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Investors who snapped up ASX gold shares on 28 February should be sitting on some outsized gains today.

That’s because 27 February marked the beginning of the sizzling run higher for the gold price.

Just what kind of sizzling run are we talking about?

Well, on 27 February gold was trading for US$2,030 per ounce, already well above the US$1,820 that same ounce was fetching on 5 October.

But amid strong central bank buying, the prospect of lower interest rates on the horizon from global central banks, and increased demand for haven assets, the gold price charged higher from there to hit new records on 20 May.

While bullion has retraced a touch from those highs, it’s still commanding US$2,336 per ounce today. This sees the yellow metal up 15.1% since the end of February.

As you’d expect, that’s been a boon for most ASX gold shares.

Indeed, since market close on 28 February, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) has rocketed 23.0%. For some context the All Ordinaries Index (ASX: XAO) is up 1.4% over this same period.

But with that kind of outperformance already in the bag, is now still a good time to buy ASX gold shares?

Why ASX gold shares could keep shining bright

A range of company-specific factors will determine how well any single ASX gold share will perform over the coming years.

But what happens with the gold price will impact them all.

On that front, UBS has upgraded four ASX gold shares, labelling the Aussie gold sector as “relatively attractive“.

As The Australian reports UBS has upgraded its outlook for Northern Star Resources Ltd (ASX: NST), Genesis Minerals Ltd (ASX: GMD), Regis Resources Ltd (ASX: RRL) and SSR Mining Inc (ASX: SSR).

The upgrades come amid the broker’s upwardly revised expectations for the gold price.

UBS’ analysts have increased their 2025 gold price target by 21% to US$2,700 per ounce. The broker also increased its 2026 price forecast by 34% to US$2,775 per ounce. And UBS’ revised 2027 gold price forecast of US$2,600 per ounce is up 30% from the prior forecast.

In Aussie dollars that would see the 2025 gold price at AU$4,053 per ounce.

Taking ASX gold share Northern Star as one example, the miner’s March quarterly report revealed it was producing gold at an all-in sustaining cost (AISC) of AU$1,844 per ounce (US$1,213/oz). So we’re talking about some hefty potential profit margins here.

Commenting on the upgrades for the ASX gold shares, UBS analysts said:

We have previously flagged some moderate risks around FY 2025 guidance and medium-term cost profiles and have taken the opportunity to update this, but this pales in comparison to the prospect of nearly AU$4,000 per ounce gold.

The post Is buying ASX gold shares right now a good idea? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• $20,000 invested in these ASX 200 shares 10 years ago is now worth… (a lot!)
• 5 things to watch on the ASX 200 on Friday

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.

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

In case Nvidia (NASDAQ: NVDA) wasn’t already beloved among investors, now the semiconductor giant is enticing income seekers by increasing its quarterly dividend payouts. The distributions still won’t be huge on a percentage basis, but Nvidia’s cash payouts will be a nice bonus for long-term shareholders.

Nvidia made another important announcement along with the dividend hike which may confuse some investors. There’s no need to worry, though, as the upcoming changes won’t diminish the incentive to buy and hold Nvidia stock.

A small yield gets a big raise

Amid a slew of positive first-quarter fiscal 2025 data points, Nvidia’s dividend raise announcement may have gotten lost in the shuffle for some investors. Yet income harvesters shouldn’t downplay the significance of Nvidia’s upcoming quarterly dividend hike.

To recap the announcement, Nvidia will increase its quarterly per-share dividend distribution by 150% from $0.04 to $0.10. There’s still time to get in, as Nvidia’s shareholders of record on June 11 will be paid on June 28 (though, depending on your broker, it might take a few extra days to see the cash payment show up in your account).

What about Nvidia’s stock split?

That’s all simple enough, but there’s another, concurrent announcement from Nvidia that might complicate things. Specifically, Nvidia is enacting a 10-for-1 forward stock split. If you’re an Nvidia shareholder of record on June 6, you’ll receive nine additional Nvidia shares after the market closes on June 7; trading on a split-adjusted basis will begin on June 10.

So, for example, the Nvidia share price might be reduced from roughly $1,160 to $116. What’s known for certain, though, is that the increased dividend distribution will be $0.01 per share after the split rather than $0.10 per share.

A penny per share per quarter doesn’t sound like much, and the forward annual dividend yield will still be minuscule (0.0034%). Still, at least the quarterly per-share payment will be 150% better than the $0.004 it would have been, post-split, without Nvidia’s dividend hike. 

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

The post What is the dividend payout for Nvidia stock? appeared first on The Motley Fool Australia.

More reading

• Is Nvidia stock going to $1,500?
• Which ASX stock I’d rather buy than Nvidia at $1,148 per share
• Nvidia stock: 4 reasons to buy, 4 reasons to sell
• ‘Significant potential’: One unexpected ASX 200 AI share to buy now
• 1 ASX growth stock that turned $10,000 into $21,000 in less than 2 years

David Moadel 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.

It’s been a rather pleasant day for the S&P/ASX 200 Index (ASX: XJO) and most ASX 200 stocks so far this Wednesday. At the time of writing, the Index has gained a healthy 0.37% and is back above 7,765 points.

But let’s talk about one ASX 200 stock that’s faring even better.

That stock is employment classifieds share Seek Ltd (ASX: SEK). Seek shares closed at $22.68 each yesterday afternoon. But this morning, those same shares opened at $23.10 and are currently up an eye-catching 4.7% at $23.74.

It appears investors are excited about the announcement Seek just made to the ASX.

Before market open this morning, Seek released an update for investors to digest. This update informed the markets that the company would be in line to receive a US$85 million ($130 million) windfall. That’s thanks to the sale of some of its assets.

ASX 200 stock in line for $130 million payday

Seek has reportedly entered into a binding agreement to offload 98.2% of its stake in OCC Mexico and 100% of its stake in Catho Online. The buyer is the Spanish employment company Red Arbor Holding, S.L.

Red Arbor has agreed to pay Seek US$85 million for these assets. That’s in addition to “customary working capital and other adjustments”.

US$20 million of that sum will be held in an escrow account as “security against certain representations and warranties given by SEEK in connection with the transaction”.

Interestingly, Seek noted that “this is a negotiated sum and is not an estimate of SEEK’s future liability in relation to those matters”.

Seek estimates that this transaction can be completed by the end of this month, June 2024. The proceeds have been earmarked for the reduction of Seek’s debt load.

The company has told ASX 200 stock market investors that these sales are expected to result in a $15-35 million net loss on sale after tax. This is a result of factors like tax impacts, transaction costs, and foreign currency losses.

Saying that, Seek reassured investors that there has been no material change to the company’s earnings guidance for the 2024 financial year as a result of these sales.

As we mentioned above, it seems that ASX 200 stock market investors are approving of today’s announcements. That’s going off the decisive movements of the Seek stock price.

Seek stock price snapshot

Despite today’s move higher, Seek shares have had a rough time on the ASX boards of late. The ASX 200 stock remains down by almost 11.5% year to date. However, shares have risen by 1.45% over the past 12 months.

Even so, long-term investors have endured a 33% drop or so from Seek’s last all-time high of over $35 a share. That came back in late 2021.

At the current Seek share price, this ASX 200 stock has a market capitalisation of $8.46 billion. The company is currently trading with a dividend yield of 1.77%.

The post This high-profile ASX 200 stock is soaring on a $130 million windfall appeared first on The Motley Fool Australia.

More reading

• Why Generation Development, Graincorp, Seek, and Treasury Wine shares are storming 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With the All Ordinaries Index (ASX: XAO) up a healthy 0.3% in afternoon trade on Wednesday, we turn our attention to three ASX All Ords shares that were just rerated by leading brokers.

Two received upgrades, while one was downgraded.

(Broker data courtesy of The Australian.)

Two ASX All Ords shares getting broker upgrades

The first ASX All Ords shares earning a broker upgrade today is Infomedia Ltd (ASX: IFM), a software-as-a-service (SaaS) provider for the auto parts and servicing industry.

The Infomedia share price has been on a downward trend since 10 April but remains up 9.0% in 2024.

Shares are down 1.75% today, trading for $1.57 apiece. At that price, Infomedia shares trade on a fully franked trailing dividend yield of 2.6%.

Bell Potter sees significant upside potential for the company. The broker raised Infomedia shares to a buy rating with a $1.90 price target. That’s 21% above current levels.

The second ASX All Ords share getting a broker upgrade is Cooper Energy Ltd (ASX: COE).

Shares in the oil and gas stock are getting hammered today, down 8.2%, trading for 20 cents apiece.

This follows a 4.4% fall yesterday when Cooper Energy released an investor briefing.

On the positive front, the company reaffirmed its FY 2024 guidance. Management is forecasting production of 60.5 TJe/d to 64.0 TJe/d, with production expenses to fall between $57 million and $63 million. Capital expenditure is expected to be $240 million to $280 million.

Canaccord appears to believe the big two-day sell-off is unwarranted. The broker raised Cooper Energy to a buy rating with a 28-cent price target. That represents a potential 40% upside from current levels.

Despite the recent retrace, the ASX All Ords share remains up 57.7% in 2024.

And one stock downgraded

Which brings us to the ASX All Ords share getting a broker downgrade, Whitehaven Coal Ltd (ASX: WHC).

Shares in the ASX coal stock are taking a beating today, down 2.9% to $8.01 apiece.

Longer-term, the Whitehaven share price is up an impressive 37.8% over 12 months. The coal miner also pays some juicy dividends. At the current price, this ASX All Ords share trades on a fully franked dividend yield of 6.1%.

While CSLA cut Whitehaven to an accumulate rating, the broker’s $9.70 price target represents a 21% potential upside from current levels.

As always, if you’re unsure of how or where to invest your money, seek expert advice.

The post 3 ASX All Ords shares just rerated by top brokers appeared first on The Motley Fool Australia.

More reading

• Up 40% in a year, why this ASX All Ords stock just hit a new 52-week high
• Why Black Cat, Brainchip, Cooper Energy, and Lovisa shares are dropping today
• Here are the top 10 ASX 200 shares today
• ASX 200 coal stocks sink amid ‘very negative message’ from Queensland government
• 1 ASX 200 stock that turned $10,000 into $72,756 in just 3 years

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

Medibank Private Ltd (ASX: MPL) shares have taken a hit in trading on Wednesday after the company announced the Australian Information Commissioner (OAIC) has commenced civil penalty proceedings against it in Federal Court.

The proceedings are in relation to the 2022 “cybercrime event”, the company says, and relate to the Commissioner’s own investigation into the event.

Medibank shares are currently trading at $3.69 apiece, down nearly 2%. Let’s take a look at what this means for the insurer.

Medibank shares hit over huge potential fines

The 2022 cyber attack on Medibank and its subsidiary AHM resulted in the exposure of sensitive customer data.

Hackers released information on the dark web, including details about names, addresses, dates of birth, phone numbers, and email addresses.

Other compromised data included Medicare numbers and, in some cases, passport numbers for international students. Medibank, following federal government advice, chose not to pay the ransom demanded by the hackers.

Maurice Blackburn Lawyers lodged a representiative complaint against Medibank, which the OAIC accepted on March 30, 2023.

In its latest submission, the OAIC alleges that Medibank “seriously interfered” with the privacy of 9.7 million Australians by “failing to take reasonable steps to protect their private information”, according to reporting by The Australian.

The OAIC is seeking penalties for each of the 9.7 million affected customers, with each contravention carrying a maximum fine of $2.22 million, The Australian Broadcasting Corporation reports.

Tallied up, this totals a staggering maximum amount of $21.5 trillion, the ABC says. However, the actual fines will be determined by the Federal Court. It is unsure how the Court will decide proceedings if ruling in favour of the Commonwealth.

Implications for Medibank shares

In today’s announcement, the ASX healthcare share stated its intent to defend the OAIC’s claims. Still, the breach has placed Medibank under scrutiny. If unsuccessful in its defence, who knows what the financial and reputational outcome of this will be.

Whilst there are no specific fine amounts listed, a maximum of $21.5 trillion is a staggering amount, more than the entire Australian GDP of US$1.7 trillion in 2023.

Medibank’s revenues were up 1.3% to $3.65 billion in H1 FY 2024. The company reported a net profit after tax (NPAT) of $233.3 million, up 6% year over year.

This was after “cybercrime costs” of $17.6 million for the period, adding to the $26.2 million the prior corresponding period.

What does this mean for investors? Well, given it is still early days, we are yet to find out. The market has yet to fully digest the news as well. Safe to say however – this is one to keep a close eye on.

Conclusion

Medibank investors have taken the news reasonably well today. The Medibank share price is down around 2% at the time of writing. In the last 12 months, the stock is up around 4%. It has climbed 4% this year to date as well.

While the exact financial impact remains uncertain, investors would be wise to stay informed about the proceedings and their potential implications for Medibank’s future performance.

The post Medibank shares dip as huge potential fines loom from 2022 data breach appeared first on The Motley Fool Australia.

More reading

• What is Goldman Sachs saying about Medibank shares in June?
• Overinvested in CBA shares? Here are two alternative ASX dividend stocks
• Here’s how I’d target a $2,000 second income by investing $35 a week
• Here are 3 reliable ASX shares I’d buy instead of the big four banks right now
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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 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.

Many of Australia’s top brokers have been busy adjusting their financial models and recommendations again. This has led to the release of a number of broker notes this week.

Three ASX shares that brokers have named as buys this week are listed below. Here’s why their analysts are feeling bullish on them right now:

Evolution Mining Ltd (ASX: EVN)

According to a note out of UBS, its analysts have retained their buy rating on this gold miner’s shares with an improved price target of $4.60. The broker feels that gold is going through a structural shift that could drive its price to A$4,000 per ounce. In light of this, the broker believes that previously flagged risks around FY 2025 guidance and medium-term cost profiles are now insignificant. Overall, it thinks that the sector is looking undervalued based on its updated gold price forecasts. The Evolution Mining share price is trading at $3.83 today.

Lovisa Holdings Ltd (ASX: LOV)

A note out of Bell Potter reveals that its analysts have retained their buy rating and $36.00 price target on this fashion jewellery retailer’s shares. This follows news that its CEO, Victor Herrero, will be leaving the company next year. Bell Potter notes that he will be replaced by John Cheston, who is the current CEO of Smiggle. While the broker sees leadership transition risk, it believes the CEO appointment aligns well to drive the next leg of growth and lift the penetration of a global business built by Herrero. Its analysts anticipate a smooth transition over the next 12 months and expect Cheston’s background to assist continued execution in Lovisa’s ~40 markets globally. The Lovisa share price is fetching $29.56 on Wednesday.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Goldman Sachs have reiterated their buy rating and $13.00 price target on this wine giant’s shares. This follows the release of a business update and a Treasury Americas investor presentation. The broker highlights that its business update revealed that management has reiterated its guidance for FY 2024. It was pleased with this and believes it alleviates recent concerns of a US-led downgrade. In addition, the broker notes that its investor presentation provided a Luxury Strategy deep dive that was encouraging. Goldman points out that it leans into the continued premiumisation trend in the US and provides scaled synergies of both the Treasury Wine and DAOU luxury portfolios. The Treasury Wine share price is trading at $12.12 this afternoon.

The post Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

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• Treasury Wine share price jumps on US opportunity and FY24 guidance update
• Broker says Lovisa shares are a buy following this week’s selloff
• 5 things to watch on the ASX 200 on Wednesday
• This ASX 200 superstar is down 13% in 2 days. Time to pounce?

Motley Fool contributor James Mickleboro has positions in Lovisa and Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Lovisa. The Motley Fool Australia has recommended Lovisa and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price is at it again.

And by ‘it’, I mean breaking into new all-time high territory.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock are up 0.9% in early afternoon trade on Wednesday, trading for $123.53 apiece.

If CBA stock closes in the green, as looks likely, this will mark the fourth consecutive trading day of gains for Australia’s biggest bank.

It will also mark yet another record closing high.

This flies in the face of a growing chorus of bearish analysts’ assessments.

Many analysts have recently said they believe all the big four ASX 200 bank shares are overvalued. And with a lofty price-to-earnings (P/E) ratio north of 21 times, CBA tends to catch the most flak.

But as witnessed by the new record high CBA share price today, investors don’t appear to share those concerns.

The big four bank looks to be getting some support amid expectations that the level of bad loans may remain subdued. That’s in part thanks to a range of cost-of-living relief measures contained in the federal budget, which should help stressed mortgage holders meet their payments.

Today’s tepid quarterly GDP growth figures released by the ABS at 11:30am AEST have also upped the odds of earlier interest rate cuts from the Reserve Bank of Australia.

The CBA share price is up 0.25% since the GDP data hit the wires and up 26.7% in a year.

Take that bears!

The post Unstoppable! CBA share price smashes yet another record high appeared first on The Motley Fool Australia.

More reading

• Why you should sell CBA, Westpac, and Bank of Queensland shares in June
• Are ASX 200 bank shares a good investment right now?
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• Here’s the average wealth of Aussies who manage their own superannuation
• Buying ASX 200 bank stocks? Here’s why they could keep outperforming

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.

Looking to add high-quality ASX healthcare shares to your portfolio? The Australian share market is home to some of the most disruptive, innovative health companies on the planet.

ASX healthcare shares have traded flat as a group in the last three months. The S&P/ASX 200 Health Care Index (ASX: XHJ) has moved less than 1.5% since 5 March.

However, two standouts among the crowd are ResMed Inc (ASX: RMD) and CSL Ltd (ASX: CSL). Both companies are leaders in their fields and could offer attractive opportunities for growth and income, in my view.

Why ResMed is a top ASX healthcare share

ResMed is a leading player in the sleep disorder treatment market. With the rising prevalence of obstructive sleep apnoea (OSA), experts say ResMed is well-positioned for significant growth.

According to analysts at Bell Potter, the OSA market is huge. The broker says more than a billion people globally suffer from OSA, and many more remain undiagnosed.

Bell Potter reckons this massive underpenetration presents a large growth opportunity for ResMed. The broker has given the company a buy rating with a $36.00 price target. The broker cited the sleep company’s competitive edge as a tailwind, which is boosted by the ongoing recall of competitor Philips’ respiratory devices.

My colleague James reported that Macquarie analysts are also bullish on ResMed, with an ASX healthcare share valuation of $34.85. If correct, both price targets represent an upside potential of 15% and 12%, respectively.

ECP Asset Management likes ResMed as well. In April, portfolio manager Sam Byrnes told the Australian Financial Review that he believed the company was undervalued.

The ASX healthcare share “derated due to the frenzy” surrounding GLP-1s weight loss drugs, Byrnes said. “This raised concerns about the future of ResMed’s sleep apnoea treatment”.

But, even with the market’s strength in 2024, ECP still finds ResMed’s valuation “very appealing”.

CSL remains a favourite ASX healthcare share

Biotech giant CSL has long delivered attractive capital gains and dividends for its shareholders. But it has traded flat for the last two to three years.

Despite this period of sideways movement, CSL’s future looks bright, according to leading fund managers and analysts.

ECP’s Sam Byrnes is positive about CSL’s prospects as well. He highlights the company’s volume growth and reduced cost of plasma collections as key drivers of future performance.

Byrnes – along with investment bank Macquarie – has set an eye-popping share price target of $500 over the next three years.

In the short-term, Macquarie has set a price target of $330 per share (next 12 months), driven by strong earnings growth in CSL’s Behring business. This is expected to account for around 90% of CSL’s profits over the next five years.

This, it says, can drive earnings higher and push the stock price to $500 per share. Analysts at Morgans and UBS are also optimistic, with the former adding CSL to its best ideas list and setting a price target of $315.40, indicating a potential upside of 11.17%.

Putting it all together, CSL could potentially trade back above $300 per share.

Two of the best?

Both ResMed and CSL could offer compelling opportunities for ASX investors. I think ResMed’s growth potential in the sleep disorder market and CSL’s fundamentals outlook make them two of the best ASX healthcare shares that money can buy.

It pays to remember that investing comes with a degree of risk and that past performance – or price targets – are no predictors of future performance.

The post Are these 2 ASX healthcare shares the best that money can buy? appeared first on The Motley Fool Australia.

More reading

• Could the CSL share price end 2024 above $300?
• 4 high-quality ASX 200 growth shares to buy in June
• $20,000 invested in these ASX 200 shares 10 years ago is now worth… (a lot!)
• 2 ASX healthcare shares to buy now for the AI revolution
• How much passive income would a $10,000 investment in CSL shares generate?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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.

The S&P/ASX 200 Index (ASX: XJO) is back on form on Wednesday and pushing higher. In afternoon trade, the benchmark index is up 0.4% to 7,768.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down a further 5% to 23.25 cents. Investors have been hitting the sell button this week after competition in the artificial intelligence chip market intensified significantly with both AMD and Nvidia announcing their latest releases. Given how much these companies (and others) are pouring into their research and development, some investors may now be thinking that Brainchip doesn’t have a hope in competing with these giants. Brainchip shares have lost more than 50% of their value since late February.

Immutep Ltd (ASX: IMM)

The Immutep share price is down almost 8% to 41.5 cents. This follows the successful completion of its institutional placement and the institutional component of its entitlement offer. The biotechnology company raised gross proceeds of approximately $89.6 million at an offer price of $0.38 per new share. Management notes that the placement attracted strong demand from existing institutional shareholders and also introduced several new institutional investors to the Immutep register. Dr Russell Howard, Chairman of Immutep, said: “We’re delighted to have such strong and unwavering support from our shareholders who share our belief in efti and have continued to invest in Immutep through this financing.”

Liontown Resources Ltd (ASX: LTR)

The Liontown Resources share price is down 5% to $1.22. This is despite there being no news out of the lithium developer on Wednesday. However, it is worth noting that most ASX lithium stocks are trading lower today. This follows a reasonably poor session for their counterparts on Wall Street overnight. This latest decline means that Liontown’s shares are now down by 55% since this time last year.

Xero Ltd (ASX: XRO)

The Xero share price is down 4.5% to $125.85. This has been driven by the cloud accounting platform provider launching a new convertible notes offering. Xero was aiming to raise US$850 million (A$1.28 billion) through fixed coupon guaranteed senior unsecured convertible notes due in 2031. It eventually successfully priced US$925 million 1.625% senior unsecured convertible notes. Xero’s CFO, Kirsty Godfrey-Billy, said: “We’re pleased with the response and the very strong demand for this offer. This will provide us with flexibility as we continue to execute our strategic priorities.”

The post Why Brainchip, Immutep, Liontown, and Xero shares are tumbling today appeared first on The Motley Fool Australia.

More reading

• Xero share price on watch amid $1.3 billion convertible notes offering
• 5 things to watch on the ASX 200 on Wednesday
• Why Black Cat, Brainchip, Cooper Energy, and Lovisa shares are dropping today
• This ASX index is up 13% in 2024. Is there more up its sleeve?
• 4 high-quality ASX 200 growth shares to buy in June

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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.

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

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett is widely considered a legend on Wall Street, and for good reason. The conglomerate’s portfolio has substantially outperformed the benchmark S&P 500 since Buffett became CEO in 1965. 

The graph below illustrates this point:

BRK.A Total Return Level data by YCharts

A contrarian approach to investing

Moreover, Buffett’s investing methodology runs counter to modern portfolio theory and the efficient markets hypothesis.

Modern portfolio theory advocates for diversification as a risk-management strategy. According to this theory, spreading investments across various assets reduces risk, thereby increasing the probability of generating positive annual returns.

However, Buffett’s approach is anything but diversified. Berkshire Hathaway’s portfolio is concentrated, with approximately 50 stocks in its holdings at the time of this writing.

Moreover, a select few equities such as Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), American Express (NYSE: AXP), Chevron (NYSE: CVX), Coca-Cola (NYSE: KO), and Occidental Petroleum (NYSE: OXY) account for a staggering 76.6% of the conglomerate’s stock investments.

By contrast, most of Buffett’s money manager contemporaries have typically crafted portfolios consisting of hundreds — and sometimes thousands — of equities, in line with the main tenet of modern portfolio theory.

Buffett and his team have also overcome the potentially disadvantageous effects stemming from the legal requirement to disclose their quarterly buys and sells. The efficient market hypothesis suggests that such disclosures should nullify Buffett’s edge by allowing other investors to mimic his portfolio.

Surprisingly, this constraint hasn’t significantly impacted the company’s ability to deliver excess returns relative to the broader market.

In 2024, for instance, Berkshire Hathaway’s shares have outperformed the sizzling S&P 500, and historically, the company has delivered returns in excess of the broader market by around 8 percentage points per year.

Can Berkshire Hathaway keep beating the S&P 500?

When considering the likelihood of Berkshire Hathaway’s stock outperforming the S&P 500, it’s essential to analyze the company’s principal stock holdings and key economic metrics, and then compare these with the benchmark index.

The six largest stock holdings in Berkshire’s portfolio have an average forward price-to-earnings (P/E) ratio of 18.3 and anticipated earnings growth of 12.4% by 2025 (see table below).

Stock	Forward P/E Ratio	Projected 2025 Earnings Growth
Apple	29.9	9.7%
Bank of America	12.3	9.6%
American Express	18.6	14.9%
Coca-Cola	22.3	6.9%
Chevron	12.5	10.3%
Occidental Petroleum	14.5	23.1%
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Average	18.3	12.4%

Data source: Yahoo! Finance.

In contrast, the S&P 500 index is trading at a higher forward P/E ratio of 21.1, with an expected average earnings growth rate of 14.2% for the same period, according to FactSet analysts.

Although Berkshire Hathaway’s core stock holdings are relatively more affordable, they are projected to have a marginally lower earnings growth rate.

Turning to Berkshire Hathaway stock itself, the company’s shares are trading at a forward P/E ratio of 18.8 and are predicted to have earnings growth of 2.4% for the following year.

This significantly lower earnings growth rate suggests that Berkshire Hathaway’s stock may not be well positioned to outperform the S&P 500 in the short term.

Cut from a different cloth

Still, a deeper analysis is ultimately required to answer the original question, because Berkshire Hathaway isn’t a typical stock.

Buffett and his team have amassed a diverse portfolio of assets, including stocks, bonds, businesses, and a substantial cash reserve. This multifaceted approach sets it apart from most other companies.

What does this all mean in practical terms? Due to its diverse asset portfolio, Wall Street regards Berkshire Hathaway as an exceptional hedge against broad market downturns.

Unlike the S&P 500, which lacks built-in downside protection, Berkshire Hathaway’s strategic composition provides a safety net during turbulent times.

Uncertainty looms

Now, let’s explore why this distinction matters. The S&P 500’s recent bull market surge owes much to the enthusiasm surrounding artificial intelligence (AI). Notably, Nvidia (NASDAQ: NVDA) — the chipmaker at the forefront of the AI revolution — holds the second-largest weight within the S&P 500. Consistently surpassing Wall Street’s earnings expectations, Nvidia has become a linchpin for the index’s performance lately.

However, here’s the crux: If Nvidia encounters any obstacles, ripple effects could reverberate throughout the entire U.S. stock market. In contrast, Berkshire Hathaway maintains limited exposure to this AI-centric theme. Its substantial focus lies in sectors such as finance, energy, and consumer goods, shielding it to a degree from the hype surrounding AI.

Although Apple is Berkshire Hathaway’s largest holding by a country mile, the tech giant doesn’t rely on AI to fuel sales. Instead, Apple leverages its loyal customer base to drive sales of its iconic iPhone. Berkshire Hathaway, in turn, isn’t overly reliant on AI to drive its share-price performance, counter to the broader market.

All roads lead to Nvidia

Berkshire Hathaway’s ability to outperform the S&P 500 in the short term hinges on Nvidia’s trajectory. Should Nvidia continue to exceed Wall Street’s estimates by a wide margin, Buffett’s conglomerate is unlikely to best the S&P 500 over the next 18 months.

However, a more profound concern looms: The S&P 500 appears markedly overvalued based on its cyclically adjusted price-to-earnings ratio. Furthermore, its bull run appears overly reliant on a single stock.

Perhaps most concerning is that Nvidia’s shares are trading at over 42 times forward earnings. This premium valuation may be warranted, but it also suggests that a fair amount of the chipmaker’s near-term upside is already accounted for, curtailing its power to drive the S&P 500 much higher.

A favorable scenario for Berkshire Hathaway

If investors balk at paying this hefty premium for Nvidia, Berkshire Hathaway should deliver superior results relative to the benchmark index over the next 18 months.

In other words, Nvidia stock may lose momentum as investors search for more attractive growth vehicles. This dynamic that favors companies like Berkshire Hathaway — namely, ones that aren’t entirely dependent on AI to create shareholder value.

Berkshire Hathaway, despite its unfavorable econometrics relative to the S&P 500, could thus deliver strong returns for shareholders over the remainder of 2024 and the whole of 2025 if this scenario plays out.

That’s a testament to Buffett’s slow-and-steady approach to value creation, which has consistently beaten the broader markets over the past seven decades and counting. 

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

The post Can Berkshire Hathaway stock keep outpacing the S&P 500? appeared first on The Motley Fool Australia.

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George Budwell has positions in Apple. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bank of America, Berkshire Hathaway, Chevron, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.