcare (10.1%). Meanwhile, around half of the S&P/ASX 200 Index (ASX: XJO) is weighted to just two sectors, ASX bank shares and ASX mining shares.

Plenty of the leading Japanese businesses generate a “substantial portion” of their revenue outside of Japan, according to BetaShares, which is good underlying diversification of their earnings. A lot of the profit generated by large ASX blue-chip shares is generated within Australia (and New Zealand).

It’s currently invested in around 150 businesses, which is ample diversification in terms of holdings, in my opinion.

Improving situation for Japanese stocks

In the 12 months to 31 May 2024, the HJPN ETF delivered a net return of 37.47% and I think it could keep performing solidly. Remember, past performance is not a reliable indicator of future performance with this ASX ETF.

New rules and disclosures by the Tokyo Stock Exchange are targeting companies with “poor capital efficiency, asking them to disclose plans for how they will realise corporate value for shareholders”, according to investment outfit Alliance Trust.

Japan may be breaking from the shackles of its deflationary situation, which has affected its economy for decades. ‘Real’ wage growth – where wages rise faster than inflation – could keep deflation at bay.

Japan’s biggest union recently agreed to its first “significant” pay rise for its workers in 33 years.

Alliance noted that WTW economists believe wage growth and easing inflation could increase domestic consumption, benefiting Japanese shares, particularly domestic-focused Japanese stocks.

Reasonable fee

It’s not the cheapest ASX ETF, with an annual management fee of 0.56%. There are plenty of cheaper ASX ETFs out there, but I think it’s a fair cost for the specific Japanese allocation it can give to an Aussie’s portfolio. Active managers would typically charge at least 1% to invest in Japanese shares.

This fund also has currency hedging for the Japanese yen exposure, reducing the effect of currency fluctuations on portfolio performance.

Foolish takeaway

I think it’s a compelling ASX ETF to consider with actions that are supporting the Japanese economy and stock market. I don’t know what the short-term returns will be, but I’m optimistic about the longer term as companies better utilise their capital for growth and/or improve shareholder returns.

The post This ASX ETF has soared almost 40% in a year! Should you buy? appeared first on The Motley Fool Australia.

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• Is it too late to buy these soaring international shares ASX ETFs?
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• Here are the top 10 ASX 200 shares today
• 2 ASX shares to buy that are at 52-week lows
• 7 ASX All Ords shares rocketing higher while the market sinks

Motley Fool contributor Tristan Harrison has positions in Alliance Trust Plc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nintendo. 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.

Leading internationally-focused ASX-listed exchange-traded funds (ETFs) have gone on a strong run in recent months. In 2024 alone, the iShares S&P 500 ETF (ASX: IVV) unit price has risen 16%.

Fearful investors may be wondering if they’ve missed out. We don’t know for sure what’s going to happen next; my crystal ball isn’t working at the moment.

But, it may create envy to see ASX ETFs like iShares Global 100 ETF (ASX: IOO) and Vanguard MSCI Index International Shares ETF (ASX: VGS) reaching new highs.

Have we missed out on all the gains? Not necessarily…

Profit growth drives share prices

As the chart below shows, the IVV ETF, the IOO ETF and the VGS ETF have all delivered strong long-term gains for investors.

This has been driven by the performance of the underlying holdings – capital growth of an ETF’s investments drives the net asset value (NAV) of the ASX ETF.

Global powerhouses like Nvidia, Alphabet, Microsoft, Amazon and Apple have all seen their share prices climb in recent months, helping the international ASX ETFs rise.

It’s true that these funds are at, or close to, all-time highs. But they have reached all-time prices many times over the years – it would have been a mistake to avoid investing at those other times.

Business profits at Nvidia, Microsoft, and others keep rising, increasing their underlying value. Yes, interest rates are still high, but those US giants are delivering earnings growth to justify higher share prices, even if the price/earnings (P/E) ratio doesn’t change.

Should we invest?

For investors who regularly plan to buy one (or more) of these international ETFs, I suggest they stick with their plan and continue buying on schedule. Share markets can be high sometimes and dip sometimes. Dollar-cost averaging will hit those different peaks and troughs.

As for investors that prefer to be selective about price with their investment decisions, the above chart doesn’t say ‘great value’ at the moment. However, I believe the long-term has shown the share market can climb over a ‘wall of worry’, such as wars, pandemics, economic downturns and so on.

I believe the IVV ETF, IOO ETF, and VGS ETF could all be materially higher in five years than they are today, with those strong underlying businesses driving ongoing success.

I’d be happy enough to buy some units today for the long term of any of the international ASX ETFs I’ve mentioned, but if I won the lottery, I wouldn’t invest it all in one go – I’d tactically want to spread out the investing over the next year or two.

The post Is it too late to buy these soaring international shares ASX ETFs? appeared first on The Motley Fool Australia.

More reading

• iShares S&P 500 ETF (IVV) inks all-time ASX high! Too late to buy?
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• 3 amazing ASX ETFs to buy when the market reopens
• Buy and hold these ASX ETFs until 2034
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon, Apple, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

More reading

• 7 ASX All Ords shares rocketing higher while the market sinks
• Top brokers name 3 ASX shares to buy today
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• These 3 ASX 200 shares were just rerated by top brokers
• 2 ASX companies dominating their niches

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 Pro Medicus. The Motley Fool Australia has recommended Jb Hi-Fi and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

During today’s session, a good number of ASX shares tumbled into the red.

And unfortunately for the two in this article, they fell to 52-week lows during today’s play.

But if analysts at Goldman Sachs are to be believed, this could have created a compelling buying opportunity for investors.

Here’s what the broker is saying about these beaten down ASX shares:

IGO Ltd (ASX: IGO)

The IGO share price dropped to a 52-week low of $6.49 on Wednesday. Investors have been hitting the sell button this year amid concerns over how weak lithium prices are impacting the battery materials miner’s performance.

However, Goldman believes that IGO is well-placed to navigate the tough operating conditions thanks to the low costs of its Greenbushes operation. It said:

Greenbushes is the lowest cost lithium asset in our coverage; Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate). We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects.

Goldman has a buy rating and $8.10 price target on the ASX share. This implies potential upside of 25% for investors over the next 12 months.

Orora Ltd (ASX: ORA)

Another ASX share that fell to a new 52-week low on Wednesday is Orora. It is a leading packaging company.

Its shares dropped to a low of $2.03 during today’s session, which means they are now down by 30% on a 12-month basis.

While this has been driven by a disappointing performance from Orora this year, Goldman Sachs believes the selling has been overdone and created a buying opportunity. It said:

We believe the legacy business benefits from relative top-line defensiveness, continued self-help in the Americas and growth capital investments that are underway in the Australasian business, while Saverglass is likely to experience near-term volume headwinds, though revert to benefit from the alcohol premiumisation trend, albeit at a slower rate than in the past ~15 years of rapid growth. We are Buy rated on the stock and believe the current market implied valuation of Saverglass provides a favourable risk-reward skew.

Goldman has a buy rating and $3.00 price target on the ASX share. This suggests that it could rise by 46% over the next 12 months.

The post 2 ASX shares to buy that are at 52-week lows appeared first on The Motley Fool Australia.

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• 3 ASX lithium stocks to buy in June 2024
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• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Orora. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The All Ordinaries index (ASX: XAO) may be having another off day, but thankfully it isn’t all doom and gloom on the ASX boards today. In fact, some ASX All Ords shares are even charging higher today.

Let’s take a look at a few that are rising even as the market tumbles. They are as follows:

Accent Group Ltd (ASX: AX1)

The Accent share price is up 2.5% to $2.00. This is despite there being no news out of the footwear retailer. Though, it is worth noting that Bell Potter reiterated its buy rating and $2.50 price target on the company’s shares this week.

Bapcor Ltd (ASX: BAP)

The Bapcor share price is up 1.5% to $5.14. This is likely to be due to investors buying the auto parts retailer’s shares in response to the receipt of an unsolicited, indicative, conditional and non-binding takeover proposal from Bain Capital this week. If the deal goes through, Bapcor shareholders would receive $5.40 cash per share from the private equity giant. Though, it is worth noting that the offer price is well short of Bapcor’s 52-week high of $7.09.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up a further 4% to $1.36. This counter drone technology company’s shares have been on fire this year. So much so, this ASX All Ords share is now up approximately 260% since the start of the year. Strong demand for its technology has been getting investors excited.

Emerald Resources NL (ASX: EMR)

The Emerald Resources share price is up 6% to $3.65. This is despite there being no news out of the Western Australian gold explorer and developer.

Judo Capital Holdings Ltd (ASX: JDO)

The Judo Capital share price is up 4% to $1.36. This has been driven by news that the business lender will be added to the ASX 200 index next week. S&P Dow Jones Indices has announced that ASX All Ords share Judo Capital will replace building materials company CSR Ltd (ASX: CSR) when it is removed from the index week. This remains subject to shareholder and final court approval of the scheme of arrangement which will see CSR acquired by Compagnie de Saint-Gobain.

Kelly Partners Group Holdings Ltd (ASX: KPG)

The Kelly Partners share price is up 4.5% to $7.73. Today’s strong gain is a mystery given that there has been no meaningful news out of the accounting company for some time. Though, its shares have been flying recently and now sit just short of a record high.

Tuas Ltd (ASX: TUA)

The Tuas share price is up 3% to $4.13. Once again, there has been no news out of this Singapore based telco. However, this ASX All Ords share is just a few cents off a record high. This has been driven by a strong performance in FY 2024.

The post 7 ASX All Ords shares rocketing higher while the market sinks appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• 1 ASX share on the cusp of profitability
• Guess which ASX All Ords stock just rocketed 9% after being added to the ASX 200
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today

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 DroneShield and Kelly Partners Group. The Motley Fool Australia has recommended Accent Group, Bapcor, and Kelly Partners Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Shares in S&P/ASX 200 Index (ASX: XJO) gold stock Evolution Mining Ltd (ASX: EVN) are taking a tumble today.

Evolution Mining shares closed yesterday at $3.76 apiece. In earlier trade today, shares were swapping hands for $3.64, down 3.2%. After some likely bargain hunting, the Evolution Mining share price has recovered to $3.72 a share, down 1.2%.

Despite that recovery, the ASX 200 miner is trailing the benchmark, with the ASX 200 down a lesser 0.6% at time of writing. And in a better comparison of apples to apples, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 0.5%.

Here’s what’s happening.

What’s pressuring the ASX 200 gold stock

When analysing share price moves among ASX 200 gold stocks, the first point of call is the gold price.

The yellow metal slipped 0.1% overnight to trade for US$2,313.96 per ounce, down from highs north of US$2,425 per ounce on 20 May. But the gold price remains up more than 14% in 2024, with most analysts forecasting further gains ahead.

So, that’s unlikely to be why the ASX 200 gold stock is underperforming today.

That underperformance is more likely linked to the miner’s market update.

This morning, Evolution Mining reported that its June quarter gold production had taken a hit from inclement weather and earthquakes.

According to the release:

The Cowal and Mt Rawdon operations have been impacted by continued high levels of rainfall. Restrictions to open-pit operations at Cowal and Mt Rawdon have necessitated the processing of lower grade stockpile ore at various stages during the past two months to maintain full processing feed rates.

Management said the rain had not impacted the underground operations at Cowal. The planned ramp-up would continue at the mine following the successful commencement of commercial production in April.

As for those earthquakes hampering the ASX 200 gold stock, the company said:

Material handling systems at Red Lake have been disrupted by localised seismic events at the Balmer and Cochenour areas. Mining rates have improved materially this quarter and there is a high level of mined ore available underground but haulage rates available via alternative systems have lowered near-term capacity

All told, the net impact of the heavy rains and earthquakes on Evolution’s gold production quarter to the end of May is around 26,000 ounces.

On the plus side of the ledger, the company reported that “significantly higher cash flow” had delivered a current cash balance of more than $320 million.

That works out to a quarter-to-date cash flow of some $145 million. And that’s after Evolution Mining paid its FY 2024 interim dividend, which totalled around $40 million.

Evolution Mining share price snapshot

Despite today’s dip, the Evolution Mining share price remains up 11% since this time last year.

The ASX 200 gold stock has gained 29% since the market close on 28 February.

The post Up 29% since February, why is this ASX 200 gold stock tumbling today? appeared first on The Motley Fool Australia.

More reading

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• Top brokers name 3 ASX shares to buy 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 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.

Today, I want to offer you a chance to make a guaranteed 60% return.

At least, apparently that’s what I want to offer you.

Huh?

Yeah, it was a surprise to me, too. I’ve never before offered a 60% return, let alone a guaranteed one.

Why would I start doing it now?

Spoiler alert: I didn’t, don’t, and won’t.

And yet, that’s apparently what I’m doing… if you believe the social media scams I’ve seen around the place.

See, unfortunately, I have the dubious honour of having my face and name (and video) used by scammers to try to trick users into sending them money.

Which… sucks.

I’m not alone, by the way. David Koch has long been used in scams like this. So have other well-known celebrities.

The worst thing? I can’t do a bloody thing about it. Yes, I report the ads when I see them. So does our team. But they’re everywhere. And don’t see all of them (very few, actually).

So while people are out there, pretending to be me, I can’t stop it happening.

I can’t stop people being scammed. I can’t stop people losing money.

And while it’s not my fault, there’s something just awful about knowing it’s my name and face that’s being used to do it.

If there’s one small ray of light, it’s that the scammers have overdubbed my video with an accent that is… not mine.

But, given the surge of AI capacity, that small glitch won’t be there for long. At some point in the not-too-distant future, the scam will be so good that even my own mother won’t be able to tell the difference.

Yes, AI and social media are wonderful in so many ways. But they have serious drawbacks, including this one.

And while this one is very personal, as I said, I’m not the first, or even the highest profile (by a long way!) person to be used in this way – and I won’t be the last.

Still, given the money at stake, and the fact that I do work for a financial services company, I wanted to put very clearly on the record that it’s not me… and to beseech you to be extraordinarily careful.

Perhaps worse, many of the people who might get sucked in by this stuff won’t actually read this piece. And I have no way of helping them.

Turns out AI can create some wonderful (and awful) things, but the world’s social media giants don’t seem to be able to use the technology to identify potential scams…

And no, this isn’t my first rodeo – the other, longer-standing scam is where people use my name and copy my social media posts to a fake account, pretending to be me. That one’s still going, too.

I wish there was more I could do about it. The best I can do is warn you. And ask you to warn others. And I can publish this, so that if anyone searches for more detail, they’ll hopefully find this article.

Other than that? Well, I feel pretty helpless, knowing these bastards are going to get money from people who see my name and image and figure they can trust the scam.

So, to be clear:

I will never offer you a guaranteed return.

I’ll never offer you anything so outlandish as a 60% return – guaranteed or otherwise.

I will never invite you to a private WhatsApp group.

I will never offer you bitcoin.

I will never DM you with a special offer or investment opportunity.

And you’ll find me on Twitter and Instagram only at @TMFScottP, and Facebook only at /scottphillipsmoney.

The Motley Fool’s Australian accounts are @themotleyfoolau and /themotleyfoolaustralia.

Can I also ask a small favour? If you see them, and you have some time, would you mind hitting the ‘report’ button on the scam posts when they pop up? It’ll help us get them pulled down and minimise the chance that someone else gets scammed!

Lastly, as my old man used to say, if it seems too good to be true, it probably is. And, as Sergeant Phil Esterhaus used to say in Hill Street Blues… let’s be careful out there.

(If there’s an investment take-away, it’s probably that anything that looks too good to be true, probably is, too. Don’t be cynical, but do be sceptical. Make sure you’re getting your information from credible sources, and that you don’t swallow everything you’re being told. Trust, but verify. And diversify, just in case.)

Fool on!

The post Do you want a guaranteed 60% return? appeared first on The Motley Fool Australia.

More reading

• Up 29% since February, why is this ASX 200 gold stock tumbling today?
• Who is investing in the Guzman y Gomez IPO?
• Why I just bagged $3,500 of this money-printing ASX stock
• Why did this ASX AI stock just crash 21%?
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor Scott Phillips 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 Mexican food business Guzman y Gomez (GYG) plans to list on the ASX next week with an initial public offering (IPO). Multiple institutions are already planning to buy the company’s shares.

Burritos, tacos and enchiladas may not seem like the most exciting product category, but Guzman y Gomez has spicy growth plans, and investors are lining up to take part in its growth journey.

We’ve seen a number of local and global players become much bigger companies after listing, including Yum! Brands, McDonald’s, Chipotle, Domino’s Pizza Enterprises Ltd (ASX: DMP) and Collins Foods Ltd (ASX: CKF). Guzman y Gomez itself has international growth plans, with a small presence in Asia and the United States.

Of course, the success of those other businesses doesn’t automatically mean Guzman y Gomez is going to do as well. But, food for thought.

Significant backers

The main proceeds of the offer will be used to fund GYG’s growth strategy over the coming years, which is primarily focused on the significant expansion of its corporate restaurant network in Australia.

Guzman y Gomez revealed it has received considerable support and demand from existing shareholders, including Aware Super, Cooper Investors, Hyperion Asset Management, Firetrail Investments and QVG Capital.

GYG’s other existing large institutional shareholders — TDM Growth Partners and Barrenjoey Private Capital — will retain significant holdings in the company after the IPO.  

Last week, Guzman y Gomez announced it had received a commitment from funds advised by Capital Research Global investors to subscribe for shares at the offer price. TDM Growth Partners is selling more shares to accommodate the investment relating to Capital Research Global, but TDM will still own 26.2% of GYG.

Will the leadership still own shares?

According to Guzman y Gomez, the board, senior management, and existing substantial shareholders (including TDM) will still own approximately 59% of GYG shares after the IPO.

A number of management and board figures plan to own shares at the GYG IPO’s completion. I will highlight a select few below.

• Guy Russo, the non-executive chair, who was previously the CEO of McDonald’s Australia and managing director of Kmart Australia and New Zealand, is expected to own 6.08 million GYG shares at IPO completion.
• Steven Marks, founder, executive director and co-CEO of Guzman y Gomez, will own 8.8 million shares at IPO completion.
• Hilton Brett, co-CEO and executive director, will own 367,000 shares.
• Bruce Buchanan, an independent non-executive director since August 2016, will own 418,250 shares.

Once the business is listed, Guy Russo and Steven Marks will own well over $100 million of GYG shares.

Foolish takeaway

Guzman y Gomez expects to open 30 new restaurants in FY25. Management believes the company has substantially built the team, restaurant pipeline and infrastructure to increase this to 40 restaurants per annum within five years, with a focus on drive-through restaurants due to their potential to deliver superior restaurant economics.

Time will tell whether the business is able to deliver on its ambitious targets.

The post Who is investing in the Guzman y Gomez IPO? appeared first on The Motley Fool Australia.

More reading

• Up 29% since February, why is this ASX 200 gold stock tumbling today?
• Do you want a guaranteed 60% return?
• Why I just bagged $3,500 of this money-printing ASX stock
• Why did this ASX AI stock just crash 21%?
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor Tristan Harrison has positions in Collins Foods. 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.

Sometimes, the one that got away gives you a second chance. Leaping 20% during the three weeks after I named it my top ASX stock pick to buy in May, chances of adding this terrific company to my portfolio at a fair price were quickly vanishing.

See, Aristocrat Leisure Limited (ASX: ALL) released its first-half results two weeks later, and boy, was it a good one. Net profits were up nearly 17% from the prior corresponding period, the interim dividend lifted by 20%, and a further $350 million in on-market share buybacks.

Yet, the pokie machine maker’s share price began retreating following the result. Between 21 May and 29 May, Aristocrat Leisure shares weakened 7.3%. On 29 May, I wasted no time, buying approximately $3,500 as a starter position in this ASX stock.

So, why did I buy Aristocrat Leisure shares?

The numbers are hard to ignore

Checking a company’s fundamentals is sort of like reviewing a person’s vital signs. A lot can be learned from these basic measures. The following figures are what initially caught my attention, prompting an interest in this dominant gaming business:

• Free cash flow yield of 4.5%
• Return on equity of 20%
• Compounded revenue growth of 18.8% over the last 12 years
• Compounded net earnings growth of 23.5% over the last 12 years
• Net cash position of $397 million
• Relatively low dividend payout ratio of 30%
• Net income margin of 23.3%

The vital signs indicate a fighting-fit company. Indeed, Aristocrat Leisure is regarded as one of the best in the business. Yet, it’s not supremely valued the way other quality companies are.

If I were to guess, I think the undemanding valuation boils down to a few possible reasons:

• Concerns of slot machine relevancy among digital-first demographics
• Staying ahead in a competitive landscape; and
• Being a somewhat controversial industry

In my opinion, this ASX stock is bulldozing the first two issues. Aristocrat is involved in both old-school pokies and app-based slot machines. Secondly, many of the company’s games are some of the most enjoyed pokies on the market: Dragon Link, Dollar Storm, Lightning Link, and Buffalo slots.

ASX stock still not without risk

There is the elephant in the room. Aristocrat Leisure operates in a heavily regulated industry and is exposed to scrutiny because of it.

Last year, Victoria introduced restrictions on operating hours, money limits, and spin rates. Any limitation on gaming risks Aristocrat’s future growth and profitability. This is the price of admission for an ASX stock like Aristocrat Leisure.

A gold mine for AI

People often refer to Nvidia Corp (NASDAQ: NVDA) as the picks-and-shovels play to the artificial intelligence gold rush. However, I see the chip company as akin to the leaching solution that extracts the valuable gold from the raw material.

The real picks and shovels are the businesses capable of harvesting the raw material to feed into AI. Data is as good as gold to casinos because it can help inform profit-optimising decisions. As such, I think pokies will increasingly be viewed as a gateway into a treasure chest of information.

If Aristocrat can be the conduit for data capture, the added value could boost margins further. I doubt many (if any) analysts are factoring this into their long-term valuations for this ASX stock.

The post Why I just bagged $3,500 of this money-printing ASX stock appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Aristocrat Leisure. 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.