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The S&P/ASX 200 Index (ASX: XJO) stock Inghams Group Ltd (ASX: ING) looks like a good buy because of its dividend income and the value it offers.

Inghams claims to be the largest integrated poultry producer in Australia and New Zealand. Its products are sold through various businesses, including fast food, food service distributors and wholesalers, and supermarkets.

The company also has strong market positions across the Australian turkey, Australian stockfeed and New Zealand dairy feed industries.

Why the ASX 200 stock looks cheap

Inghams is recovering from the impacts of inflation, which significantly affected costs during that period a couple of years ago.

The company is now getting back to good profitability – the FY24 first-half result saw group core poultry volume grow 2.2% to 240.8kt, revenue rose 8.7% to $1.64 billion, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 19.9% to $252.1 million, and the underlying net profit after tax (NPAT) jumped 134.2% to $62.3 million.

Inghams is expecting some benefit from lower key feed costs in FY25, which could help profit rise again.

The ASX 200 stock is also investing in automation which it expects, over time, will “provide cost savings, higher yield and throughput outcomes, and improved product quality.” It’s also expected the automation investments will support increased production of value-add products and new customer opportunities.

On top of that, Inghams’ new distribution in Hazelmere, WA, has started operations. It also opened new distribution centres in August 2022 and April 2023 in Victoria and South Australia, respectively. These new facilities can help the company’s efficiencies.

The forecast on Commsec suggests Inghams could make earnings per share (EPS) of 33.4 cents in FY25 and 36.8 cents in FY26, putting it on a forward earnings multiple of under 12x for FY25 and under 11x for FY26.  

While we don’t know precisely what the earnings are going to be, things look positive for Inghams shares and the trajectory of profit.

Big dividend yield

With the ASX 200 stock’s low price/earnings (P/E) ratio, it’s projected to have a solid dividend yield, just like before COVID-19.

Commsec’s forecast suggests Inghams might go with a dividend payout ratio of around 66%. This could lead to a grossed-up dividend yield of 8.3% in FY25 and 8.9% in FY26.

The prospect of rising profit, a growing dividend, and a big yield look like a compelling combination that could power tasty returns over the next two or three years.  

The post With its 8% yield, I think this undervalued ASX 200 stock is an opportunity not to miss appeared first on The Motley Fool Australia.

More reading

• Guess which ASX dividends stocks analysts think are top buys
• 3 ASX shares that look way too cheap to ignore right now
• 3 buy-rated ASX 200 dividend stocks with 5% to 8% yields
• 2 cheap ASX shares to add to your portfolio before they get expensive
• Here are the top 10 ASX 200 shares today

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.

Tuesday’s federal budget included around $5.4 billion worth of initiatives to help Australians cope with the surging cost of living.

While this is welcome news for many, others are concerned the Government’s increased spending will create additional inflationary pressure.

If this proves the case, we could find ourselves waiting even longer for any much-anticipated interest rate cuts from the RBA, notwithstanding the latest jobs data indicating unemployment is rising faster than expected.

As such, even with the additional help provided in this week’s budget, we may have to get used to paying higher prices on everyday essentials for longer.

For most of us, having access to a passive income stream generated by ASX dividend shares would be very handy right now and help further ease those cost-of-living pressures.

So we asked our Foolish writers which ASX dividend shares they think offer the very best buying for income investors in May.

Here is what the team came up with:

6 best ASX dividend shares for May 2024 (smallest to largest)

• Harvey Norman Holdings Limited (ASX: HVN), $5.38 billion
• Sonic Healthcare Ltd (ASX: SHL) $12.79 billion
• Coles Group Ltd (ASX: COL), $21.83 billion
• Woolworths Group Ltd (ASX: WOW), $38.66 billion
• Telstra Group Ltd (ASX: TLS), $42.40 billion
• Fortescue Ltd (ASX: FMG), $82.95 billion

(Market capitalisations as of market close 17 May 2024).

Why our Foolish writers love these ASX passive income stocks

Harvey Norman Holdings Limited

What it does: Most Australians have probably made a mad dash to a Harvey Norman store at some point for a new appliance, computer, furniture item, or other consumer product – a charging adapter, in my recent case. Boasting more than 300 stores across eight countries, Harvey Norman is a retailing staple.

By Mitchell Lawler: According to billionaire investor Bill Ackman, “The best businesses in the world are capital-light franchises which own the right to collect royalties on a compounding base of assets”. 

Admittedly, Harvey Norman isn’t exactly a ‘capital-light’ business, though it is highly profitable thanks to its franchise model. I’ve said it before – Harvey Norman is akin to McDonald’s Corp: Buying the land, leasing it out, and charging a franchise fee. 

Personally, I think Harvey Norman shares are undervalued. Especially after the government decided to throw $300 into the pocket of basically every Australian household via the latest federal budget. A business like Harvey Norman might see a boost from those who didn’t need the financial relief.

This ASX dividend payer currently trades on a trailing dividend yield of 5.09%.

Motley Fool contributor Mitchell Lawler does not own shares of Harvey Norman Holdings Limited.

Sonic Healthcare Ltd

What it does: Sonic Healthcare is a global pathology business with operations in Australia, the United States, Germany, Switzerland, the United Kingdom, Belgium, and New Zealand.

By Tristan Harrison: Down 25% since this time last year, the Sonic Healthcare share price is much cheaper now than a year ago. I think this makes it great value right now for ASX income investors.

The ASX 200 healthcare stock now trades on a trailing dividend yield of around 3.6%, excluding franking credits.

Sonic Healthcare has grown its dividend every year since 2013 and almost every year for the past three decades. The company’s board of directors has a stated “progressive dividend policy”, making it an appealing pick for resilient passive income.

I believe the ASX healthcare company can grow earnings thanks to a number of different tailwinds.

A growing and ageing population can translate into more demand for Sonic’s services. It’s also investing in businesses that bring new technology to the pathology table, such as AI and microbiome testing.

Sonic Healthcare continues to make acquisitions, which boosts its scale and allows it to achieve increased synergies. It recently announced the acquisition of Dr Risch Group, which generated around AU$156 million of revenue in Switzerland in 2023.

Motley Fool contributor Tristan Harrison owns shares of Sonic Healthcare Ltd.

Coles Group Ltd

What it does: Coles is one of the big two supermarket operators in Australia with more than 840 stores across the country. The company also operates more than 950 liquor stores through brands, including First Choice and Liquorland.

By James Mickleboro: I think Coles would be a great ASX dividend share to buy in May, particularly given its shares are now trading closer to their 52-week low than their 52-week high. 

I believe this recent share price weakness means Coles shares are great value now, especially for a company with a market leadership position, a positive growth outlook, defensive earnings, and an attractive dividend yield.

Speaking of the latter, the team at Morgans is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on the current Coles share price of $16.20, this equates to yields of 4.1% and 4.25%, respectively.

Morgans also sees plenty of upside for Coles shares with its add rating and $18.95 price target. The broker highlights that “the ongoing scrutiny on the supermarkets has affected short-term sentiment in the sector, which we believe creates a good buying opportunity in COL.”

Motley Fool contributor James Mickleboro does not own shares of Coles Group Ltd.

Woolworths Group Ltd

What it does: Woolworths operates Australia’s largest supermarket network and also has a presence in New Zealand.

By Bronwyn Allen: When negative market sentiment temporarily drives down the share price of a blue chip stock, the dividend yield may be temporarily enhanced.

Woolworths shares were down 15.6% year-to-date to $31.65 at Friday’s close. Top broker Goldman Sachs is tipping dividends of $1.08 in FY24 and $1.14 in FY25. That means dividend yields of 3.4% and 3.6%, respectively.

When you add the 100% franking, those yields move up to around 5% and 5.3%. That’s about what you’d get if you left your cash in a savings account. There’s no prospect of capital growth in cash investing, but there is with Woolworths shares.

Goldman has a 12-month price target of $39.40 on the ASX 200 consumer staples stock, implying a potential 24.5% upside. The broker assesses the current Woolworths share price as “a value entry level for a high-quality and defensive stock”.

Motley Fool contributor Bronwyn Allen does not own shares of Woolworths Group Ltd.

Telstra Group Ltd

What it does: Telstra is a stock that needs little introduction. It is the largest telecommunications provider in Australia and the market leader in mobile telephony and fixed-line broadband services.

By Sebastian Bowen: When looking at the major ASX 200 blue chip shares right now, I think Telstra qualifies as the most oversold of the bunch. Investors have sent this telco down by around 16% since June last year. This pessimism seems to stem from Telstra’s decision not to sell off its valuable infrastructure assets. 

However, I think this was the right decision for the telco and, as such, reckon this share price slump is a considerable buying opportunity. Retaining some of its most valuable assets in-house is not a bad thing for Telstra’s long-term future. It should bode well for Telstra’s dividends and bolster their reliability.

Speaking of dividends, Tesltra’s share price falls have resulted in this company’s dividend yield rising to over 4.7% at recent pricing. Given that dividend yield typically comes with full franking credits attached too, I think Telstra shares are well and truly oversold this May. 

Motley Fool contributor Sebastian Bowen owns shares of Telstra Group Ltd.

Fortescue Ltd

What it does: Fortescue was established in 2003 and is based in Western Australia. The company counts among the world’s biggest iron ore miners and has been leading the competition to become an integrated green technology, energy, and metals company.

By Bernd Struben: Not only has Fortescue delivered outsized passive income over the past year, the company’s share price has also soared by 33%.

For its half-year results, the miner reported a 21% year-on-year increase in revenue to US$9.5 billion. And net profit after tax (NPAT) increased by 41% to US$3.3 billion.

As for that income, the ASX 200 miner has paid out $2.08 per share in fully franked dividends over the past 12 months. At the recent Fortescue share price of $26.94, that equates to a fully franked trailing yield of 7.7%.

And I think the outlook remains strong. Despite iron ore shipments slipping in the past quarter, management reaffirmed the company’s full-year shipments and cost guidance.

Fortescue also stands to benefit from the $6.7 billion in tax incentives for green hydrogen production contained in the new federal budget. With its investments in green hydrogen, green ammonia, and green iron, Fortescue leads its peers in this field.

Motley Fool contributor Bernd Struben does not own shares of Fortescue Ltd.

The post Top ASX dividend shares to buy in May 2024 appeared first on The Motley Fool Australia.

More reading

• Here are 3 reliable ASX shares I’d buy instead of the big four banks right now
• Goldman says these 6 ASX retail shares are a buying opportunity
• ASX 200 mining shares charging higher amid China’s $210 billion cash injection
• Buy, hold or sell these 3 ASX 200 healthcare shares: Experts
• 2 of the best ASX 200 blue chip shares to buy in May

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

Thanks to the strong economy, the ASX bank share sector has done quite well during this period of higher interest rates. However, there are still danger signs, particularly with arrears rising.

In the recent FY24 third-quarter update, we heard from Commonwealth Bank of Australia (ASX: CBA) how its arrears over 90 days have increased. At March 2023, home loans at least 90 days overdue were 0.44% of its loan book, but that had increased to 0.61% at March 2024.

What could this mean for bank earnings?

According to reporting by the Australian Financial Review, brokers Wilsons said:

There is a broad consensus among the banks that bad debts will follow arrears higher over the medium-term amidst weakening credit quality from the still percolating impact of higher interest rates on households.

ASX bank shares are expected to see earnings per share (EPS) decline in FY24 and FY25, according to Wilsons. It described the current valuations as “uncompelling” and said investors should stay “underweight”.

Broker Morgan Stanley is concerned about banks’ net interest margin (NIM). According to reporting by The Australian, Morgan Stanley said:

In our view, it will be difficult for retail bank margins to expand and profitability to improve given the ambitions of the five largest banks.

We think this limits the potential for a strong recovery in EPS and dividend growth and an increase in sustainable returns.

Where I’d invest in ASX shares

I’d imagine that many investors are attracted to the ASX bank shares of CBA, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) partly because of the dividend yield.

So, I’ll talk about three ASX shares that seem reliable for dividends and offer a good yield.

Rural Funds Group (ASX: RFF) owns a variety of farmland including cattle, almonds, macadamias and vineyards. It has grown or maintained its distribution every year since it first started paying in 2014. Its rental income is benefiting from steady contracted rental increases at its farms. The business currently has a distribution yield of 5.8%.

Medibank Private Ltd (ASX: MPL) is Australia’s largest private health insurer. Many households value having access to private health, and some high-income people are benefiting from avoiding the Medicare levy surcharge by having private health insurance. Its policyholder numbers keep growing and this is helping its underlying profit grow. Commsec forecasts suggests a grossed-up dividend yield of 6.6% in FY25.

Telstra Group Ltd (ASX: TLS) is Australia’s largest telecommunications business, with leading 5G network coverage. The ASX share continues winning new subscribers and this is helping drive its profitability higher, as well as funding more investment across its business. It’s growing its dividend again and has a projected grossed-up dividend yield of 7.3% for FY25, according to Commsec.

The post Here are 3 reliable ASX shares I’d buy instead of the big four banks right now appeared first on The Motley Fool Australia.

More reading

• With $1,000 to invest, should I buy ASX growth stocks or income shares?
• How much could $10,000 invested in Telstra shares be worth next year?
• Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy)
• Buy Telstra and these ASX dividend stocks for income
• How to help recession-proof your ASX share portfolio in May 2024

Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. 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 and Telstra Group. 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.

Billionaire investor Warren Buffett and his company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) had their annual meeting earlier this month. As always, the event was full of insights for investors, who often mimic Buffett’s investing moves. This time around, what stuck out to me wasn’t what Buffett was saying or which stocks he was buying, but about what he was not doing. And that’s evident through one number.

Berkshire’s cash pile to top $200 billion this quarter

As of the end of March, Berkshire had $189 billion in cash and equivalents on its books, which is a record for the company. And Buffett says that figure is likely to grow even higher. “It’s a fair assumption that they’ll probably be at about $200 billion at the end of this quarter,” he said.

Perhaps equally surprising is that Berkshire has also been reducing its position in iPhone and iPad maker Apple, selling 13% of its shares in the business. Apple, however, remains Berkshire’s largest holding, accounting for approximately 40% of its overall portfolio.

Why isn’t Buffett loading up on stocks?

With Berkshire’s record levels of cash on hand, investors may find it odd that the billionaire investor isn’t on a buying spree, especially at a time when the markets appear to be hot. It’s definitely a notable development at a time when investors generally seem bullish. Year to date, the S&P 500 has risen more than 9% and has been hitting record levels of its own.

But Buffett isn’t seeing great buying opportunities out there. “We’d love to spend it, but we won’t spend it unless we think they’re doing something that has very little risk and can make us a lot of money,” he said.

Buffett is a value investor at heart and if he’s not seeing much in the way of buying opportunities out there, and that should raise flags for investors. He always preaches that investors should be “fearful when others are greedy.” And given the greed in the markets over the past year, it may not be a bad idea for investors to rethink which buying opportunities are actually good ones in the markets these days.

Have valuations become excessive?

The S&P 500 is averaging a price-to-earnings multiple of 27 right now. While that is higher than it has been in the past, it’s below the 30 times earnings it was averaging in 2020 when meme stocks were starting to take off.

Many stocks, however, have been hot buys over the past year and are now trading at some high earnings multiples. These stocks have been the S&P 500’s top performers in the past 12 months:

Stock	12-Month Performance	P/E Ratio
Super Micro Computer	485%	44
Vistra	274%	56
Nvidia	219%	76
Constellation Energy	168%	29
NRG Energy	153%	12

Data source: YCharts. Returns as of May 13, 2024.

Not only have the returns for some of these stocks become sky high, but the majority of their earnings multiples are now in excess of 40. Finding good quality stocks is becoming more challenging for investors. While a stock such as Nvidia certainly has a lot of long-term potential and that future growth may be worth paying a premium for, it also makes the stock vulnerable to a sell-off if it falls short of expectations given the high expectations that come with such inflated prices.

Now may be an optimal time for investors to reassess their positions

Buffett has trimmed his stake in Apple and taken some profits, and investors may want to consider doing the same with their own holdings. While you may not necessarily want to try timing the market, it’s important to always consider valuations when buying and holding stocks because there is an opportunity cost associated with tying up money in an investment that may not be optimal.

There are many good, cheap stocks out there to buy. And unless you’re incredibly bullish on a growth stock that’s trading at a high multiple, you may want to consider other options. 

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

The post 1 concerning number from Warren Buffett’s annual shareholder meeting that should raise flags for investors appeared first on The Motley Fool Australia.

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• If I were Warren Buffett, I’d buy these 3 ASX shares
• I’d follow Warren Buffett and buy this ASX ETF right now for exposure to Japan stocks
• Why has Warren Buffett just sold $20 billion of his biggest investment?

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Constellation Energy, and Nvidia. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, Constellation Energy, and Nvidia. The Motley Fool Australia has recommended Berkshire Hathaway and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen has positions in A2 Milk. 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 Bendigo And Adelaide Bank. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Long-term investors in the iShares S&P 500 ETF (ASX: IVV) would be a pretty happy lot on the ASX today. After all, this exchange-traded fund (ETF) has given investors some truly stunning returns over the last few years.

How stunning? Well, according to the provider, the iShares S&P 500 ETF has delivered a total return (growth and dividend distributions) of 24.47% over the 12 months to 30 April 2024.

IVV investors have also enjoyed an average return of 14.17% per annum over the three years to 30 April. That rises to 14.69% per annum over the past five years and peaks at 16.24% per annum over the past ten.

To give you a sense of just how lucrative a 16.24% return is, an investor who put $10,000 into IVV units a decade ago would have approximately $50,000 today, thanks to those high returns compounding. That’s assuming they reinvested all dividend returns of course.

Those ten-year returns IVV investors have enjoyed would have been more than double what an investor putting money into an ASX index fund like the Vanguard Australian Shares Index ETF (ASX: VAS) received. Over those same 10 years, VAS investors bagged an average of 7.83% per annum.

So does this stellar track record make the iShares S&P 500 ETF a no-brainer buy today?

Well, let’s clear up why this American index fund has been such a good investment.

What is this ‘slice of America’?

The iShares S&P 500 ETF tracks the S&P 500 Index (SP: .INX), which is the flagship stock market index of the United States. It represents an investment in the largest 500 companies on the American markets, weighted by market capitalisation.

That means you are getting exposure to almost any public American company you can think of here –everything from Apple, Amazon, Microsoft and NVIDIA to Mastercard, Kellogg, Coca-Cola and Nike.

This is why the legendary Warren Buffett has called an S&P 500 Index fund a ‘slice of America’. Buffett has even recommended it as an investment to anyone who doesn’t want to try and actively beat the market by picking their own stocks.

How have ASX investors bagged 16% per annum from the IVV ETF?

Over the past decade, the S&P 500 has been turbocharged by the performance of what are now its largest holdings – the US tech giants.

To give you an idea of how much this has helped the S&P 500, Amazon stock has risen by around 1,130% since May 2014. Apple is up by around 730%, while Microsoft has enjoyed a 965% increase. But that pales against Nvidia, whose lucky long-term investors have been showered with proverbial gold. Nvidia stock has exploded by almost 21,000% over the past decade.

Without the ‘magnificent seven’ US tech giants, the iShares S&P 500 ETF’s returns would not nearly be as stunning.

Another factor to consider has been the Australian dollar’s weakening value against the American dollar. Ten years ago, one Aussie dollar was buying 94 US cents. Today, it will only fetch 66.65 US cents.

This means that any assets priced in American dollars are inherently more valuable in Australian dollars today than they were in 2014, even if they haven’t changed in US dollar terms.

To give you an insight into how much this has affected IVV’s ASX returns, consider that the currency-hedged iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV) has returned 10.13% per annum over the past five years, against the unhedged IVV’s 14.69%.

Should investors buy the iShares S&P 500 ETF today?

I think this index fund is a great investment for any passive-minded investor who wants a diversified slice of some of the best companies in the world. This index fund can add some healthy international diversification to any ASX share-based portfolio. Plus, it comes with an endorsement from the great Warren Buffett, so what more can one ask for?

However, this comes with a caveat. I think the massive returns investors have enjoyed over the past decade are something of a fluke. As such, I don’t think anyone buying this ETF today should be expecting anything close to 16% per annum over the coming 10 years.

It’s highly unlikely in my view that the likes of Apple, Microsoft and Amazon are going to grow by another 700 or 1,000% over the next decade. And Nvidia’s 21,000% return is almost certainly not going to be repeated.

Plus, the Australian dollar is probably not going to lose another 30 cents against the US dollar by 2034.

So by all means, buy this ETF today. Just don’t expect it to turn every $10,000 invested into $50,000 in ten years time.

The post 16% per annum: Is the iShares S&P 500 ETF (IVV) too good to turn down? appeared first on The Motley Fool Australia.

More reading

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• Top ASX shares to buy for your superannuation fund in May 2024
• If I’d put $5,000 in iShares S&P 500 ETF (IVV) at the start of 2024, here’s what I’d have now
• 3 reasons the iShares S&P 500 ETF (IVV) is a great long-term investment

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Amazon, Apple, Berkshire Hathaway, Coca-Cola, Mastercard, Microsoft, Nike, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Berkshire Hathaway, Mastercard, Microsoft, Nike, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended WK Kellogg and has recommended the following options: long January 2025 $370 calls on Mastercard, long January 2025 $47.50 calls on Nike, long January 2026 $395 calls on Microsoft, short January 2025 $380 calls on Mastercard, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Amazon, Apple, Berkshire Hathaway, Mastercard, Microsoft, Nike, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have a high tolerance for risk and are on the lookout for big returns, then read on.

That’s because Bell Potter is tipping one speculative ASX stock to rise more than 200% from current levels.

Let’s dig a bit deeper now and see which stock could potentially more than triple your money if everything goes to plan.

Which ASX stock?

The ASX stock in question is Talga Group Ltd (ASX: TLG). It is a battery anode and advanced materials company aiming to accelerate the global transition towards sustainable growth.

Talga’s Lulea Anode Refinery is the first of its kind in Europe. It will manufacture sustainable anode material for greener lithium-ion batteries from the high grade natural graphite mined from Talga’s own deposits near Vittangi.

According to the note, the broker has retained its speculative buy rating and $2.35 price target on the company’s shares.

Based on its current share price of 75 cents, this implies potential upside of 213% for investors over the next 12 months.

To put that into context, a $5,000 investment would become over $15,000 if Bell Potter is on the money with its recommendation.

What is the broker saying?

Bell Potter highlights that Talga has just released an updated Exploration Target (ET) for its Vittangi natural graphite project in Northern Sweden. It said:

The ET lifts from 170-200Mt to 240-350Mt at the same grade range of 20-30% graphitic carbon (Cg). The expanded range was supported by electro-magnetic surveys and conventional field mapping conducted since 2014, which identified significant conductors at depth and along strike from the existing Mineral Resource Estimate (MRE). Management believes the ET aligns with future demand from offtake partners.

The broker believes this project will be operational for a very long time. It adds:

We currently estimate a 24-year LOM on Stage-1, which consists of a 100ktpa mining rate producing ~19.5ktpa of Anode material. Stage-2 (BPe commencing 4 years post Stage-1) lifts production to over 100ktpa of anode material over 14 years. In our view, the updated guidance indicates to potential offtake partners (and strategic equity) that the Vittangi project is a long-life, high-grade and large-scale anode project of strategic significance.

Finally, supporting its speculative buy rating are the following factors. It concludes:

We maintain our speculative Buy rating and our valuation of $2.35/sh fully diluted and funded. Key milestones over the next 12 months which support our thesis for TLG include 1) Environmental permit clearance 2) Binding offtake for ~75% of production, 3) project funding (BPe 60/40 debt/equity) and 4) construction commencement (BPe 2HCY24).

Time will tell if the broker makes the right call on this speculative ASX stock.

The post Bell Potter says this speculative ASX stock could rise 200%+ appeared first on The Motley Fool Australia.

More reading

• 16% per annum: Is the iShares S&P 500 ETF (IVV) too good to turn down?
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• How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years!
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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 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 has been another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating and $51.00 price target on this gaming technology company’s shares. This follows the release of a first half result which came in well ahead of the broker’s expectations. This was driven largely by lower than expected costs and a strong performance from its Rest of World segment. The latter offset a slightly softer than expected performance in the United States. Outside this, the broker is supportive of the company’s plan to look at the sale of its digital assets given how their growth has slowed. Though, the price it receives for these assets will be key. All in all, the broker remains very positive on the company and sees value in its shares despite yesterday’s rally. The Aristocrat Leisure share price is trading at $45.71 today.

Graincorp Ltd (ASX: GNC)

A note out of Bell Potter reveals that its analysts have retained their buy rating on this grain exporter’s shares with an improved price target of $9.50. This follows the release of a half year result that was modestly ahead of the broker’s expectations. Bell Potter was also pleased to see that its FY 2024 guidance remains unchanged and that its through the cycle EBITDA has been upgraded from $310 million to $320 million. This reflects the inclusion of the XF Australia feeds acquisition. But it may not stop there. It notes that its through the cycle earnings would likely lift on any new oilseed crush capacity, which is being investigated. The Graincorp share price is fetching $8.53 this afternoon.

Incitec Pivot Ltd (ASX: IPL)

Analysts at Goldman Sachs have retained their buy rating on this fertiliser and commercial explosives company’s shares with an improved price target of $3.35. Goldman was pleased with Incitec Pivot’s half year results, noting that there was solid APAC pricing momentum. In addition, it highlights that the Fertiliser sale process is ongoing with PT Pupuk Kalimantan Timur and that management has flagged a transformation program. The latter is expected to target pricing, cost and working capital disciplines. But importantly, it believes the program could represent upside to consensus estimates. The Incitec Pivot share price is trading at $2.92 on Friday.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why is this ASX 200 stock surging despite a $500 million writedown?
• Why Aristocrat Leisure, Graincorp, Incitec Pivot, and Patriot Battery Metals shares are rising today
• Guess which ASX 200 stock is surging 11% on an ‘outstanding’ result

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. 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.

Mineral Resources Ltd (ASX: MIN) shares have been on a tear since mid-January, when the ASX 200 mining stock hit a 52-week low of $52.52.

That was back on 22 January, and since then, Mineral Resources shares have had one heck of a rebound.

At the time of writing on Friday, they’re up 0.59%, trading at $78.45 after touching a 52-week high of $79.27.

In fact, the S&P/ASX 200 Materials Index (ASX: XMJ) is the only market sector in the green on Friday following news of A$210 billion of economic stimulus in China which is likely to boost iron ore demand.

The rest of the market seems to be cooling off from yesterday’s excitement. The S&P/ASX 200 Index (ASX: XJO) is limping along on Friday afternoon, carrying a 0.72% loss.

Now, back to Minerals Resources shares and whether it’s too late to buy them after this recent run.

Is it too late to buy Mineral Resources shares?

The answer to this question depends on who you ask.

First to top broker, Morgan Stanley.

Earlier this month, the broker upped its share price target on Mineral Resources shares by 24% to $83.

So by this measure, Mineral Resources shares still have a little bit of upside to offer at 4.8%.

Next, Bell Potter.

Its analysts retained their buy rating on Mineral Resources shares in a note published in late April.

They raised their 12-month share price target to $85. So, the potential upside is a tad better at 7.35%.

Bell Potter liked the company’s quarterly update released on 24 April.

The broker noted sales volumes were above its own forecasts and it was happy to see the recommencement of spodumene concentrate sales from the Wodgina lithium mine.

Mineral Resources also reported an improvement in its spodumene prices at the end of the quarter with a 22,000 tonnes shipment sold at US$1,300 per tonne for SC6 equivalent. This compares to the quarterly average of US$1,030 per tonne.

Another positive was the Onslow Iron Project remaining on track to export its first ore in June.

Finally, we look to Goldman Sachs for their view on Mineral Resources shares.

It’s vastly different from Bell Potter and Morgan Stanley.

Mining giant has 40% potential downside from here

Goldman not only has a sell rating on Mineral Resources, it also thinks the shares were too expensive to buy at their 52-week trough!

The broker has a 12-month share price target of $47 on Mineral Resources today. This implies a significant potential downside of 40% over the next 12 months.

This broker had a different take on the company’s quarterly report, noting that lithium and iron ore production and realised prices had not met Goldman’s own forecasts.

However, Goldman still likes the company and its track record for delivering impressive returns.

The broker commented:

We continue to highlight that MIN has an impressive 20-yr track record of generating high returns on capital with an average ROIC of >20% since listing.

This has been achieved through MIN’s ability to build and operate crushing plants and mining projects faster and at lower capital intensity than most other companies.

Despite this impressive track record, we continue to rate MIN a Sell …

Goldman said the reasons for its sell rating included Mineral Resources being fully valued compared to its peers. It is also trading well above its net asset value (NAV), which Goldman places at $54.60 per share.

The broker also cited its expectations of further falls in lithium prices.

This, coupled with higher capex costs at Onslow, leads the broker to believe that Mineral Resources will generate low or negative free cash flow in FY24 and FY25.

Goldman also says the company’s balance sheet is “highly geared but debt covenant light”.

The post Up 51% from their 52-week low, is it too late to buy Mineral Resources shares? appeared first on The Motley Fool Australia.

More reading

• 4 founder-led ASX 300 shares that have helped this fund outperform
• Here are the top 10 ASX 200 shares today
• Guess which 3 ASX 200 stocks just earned major broker upgrades!
• Brokers name 3 ASX shares to buy now
• ASX lithium shares tumble as falling prices hit export values

Motley Fool contributor Bronwyn Allen 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.

Fancy investing in an ASX All Ords stock that would have seen your investment balloon by an eye-watering 292% in just three years?

Me too!

After all, the All Ordinaries Index (ASX: XAO) returned a far more ordinary 11.5% (excluding dividend payouts) over this same period.

The star performer in question is ASX coal miner Yancoal Australia Ltd (ASX: YAL).

Here’s how the company would have grown a $9,000 investment three years ago into a whopping $35,234 today.

ASX All Ords stock delivers the goods

Three years ago, in mid-May 2021, you could have bought the ASX All Ords stock for $2.01 a share.

Meaning your $9,000 investment would have netted you 4,477 Yancoal shares and a bit of pocket change.

By the end of 2021, your ASX investment would already be up some 30%, while you probably spent that pocket change.

And things really began to heat up in 2022.

That year, thermal coal prices more than doubled to reach all-time highs following Russia’s invasion of Ukraine. The Yancoal share price also notch its own record highs.

Although the coal price has tumbled more than 65% since those record highs, the Yancoal share price has held up much better, as the ASX All Ords share continues to be a cash-generating machine.

In afternoon trade today, Yancoal shares are swapping hands for $5.95 apiece.

So, the 4,477 shares you bought three years ago would be worth a rounded $26,460 today. Which, you might be thinking, is well below the headline-grabbing $35,234 mentioned above.

What gives?

The dividends, of course!

Don’t forget the passive income

Over the past three years the ASX All Ords stock has not only seen its share price rocket, it’s also delivered shareholders some seriously outsized passive income.

If you’d bought shares in May 2021, you have been eligible to receive the past three dividend payouts, all but one of which were fully franked.

Those four payouts work out to $1.92 per share.

So, if we add that into the current Yancoal share price of $5.95, the accumulated value of this ASX All Ords stock over the past three years works out to $7.87 per share.

Meaning your 4,477 shares would have netted you $35,234 by today, with some potential tax benefits from those franking credits.

Boom!

Now, as always, before investing in Yancoal shares or any other ASX stock, do your own research or seek expert advice.

The post How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years! appeared first on The Motley Fool Australia.

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• My top ASX dividend pick for 2024 is a passive income powerhouse
• 2 ASX passive income shares paying 8% and 13% yields

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.