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The Nuix Ltd (ASX: NXL) share price is rising from the ashes as it trots towards 4 years as an ASX-listed company.

As the trading ceases for another day, shares in the investigative analytics software provider rest at $2.98, up 25.21% from Friday’s closing price. The rapid rise makes Nuix’s monthly return look outlandish, sitting at a smitten 53%. It would’ve taken the last 4 years and 19 days to get the same return from the S&P/ASX All Ordinaries Index (ASX: XAO) before dividends.

Zoom out, and the returns from holding Nuix quickly become astronomical. For example, the one-year return from this Sydney-based tech company is 195% as of Monday afternoon. Yes, that’s the equivalent of turning $5,000 into $14,750 in 12 months.

It sparks the question: Why the sudden shift in gears after what was a disastrous time?

What’s behind the resurgence?

There’s no way of pinpointing what flipped the switch to put Nuix shares on a positive trajectory. However, we can see which announcements were followed by significant company share price increases. This should give us an insight into some of the driving forces behind the change in investor sentiment.

A quick glance at a one-year price chart shows 20 July 2023 as the first major upward move, as shown below.

On 20 July 2023, Nuix released its FY23 preliminary results. A few important pieces of information were contained in this announcement:

• Nuix was returning to growth, forecasting $184 million to $186 million in annualised contract value
• Legal costs were on the downtrend, and
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) were expected to rise

Fast forward to the present day, and it’s a similar situation presented in today’s FY24 earnings update. Nuix expects to exceed its 10% revenue growth target for the full financial year, and statutory EBITDA is anticipated to land between $47 million and $52 million — increasing more than 35% from FY23.

Part of the rosy forecast originates from Nuix bagging a ‘significant multi-year deal’ with an unnamed customer.

Still hanging over Nuix shares

It would be remiss to gloss over the anchors still shackled to the metaphorical ankles of Nuix.

While the Nuix share price has performed exceptionally recently, it has still underperformed the benchmark since its hyped initial public offering (IPO). From its listing, the ASX tech share is down approximately 63%, whereas the All Ordinaries Index is up about 19%.

Lastly, the high-flyer remains subject to a decision on allegations of misleading the market made by the Australian Securities and Investment Commission (ASIC). Without knowing the verdict, the pending outcome presents a risk.

The post Up 53% in a month, how Nuix shares are winning back investors appeared first on The Motley Fool Australia.

More reading

• Why Gentrack, New Hope, Nuix, and Star Entertainment shares are charging higher

Motley Fool contributor Mitchell Lawler 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.

It was a good start to the week for the New Hope Corporation Ltd (ASX: NHC) share price.

The ASX 200 mining stock was up over 7% to $5.05 at one stage before closing the session at $4.95.

Why were investors buying this ASX 200 mining stock?

The catalyst for this strong gain was the release of the coal miner’s quarterly update, which revealed strong production and earnings growth.

According to the release, for the three months ended 30 April, New Hope delivered a 28% quarter on quarter increase in ROM coal production to 3,665,000 tonnes. This reflects a 23% increase in Bengalla production to 2,955,000 tonnes and 55% jump in New Acland production to 710,000 tonnes.

Also increasing strongly were the ASX 200 mining stock’s sales volumes. New Hope reported a 21% quarter on quarter increase in coal sold to 2,358,000 tonnes. This was achieved with an average realised sales price of $179.78 per tonne, which was flat on the previous quarter.

And with the Bengalla Mine achieving an FOB cash cost (excluding state royalties) of $73.4 per sales tonne for the quarter, which is a 7.8% reduction, New Hope’s underlying EBITDA increased by a sizeable 21.6% quarter on quarter to $218.8 million.

This ultimately led to the ASX 200 mining stock ending the period with a cash balance of $381.3 million. This is post-payment of the interim fully franked dividend of $143.7 million and Malabar equity raise commitment of $79.7 million.

Should you invest?

The team at Goldman Sachs doesn’t appear to believe that investors should be buying this ASX 200 mining stock right now.

While the broker has not yet responded to this update, so its recommendation could yet change, it currently has a sell rating and $3.50 price target on its shares. This implies significant downside potential of almost 30%.

Goldman believes that its shares are overvalued at current levels compared to peers. It explains:

The stock is trading at ~1.3x NAV (A$3.58/sh) and discounting a long-run thermal coal price of ~US$95/t (real) vs. our US$83/t estimate (based on our view of long run global marginal costs). NHC is also trading on a NTM EBITDA multiple of ~4.5x vs. global coal peers on ~3.0x. We note that FCF yield is -4%/11% in FY24/25 on our ~US$140/115/t thermal coal price assumptions, and -4%/18% at spot thermal (both include benefits from hedging).

Thermal Coal market to soften further in 2024: our global commodity team forecasts a ~40Mt surplus for 2024 due to decreasing global import demand, largely driven by a weakening in China hoarding demand (-80Mt) and high inventory levels, and growing export capacity (+47Mt) from Indonesia, Australia and Russia and we expect marginal costs to fall to US$100/t in 2024. We forecast US$130/t for 6000kcal NEWC benchmark in 2024.

The post Why did this ASX 200 mining stock jump 7%? appeared first on The Motley Fool Australia.

More reading

• Why Gentrack, New Hope, Nuix, and Star Entertainment shares are charging higher
• Invested $8,000 in New Hope shares 3 years ago? Here’s how much you have now!
• ASX coal shares higher despite major superannuation fund walking away
• Here are the top 10 ASX 200 shares today
• Here’s how I’d aim for a tonne of passive income from $20,000 in an ASX share portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has 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.

With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating on this gaming technology company’s shares with an improved price target of $53.00. The broker has been busy running the rule over Aristocrat’s half year results and potential divestment plans. The broker remains as positive as ever on the company’s outlook, particularly in North America. It also continues to see value in offloading its digital assets, which are undergoing a strategic review. Citi believes the assets, which lack any real synergies with the rest of the business, could be sold for around $2 billion. These funds could then underpin another sizeable capital management program. The Aristocrat Leisure share price is trading at $47.31 on Monday afternoon.

James Hardie Industries plc (ASX: JHX)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $65.00 price target on this building materials company’s shares. The broker is feeling confident ahead of the release of the company’s FY 2024 results this week. Morgan Stanley believes that price increases at the start of the year will have helped offset higher input costs. Combined with improving volumes, the broker believes that James Hardie’s margins will be strong for the fourth quarter and that the market will respond positively to this. The James Hardie share price is fetching $54.75 today.

Regis Healthcare Ltd (ASX: REG)

Analysts at Macquarie have retained their outperform rating on this aged care operator’s shares with a significantly improved price target of $5.50. The broker has been updating its financial model to reflect the final recommendations from the Aged Care Taskforce report. These recommendations are designed to support an aged care system that is sustainable, fair, and facilitates greater innovation in the sector. Macquarie believes the recommendations are very favourable for Regis Healthcare. So much so, the broker has lifted its earnings estimates materially through to 2028. This has given its valuation a very big boost. The Regis Healthcare share price is trading at $4.12 this afternoon.

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

More reading

• Top brokers name 3 ASX shares to buy next week
• Here’s how the ASX 200 market sectors stacked up last week
• Brokers name 3 ASX shares to buy now
• Here are the top 10 ASX 200 shares today
• Why Aristocrat Leisure, Graincorp, Incitec Pivot, and Patriot Battery Metals shares are rising today

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

The ASX dividend stock Centuria Industrial REIT (ASX: CIP) has suffered falls of more than 23% since the 2021 peak, as you can see on the chart below. That compares to a more than 5% rise for the S&P/ASX 200 Index (ASX: XJO).

What’s going on?

Higher interest rates appear to be impacting the market’s sentiment on the business. It’s a real estate investment trust (REIT), and Australia’s largest domestic pure-play industrial REIT. According to the company, it has a portfolio of high-quality industrial assets situated in metropolitan locations throughout Australia and a “quality and diverse tenant base”.

Elevated debt costs are troublesome for REITs because, in theory, higher interest rates generally lower the value of assets like property. REITs also typically have fairly high levels of debt, which is now more expensive to maintain following the RBA interest rate hikes.

Centuria Industrial REIT says it aims for income and capital growth opportunities. There are a couple of elements that make the ASX dividend stock very appealing to me in the current environment after its share price decline.

Quality tenants

As a property business, one of the most important things is who is leasing the buildings. Are they reliable tenants?

When I look at the company’s biggest tenants by lease income, I think it’s a list of dependable businesses. The biggest five are responsible for 31% of the rental income: Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW), Arnott’s, AWH and Visy.

Furthermore, the ASX dividend stock is looking to grow and service the same customers across multiple locations.

Strong rental drivers

The REIT is benefitting from a number of growth drivers for industrial real estate.

Population growth is one of these drivers. According to CBRE Research, around 4.5 square metres of industrial and logistics space is required per person. While the major Australian political parties are talking about trying to limit immigration, Australian net migration is expected to be (one of) the highest among developed nations through to 2030, according to Centuria Industrial REIT.

Another helpful factor for the business is increasing levels of e-commerce adoption. The ASX dividend stock highlights that the COVID-19 pandemic accelerated e-commerce adoption. E-commerce spending is currently 12.8% of total retail spend, which is expected to grow to around 15% by 2027.

A third positive for Centuria Industrial REIT is increased onshoring of production and assembly to mitigate the supply issues seen as a result of the pandemic, and geopolitical and trade tensions, which increased shipping time and costs. This change should help drive further demand for industrial property.

According to Centuria, industrial property demand is forecast to exceed uncommitted new supply through to 2026. The strong demand and low vacancy rate is helping drive the business’ rental income growth.

Big discount and solid dividend yield

Centuria Industrial REIT regularly releases a net asset value (NAV) figure, which tells us what its property portfolio and other assets and liabilities are worth as an overall dollar amount.

During this period of high interest rates, it may be worth being more cautious around REIT NAVs, but I like the discount that this ASX dividend stock is trading at.

The company said its NAV was $3.89 as at 31 December 2023, so the current Centuria Industrial REIT share price is trading at a 17% discount to this.

It’s expecting to pay an FY24 annual distribution of 16 cents per unit, translating into a distribution yield of 4.9%, which I think is solid.

The post 1 ASX 200 dividend stock down 20% to buy right now appeared first on The Motley Fool Australia.

More reading

• Buy Telstra and these ASX dividend stocks for income
• 5 ASX dividend shares to buy next week

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.

Cheap S&P/ASX 200 Index (ASX: XJO) shares can be a great source of investment outperformance, if we manage to buy the right ones!

Essentially, by buying businesses for less than they’re intrinsically worth, we give ourselves a bigger margin of safety to make pleasing returns.

On that note, I believe right now is a good time to buy the following two ASX 200 shares due to the strength of their operations and the cheap valuations they’re trading at.

Brickworks Limited (ASX: BKW)

Brickworks is one of the largest building product manufacturers in Australia. It manufactures clay bricks and pavers, masonry and stone, roofing, specialised building systems, cement, and timber battens.

What’s most interesting to me about Brickworks is its array of property assets and the 26.1% stake in investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Brickworks owns land in its own name. It’s the key asset of an industrial property trust held in a 50/50 partnership with Goodman Group (ASX: GMG) and a 50% stake in a manufacturing property trust where Brickworks is the tenant.

The industrial property trust is generating rental profit for Brickworks, and it will continue to grow as more large warehouses are completed.

Brickworks’ most valuable asset is its Soul Patts investment. The latter is invested across numerous sectors including telecommunications, property, credit/bonds, financial services, resources, agriculture, and more. This investment provides asset diversification and a growing dividend for Brickworks.

Brickworks had an inferred asset backing of $5.59 billion as at January 2024. Adjusting this to the current market capitalisation of Soul Patts would put Brickworks’ asset backing at roughly $5.4 billion. That compares to the Brickworks market capitalisation of $4.05 billion.

I think there’s a very sizeable discount here, making Brickworks look cheap to me, particularly considering its industrial property trust is continuing to build more warehouses.

As a bonus, this ASX 200 share hasn’t cut its dividend for almost 50 years, so it seems like a solid choice for reliable income.

Qantas Airways Limited (ASX: QAN)

The Qantas share price has seen volatility over the past year, as we can see on the chart below.

With COVID-19 restrictions and related impacts in the rearview mirror, I believe the ASX travel share has a chance to make fairly consistent profits in the years ahead.

In the FY24 first-half result, Qantas reported underlying profit before tax of $1.25 billion and statutory net profit after tax (NPAT) of $869 million. This led to the airline announcing an additional on-market share buyback of up to $400 million.

Qantas was recently hit with a $100 million penalty by the ACCC, but the issue now seems to be resolved, which is a positive. The company’s revenue outlook still seems to be strong. In the FY24 first-half result, the airline reported that travel demand remained strong across all sectors, with leisure continuing to lead the way and business travel now approaching pre-COVID levels.

The Qantas loyalty division is targeting underlying earnings before interest and tax (EBIT) of between $800 million and $1 billion by FY30, which could significantly boost Qantas’ overall earnings.

Broker UBS suggests Qantas could make earnings per share (EPS) of 91 cents in FY24, 92 cents in FY25, 90 cents in FY26, 99 cents in FY27, and $1.11 in FY28. This would put the Qantas share price at under 7x FY24’s estimated earnings and at just 5.5x FY28’s projected earnings. I view those earnings multiples as low.

I think this could be a good time to invest in this cheap ASX 200 share while it’s hurting from negative coverage.

The post 2 cheap ASX 200 shares I’d buy in May appeared first on The Motley Fool Australia.

More reading

• Here’s the Qantas dividend forecast through to 2026
• Buy one, sell the other: Goldman’s verdict on these 2 ASX 200 travel shares
• These ASX 200 blue chip shares could rise 10% to 30%
• If I were Warren Buffett, I’d buy these 3 ASX shares
• Short sellers up the ante on Qantas shares

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Goodman Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain. At the time of writing, the benchmark index is up 0.6% to 7,862.3 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are charging higher:

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price is up 21% to $8.71. This follows the release of the half year results of the software provider to utilities and airports. Gentrack reported a 21% increase in revenue to $102 million and EBITDA of $12.3 million. The latter is in line with its guidance for full year EBITDA of $23.5 million to $26.5 million. Management said: “Growth is driven by recent and in-year new customers as well as upsells and upgrades for existing customers. In Utilities we have seen growth in all our core markets, (New Zealand, Australia, and the UK), and this financial year we have added Saudi Arabia as a source of growth.”

New Hope Corporation Ltd (ASX: NHC)

The New Hope share price is up 7% to $5.01. This follows the release of the coal miner’s quarterly update. New Hope reported a 28% quarter on quarter increase in ROM coal production to 3,665,000 tonnes and a 21% lift in coal sold to 2,358,000 tonnes. An average realised sales price of A$179.78 per tonne was achieved during the three months, which is in-line with the previous quarter. This led to New Hope reporting an underlying EBITDA of A$218.8 million for the quarter. This is up 21.6% compared to the previous quarter.

Nuix Ltd (ASX: NXL)

The Nuix share price is up 25% to $2.97. Investors have been buying this investigative analytics and intelligence software provider’s shares following the release of a trading update. Nuix advised that based on general positive trading in the second half, including a significant multi-year deal win, it is likely to exceed its strategic target of growing statutory revenue by around 10% in constant currency for the full year. In light of this, Nuix advised that it currently expects that statutory EBITDA for FY 2024 to be in the range of $47 million to $52 million. This will be an increase of at least 35% on FY 2023’s numbers.

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment share price is up almost 17% to 52.5 cents. This morning, the casino and resorts operator denied that it has received a proposal directly from Hard Rock Hotels and Casinos. However, it confirmed that it has received inbound interest from a number of other external parties regarding potential transactions. This includes a consortium of investors which includes the entity Hard Rock Hotels & Resorts (Pacific), which is a local partner of Hard Rock.

The post Why Gentrack, New Hope, Nuix, and Star Entertainment shares are charging higher appeared first on The Motley Fool Australia.

More reading

• Are Star shares now rolling the dice on a rescue bid?
• Here are the top 10 ASX 200 shares today
• Invested $8,000 in New Hope shares 3 years ago? Here’s how much you have now!
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

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

National Australia Bank Ltd (ASX: NAB) shares are known for having an attractive dividend yield. As the second-largest bank on the ASX, it has scale benefits that enable it to generate huge profits, regularly invest in its operations, and pay big dividends.

Banks normally trade on a relatively low price/earnings (P/E) ratio, which is one of the main reasons why their dividend yields are so high. Another reason for the sizeable payouts is that banks usually have a high dividend payout ratio of the profit.

Let’s look at how big the NAB payouts have been in the past year.

NAB dividend yield

NAB recently reported its FY24 first-half result, which showed cash earnings of $3.55 billion. That represented a reduction of 12.8% year over year and was down 3.1% half-on-half. The bank’s statutory net profit was $3.49 billion. Profit is important because it funds dividend payments.

NAB decided to grow the HY24 dividend payout by 1.2% to 84 cents per share. That meant the last two dividends declared amounted to $1.68 per share.

At today’s NAB share price, its current cash dividend yield is 4.9% with a grossed-up dividend yield of 7% with franking credits. That’s a much stronger yield than what you can get from a savings account.

What about future payments?

The last two dividends are history, I think looking at future dividends is more important.

The estimate on CMC Markets suggests the bank may pay a total FY24 dividend per share of $1.68, so it’s projected to have the same dividend yield for the rest of the year.

But, the bank is then projected to increase its annual payout in FY25 to $1.685 per share, which would be a cash yield of 4.9% and 7% grossed-up – the increase is so small the yield is approximately the same as FY24.

Earnings per share (EPS) is projected (according to CMC Markets) to fall slightly in FY24 and FY25 but then rise in FY26 to $2.37. This could fund an increase of the dividend per share to $1.715, which would represent a cash dividend yield of 5% and a grossed-up dividend yield of 7.1%.

Of course, these are just forecasts, and the payout could be stronger or weaker than what analysts are expecting, depending on what happens with the company’s profit and the wider economic picture.

NAB share price snapshot

At the current NAB share price, it’s valued at 15x FY24’s estimated earnings. Since the start of 2024, NAB shares have gone up 12% compared to a 3% rise for the S&P/ASX 200 Index (ASX: XJO).

The post What’s the dividend yield of NAB shares right now? appeared first on The Motley Fool Australia.

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• Here’s what Wilsons is saying about ANZ, CBA, NAB, and Westpac shares
• An ASX dividend giant I’d buy over NAB shares for 2024
• It was huge week for ASX 200 bank shares. Here’s why
• How much passive income would I make from 200 NAB shares?
• 3 ASX 200 shares I want to buy if the stock market crashes again

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

The S&P/ASX 200 Index (ASX: XJO) is having a good start to the week. In afternoon trade, the benchmark index is up 0.75% to 7,872.8 points.

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

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is down 6% to 15.5 cents. This was despite the lithium miner announcing the appointment of its new CEO this morning. The company has appointed Paul Brown as CEO, effective 4 June 2024. The release notes that Mr Brown has a successful professional career spanning 25 years in the Australian resources industry. This includes as the current CEO of $49 million Hastings Technology Metals (ASX: HAS). The company said: “The Board’s priorities in selecting a new CEO were identifying someone with lithium mining experience who will consider all options for the restart of mining operations to guide Core’s activities in response to the low price lithium environment.”

Duratec Ltd (ASX: DUR)

The Duratec share price is down 4% to $1.06. This has been driven by a guidance downgrade from the engineering, construction, and remediation contractor. It was targeting revenue of $570 million to $610 million and EBITDA of $45 million to $52 million in FY 2024. However, due to delays in expected project awards, Duratec now expects revenue of $550 million to $565 million and EBITDA of $46 million to $48 million.

Galan Lithium Ltd (ASX: GLN)

The Galan Lithium share price is down 17% to 24 cents. This morning, this lithium developer announced firm commitments for an equity raising of $14 million to institutional, sophisticated, and professional investors. These funds will be raised at 23 cents per new share. This represents a 20.7% discount to where its shares last traded. The equity raising will provide working capital headroom and financial flexibility for the ongoing development of the Hombre Muerto West (HMW) Phase 1 construction.

Michael Hill International Ltd (ASX: MHJ)

The Michael Hill share price is down 19% to 49.5 cents. Investors have been hitting the sell button today in response to the release of a trading update from the jewellery retailer. It notes that the positive sales momentum it had been expecting through the second half has not materialised. As a result, second half sales are broadly in line with the first half and its margins remain under pressure. This led to its first half earnings being wiped out by a loss in the third quarter.

The post Why Core Lithium, Duratec, Galan Lithium, and Michael Hill shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Why brokers just revised their outlook for these 4 top ASX All Ords shares
• Why did this ASX All Ords stock just crash 24%?
• Why did the Core Lithium share price just crash 6%?
• These are the 10 most shorted ASX shares
• Why these ASX mining shares have ‘got some huge advantages’: Chalmers

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 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.

Four leading ASX All Ords shares just earned broker re-rates.

Some for the better.

Some for the worse.

This could explain why some of the ASX All Ords shares are outperforming the All Ordinaries Index (ASX: XAO)’s 0.6% intraday gains, while some are decidedly lagging.

So, without further ado, here are the four companies in question.

(Broker data courtesy of The Australian.)

ASX All Ords stocks getting broker downgrades

The first company getting a broker re-rate today is iron ore miner Rio Tinto Ltd (ASX: RIO).

The Rio Tinto share price is up 2.5% today at $135.46 a share. This sees the ASX All Ords share up 24% over 12 months.

Following on that strong run, Citi doesn’t believe there’s much more upside ahead for the Rio Tinto share price over the coming year.

The broker cut its rating to ‘neutral’. Although Citi left its target price for Rio Tinto shares unchanged at $137.00, which still represents a potential upside of 1.4% from current levels. Not to mention the 4.8% fully franked trailing dividend yield.

According to Citi’s Paul McTaggart, the mining giant is no longer trading at a “deep discount to valuation” following on the big share price surge.

McTaggart also isn’t convinced China’s new stimulus measures are enough to rekindle its struggling property sector and materially boost iron ore demand.

According to McTaggart (quoted by The Australian):

While the recent Politburo meeting pledged to support the property sector through supply and inventory management to stabilise house price and sales, Citi thinks this is unlikely to stimulate incremental steel demand.

Furthermore, China steel mills are now loss-making again, and we are heading into a period of seasonal weakness for mining equities.

Also getting downgraded today is jewellery retailer Michael Hill International Ltd (ASX: MHJ).

The Michael Hill share price is down a painful 20% today to 50 cents per share following a disappointing trading update released after market close on Friday. The company reported its sales margins remain under more pressure than management had anticipated.

This profit warning saw Citi cut the ASX All Ords share to a ‘neutral’ rating and reduce its target price by 21% to 68 cents a share. Notably, that’s 36% above the current level.

Commenting on the trading update, Citi’s James Wang said:

Further, the absence of comments about any recent improvement makes us cautious on the outlook. Ongoing gross margin weakness also raises questions around the effectiveness and sustainability of the brand elevation strategy.

Michael Hill shares are down 51% over 12 months.

Two shares with brightened outlooks

On the other side of the ledger, ASX All Ords share Pointsbet Holdings Ltd (ASX: PBH) was just raised to an ‘overweight’ rating by JP Morgan.

The Pointsbet share price is up 11% today at 51 cents.

The strong run, and broker upgrade, follow on this morning’s announcement of boosted FY 2024 earnings guidance for the sports betting company.

The ASX All Ords share lifted the forecast for its normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for the full year to the range of $4 million to $6 million. That’s up from the prior guidance of a full-year EBITDA loss of $9 million to $14 million.

Which brings us to the fourth ASX All Ords share getting a broker re-rate today, bank stock Bendigo and Adelaide Bank Ltd (ASX: BEN).

The Bendigo share price is up 1.4% today at $10.88 a share.

Following on Friday’s trading update, Citi has increased its price target by 9% to $9.25 a share. Which tells me the broker expects some headwinds for the bank stock ahead. Though less than it previously expected.

Among the positive metrics Bendigo Bank reported on Friday was an increase in its net interest margins (NIMs) over the 10-month period.

Bendigo Bank’s NIM post revenue share arrangements was 1.87%, up from 1.83% reported in 1H FY 2024.

The ASX All Ords share has gained 26% over 12 months.

The post Why brokers just revised their outlook for these 4 top ASX All Ords shares appeared first on The Motley Fool Australia.

More reading

• Why Core Lithium, Duratec, Galan Lithium, and Michael Hill shares are sinking today
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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 and PointsBet. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are over 2,000 shares available to buy on the ASX, so choosing which ones to entrust with your hard-earned cash can be challenging. Today, I’m taking a closer look at three ASX shares that I think are worth investing in for the long term.

Of the three, I recently invested in two of them for my own portfolio. And if someone gave me $10,000 to invest today, I’d put some more money into these companies, plus an ASX exchange-traded fund (ETF).

I’m a fan of buying growing businesses that have seen temporary share price falls because it allows me to invest at a cheaper price/earnings (P/E) ratio. When it comes to buying companies with good growth prospects at a reasonable price, here’s why I really like these three:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price has dropped by around 25% since 9 January this year, making the ASX 200 stock my favourite pick right now.

The business is a major KFC operator, with growing outlet numbers in Australia, the Netherlands, and Germany. Collins Foods is also responsible for Taco Bell restaurants in Australia, with 27 outlets at the last count.

KFC has been a strong brand in the fast food world for decades, but it doesn’t have the same geographic reach as McDonald’s. As such, I believe Collins Foods has plenty of room for growth in the years ahead if it just keeps adding to its network in Australia and Europe. The company’s KFC network grew by four locations in Australia and eight locations in the Netherlands in the first half of FY24.

The combined Dutch and German populations are over 100 million, but the company’s European revenue was less than a third of Australia’s revenue in HY24. Therefore, I think the ASX consumer stock has a long growth runway in Europe.

The business is achieving pleasing operating leverage, with rising profit margins, enabling net profit to grow quicker than revenue. HY24 revenue rose 14.3%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 16.7%, and underlying net profit after tax (NPAT) went up 28.7%.

Impressively, the business has grown its dividend every year since 2014, and it currently has a grossed-up dividend yield of 4.2%. According to Commsec, the Collins Foods share price is valued at just 12x FY26’s estimated earnings.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel is one of the largest corporate travel operators in the world.

The Corporate Travel Management share price has dropped by around 30% from 29 January 2024, as displayed on the chart below.

However, the long-term outlook for the business is very compelling, in my opinion. Management hopes to win at least $1 billion of new client work each year for the next few financial years.

Corporate Travel plans to grow its revenue (organically) by at least 10% per annum over the next five years. According to the company, its operating leverage can also help boost EBITDA by 15% per annum in the next five years.

Furthermore, if the ASX 200 company makes any acquisitions in the near future, there’s potential for revenue growth in addition to the numbers above. At the current Corporate Travel Management share price, it’s valued at just 12x FY26’s estimated earnings.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This ASX ETF focuses on US companies with strong, sustainable economic moats, or competitive advantages, which are expected to last for many years.

Competitive advantages can take many forms, including network effects, cost advantages, brand power, intellectual property, and so on.

To make it into this ETF’s portfolio, businesses must be priced attractively compared to what Morningstar analysts think they’re worth. Examples of companies currently held by MOAT include Nike, Etsy, Campbell Soup, and Alphabet (Google).

With a portfolio full of good-value, competitively-advantaged companies, I’m optimistic this fund can continue its winning streak.

The ASX ETF has performed strongly over the long term, delivering an average annual return of around 15% over the past five years.

The post I’d invest $10,000 into these excellent ASX shares for the long term appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Corporate Travel Management, Etsy, and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $47.50 calls on Nike. The Motley Fool Australia has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Alphabet, Collins Foods, Nike, and 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.