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The BHP Group Ltd (ASX: BHP) share price is sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $45.08. In morning trade on Thursday, shares are changing hands for $44.50 apiece, down 1.3%.

For some context, the ASX 200 is down 0.8% at this same time.

The BHP share price is slipping as ASX investors digest the news that BHP’s $74 billion takeover offer for global miner Anglo American (LSE: AAL) will not proceed.

At least, not anytime soon.

BHP share price slides on rejected takeover extension

As the Motley Fool reported last night, BHP’s three consecutively better bids for Anglo American (the first lobbed on 26 April) were not enough to convince the miner’s board that the offer presented better value for shareholders than they could deliver themselves.

A decision that looks to be pressuring the BHP share price today.

Last night, with just hours to go before the takeover deadline stipulated under British regulations was reached, BHP CEO Mike Henry still sounded confident that a deal, which would have seen BHP become the world’s biggest copper miner, might yet be reached.

Having received a one-week extension to the takeover deadline last week following its third acquisition bid, BHP requested another extension on the discussions yesterday.

The miner stated:

BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination. BHP believes a further extension of the deadline is required to allow for further engagement on its proposal.

Anglo’s board was having none of it, however. Anglo replied:

In aggregate, BHP has not addressed the board’s fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American’s shareholders.

The board unanimously decided not to extend the deadline, which came at 5pm London time.

Mike Henry responds

Commenting on the end of the takeover negotiations that’s seeing the BHP share price underperforming today, CEO Mike Henry said in no uncertain terms, “BHP will not be making a firm offer for Anglo American.”

Henry continued:

BHP is committed to its capital allocation framework and maintains a disciplined approach to mergers and acquisitions.

While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and, despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.

We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.

Now what?

Anglo American appears determined to go its own way. Though it’s always possible other suitors could come knocking.

Under British regulations, BHP cannot make another offer for at least six months, unless a competing offer comes in from another company.

With today’s intraday losses factored in, the BHP share price remains up 3% over 12 months.

The post BHP share price tumbles as $74 billion deal evaporates appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• BHP share price on watch after Anglo American takeover update
• Should you buy BHP shares now before tonight’s Anglo American takeover reveal?
• Planning your retirement? Here are the most popular investments outside superannuation
• BHP share price marching higher amid fast approaching $75 billion takeover deadline

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.

Growth stocks are companies that have potentially significant expansion opportunities ahead of them. Because of their future potential, investors expect that their share prices will rise much more quickly than the market average.

Growth shares are usually junior companies with a fair bit of buzz about them – perhaps they’re developing some revolutionary new product or service, or maybe they’re closely aligned with emerging global trends, like Artificial Intelligence (AI) or decarbonisation.

Many ASX growth shares are tech companies. Rapid advances in technology mean products and services that weren’t even conceivable a few decades ago are now practically ubiquitous (think smartphones, streaming services, and cryptocurrency). This extreme pace of innovation means new tech start-ups can occasionally take off overnight, making their investors rich and striking FOMO into everyone else.

However, growth stocks don’t have to be tech shares – it’s not unusual to see a junior mining stock’s price skyrocket if it uncovers a significant new resource, and even the odd retail stock can make quick gains if it launches into a potentially lucrative new market.

But remember – growth shares are riskier than other types of shares. They are often speculative plays, and not every gamble will pay off. So, only risk what you can afford to lose.

Despite the risk – or perhaps because of it – growth stocks can be very exciting to invest in. And, luckily for us ASX investors, there are plenty of options available for us to choose from. Here are 3 I’d consider buying if I had a spare $5,000.

Audinate Group Ltd (ASX: AD8)

Audinate shares have been on a tear recently. Over the past 12 months, its share price has skyrocketed over 65% – and that’s despite a 30% drop from the 52-week high price of $23.51 it hit back in March.

The rise in its share price has come on the back of its strong financial performance. In its 1H24 results – covering the six months ending 31 December 2023 – Audinate’s revenues jumped almost 48% versus 1H23 to US$30.4 million. And, after recording a net loss of US$0.4 million in 1H23, Audinate’s net profit after tax in 1H24 was US$4.7 million – a pretty impressive turnaround.

Audinate specialises in audiovisual (AV) technology. Its flagship product is called Dante, which replaces old-school analogue cable AV connections with a digital computer network. It has a large variety of applications, from corporate office buildings, broadcast media, and even churches and other places of worship.

Light & Wonder Inc. CDI (ASX: LNW)

Headquartered in Las Vegas, Light & Wonder is a gaming company specialising in poker machines, online casino games, and what it calls ‘social games’ – essentially mobile and web casino games where you don’t play for real money or prizes.

Its share price has soared over 50% higher in the past 12 months – significantly more than established rival Aristocrat Leisure Limited (ASX: ALL) – on the back of strong earnings growth. Quarterly revenue for the 3 months ended 31 March 2024 was up 13% versus the prior comparative period to US$756 million. This revenue uplift – combined with lower depreciation and amortisation expenses – led to a staggering 273% jump in net profit (to US$82 million for the quarter).  

Nextdc Ltd (ASX: NXT)

Although Nextdc is quite an established ASX technology company, it still has significant growth potential ahead of it, which makes it a worthy addition to this list.

Nextdc operates data centres all across Australia, as well as internationally in New Zealand, Japan and Malaysia. This is already a growth sector, given how much of our time nowadays is spent online. All that data we create has to be stored somewhere.

However, rapid advancements in AI could supercharge Nextdc’s growth in the next few years. AI, like ChatGPT and other machine learning programs, need enormous amounts of data to function, which could drive up demand for data centres even further. And the company knows it. In April, it launched a capital raise seeking an eyewatering $1.3 billion from investors to help finance its growth pipeline.

The post 3 ASX growth stocks I’d buy with $5,000 appeared first on The Motley Fool Australia.

More reading

• 1 ASX growth stock that turned $10,000 into $21,000 in less than 2 years
• Down 19% in a month, should you pounce on this ASX 200 tech stock?
• Joining the revolution: How I’d invest in ASX AI shares right now
• 3 high-quality ASX shares tipped to generate strong returns
• Here’s how the ASX 200 market sectors stacked up last week

Motley Fool contributor Rhys Brock has positions in Audinate Group and Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group and Light & Wonder. The Motley Fool Australia has positions in and has recommended Audinate Group. The Motley Fool Australia has recommended Light & Wonder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you want to give your investment portfolio a nice boost, then it could be worth considering the ASX shares listed below.

That’s because they have been named as buys and tipped to rise materially from current levels. Here’s what you need to know about them:

James Hardie Industries plc (ASX: JHX)

Analysts at Goldman Sachs see a lot of value in this building materials company’s shares following a recent pullback.

The broker notes that it sees “upside from cyclical improvement and strategic execution against higher value product mix targets, which has scope to substantially improve group profitability.” It also highlights that its analysts “continue to expect robust growth in FY26 as North America volumes accelerate to 7%, while new construction and PDG maintain momentum.”

In light of this, the broker put a buy rating and $57.85 price target on its shares earlier this month. This implies potential upside of almost 25% for investors over the next 12 months.

Neuren Pharmaceuticals Ltd (ASX: NEU)

The team at Bell Potter is feeling very bullish about this pharmaceuticals company and sees it as an ASX share to buy right now.

The broker was pleased with the phase two results from its NNZ-2591 trial in Pitt Hopkins syndrome. It highlights that NNZ-2591 “has now shown encouraging clinical data in two indications, each of which represent a similar if not larger market opportunity than Rett syndrome.”

In addition, with no approved treatments available, it believes that “NNZ-2591 is comfortably in poll position to be the first drug to market.”

In response to the news, the broker has retained its buy rating with an improved price target of $28.00. This implies potential upside of almost 35% for investors from current levels.

Woodside Energy Group Ltd (ASX: WDS)

A third ASX share that could deliver big returns for investors according to analysts is energy giant Woodside.

Morgans thinks investors should be snapping up the company’s shares while they are down in the dumps. It notes that “with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions.”

This is particularly the case given its belief that Woodside “will still generate substantial high-quality earnings for years to come.”

Morgans has an add rating and $36.00 price target on its shares. This implies potential upside of 31% for investors from current levels. In addition, the broker is forecasting dividend yields of 4%+ in both FY 2024 and FY 2025. This boosts the total potential 12-month return to over 35%.

The post These ASX shares could rise 25% to 35% appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why Cettire, Neuren, Peter Warren, and Qantas shares are falling today
• Why you should buy this ‘industry leading’ ASX 200 tech stock
• If I buy 1,000 Woodside shares, how much passive income will I receive?
• 5 things to watch on the ASX 200 on Wednesday

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 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.

Commonwealth Bank of Australia (ASX: CBA) is one of the biggest and most popular investments in Australia. But, there are plenty of other ASX dividend stocks that can provide passive income.

CBA has delivered solid returns over the past three years. But I believe diversification is an essential part of almost any investment strategy. Having all or most of one’s dividend eggs in one basket could be a recipe for trouble if the banking sector experiences trouble, such as elevated bad debts.

Other businesses can provide a pleasing level of dividend income compared to CBA’s current grossed-up dividend yield of 5.5%. The below two ASX shares could be compelling options to diversify a dividend portfolio.

Medibank Private Ltd (ASX: MPL)

Medibank is the largest private health insurance business in Australia with its Medibank and ahm brands.

A core driver of earnings for Medibank is how many policyholders it has. In the FY24 first-half result it reported a 0.2% (or 3,400) increase in net resident policyholder numbers and a 12.3% (or 33,800) rise in net non-resident policy units. In a recent update, the business said that based on its performance in the three months to March 2024, it “remains on track” to deliver on its guidance of resident policyholder growth of between 1.2% and 1.5% in FY24.

More policyholders can result in stronger operating profit and a growing dividend for the ASX dividend stock – HY24 group operating profit rose 4.7%, helping fund a 14.3% increase to the dividend per share.

I believe there are tailwinds for the company’s policyholder numbers and profit with Australia’s growing and ageing population.

Healthcare is a relatively defensive sector – people usually place a high value on their health, so private insurance demand could remain strong in the years ahead.

According to the estimate on Commsec, at the current Medibank share price, shareholders could receive a grossed-up dividend yield of 6.3% in FY24.

Charter Hall Long WALE REIT (ASX: CLW)

This is a diversified real estate investment trust (REIT) that owns property across a variety of sectors including agri-logistics, social infrastructure, office, industrial and logistics, hospitality, service stations and quality retail. It has a portfolio occupancy rate of 99.9%, which is very high.

Examples of some of the key tenants include the Australian government, Telstra Group Ltd (ASX: TLS), BP and Endeavour Group Ltd (ASX: EDV). Having blue-chip tenants like this should mean the rental income is resilient.

Pleasingly, the business has a weighted average lease expiry (WALE) of more than 10 years. This means there is a high level of income security and rental visibility for the coming years.

While debt costs have increased, the ASX dividend stock’s rental income continues to grow. Around half of its leases are linked to CPI inflation, it’s expecting to report a 5.4% weighted average increase in FY24. The other half of leases have fixed annual increases, with an average fixed increase of 3.1%.

It’s expecting to pay a distribution per unit of 26 cents in FY24, which translates into a current distribution yield of 7.5%.

The post Overinvested in CBA shares? Here are two alternative ASX dividend stocks appeared first on The Motley Fool Australia.

More reading

• 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
• 2 high-yield ASX dividend shares to buy as they bounce
• With $1,000 to invest, should I buy ASX growth stocks or income shares?
• Why I’d buy high-yield ASX dividend shares for superannuation in retirement

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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.

If you have $500 burning a hole in your pocket and want to put it to work in the share market, then read on.

That’s because listed below are two ASX shares that have been tipped to deliver big returns for investors over the next 12 months.

Let’s see why they could be great options for a $500 investment right now:

Camplify Holdings Ltd (ASX: CHL)

Analysts at Morgans see significant value in Camplify’s shares and have them on the broker’s best ideas list.

Camplify is the number one player in ANZ in the peer-to-peer recreational vehicle (RV) rental market. Morgans believes the company has a significant growth opportunity both at home and abroad. It explains:

CHL is the #1 player in ANZ in the peer-to-peer RV rental space. We expect CHL to continue to grow into its large addressable market locally, with over 790k registered RVs in Australia and ~130k in NZ. CHL only has ~2% of these on its platform. It has broadly doubled its domestic fleet since listing and with its acquisition of Germany- based PaulCamper (PC) now has a total fleet of over 29,000, making it a true global player. Some key positive points worth noting and likely drivers of medium-term growth for CHL include: 1) it has a robust take-rate for its core platform of ~32% vs PC at ~20%. We expect PC to see a marked improvement in this take-rate in time due to the roll-out of CHL’s Premium Membership and insurance offering; 2) With the establishment of the MyWay MGA insurance business, CHL will likely see an overall increase in insurance revenue in Europe; 3) CHL has had 4 straight quarters of positive OCF, has ~A$26.6m cash on balance sheet and no debt.

Morgans has an add rating and $2.55 price target on its shares. If this ASX share were to rise to this level, it would turn a $500 investment into approximately $820.

Regal Partners Ltd (ASX: RPL)

Bell Potter thinks that Regal Partners could be an ASX share to buy. It is a specialist alternative investment manager that was formed in 2022 following the merger of Regal Funds and VGI Partners.

It manages a broad range of investment strategies covering long/short equities, private markets, real and natural assets, and credit and royalties on behalf of institutions, family offices, charitable groups, and private investors.

Bell Potter believes the company’s shares are undervalued based on its positive growth outlook. It said:

We continue to favour RPL, given its strong organic & inorganic growth potential, and entrepreneurial culture. Following the acquisition of PM Capital and Taurus (50%) last year, the firm has shown an acceleration of inflows, strong investment performance and success in marketing new funds. We feel this strong performance is not reflected in the share price and see considerable upside.

The broker has a buy rating and $4.02 price target on its shares. This implies potential upside of 28% and would turn a $500 investment into approximately $640. It also expects 6%+ dividend yields through to FY 2026.

The post The best ASX shares to invest $500 in right now appeared first on The Motley Fool Australia.

More reading

• Buy this ASX All Ords stock for a 30% gain and 6% dividend yield
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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 recommended Camplify. The Motley Fool Australia has recommended Camplify. 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.

Nvidia‘s (NASDAQ: NVDA) stock jumped 9% to a new all-time high on May 23, after the company posted its latest earnings report. In the first quarter of fiscal 2025, which ended on April 28, the chipmaker’s revenue surged 262% year over year to $26.0 billion and exceeded analysts’ estimates by $1.5 billion. Its adjusted earnings surged 461% to $6.12 per share and also cleared the consensus forecast by $0.54.

Those growth rates were explosive, but does Nvidia’s stock still have room to run after rallying about 2,720% over the past five years? Let’s review the four reasons to buy Nvidia’s stock — as well as the four reasons to sell it — to decide.

The key numbers

Back in fiscal 2023, which ended in January of that year, Nvidia’s revenue flatlined as its adjusted EPS fell 25%. Its sales of gaming GPUs cooled off as PC shipments declined in a post-pandemic market, and the macro headwinds curbed its sales of data center chips. But in fiscal 2024, its revenue and adjusted EPS surged 126% and 288%, respectively.

That abrupt acceleration was driven by the rapid expansion of the artificial intelligence (AI) market. Nvidia’s data center GPUs are used to process complex AI tasks, and the market’s demand for those chips quickly outstripped its available supply. Nvidia generated 87% of its revenue from its data center chips in the first quarter of fiscal 2025.

Nvidia also announced a 10-for-1 stock split that will take effect on June 7. The split won’t alter Nvidia’s valuations, but it might attract some interest from smaller retail investors while boosting the stock’s liquidity through more options trading.

The four reasons to buy Nvidia

The bulls still love Nvidia for four reasons. First, they believe it will continue to dominate the AI market with its data center GPUs. The global AI market could still expand at a compound annual growth rate (CAGR) of 37% from 2023 to 2030, according to Markets and Markets, and Nvidia could be the simplest way to profit from that secular boom.

Second, its first mover’s advantage in the AI space gives it tremendous pricing power. Its top-tier H100 GPUs cost more than $40,000, and it can keep raising those prices to boost its gross margin. Third, Nvidia’s gaming business, 10% of its first-quarter revenue, is gradually recovering as the PC market stabilizes.

Lastly, Nvidia’s stock still looks reasonably valued relative to its growth potential. From fiscal 2024 to fiscal 2027, analysts expect its revenue to grow at a CAGR of 43% as its EPS increases at a CAGR of 49%.

Based on those estimates, Nvidia’s stock trades at just 41 times forward earnings. Advanced Micro Devices (AMD -3.77%), which is growing at a much slower rate and has less exposure to the AI market, trades at 46 times forward earnings.

The four reasons to sell Nvidia

Meanwhile, the bears are skeptical about Nvidia for four reasons. First, they believe Nvidia will lose its first mover’s advantage in the data center GPU market as more competitors carve up the market. AMD’s new Instinct data center GPUs already cost less than Nvidia’s top-tier GPUs, and tech giants such as Microsoft, Alphabet‘s Google, and Meta Platforms have all been developing their own in-house AI chips to reduce their long-term dependence on Nvidia.

Second, U.S. regulators recently barred Nvidia from shipping its top-tier AI GPUs to China. That pressure could drive Chinese chipmakers to accelerate their development of comparable AI accelerators. If those efforts are successful, Chinese companies could eventually flood the global market with cheaper AI chips and crush Nvidia’s gross margins.

Third, Nvidia’s insiders sold about twice as many shares as they bought over the past 12 months. That cooling insider sentiment suggests that Nvidia could be running out of room to run as the market hovers near its all-time highs. Last but not least, the recent buying frenzy in AI chips could eventually lead to a supply glut if the market finally cools off.

The strengths still outweigh the weaknesses

Nvidia faces some long-term challenges, but I believe its strengths still clearly outweigh its weaknesses. Its business is still firing on all cylinders, its margin is expanding, and its stock still looks reasonably valued. Therefore, it’s not too late to accumulate more shares of Nvidia if you believe the AI market will continue flourishing over the next few decades.

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

The post Nvidia stock: 4 reasons to buy, 4 reasons to sell appeared first on The Motley Fool Australia.

More reading

• ‘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
• Prediction: Nvidia stock will continue to rise…and here’s why
• Joining the revolution: How I’d invest in ASX AI shares right now
• Nvidia shares are now worth more than 17 times the market cap of BHP. What’s next?

 Leo Sun has positions in Meta Platforms. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Do you have room for some new additions to your income portfolio in June?

If you do, then it could be worth checking out the highly rated ASX dividend stocks listed below that analysts rate as buys. Here’s what you need to know about them:

Dexus Industria REIT (ASX: DXI)

The first ASX dividend stock that could be a top buy in June is Dexus Industria. It is a real estate investment trust with a portfolio of high quality industrial warehouses located across capital cities such as Sydney, Melbourne, and Adelaide.

Morgans currently has the company on its best ideas list with an add rating and $3.18 price target. It commented:

The portfolio is valued at $1.6bn across +90 properties with 89% of the portfolio weighted towards industrial assets (WACR 5.38%). The portfolio’s WALE is around 6 years and occupancy 97.5%. Across the portfolio 50% of leases are linked to CPI with the balance on fixed increases between 3-3.5%. While we expect cap rates to expand further in the near term, DXI’s industrial portfolio remains robust with the outlook positive for rental growth. The development pipeline also provides near and medium-term upside potential and post asset sales there is balance sheet capacity to execute.

As for income, Morgans expects the company to pay dividends per share of 16.4 cents in FY 2024 and then 16.6 cents in FY 2025. Based on the current Dexus Industria share price of $2.93, this will mean dividend yields of 5.6% and 5.65%, respectively.

Rural Funds Group (ASX: RFF)

Another ASX dividend stock that is highly rated is Rural Funds. It is an agricultural REIT with a diversified farmland portfolio across five core sectors. Its properties, which are focused on almond orchards, vineyards, cattle, cotton and macadamias, are predominantly leased to corporate agricultural operators on long leases.

Bell Potter thinks income investors should be buying the company’s shares and has named it on its Australian equities panel this month with a buy rating and $2.40 price target. It commented:

RFF trades at a historical high discount to its market NAV per unit ($2.78 pu) at ~28%. While we are in general seeing large discounts to NAV in ASX listed farming and water assets to market NAV, the discount that RFF is trading appears excessive and we are seeing a value opportunity in RFF. While the timing of that value discount closing is difficult to call, investors are likely to be rewarded with a ~6% yield to hold the position until such a time as the asset class rerates. Furthermore, RFF aims to achieve income growth through productivity improvements, conversion of assets to higher and better use along with rental indexation which is built into all of its contracts with its tenants.

The broker expects Rural Funds to pay dividends per share of 11.7 cents in both FY 2024 and FY 2025. Based on its current share price of $2.01, this would mean dividend yields of 5.8%.

The post 2 of the best ASX dividend stocks for income investors to buy in June appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. 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 have been soaring over the last couple of years.

Thanks to its explosive revenue and earnings growth, the ASX tech stock has risen approximately 300% since this time in 2022.

This means that if you had been lucky enough to have invested $10,000 into the location technology company’s shares two years ago, your investment would have grown to be worth $40,000 today.

But if you thought this ASX stock was now peaking, think again. That’s the view of analysts at Bell Potter, which believe Life360 shares can keep rising from current levels.

What is the broker saying about this high-flying ASX stock?

According to a recent note, the broker has responded to Life360’s first quarter update by reiterating its buy rating with a price target of $17.75.

Based on its current share price of $14.80, this implies potential upside of 20% for this ASX stock over the next 12 months. If this proves accurate, it would turn a $10,000 investment into approximately $12,000.

Bell Potter likes Life360 due to the resilience of its business and potential to continue growing strongly in the future. It said:

Life360 has c.1.9m paying circles – the best measure of subscriber numbers – and managed to grow this base by 39% in 2021, 23% in 2022 and 21% in 2023 despite the disruptions associated with COVID-19. This growth shows resilience in the subscriber base and, furthermore, the potential for continued strong growth in the base with market conditions now back to normal.

In addition, the broker highlights that the ASX stock has the potential to enter and disrupt other markets. It adds:

Life360 has the potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents. An example is roadside assistance where Life360 launched a subscription-based product called Driver Protect which disrupted the market and helped enable monetisation of its user base. Other markets Life360 could potentially enter include insurance, item & pet tracking, senior monitoring, home security and/or identity theft.

Potential re-rating

In light of the above and given the valuation of a peer, the broker believes that this ASX stock deserves to trade on higher multiples. Particularly given its plan to list on Wall Street in the near future. It concludes:

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 higher multiples of comps like Reddit (NYSE: RDDT). There is, however, no change in the 9.3% WACC we apply in the DCF. The net result is a 9% increase in our PT to $17.75 which is >15% premium to the share price so we maintain our BUY recommendation. 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.

The post Check out this soaring ASX stock, up 300% in 2 years, with more gains likely to come appeared first on The Motley Fool Australia.

More reading

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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.

Coles Group Ltd (ASX: COL) shares have been a popular option for income investors since landing on the ASX boards in 2018 following a divestment by Wesfarmers Ltd (ASX: WES).

It isn’t hard to see why the supermarket giant features in countless income portfolios and superannuation funds across the country.

Given the nature of its business, Coles has defensive earnings. This means that its earnings are resilient and often grow even in the toughest economic environments.

For example, the Coles dividend was one of only a handful that continued to grow during the COVID pandemic.

It has continued to grow since then, with the Coles board declaring a 66 cents per share fully franked dividend in FY 2023.

This represents an 80% payout ratio, which was in line with its dividend policy of paying out 80% to 90% of earnings. Management notes that this policy allows Coles to reward its shareholders while also enabling it to retain strategic flexibility.

But that dividend has been paid now. So, what’s next for the Coles dividend? Let’s see what analysts are forecasting for the supermarket giant.

Coles dividend forecast

Interestingly, analysts actually expect the Coles dividend to be lower year on year in FY 2024 for the first time since its listing.

For example, Goldman Sachs is forecasting a fully franked dividend of 65 cents per share for the financial year.

Based on the current Coles share price of $16.07, this will mean a 4% dividend yield for investors.

Goldman then expects another dividend cut to 64 cents per share in FY 2025 due to softening profit margins. This would mean a dividend yield of just under 4% for investors that year.

The good news is that the broker believes that a return to growth will take place in FY 2026 thanks to a rebound in its profit margins.

Goldman is expecting the Coles dividend to come in at a fully franked 72 cents per share. This represents a 12.5% increase year on year and equates to an attractive 4.5% dividend yield.

Should you buy Coles shares?

Goldman is currently sitting on the fence when it comes to Coles shares.

The broker recently upgraded the retailer’s shares to a neutral rating with a $16.30 price target. This is a touch higher than where they trade today.

The broker feels that the Coles share price is fairly valued at current levels. It said:

In our opinion, whilst COL has under-invested in its digital transformation and omni-channel strategy, we believe 1) COL has made encouraging steps to address under-investment with key Witron facilities now operating 2) whilst Ocado facilties have been delayed, risks of further delay are more limited. We expect COL to report lower comps sales and EBIT margin growth in FY25/26 vs key competitor WOW, though execution under new CEO has been increasingly positive. COL is trading below long term 12m forward P/E but with double running cost associated with Witron/Ocado facilities alongside existing infrastructure, we believe this is fair value. We are Neutral rated on COL.

The post Here’s the Coles dividend forecast through to 2026 appeared first on The Motley Fool Australia.

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

If we invest in the right places, we can unlock a high level of future income. Hence, I’m a fan of buying cheap ASX dividend shares with solid yields.

When a business’ share price trades at a lower level than its underlying net asset value (NAV), it can mean the dividend yield is appealing because the market may be undervaluing the cash flow the businesses are distributing to shareholders.

In a world where interest rates are still very high, I’d want to see the stocks I’m investing in for passive future income have a good dividend yield. With that in mind, below are two that tick my investment boxes.

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) that’s invested in an exciting area of the commercial property market: industrial property.

According to Centuria, businesses are reportedly expanding their supply chains and capabilities in Australia following the disruptions since the onset of COVID-19. That requires large warehouses, which the REIT provides.

The ASX dividend share is seeing enormous organic revenue growth. In the three months to 31 March 2024, the business reported positive re-leasing spreads of 50% in the year to date. In other words, for its newly signed contracts, the business is receiving 50% more rent for the same properties than it was before on the previous contract.

That level of rental growth isn’t guaranteed to continue forever, but it shows the high demand for this type of property in Australia’s cities.

At 31 December 2023, the business had a NAV per unit of $3.89, which means the current share price is at a discount of around 20% to the NTA. I think that makes it a cheap ASX dividend share.

It expects to pay a distribution of 16 cents per unit in FY24, which would be a distribution yield of approximately 5%.

Bailador Technology Investments Ltd (ASX: BTI)

Bailador is a technology company that aims to invest in some of the most promising private software and technology businesses.

The technology investment business usually invests in businesses that are run by the founders, have a proven business model with attractive unit economics, and generate international revenue as well as repeat revenue.

Bailador aims to pay a dividend yield equivalent to 4% of its pre-tax NTA. This translates to a targeted yield of 5.7%, grossed-up for franking credits.

The business is at a 34% discount to its pre-tax NTA, it looks like a very cheap ASX dividend share to me. That means the actual cash yield, based on the April 2024 pre-tax NTA, could be 6% with a grossed-up dividend yield of 8.6% due to that large NTA discount.

Bailador recently expanded its portfolio and announced a $20 million investment in Venture Startups International, which operates Updoc, a digital healthcare platform that connects consumers who need medical services with registered health practitioners via a telehealth offering. It offers advice, online prescriptions, specialist referrals, pathology referrals and medical letters.

Since its inception, Updoc has served over 200,000 consumers, so it has a sizeable scale. Updoc will use the $20 million to accelerate the development of its products and support continued expansion.

The post 2 cheap ASX dividend shares I’d buy now for future income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments. The Motley Fool Australia has recommended Bailador Technology Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.