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If you’re looking to bolster your investment portfolio’s returns, then it could be worth looking at the ASX 200 share in this article.

That’s because analysts at Bell Potter believe that a total return in excess of 20% is possible over the next 12 months.

Which ASX 200 share is the broker bullish on?

The stock in question is Eagers Automotive Ltd (ASX: APE). It is an automotive retailer with a significant network of dealerships sprawling across Australia.

According to a note from this morning, the broker has reiterated its buy rating on the ASX 200 share with a slightly trimmed price target of $14.75 (from $15.20).

Based on its current share price of $12.55, this implies potential upside of 17.5% for investors between now and this time next year.

But the returns won’t stop there according to Bell Potter. It expects Eagers Automotive to pay 74 cents per share fully franked dividends in FY 2024, FY 2025, and FY 2026.

This represents 5.9% dividend yields at current prices and boosts the total 12-month return to approximately 23.5%.

To put that into context, a $20,000 investment would turn into almost $25,000 if Bell Potter is on the money with its recommendation.

What is the broker saying?

Bell Potter notes that the ASX 200 share is due to hold its annual general meeting next week. In previous years, the company has provided a trading update at the event and the broker expects this to be the case this year.

The note reveals that its analysts are expecting a relatively flat start to FY 2024 compared to the same period last year. It said:

Eagers will hold its AGM next week on Wednesday, 22nd May and as per usual we expect the company to provide a trading update for the year-to-date (ytd). We expect underlying net profit before tax for the first four months of 2024 to be roughly in line with the pcp as we see the positive of much stronger Toyota sales in Australia for the ytd (up 45% versus pcp) to be largely offset by the negatives of a lower contribution from BYD (due to the clearance of Atto 3’s) and any impact from the cyber security incident in late 2023.

Nevertheless, the broker believes its shares are undervalued based on its current 11x earnings multiple and deserves to trade at 12.5x earnings. It said:

We have reduced the multiples we apply in the PE ratio and EV/EBITDA valuations from 13x and 6x to 12.5x and 5.75x and also increased the WACC we apply in the DCF from 9.0% to 9.2% given the uncertainty around the trading update and the potential for the ytd performance to be flat to slightly down. The result is a 3% decrease in our PT to $14.75 which still >15% premium to the share price so we maintain our BUY recommendation.

The post Buy this ASX 200 share for a 20%+ return appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday

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

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

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

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Macquarie, its analysts have retained their outperform rating and $48.50 price target on this gaming technology company’s shares. The broker is feeling confident ahead of the company’s half year results release this week. It is expecting a result in line with consensus expectations. This will mean earnings growth of approximately 6% year on year. After which, the broker believes Aristocrat is well positioned to accelerate its growth thanks to the diversity of its portfolio. This is expected to offset any competitive pressure in the key North American market. The Aristocrat share price is trading at $40.60 at the time of writing.

CSL Ltd (ASX: CSL)

Analysts at UBS have retained their buy rating and $330.00 price target on this biotherapeutics giant’s shares. This follows the release of a quarterly update from the company’s collections partner, Terumo. It notes that Terumo’s update revealed that it has ramped up the rollout of CSL’s new Rika collection platform to more centres in the United States. In fact, the ramp up appears to be ahead of schedule, with the FY 2024 target already reached. This can only be good news given the benefits of the new technology on plasma yields. The CSL share price is fetching $284.02 on Wednesday afternoon.

Eagers Automotive Ltd (ASX: APE)

A note out of Bell Potter reveals that its analysts have retained their buy rating on this auto retailer’s shares with a trimmed price target of $14.75. Unlike Aristocrat Leisure, a reasonably mixed update is expected from Eagers Automotive next week. Bell Potter is expecting the company’s underlying net profit before tax for the first four months of 2024 to be broadly in line with the prior corresponding period. This is due to strong Toyota sales in Australia being largely offset by the negatives of a lower contribution from BYD and any impact from its cyber security incident. Nevertheless, due to its low earnings multiples and big dividend yield, the broker feels its shares are great value at current levels and retains its buy recommendation. The Eagers Automotive share price is trading at $12.54 on Wednesday.

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

More reading

• Buy this ASX 200 share for a 20%+ return
• These ASX 200 blue chip shares could rise 10% to 30%
• 5 things to watch on the ASX 200 on Wednesday
• 1 magnificent ASX stock down 10% to buy and hold forever
• 4 founder-led ASX 300 shares that have helped this fund outperform

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CSL and Eagers Automotive Ltd. 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 strong session on Wednesday. At the time of writing, the benchmark index is up 0.5% to 7,763.8 points.

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

Fletcher Building Ltd (ASX: FBU)

The Fletcher Building share price is down a further 3% to a new multi-year low of $2.66. Investors have been selling this building materials company’s shares this week following the release of a disappointing trading update. Management advised that market conditions across the company’s Materials and Distribution divisions have weakened throughout FY 2024. As a result, it expects to fall short of its EBIT (before significant items) guidance of NZ$540 million to NZ$640 million. It now expects a result in the range of NZ$500 million to NZ$530 million. Fletcher Building also warned that it expects market conditions to remain challenging in both New Zealand and Australia in the near term.

Healius Ltd (ASX: HLS)

The Healius share price is down almost 7% to $1.25. This appears to have been driven by the release of a broker note out of Morgan Stanley. According to the note, the broker has reiterated its underweight (sell) rating on the pathology services company’s shares with a $1.00 price target. Morgan Stanley has concerns that the company debt refinancing announcement is a sign that operating conditions have deteriorated further during the second half.

Iperionx Ltd (ASX: IPX)

The Iperionx share price is down almost 5% to $2.02. This has been driven by news that the titanium metal and critical materials company has completed an institutional placement. The company has received firm commitments for a placement of 26.2 million new shares at a discount of $1.91 per new share. This will raise gross proceeds of $50 million before costs. The proceeds from the placement will be used to scale titanium manufacturing capacity at IperionX’s operations in Virginia. This includes new equipment at the Advanced Manufacturing Center, final design, and engineering studies to increase titanium production capacity to ~2,000 metric tons per annum.

Iress Ltd (ASX: IRE)

The Iress share price is down 4% to $8.11. Investors have been selling this financial technology company’s shares after it released an update on unauthorised access to its user space on GitHub. Management advised that in the course of the investigation, it has now been discovered that a credential within Iress’ GitHub user space was stolen and used to gain access to Iress’ OneVue production environment. The OneVue production environment contains client data and Iress is investigating the extent and nature of the data accessed. At this time, it has found no evidence that the remainder of Iress’ production environment, software or client data has otherwise been compromised.

The post Why Fletcher Building, Healius, Iperionx, and Iress shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Guess which four ASX 300 shares were just re-rated by top brokers
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX shares at 52-week lows or worse
• 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.

Three ASX All Ords shares are setting the bar high on Wednesday, surging as much as 20%.

The All Ordinaries Index (ASX: XAO) is up a healthy 0.5% in afternoon trade amid some tailwinds from the federal budget. But these three ASX All Ords shares are leaving those gains in the dust.

So, without further ado…

Three ASX All Ords stocks rocketing higher

First up is global education services provider IDP Education Ltd (ASX: IEL).

The IPD share price closed yesterday at $15.88. In earlier trading today, investors had bid up the ASX All Ords share to $18.07, up 13.8%. After some likely profit taking, shares are currently swapping hands for $16.75 apiece, up 5.5%.

IDP looks to be benefiting from the news that the stock is going to be included in the MSCI Global Small Cap Index commencing in June. This could see investors from across the world trading the stock.

Launched in 2001, MSCI notes:

The MSCI World Small Cap Index captures small cap representation across 23 developed markets countries. With 4,130 constituents, the index covers approximately 14% of the free float-adjusted market capitalisation in each country.

Also rocketing higher today is ASX All Ords share Chalice Mining Ltd (ASX: CHN).

Chalice Mining shares closed yesterday at $1.46. In afternoon trade today, they are changing hands for $1.60 apiece, up 9.8%.

With no fresh news out from Chalice Mining, investors may be buying shares with expectations that the Federal budget could offer ongoing tailwinds for the miner.

Among the details released last night, the government revealed its $22.7 billion Future Made in Australia (FMIA) plan will provide $13.7 billion in tax incentives for green hydrogen and processed critical mineral production.

That could align well with Chalice Mining’s Julimar project in Western Australia, which hosts platinum group elements, nickel, copper, cobalt and gold. Chalice has previously flagged that the Julimar could provide the foundation for a world-class green metals project.

Which brings us to the third ASX All Ords share soaring today, Renascor Resources Ltd (ASX: RNU).

Renascor shares closed yesterday trading for 10 cents. Those same shares are currently swapping hands for 12 cents apiece, up a blistering 20% today.

Renascor also looks to be a beneficiary of potential additional government support for its graphite mining and processing operations.

On 30 April, prior to the release of the new budget, the ASX All Ords share reported:

The previously announced and conditionally approved $185 million loan facility from the Australian government’s $4 billion Critical Minerals Facility has been approved to be utilised to fast track the construction of Renascor’s proposed graphite mining and processing operation, the upstream portion of Renascor’s Battery Anode Material (BAM) Project in South Australia.

The post 3 ASX All Ords shares going gangbusters on Wednesday appeared first on The Motley Fool Australia.

More reading

• Why BHP, Boss Energy, Domino’s, and Renescor shares are racing higher
• 4 founder-led ASX 300 shares that have helped this fund outperform
• Top fundie says this heavily shorted ASX 200 stock is ‘cheaper than it’s worth’
• These are the 10 most shorted ASX shares
• 5 ASX shares to buy following the market selloff

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 Idp Education. The Motley Fool Australia has recommended Idp Education. 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 sold gain. At the time of writing, the benchmark index is up 0.5% to 7,764.4 points.

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

BHP Group Ltd (ASX: BHP)

The BHP Group share price is up 2.5% to $44.21. This appears to have been driven by news that its takeover target Anglo American (LSE: AAL) has announced a divestment plan. This plan will see the miner offload its coal, platinum, and nickel assets in order to focus on its potash, copper, and iron ore assets. The market appears to believe this could be a sign that the takeover won’t happen and that Anglo American intends to go it alone after rejecting two bids from BHP. The market has never been overly sure about the deal and appears to be responding positively to the prospect of this being the end of the matter.

Boss Energy Ltd (ASX: BOE)

The Boss Energy share price is up 2% to $5.78. This follows news that the uranium developer has uncovered copper during its drilling campaign at the Honeymoon project. Given that uranium and copper are the two hottest commodities in 2024, the market appears excited by the news. It is worth noting that Boss Energy intends to let First Quantum Minerals (TSE: FM) do the hard work for it with a farm-in agreement. This “enables Boss to remain fully-focused on its core business of uranium exploration, development and production while having exposure at no cost to the significant potential of a base metals exploration program led by a global major.”

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s Pizza share price is up 2% to $38.76. A number of consumer stocks are rising today in response to the Federal Budget. Investors may believe that the government’s plans will put more disposable income in the pockets of consumers. This could give this pizza chain operator’s sales a boost in Australia.

Renascor Resources Ltd (ASX: RNU)

The Renascor Resources share price is up 20% to 12 cents. The market appears to believe that the company’s proposed vertically integrated Battery Anode Material Manufacturing Project in South Australia could benefit from the Federal Budget. The Government is investing $8.8 billion over the decade to strengthen critical minerals supply chains. This Budget establishes a production tax incentive for processing and refining critical minerals at an estimated cost of $7 billion over the decade.

The post Why BHP, Boss Energy, Domino’s, and Renescor shares are racing higher appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ords shares going gangbusters on Wednesday
• ASX 200 uranium stock Boss Energy surges on copper news
• What the federal budget means for interest rates and ASX shares
• Buying BHP shares? Here’s what’s happening with the Anglo American takeover
• Buy BHP and these ASX dividend stocks

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This Wednesday is shaping up to be a very pleasant one for the All Ordinaries Index (ASX: XAO) and most ASX All Ords shares. At the present time, the All Ords has gained a rosy 0.45%. But let’s talk about what’s going on with the Novonix Ltd (ASX: NVX) share price.

Novonix shares are on fire today. The ASX All Ords battery technology and graphite stock closed at 82 cents a share yesterday. But this morning, those same shares opened at 85 cents a pop before rising to 86 cents at the time of writing. That’s a gain worth a healthy 4.48%.

This happy day for the Novonix share price comes after the company made a major announcement to investors this morning before market open via an ASX filing.

This filing revealed Novonix has signed a “non-exclusive testing and development agreement (TDA)” with PowerCo SE. PowerCo is a battery cell company owned by the German vehicle manufacturing giant Volkswagen Group.

Here’s some of what the announcement told investors:

The work to be conducted under the TDA will include NOVONIX developing, testing, and analyzing synthetic graphite anode materials tailored to meet PowerCo’s requirements and upon successful completion of certain development work under the TDA, NOVONIX and PowerCo may enter into a supply agreement for developed products with details to be determined at that time…

The TDA could lead to future collaboration with NOVONIX with a focus on requirements of the St. Thomas facility and aims to bolster the development of the North American battery materials supply chain.

Novonix also reiterated that its North American Riverside facility is still scheduled to commence synthetic graphite (a key battery ingredient) production by the end of 2024. The company is planning to scale production up to 20,000 tonnes per annum in time. Novonix also stated that it “plans to further expand capacity to a total of 150,000 tonnes per annum of production capacity in North America”.

Novonix share price snapshot

Judging from today’s share price reaction, it seems investors are rather excited about today’s Powerco announcement. This lift in the Novonix share price extends a stellar year for the company over 2024. Novonix shares are now up an impressive 16.2% year to date.

However, the company is still down by almost 15% over the past 12 months. It also remains a very long way from the all-time highs of almost $11 a share that we saw back in late 2021.

At the current Novonix share price, this All Ords battery stock has a market capitalisation of $403.4 million.

The post Novonix share price rockets on new Volkswagen deal appeared first on The Motley Fool Australia.

More reading

• Why Fletcher Building, Healius, Iperionx, and Iress shares are sinking today
• 3 ASX All Ords shares going gangbusters on Wednesday
• Why BHP, Boss Energy, Domino’s, and Renescor shares are racing higher
• ASX 200 uranium stock Boss Energy surges on copper news
• Why is the Arafura share price surging 11% today?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Volkswagen Ag. 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.

S&P/ASX 200 Index (ASX: XJO) uranium stock Boss Energy Ltd (ASX: BOE) is charging higher today.

The Boss Energy share price closed yesterday at $5.66. In earlier trade shares were swapping hands for $5.79 apiece, up 2.3%. At the time of writing shares are trading for $5.75 apiece, up 1.6%.

For some context, the ASX 200 is up 0.5% at this same time.

The ASX 200 uranium stock is, obviously, best known for its uranium assets at its Honeymoon project in South Australia.

Boss Energy produced its first drum of uranium at Honeymoon in April.

The company recently said it’s on track to ramp up to a steady-state production rate of 2.45 million pounds of U3O8 per year.

However, it’s not uranium that’s got investors bidding up the ASX 200 uranium stock today.

It’s copper.

Here’s why.

ASX 200 uranium stock strikes copper

This morning Boss Energy announced that Canadian-listed First Quantum Minerals Ltd (TSE: FM) maiden diamond drilling program at Honeymoon successfully intersected “basement-hosted base metal mineralisation”.

The copper and gold intersections came in below the Yarramba Palaeovalley, which holds the uranium.

The ASX 200 uranium stock entered into an earn-in exploration agreement with First Quantum back in February 2022.

At the time, management stated:

The agreement enables Boss to remain fully focused on its core business of uranium exploration, development and production while having exposure at no cost to the significant potential associated with a base and precious metals exploration program led by a global major.

That exposure looks to be paying off.

First assay results included:

• 16 metres at 0.27% copper and 0.1 grams of gold per tonne at 288 metres
• 47 metres at 0.19% Cu from 404 metres, with a number of narrower zones of 5 metres to 6 metres containing up to 0.5% Cu and 0.12g/t Au

Under the existing agreement, First Quantum has the right to earn a 51% interest in Honeymoon’s base metal endowment by spending $6 million on exploration and a further 24% interest by sole-funding all base metals expenditure up to a decision to mine.

Following receipt of these results, First Quantum said it will continue to fund further copper and gold exploration at Honeymoon.

However, management noted:

Boss retains the sole right to explore for and exploit all uranium discoveries on the JV Project (being greater than 50% of the in-situ metal value being uranium). Boss will have a first right of offer in respect of any uranium discoveries made by First Quantum within the Curnamona craton of South Australia.

With copper, gold and uranium prices all surging over the past year, Boss Energy’s Honeymoon project could prove to be more profitable than expected.

With today’s intraday gain factored in, the ASX 200 uranium stock is up 110% since this time last year.

The post ASX 200 uranium stock Boss Energy surges on copper news appeared first on The Motley Fool Australia.

More reading

• Why Boss Energy, Meteoric Resources, Pantoro, and Worley shares are falling today
• Will ASX uranium shares run higher on this ‘historic’ supply ban?
• Here are the top 10 ASX 200 shares today
• How to invest in uranium on the ASX
• Is ASX uranium the new lithium?

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.

The Arafura Rare Earths Ltd (ASX: ARU) share price is having a strong session.

In fact, at one stage today, the rare earths developer’s shares were up as much as 11% to 20.5 cents.

Its shares have eased back a touch since then but remain up 5.5% in afternoon trade.

Why is the Arafura share price zooming higher?

Investors have been fighting to get hold of the company’s shares today in response to the Federal Budget.

The market appears to believe that Arafura Rare Earths will benefit from the government’s target of making Australia a renewable energy superpower. This target includes the Government investing almost $9 billion over the decade into critical minerals supply chains. The Budget explains:

The Government is investing $8.8 billion over the decade to add more value to our resources and strengthen critical minerals supply chains. This Budget establishes a production tax incentive for processing and refining critical minerals at an estimated cost of $7 billion over the decade. It commits up to $1.2 billion in strategic critical minerals projects through the Critical Minerals Facility and the Northern Australia Infrastructure Facility, and pre‑feasibility studies for common user precincts.

Arafura Rare Earths is developing the Nolans Project, which is 135 kilometres north of Alice Springs in Australia’s Northern Territory.

The company highlights that the cornerstone of the project is one of the world’s largest undeveloped Neodymium and Praesodymium (NdPr) resources. With an initial mine life of 38 years and a valuable phosphoric acid by-product, it believes that Nolans will be a long life, low cost operation producing NdPr oxide. This is a critical component of rapidly growing global demand for electric vehicles and renewable energy technology.

Arafura Rare Earths may not be commencing production any time soon, but it already has binding offtake agreements in place. This includes with automakers Hyundai and Kia, and Siemens Gamesa Renewable Energy. In addition, the company has a memorandum of understanding in place with giant General Electric (NYSE: GE), and is progressing advanced negotiations with several prospective offtake partners.

The company has already been a winner from previous government funding. Earlier this year, it secured conditional Commonwealth Government approval for a debt financing package of US$533 million to progress the Nolans Project.

Commenting on that approval, CEO, Darryl Cuzzubbo, said:

Securing debt facilities of US$533 million from EFA and NAIF is a critical achievement for the Nolans Project and signifies its economic importance to Australia and the Northern Territory. “Gaining this level of support from the Commonwealth Government is a critical milestone in becoming a globally significant producer of NdPr, a product essential for electric vehicle and wind turbine manufacturers to achieve future growth targets as part of the energy transition.

Arafura Rare Earths has yet to comment on the Federal Budget.

The post Why is the Arafura share price surging 11% today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 uranium stock Boss Energy surges on copper news
• What the federal budget means for interest rates and ASX shares
• Why this could be the best ASX 200 consumer staples stock to buy in May
• With $1,000 to invest, should I buy ASX growth stocks or income shares?
• Guess which ASX gold stock just rocketed 92% on this ‘outstanding’ new discovery

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.

ASX shares are broadly enjoying a strong run on Wednesday on the heels of the Federal government’s budget announcement.

In early afternoon trade today, the S&P/ASX 200 Index (ASX: XJO) is up 0.5%.

Not surprisingly, given the multi-billion dollars of new support for ASX shares focused on renewable energy and critical minerals, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) is outperforming, up 1.4%.

With the budget potentially fuelling inflation and pushing interest rate relief from the RBA further into the future, ASX financial shares are among the weaker performers, with the S&P/ASX 200 Financials Index (ASX: XFJ) up just under 0.1% at this same time.

Here’s what’s happening.

Will the budget fuel inflation and push out interest rate cuts?

Investors in ASX shares may wish to position their portfolios for higher rates for longer.

With the Federal budget adding an additional $24 billion to the Aussie economy over the next four years, inflation could rekindle.

Treasurer Jim Chalmers has crafted the budget with hopes it will help reduce price rises. As such, Aussie households will receive energy relief in the form of a $300 power bill rebate, to be delivered quarterly. This comes atop the next stage of tax cuts.

“Just as every Australian taxpayer will get a tax cut, every Australian household will get energy price relief,” Chalmers said.

However, the budget itself assumes the RBA will only begin to “gradually ease” the official cash rate from the current 4.35% “around the middle of 2025”. The government expects the cash rate to still be at 3.6% in mid-2026.

But Judo Bank economic advisor Warren Hogan has a far more hawkish outlook, believing investors in ASX shares should prepare for further interest rate hikes rather than cuts in the wake of the Federal budget.

According to Hogan (quoted by Sky News):

I do think they have shown some restraint. I think many Australian governments in the past might have spent more like $20 billion on new measures, but they’ve only done $10 billion. That might mean we only need one or two rate hikes, but it doesn’t change the underlying story about the economy.

I think there is a very strong chance the RBA might have to raise rates again.

AMP’s chief economist Shane Oliver noted that, “The cost-of-living measures will help lower measured inflation. But the new stimulus risks boosting demand.”

Oliver added:

Government support for high wage increases for some sectors risks adding to wages growth given the flow on and influencing effects at a time when wages growth is already at its maximum level consistent with the inflation target. All of which risks making the RBA’s job harder.

Putting all the Federal budget pieces together, Oliver said, “The net effect adds to the risk of higher for longer interest rates but is probably not enough to change our forecast for a rate cut later this year.”

As for the ASX shares that stand to benefit…

What the budget means for ASX shares

ASX shares in the critical minerals space and those involved in green hydrogen and renewables could be set to benefit from the government’s $22.7 billion Future Made in Australia (FMIA) plan.

FMIA will provide $13.7 billion in tax incentives for green hydrogen and processed critical mineral production. There’s also $1.7 billion to drive innovation in producing green iron and other metals along with low emissions fuels.

The plan includes $13.7bn in production tax incentives for green hydrogen and processed critical minerals and a $1.7bn innovation fund for priority sectors including green metals and “low carbon fuels”.

ASX shares that could potentially benefit from the billions in new funds due to their exposure to subsidised metals include Fortescue Metals Group Ltd (ASX: FMG), BHP Group Ltd (ASX: BHP), Pilbara Minerals Ltd (ASX: PLS), IGO Ltd (ASX: IGO) and Liontown Resources Ltd (ASX: LTR).

The tax cuts and energy relief will also put more money back into consumers’ pockets.

That should offer some welcome tailwinds for ASX shares in the retail space such as JB Hi-Fi Ltd (ASX: JBH) and Harvey Norman Holdings Ltd (ASX: HVN).

And ASX shares like Domino’s Pizza Enterprises Ltd (ASX: DMP) could enjoy a lift as lower-income households reopen their pocketbooks.

Commenting on what the overall impact of the budget will be for ASX shares, AMP’s Oliver said, “The budget is positive for spending and hence retail shares, but this may be offset by higher than otherwise rates. Some manufacturers may benefit from FMIA.”

The post What the federal budget means for interest rates and ASX shares appeared first on The Motley Fool Australia.

More reading

• Buying BHP shares? Here’s what’s happening with the Anglo American takeover
• 5 things to watch on the ASX 200 on Wednesday
• Buy BHP and these ASX dividend stocks
• Why more ASX mining shares could soon turn to takeover bids
• Should you buy Fortescue shares for that fat 8% dividend yield?

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 Domino’s Pizza Enterprises. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I love a good ASX 200 consumer staples stock investment. The consumer staples sector can offer investors a few unique traits that are invaluable in a stock portfolio. Those include defensive revenue streams, non-cyclical and inflation-resistant earnings and steady dividends.

I own several consumer staples stocks in my own share portfolio. But there is one stock that I don’t yet own from this sector that I think could be the best one to buy this May.

It is none other than ASX 200 supermarket operator Woolworths Group Ltd (ASX: WOW).

I have long shunned Woolworths shares as a good investment. This has been largely due to concerns about a relatively high price-to-earnings (P/E) ratio valuation (and correspondingly low dividend yield) compared to the company’s arch-rival Coles Group Ltd (ASX: COL).

Put simply, I’ve always regarded Woolworths as a superior investment to Coles, but Coles as the better buy thanks to its far cheaper valuation.

That is no longer the case. It has been one of the roughest years for the Woolworths share price that we’ve seen for a very long time in 2024. Year to date, this famous Australian company is currently down a nasty 16.64%. That’s even after today’s lift of 0.45% up to $31.27 a share (at the time of writing).

Things look even worse for Wooleis over the past 12 months, with the company nursing a loss of 19.5% over this period.

The ASX 200 consumer staples stock has also lost a chunky 25.5% or so since its last all-time high of over $42 that we saw back in 2021. Check that all out for yourself below:

Why is this ASX 200 consumer staples stock looking so cheap?

There’s no doubt these falls have been painful for existing Woolworths shareholders to bear. But even so, it has given new investors a potentially lucrative entry point into this company that hasn’t been previously available.

To illustrate, around this time last year, we conducted an in-depth comparison of Woolworths and Coles as an investment. At the time, Woolworths shares were trading on a trailing dividend yield of 2.56%. That compared to a 3.62% yield on Coles shares.

Today, Woolies stock has a dividend yield of 3.36%, an increase of 31.2%.

And, as we looked at last week, there are now only a couple of points between both companies’ P/E ratios on one current measure.

Now, Woolworths shares haven’t fallen so substantially over the past 12 months for no reason. The company didn’t exactly pull off a smooth leadership transition when its CEO Bradford Banducci announced his sudden resignation earlier this year. And Woolies’ recent results point to the company losing market share to Coles.

Even so, this ASX 200 consumer staples stock remains the dominant player in the Australian grocery and supermarket spaces, commanding the highest market share by some distance.

I don’t think there’s much evidence that Woolworths is locked in a permanent tailspin against Coles. Thanks to its leading industry position and strong brand power, I expect the company to bounce back eventually.

As such, I think this company’s shares are a bargain on the ASX today, making Woolworths the ASX 200 consumer staples stock to buy this May.

The post Why this could be the best ASX 200 consumer staples stock to buy in May appeared first on The Motley Fool Australia.

More reading

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• How to help recession-proof your ASX share portfolio in May 2024
• Coles share price holds firm while Woolworths tumbles 18% in 2024. Time to buy?
• 3 ASX shares that look way too cheap to ignore right now

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