Tag: Fool

Four well-known S&P/ASX 200 Index (ASX: XJO) shares were just rerated by leading brokers.

Three earned upgrades while one was downgraded.

Here’s what’s happening.

(Broker data courtesy of The Australian.)

Three ASX 200 shares earning broker upgrades

The first ASX 200 share getting an upgrade is The Lottery Corp Ltd (ASX: TLC), Australia’s biggest lottery company.

The Lottery Corp share price is up 1.4% in morning trade today at $4.97. That sees the stock up 3.1% so far in 2024.

And the betting company could stand to benefit from the upcoming tax returns most Aussie households will be receiving. While some people will use that to pay down debt, add to savings, or invest in ASX stocks, I imagine others will he happy to take a punt with some of their upcoming refunds.

Citi sees some solid growth ahead, in either case. The broker raised the Lottery Corp to a ‘buy’ rating with a $5.60 price target. That represents a potential upside of just under 13% from current levels.

Lottery Corp shares also trade on a fully franked trailing dividend yield of 2.9%.

Which brings us to the second ASX 200 share getting a broker upgrade, speciality retailer Premier Investments Ltd (ASX: PMV).

Premier also could be one to benefit from the upcoming tax refunds and other cost-of-living relief measures contained in the federal budget.

The Premier share price is up 2.1% today at $29.44, which sees shares up 4.4% year to date. Premier shares also trade on a fully franked dividend yield of 4.2%.

And CLSA forecasts another potential 9% share price gain from here. The broker raised Premier Investments to an ‘accumulate’ rating with a $32 price target.

Rounding off the list of ASX 200 shares receiving upgrades is healthcare provider Ramsay Health Care Ltd (ASX: RHC).

The Ramsay Health Care share price is up 4.0% today at $48.85, which sees shares down 8.2% year to date. The stock trades on a fully franked dividend yield of 1.4%.

Ramsay Health Care is a company that could catch some strong tailwinds from the rapid advancement of artificial intelligence. AI is widely forecast to drive efficiencies and new treatments in healthcare over the medium to longer term.

JP Morgan is getting more bullish on its outlook for this ASX 200 share. The broker raised its rating to ‘neutral’ with a $50 price target, a bit more than 2% above current levels.

And one company getting downgraded

Turning to the ASX 200 share getting downgraded, we have fashion jewellery retailer Lovisa Holdings Ltd (ASX: LOV).

The Lovisa share price crashed 10.4% yesterday and is down 3.2% today, at $29.44 a share.

Despite that big sell-down, the Lovisa share price remains up 20.6% in 2024. And Lovisa shares trade on a partly franked dividend yield of 2.8%.

But investors and brokers alike have been rethinking the growth outlook for the company after it announced that CEO Victor Herrero will be exiting on 31 May next year.

Motley Fool analyst James Mickleboro highlighted why Herrero’s pending departure is dimming Lovisa’s medium-term outlook:

The outgoing CEO has been instrumental in Lovisa’s global expansion. And while a lot of the hard work has certainly been done since his arrival in 2021, there’s still a lot more to come. The market may be concerned that his exit now puts at risk the successful execution of this expansion.

The ASX 200 share was downgraded by a number of brokers including Barrenjoey, Citi, Morgan Stanley and Canaccord.

Canaccord has the lowest price target for Lovisa shares among the brokers, at $29.00. This implies that most of the pain from Herrero’s upcoming exit has now already been priced into the stock.

The post Why these 4 ASX 200 shares were just rerated by top brokers appeared first on The Motley Fool Australia.

More reading

• Why Lovisa, Premier Investments, Silver Lake, and WA1 Resources shares are tumbling today
• Why are Lovisa shares sinking 10% on a green day?
• What are 3 of the safest ASX consumer discretionary shares in Australia right now?
• Up 66% in a year, the Lovisa share price just hit an all-time high
• Brokers name 5 fantastic ASX growth shares to buy in June

Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 JPMorgan Chase, Lottery, and Lovisa. The Motley Fool Australia has recommended Lovisa and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The CSL Ltd (ASX: CSL) share price opened trading at $283.70 apiece on Tuesday, having largely tracked sideways for the last three months of business. Meanwhile, the broader S&P/ASX 200 Health Care Index (ASX: XHJ) has followed a similar path, up just 1.2% in that time.

CSL shares have a history of delivering market-beating returns over the long term. But investors haven’t bid up the biotechnology giant’s stock in the past two to three years of trade. Now that we’re well past the “pandemic era,” what’s next?

Let’s take a look to see if the CSL share price can break the $300 barrier by the end of 2024.

Fundies like CSL share price

ECP Asset Management is one fund manager that appears bullish on CSL. Speaking to The Australian Financial Review in April, portfolio manager Sam Byrnes said the $2.9 billion asset manager likes CSL’s prospects.

“We are very positive on the outlook for CSL”, he said, noting the biotech is “now seeing volume growth alongside a decrease in the cost of plasma collections”.

“Capex is set to reduce 30 % this year and its future growth will be less capital intensive with the introduction of more efficient plasma collection devices and a yield enhancement program”.

These factors, Byrnes says, should increase CSL’s return on capital over the next five years. “We’d be happy with $500 [per share] in five years”, he concluded.

CSL share price above $500?

ECP’s Byrnes alludes to Macquarie’s $500 per share target for CSL over the next three years, as covered by my colleague Bernd.

The mammoth valuation, set in April, was built on strong earnings growth in the Behring business. This is expected to drive around 90% of CSL’s profits in the next five years, it says.

Macquarie has a price target of $330 per share on the CSL share price in the short term.

Meanwhile, analysts at Morgans and UBS are both optimistic about CSL’s future.

According to my colleague James, Morgans added CSL to its best ideas list. It cites potential double-digit earnings growth from increased plasma collections and new product approvals.

Morgans has an “add” rating with a price target of $315.40, suggesting a potential upside of 11.17% from the current share price. UBS also retained its buy rating and a $330 price target. It too likes the growth in CSL’s plasma collections market.

Not all roses

Not everyone views CSL through rose-coloured glasses. Atlas Funds Management chief investment officer, Hugh Dive is one. The fund manager likes CSL — no debate — and has owned the stock for more than six years, according to The Australian Financial Review. But he is a little more cautious.

Dives—who did not provide a price target—said that while growing earnings by 10% per year is “achievable in the short term,” it remains “extremely difficult over a long period of time.”

He added that “the law of large compounding numbers” could make it difficult for CSL to grow earnings that fast—not “without some degree of high sustained inflation.”

Foolish takeaway

With analysts’ positive outlook and strategic advancements in plasma collection, CSL appears well-positioned to grow earnings in the next three years, in my opinion.

The consensus among experts suggests that the CSL share price could indeed surpass $300 by the end of 2024, with significant long-term growth potential beyond that.

Regardless of these views, it is essential to remember that investing comes with risks. So, make sure to consider your own personal financial circumstances as well.

The post Could the CSL share price end 2024 above $300? appeared first on The Motley Fool Australia.

More reading

• How much passive income would a $10,000 investment in CSL shares generate?
• How you could retire rich by investing like Warren Buffett with ASX shares
• 3 of the best ASX 200 shares to buy for your retirement portfolio
• Can CSL shares deliver market-beating returns for investors?
• Don’t get clever, just buy stability: 2 defensive ASX shares to buy now

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

Life360 Inc (ASX: 360) shares are jumping on Tuesday morning.

At the time of writing, the location technology company’s shares are up 7% to $16.28.

Why are Life360 shares jumping?

Investors have been buying the company’s shares this morning in response to news that it has launched its Nasdaq initial public offering (IPO).

According to the release, Life360 estimates that it will receive net proceeds from this offering of approximately US$84.4 million, assuming an initial public offering price of US$30.43 per share, and after deducting the estimated underwriting discount and estimated offering expenses,

Management explained that the principal purposes of this offering are to increase its capitalisation and financial flexibility and create a public market for its common stock in the United States.

It currently intends to use the net proceeds received from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures.

It may also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services, or technologies. However, it does not currently have any agreements or commitments to enter into any such acquisitions or investments.

Once complete, the company expects to trade on Wall Street under the Life360 Inc (NASDAQ: LIF) ticker code.

Why would US investors buy into the company?

Life360 shares have been a popular and successful option for ASX investors since their listing. This has been driven by its rapid sales and earnings growth.

In respect to the former, Life360’s subscription growth has grown from US$86.6 million in 2021 to US$220.8 million in 2023. It is currently guiding to core subscription revenue growth of at least 20% in 2024.

The good news is that management believes it still has a significant market opportunity to grow into in the future, which would be appealing to investors on Wall Street. It highlights:

We are a market leader in family safety, connecting millions of people globally through software and hardware to the people, pets and things they care most about. We offer a range of services including location sharing, safe driver reports, and crash detection with emergency dispatch. The widespread proliferation and continued growth of connected devices has led to a normalization of location sharing for a wide range of consumer applications such as item tracking, communication, social coordination or travel.

The Life360 Platform is currently available in 171 countries through the Apple App Store and 133 countries through the Google Play Store through both tiered and single subscription offerings. We believe that the opportunity for our core subscription offerings alone translates into a TAM of US$75 billion. Our core subscription offering consists of a bundle of services that competes with a variety of single point solutions.

Is this listing good news for ASX investors?

The team at Bell Potter has previously stated its belief that the Wall Street listing would be good news for Life360 shares. It explained:

Key potential catalysts for the stock include another strong quarter of paying circle growth in Q2 (April was another good month), a potential upgrade to the 2024 guidance sometime in H2 and a US listing at some stage in the next 12 months.

We have increased the multiple we apply in the EV/Revenue valuation from 5.5x to 6.5x given the proposed US listing and potential re-rating of the stock given the much higher multiples of comps like Reddit (NYSE: RDDT).

Bell Potter currently has a buy rating and $17.75 price target on its shares.

The post Life360 shares jump 7% on Nasdaq IPO launch appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• I think this is the best ASX artificial intelligence (AI) stock to buy right now
• 3 ASX 200 tech stocks that smashed the market in May
• 3 excellent ASX tech shares to buy to supercharge your investment portfolio
• Brokers name 5 fantastic ASX growth shares to buy in June

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX All Technology Index (ASX: XTX) has been a standout performer in 2024. Delivering an impressive 13.4% gain since the start of the year, the index’s success highlights the growing strength of Australia’s technology sector.

The All Technology Index has been a stellar performer since its launch in February 2020, climbing 69.6% in that period. The index is designed to measure the performance of technology companies listed on the ASX. It includes a broad range of tech-related businesses, including software, hardware, and IT services. 

Key players in the index

The ASX All Technology Index includes a mix of well-established companies and promising newcomers. Some of the most notable companies within the index are:

• Xero Ltd (ASX: XRO): Cloud-based accounting software company offering intuitive financial management tools
• REA Group Ltd (ASX: REA): Operates popular property websites like realestate.com.au.
• WiseTech Global Ltd (ASX: WTC): Provides software solutions to the logistics sector

Factors driving the growth

The COVID-19 pandemic significantly accelerated digital transformation across industries. Companies invested heavily in technology to support remote work, e-commerce, and digital customer engagement. This surge in demand for tech solutions boosted the performance of companies in the sector. 

Increased demand has been reflected in strong earnings reports. Xero reported a 75% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) in FY24, which reached $527 million. REA reported a 24% increase in EBITDA for the 9 months ended 31 March 2024. Likewise, WiseTech Global reported a 23% increase in EBITDA in 1HFY24. 

A supportive regulatory environment in Australia has fostered growth in the tech sector. Government support through grants, tax incentives, and innovation programs has played a crucial role in fostering a conducive environment for tech companies to scale operations. 

Many ASX-listed tech companies, such as Xero and WiseTech Global, have successfully expanded their footprint beyond Australia, tapping into international markets. This global presence has provided them diverse revenue streams and reduced reliance on the domestic market, further strengthening financial performance.

What is the outlook for the ASX All Technology Index? 

As we move through 2024, the outlook for Australian tech stocks remains optimistic, though not without potential challenges. The continued emphasis on digital innovation and the growing importance of technology in everyday life are expected to sustain demand for tech solutions. Companies within the ASX All Technology Index are likely to benefit from ongoing trends such as the rise of artificial intelligence, cybersecurity, and cloud computing.

Nonetheless, several factors could influence the tech sector’s performance. Economic conditions, including inflation and interest rates, will play a significant role in shaping the investment landscape. Higher interest rates could impact the valuation of tech stocks as investors reassess the risk-reward profile of growth-oriented companies. 

Keeping a balanced perspective and focusing on long-term growth drivers will assist investors in navigating the Australian tech stock landscape and capitalise on opportunities ahead.

The post This ASX index is up 13% in 2024. Is there more up its sleeve? appeared first on The Motley Fool Australia.

More reading

• 4 high quality ASX 200 growth shares to buy in June
• Leading brokers name 3 ASX shares to buy today
• Up 17% per annum: Is this index-beating ASX investment too good to turn down?
• 3 excellent ASX tech shares to buy to supercharge your investment portfolio
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Katherine O’Brien 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 REA Group, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I am fortunate enough to have a few winning shares in my ASX share portfolio. It has certainly made the many years I have been investing in ASX shares worthwhile.

But I am certainly not an infallible investor, and have found my fair share of absolute stinkers within my portfolio over the years as well.

Whilst I have sold most of my bad investments for a subsequent loss, there are still a couple of giant weeds that remain in my ASX share portfolio, spoiling what I otherwise consider to be a good-looking garden.

As we’ve already established, you always have to option to ‘pull’ your seeds out of the garden by selling them. Whether you should do so or not is the question.

So today, let’s talk about two weeds in my ASX share portfolio ‘garden’ and whether or not I’m going to sell them.

Weeding an ASX share portfolio

First up is A2 Milk Company Ltd (ASX: A2M). I bought A2 Milk shares back in 2021 when the company was hit hard by projections that its past growth rates wouldn’t continue. At the time, I thought that the market’s reaction to this bad news was overdone. I was wrong.

Those shares are still in my ASX share portfolio today, nursing a significant loss on my initial investment.

I’ve come close to selling out of this position before. But I do think this company can turn things around, if slowly. A2’s February half-year earnings report showed the company had increased its revenues over the period by a decent 3.7%, leading to an even more impressive 15.6% spike in net profits.

If this report had shown falls in revenues or profits, it probably would have been enough to have me sell out. But I’m confident things can keep improving from here, and as such, I’m not pulling out the A2 Milk weed out of my ASX share portfolio just yet. Hopefully, it can evolve into a flower over time.

Adairs: Weed or sapling

Secondly, we have ASX 200 homewares retailer Adairs Ltd (ASX: ADH). Adairs was another 2021 purchase (it probably wasn’t my best year). At the time, I believed this was a high-quality company, which is a view I still hold. My problem was that I paid a share price that was too high.

Over subsequent years, Adairs suffered from the post-COVID ‘return to normal’ that many other companies have also been through.

However, I have been watching this investment closely and have been encouraged by what I’ve seen over the past 12 months.

February’s half-year earnings showed Adairs continuing to navigate difficulties. Revenues and profits fell compared to the previous year. But I was encouraged to see gross margins and cash flows grow, while the company’s debt fell. The resumption of dividend payments was also an encouraging sign.

I’ll continue to hold my Adairs shares for now, as I think there’s a good chance the company will continue to recover. Hopefully, this weed will also grow into a flower over time.

Foolish takeaway

Pulling the weeds out of your ASX share portfolio is never a fun task. For one, you are crystalising a loss and abandoning hope that an investment can turn things around. There are also psychological factors at play – selling an investment is tantamount to confirming that you’ve made a mistake. Additionally, if your weed can pull off a recovery after you’ve sold out, you’ll feel even worse.

But it’s my view that one of the best habits you can learn in the investing world is to act decisively on a weed if you’re investing thesis is broken. After all, a 30% loss is much better than an 80% one down the track. That’s why A2 Milk and Adairs remain in my ASX share portfolio, while WAM Global Ltd (ASX: WGB) and Zoom Video Communications, for example, got the boot long ago.

The post My ASX share portfolio has two giant weeds in it. Should I pull them out? appeared first on The Motley Fool Australia.

More reading

• This ASX share is projected to pay a huge yield of 16% in 2026!
• How ASX shares vs. property performed in May
• Here are the top 10 ASX 200 shares today
• Up 63%: The A2 Milk share price just hit a new 52-week high
• Guess which 7 ASX 200 shares are smashing new 52-week highs today

Motley Fool contributor Sebastian Bowen has positions in A2 Milk and Adairs. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs and Zoom Video Communications. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended A2 Milk and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of options for investors to choose from on the Australian share market. So many, that it can be hard to decide which ASX shares to buy above others.

But don’t worry because analysts have done the hard work for you and picked out ones that they think offer decent returns.

I have then gone a step further by narrowing things down to three ASX shares that analysts think have the potential to rise more than 25% from current levels.

To put that into context, a $10,000 would turn into at least $12,500 in 12 months if analysts are accurate with their recommendations for these ASX shares.

With that in mind, here’s what you need to know about them:

IDP Education Ltd (ASX: IEL)

This language testing and student placement company’s shares could have been severely oversold according to analysts at Goldman Sachs.

Particularly given its belief that “IEL’s structural growth outlook and business quality remain unchanged” despite some temporary headwinds.

Goldman Sachs currently has a buy rating and $25.30 price target on the ASX share. This implies potential upside of 60% for investors over the next 12 months.

Megaport Ltd (ASX: MP1)

Another ASX share that could offer investors major upside potential is Megaport. It is a network as a service company that offers scalable bandwidth for public and private cloud connections, metro ethernet, data centre backhaul, and internet exchange services.

Megaport has been growing at a rapid rate in recent years thanks to the cloud computing boom. The good news is that Macquarie thinks that this strong form can continue.

In light of this, the broker recently put an outperform rating on Megaport’s shares with a price target of $18.30. This implies potential upside of 36% for investors from current levels.

Webjet Limited (ASX: WEB)

Finally, the team at Morgans thinks that Webjet could be an ASX share to buy. It is an online travel booking provider and business to business (B2B) hotel technology company.

Its analysts are feeling very positive about the company’s outlook and see it as a “high-quality growth stock.” This is due largely to its rapidly growing WebBeds B2B business and the “significant market share still up for grabs.”

Last month, Morgans put an add rating and $11.20 price target on Webjet’s shares. Based on its current share price, this suggests that upside of over 26% is possible for investors between now and this time next year.

The post 3 ASX shares that can rise 25%+ in 12 months appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Top ASX shares to buy in June 2024
• Wilsons gives its verdict on Webjet and these popular ASX 200 stocks
• Brokers name 5 fantastic ASX growth shares to buy in June
• Holidays on hold: How will this affect ASX travel shares?

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

The Fortescue Ltd (ASX: FMG) share price has dropped over 6% in the past week, as shown on the chart below. Market sentiment about the ASX iron ore share is usually influenced by the commodity price, which appears to be the cause right now.

Demand for iron ore is largely driven by China because of how much of the commodity the Asian superpower purchases. When demand in China weakens, it can lead to a decline for the iron ore price.

The most recent data from China has not been encouraging.

Weak Chinese demand

According to reporting by The Australian, Singapore iron ore futures dropped 3.5% to a near six-week low of US$111.45 per tonne after China’s monthly manufacturing PMI (purchasing managers’ index) for May dropped back to a level that indicates “contraction”, suggesting a weak Chinese outlook.

There has been a rapid decline in iron ore futures; on Thursday, the price reached a three-month high of US$123 per tonne.

The Australian also reported that the value of new home sales in China from the 100 biggest real estate companies showed a 34% year-over-year decline in May. It was also reported that the level of iron ore inventory at China’s ports reached a two-year high.

Chinese officials recently reiterated the country’s stance on continuing to control crude steel output in 2024, according to reporting by Mining.com. China is aiming to reduce its level of carbon dioxide emissions by 1% compared to 2023’s national total.

China is planning to strengthen its control over steel output and capacity. Analysts from Sinosteel Futures were quoted by Mining.com, who said:

It remains unclear whether steel output this year will be flat on year or be lowered; such details are worth monitoring further.

Is there any positivity for the iron ore price and Fortescue shares?

Some analysts are optimistic about where the iron ore price can go from here.

Global bank HSBC‘s chief economist Paul Bloxham believes there could be a surge in demand that will support the iron ore price and keep it relatively high for the next 12 months, according to reporting by the ABC.

Bloxham suggests the iron ore ice will average US$105 per tonne in 2025, which is stronger than what other analysts are forecasting. Goldman Sachs thinks it could be US$95 per tonne in 2025.

While there is weakness in the Chinese real estate market, HSBC suggests an increase in renewable energy manufacturing in China and globally can compensate for any shortfall. The US Inflation Reduction Act funding could indirectly help boost iron ore demand. Bloxham said:

It’s a big policy measure there that has been taken to support investing in capacity to make the energy transition.

It’s happening in Europe, it’s happening in Japan. Australia of course has followed as well to support our energy transition.

That’s driving a lot of the demand for the increase in the products that go into electric vehicles, solar panels, batteries, and wind farm equipment.

Fortescue share price

When the iron ore price falls, Fortescue receives less revenue for the same amount of production but pays the same amount for the mining costs. This hurts its net profit after tax (NPAT).

That’s why a lower iron ore price is bad news for the Fortescue share price, which is down 15% since the start of 2024.

The post Down 6% in a week. Are Fortescue shares carrying an iron anchor? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Forget Fortescue and buy this ASX mining stock now
• Buy, hold, or sell: What is Bell Potter saying about Fortescue shares?
• Why these 3 top ASX 300 stocks dragged the benchmark lower this week
• Why Core Lithium, Fortescue, Peter Warren, and Talga shares are falling today

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

If you are wanting to grow your wealth, then the share market and ASX shares could be the way to do it.

That’s because thanks to the power of compounding, a single investment has the potential to grow materially in value.

But how could you turn $10,000 into $100,000 with ASX shares? Let’s take a look and see.

Growing your wealth with ASX shares

As I mentioned above, compounding is your best friend when it comes to investing.

It is what happens when you generate returns on top of returns. It essentially supercharges your returns the longer you leave it.

For example, historically, the share market has delivered an average total return of 10% per annum.

There’s no guarantee that this will happen again in the future, but I think it is reasonable to base our assumptions on this level of return for the purpose of this exercise.

If you were to invest $10,000 into ASX shares and generated a 10% return per annum, your investment would become $11,000 after one year and then approximately $26,000 after 10 years.

You’re still only a quarter of the way there. So, let’s keep going and let compounding do its thing.

If we fast forward another 10 years, your investment would have grown to just over $67,000 if it continued to compound by 10% per annum.

You’re now getting very close to your goal. In fact, with compounding now going into overdrive, it would take just a touch over four more years for your portfolio of ASX shares to become worth $100,000.

All in all, that’s approximately 24 years of investing to reach your goal.

Getting there quicker

If you can beat the market, which is no easy feat, you could get there sooner.

For example, a $10,000 investment in ASX shares that compounds by 13% per annum would get to $100,000 in 19 years.

But how can you beat the market? Well, one person that has beaten the market consistently since the 1960s is Warren Buffett.

His penchant for buying high quality companies with sustainable competitive advantages and fair valuations has been one of the keys to his success.

And the good news for Aussie investors is that the VanEck Morningstar Wide Moat ETF (ASX: MOAT) has been designed to allow investors to invest their hard-earned money into the type of shares that Buffett would buy.

Over the last 10 years, the index the fund tracks has generated a market-beating return of 17.06% per annum. This would have turned a $10,000 investment into $48,000. Clearly it pays to follow Buffett’s investment style.

The post How to turn $10,000 into $100,000 with ASX shares appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX ETFs to buy in June
• How I’d aim to turn $20,000 invested in ASX shares into passive income of $1,200 a month!
• Buy and hold these ASX ETFs for 10 years
• Warren Buffett’s sister uses this simple method for passive income without dividends
• I’d invest $10,000 into these excellent ASX shares for the long term

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

The average dividend yield on the Australian share market usually sits at around 4%.

While this is a nice yield, income investors don’t have to settle for it. Not when there are some high quality ASX dividend stocks out there with notably better forecast yields.

Let’s take a look at three that are expected to provide dividend yields greater than 5% this year and next:

Rio Tinto Ltd (ASX: RIO)

If you’re not averse to investing in the mining sector, then Rio Tinto could be worth considering.

Goldman Sachs is feeling very positive about the mining giant and has a buy rating and $138.90 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends per share of US$4.29 (A$6.42) in FY 2024 and then US$4.55 (A$6.81) in FY 2025. Based on the latest Rio Tinto share price of $128.52, this will mean yields of approximately 5% and 5.3%, respectively.

Telstra Group Ltd (ASX: TLS)

Goldman Sachs also thinks that income investors should consider buying Telstra shares while they are down.

Although the broker was quite disappointed with its recent trading update, it still sees significant value in the telco giant’s shares at current levels and is forecasting some attractive yields from its shares in the coming years.

Goldman currently has a buy rating and $4.25 price target on the ASX dividend stock.

As for income, its analysts are now expecting fully franked dividends of 18 cents per share in FY 2024 and then 18.5 cents per share in FY 2025. Based on the current Telstra share price of $3.47, this equates to dividend yields of 5.2% and 5.3%, respectively.

Transurban Group (ASX: TCL)

A third ASX dividend stock that could be a buy this month according to analysts is Transurban. It manages and develops urban toll road networks in Australia and the United States. In Australia, this includes the Cross City Tunnel, the Eastern Distributor, and Westlink M7.

Citi is a fan of the company and currently has a buy rating and $15.50 price target on its shares.

As well as plenty of upside, its analysts are expecting some great yields from its shares in the coming years. For example, the broker is forecasting dividends per share of 63.6 cents in FY 2024 and then 65.1 cents in FY 2025. Based on the current Transurban share price of $12.59, this will mean dividend yields of 5% and 5.2%, respectively.

The post Buy Rio Tinto and these ASX dividend stocks for 5%+ yields appeared first on The Motley Fool Australia.

More reading

• Should you buy this defensive ASX 200 stock on a pullback?
• Rio Tinto shares marching higher amid an ‘exciting new chapter’ for production
• Here is the earnings forecast through to 2026 for Telstra shares
• How I’d try to turn an empty portfolio into $300k by buying cheap ASX shares, starting now
• How UBS expects Telstra shares to gain 27% and deliver dividend growth

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Transurban Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you wanting to add some ASX 200 growth shares to your portfolio this month?

If you are, then it could be well worth checking out the four buy-rated options listed below. Here’s what you need to know about these high quality stocks:

NextDC Ltd (ASX: NXT)

Goldman Sachs thinks that NextDC is an ASX 200 growth share to buy. It is one of the region’s leading colocation service providers from its growing collection of world-class data centres.

It likes the company due to “the rapid growth in cloud adoption, which has been supported by the continued evolution of the enterprise telecommunications market, and the significant demand by both public and private investors for digital infrastructure assets.”

Goldman currently has a buy rating and $18.59 price target on its shares.

ResMed Inc. (ASX: RMD)

Another ASX 200 growth share that could be a buy in June is ResMed. It is a sleep treatment-focused medical device company with an industry-leading portfolio of hardware and software solutions.

It has been tipped to grow strongly over the long term. This is thanks largely to the quality of its products and huge market opportunity. In respect to the latter, management estimates that there are 1 billion people impacted by sleep apnoea worldwide. However, only ~20% of these sufferers are believed to have been diagnosed.

Macquarie is bullish on ResMed and has an outperform rating and $34.85 price target on its shares.

Treasury Wine Estates Ltd (ASX: TWE)

A third ASX 200 growth share that could be a buy is Treasury Wine. It is one of the world’s largest wine companies and the owner of a collection of very popular brands. The jewel in the crown is of course Penfolds.

Morgans rates the wine giant highly and believes its recent US acquisition could prove to be a great addition. It notes that the addition of DAOU Vineyards “is in line with TWE’s premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio.”

The broker currently has an add rating and $14.03 price target on its shares.

Xero Limited (ASX: XRO)

A final ASX 200 growth share that could be a buy in June is Xero. It is a cloud accounting platform provider with ~4.16 million subscribers globally.

But if you thought this number was close to peaking, think again. Management estimates that its addressable market is 45 million subscribers, which means it has only captured a small slice of its market so far.

Goldman Sachs thinks its market opportunity could be even larger. Its analysts “see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM.”

The broker has a buy rating and $164.00 price target on Xero’s shares.

The post 4 high quality ASX 200 growth shares to buy in June appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• $20,000 invested in these ASX 200 shares 10 years ago is now worth… (a lot!)
• Here’s how the ASX 200 market sectors stacked up last week
• Growth spurt: 2 ASX growth shares set to skyrocket
• Brokers name 3 ASX shares to buy now

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