Tag: Fool

It hasn’t been a pleasant Tuesday for the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares so far today. At the time of writing, the ASX 200 has fallen by 0.25%, down to around 7,730 points. But the Transurban Group (ASX: TCL) share price is faring even worse than that.

The ASX 200 toll roads stock closed at $12.75 a share yesterday afternoon. But this morning, Transurban shares opened at $12.72 before dropping a chunky 1.06% to the $12.62 the company is now commanding.

This drop comes after Transurban released an ASX update this morning before market open. This outlined a new “operating model” for its senior management. These changes have reportedly been made to “support the Group’s strategic growth agenda”.

ASX 200 stock announces management shakeup

Under the new model, four new executive roles are to be created. Those are Chief Commercial Officer, Group Executive Australian Markets, Group Executive Delivery and Risk, and Group Executive Corporate Affairs.

In exchange, the roles of Group Executive NSW, Group Executive Queensland and Group Executive Victoria will no longer exist at Transurban.

The Group Executive Delivery and Risk and Group Executive Corporate Affairs positions are yet to be filled, with an executive search now underway. However, the current Group Executive Delivery and Risk partner, Hugh Wehby, will be stepping into the Chief Commercial Officer position. Nicole Green, current acting Group Executive Victoria, is taking on the Group Executive Australian Markets role.

There will be no changes to Transurban’s Chief Financial Officer, Group Executive People and Culture, Group Executive Customer and Technology, or President North America roles.

Transurban CEO Michelle Jablko said that the new model would help Tranurban “build on its strong foundation with further growth and a strong stakeholder focus”. Here’s some more of what she said in the statement:

I am delighted that Hugh Wehby, Group Executive Partners, Delivery and Risk has been appointed Chief
Commercial Officer, and Nicole Green, Acting Group Executive Victoria, has been appointed Group Executive Australian Markets…

There are significant opportunities ahead, but we need to evolve the way we grow. These changes to how we operate will help achieve that, by removing complexity and creating further simplicity and efficiency that will best position us going forward…

I would like to thank Sue Johnson and Michele Huey for the roles they have played in our growth over many years

Huey and Johnson are currently serving as Transuraban’s Group Executive NSW and Group Executive Queensland, respectively.

Transurban share price snapshot

It seems investors aren’t exactly welcoming this shakeup. That’s judging by the reaction of the Transurban share price today.

Transurban shares have had a tough year. The toll road operator is now down 8.6% year to date in 2024 (including today’s dip). As well as down 15.64% over the past 12 months. Check that all out for yourself below:

At the current Transurban share price, this ASX 200 stock has a trailing dividend yield of 4.86%.

The post Why is the Transurban share price lagging the market today? appeared first on The Motley Fool Australia.

More reading

• How to help recession-proof your ASX share portfolio in May 2024
• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost
• Bell Potter names the best ASX 200 stocks to buy in May
• 5 top ASX dividend stocks to buy in May
• The smartest ASX dividend shares to buy with $500 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 positions in and has recommended Transurban 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.

Thursday is shaping up to be a huge day for S&P/ASX 200 Index (ASX: XJO) investors.

Yes, yes, I know the Federal budget comes out tonight.

And depending on what is and isn’t included, this could have some major implications for ASX 200 shares at market open tomorrow.

With the government expected to up its support for miners in the critical minerals space, this will be one sector to watch.

Now here are two reasons Thursday could see some even bigger moves among ASX 200 stocks.

What’s happening on Thursday?

At market open on Thursday, ASX 200 investors will get some fresh insight into how the Federal Reserve’s inflation battle is going in the United States.

The latest consumer price index (CPI) data will be released on Wednesday in the US, overnight Aussie time.

“Analysts anticipate a downward trend in inflation, marking a pivotal moment in the economic landscape,” Josh Gilbert, market analyst at eToro said.

With inflation in the world’s top economy proving to be unexpectedly sticky, the Fed has been holding the official interest rate at 20-year highs. And markets have been pushing back the timing and pace of any pending interest rate cuts.

According to Gilbert:

The upcoming CPI reading carries significant implications, especially amidst anticipation of a rebound in inflation. While markets initially eyed July for potential rate cuts, the outcome of this week’s data could alter this trajectory.

Gilbert noted that if US inflation does ease in April, this could put “rate cuts back on the agenda”. This would also likely offer some healthy tailwinds for the ASX 200 on Thursday.

Indeed, Fundstrat Global’s Tom Lee is recommending clients buy stocks ahead of the CPI data release.

According to Lee (quoted by The Australian Financial Review):

We think an ‘in-line’ April CPI will cause the market’s expected number of Fed cuts (by year-end 2024) to rise from about 1.8 towards 2.5 cuts or more. The rationale, in our view, is that this April CPI will highlight the possibility that auto insurance’s disproportionate impact on CPI is eroding.

The key in April CPI remains auto insurance. This rose +2.58 per cent in March and was the singular largest contributor to the ‘hot’ March reading (miss). It is not entirely clear if April will show an improvement. But we think each month that passes, this probability rises that the surge in auto insurance is ebbing.

What else could materially move the ASX 200 on Thursday?

The second thing that could either boost or pressure the ASX 200 on Thursday is the latest Aussie unemployment data.

This will largely be a case of good news for workers is bad news for the stock market. If the labour market data is robust this will make the RBA’s own inflation battle trickier and push out the likelihood of any near-term interest rate cuts in Australia.

Gilbert believes, however, that unemployment has likely ticked higher:

This past Wednesday, Seek released labour market data, revealing that the number of job ads plunged 4.7% in April to the lowest level since January 2021. It’s likely that we will see a climbing unemployment figure that echoes this movement.

With Treasurer Jim Chalmers confirming that jobseeker payments won’t increase in the new Federal budget (due out tonight), Gilbert cautioned, “There is plenty of concern, especially with an increase in the rate of business insolvencies further tightening the jobs market this year.”

Gilbert added:

While much of this is usually good news when trying to fight inflation, the issue is proving sticky and interest rate cuts still seem a long way off if there are no meaningful concessions for hard-done-by workers in the budget.

The ASX 200 is down 0.3% in afternoon trade today, at 7,725.4 points.

The post 2 reasons Thursday is shaping up to be a huge day for the ASX 200 appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Friday

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.

Netwealth Group Ltd (ASX: NWL) shares have skyrocketed since the start of the year.

The ASX financial share has streaked 29.94% higher to trade at $20.18 per share at the time of writing.

Meantime, the S&P/ASX 200 Index (ASX: XJO) has limped 1.34% forward.

Here’s how much you’d have now had you invested $10,000 in Netwealth shares at the start of 2024.

Netwealth shares began the year at $15.35 per share

Yep, you read that right.

The Netwealth share price at the opening bell on 2 January was $15.35.

So, a $10,000 budget would have bought you 651 Netwealth shares. Total spend: $9,992.85.

Today, those 651 shares are worth $13,137.18.

On top of that capital gain, you would have received the interim dividend of 14 cents per share plus franking in March. That’s worth a total of $91.14 ex-franking.

So, the total return you would have received just four-and-a-half months after acquisition is $3,235.47.

What’s the latest news from Netwealth?

Netwealth’s latest price-sensitive news announcement came on 11 April when the company released its March quarter business update.

Netwealth reported $2.7 billion in net inflows for the quarter, a 62.2% increase on the prior corresponding period (pcp) of the March quarter 2023.

This took its funds under administration (FUA) to $84.7 billion as of 31 March.

FUA increased by $6.7 billion during the March quarter, comprising FUA net inflows of $2.7 billion and positive market movement of $4 billion.

The number of accounts increased by 11.6% compared to the pcp.

Over the 12 months to 31 March, the company achieved record FUA inflows of $21.2 billion.

Total FUA for the year increased by 28.5% or $18.8 billion, comprising net inflows of $10.6 billion and positive market movement of $8.2 billion.

It appears that shareholders had loftier ambitions for that set of results, with the Netwealth share price declining 5.03% on the day the report was released.

Should you buy Netwealth at today’s share price?

The consensus rating on Netwealth shares among 16 analysts on the CBA trading platform is a hold.

Three analysts say the stock is a strong buy, 1 says a moderate buy, six say hold, two give it a moderate sell rating and four analysts say Netwealth shares are a strong sell.

The consensus expectation for earnings per share (EPS) is 35 cents in 2024, 43.7 cents in 2024 and 52.2 cents in 2025.

The analysts anticipate dividends per share of 29.9 cents in 2024, 38 cents in 2025 and 45 cents in 2026.

Netwealth shares are trading on a price-to-earnings (P/E) ratio of 55.54, according to CBA.

The post If you’d invested $10,000 in Netwealth shares at the start of the year, here’s how much you’d have now appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Why COG, Karoon Energy, Netwealth, and Pilbara Minerals shares are dropping today

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

The Resmed CDI (ASX: RMD) share price has risen 46% over the last six months, and a fund manager reckons there are more gains to come.

This ASX healthcare share has been through a lot in the past year as investors worried about the effects of weight loss drugs on its business, as we can see on the chart below.

The latest financial updates have shown the company continues to deliver a strong, profitable performance. The FY24 third-quarter earnings before interest and tax (EBIT) beat market consensus estimates by 7%, and management was feeling confident about the outlook in the conference call, according to fund manager Firetrail.

Firetrail said there has been “significant noise” about ResMed shares because of a GLP-1 drug trial being conducted on sleep apnea patients.

The fund manager is still bullish about the company for a few different reasons. I’ll run through each of them below, leading Firetrail to say that Resmed shares are “just too cheap!”.

Manageable impacts from weight loss drugs

Firetrail said its view has been that increased awareness of CPAP (continuous positive airway pressure) therapy will “largely offset the negative impact of patient drop-out due to weight loss”.

With its FY24 third-quarter update, Resmed updated its findings from the dataset of 660,000 patients with a sleep apnea diagnosis who have taken a GLP-1 drug in the past two and a half years.

Firetrail commented:

While not proving causation, only correlation, this data shows that GLP-1 users are 10.5% more likely to start CPAP therapy and have mask resupply rates 3-5% better than non-GLP-1 patients with sleep apnoea.

Revenue growth

The fund manager said competitor Philips’ consent decree “looks likely to keep it out of the US CPAP device market for a number of years.”

Firetrail pointed out that Resmed recently reported record device sales in what is its seasonally weakest quarter. In the FY24 third quarter, the business generated revenue growth of 7%, taking the revenue to $1.2 billion.

The fund manager suggests the business is growing its market share amid these record sales.

Gross profit margin

The third positive area that Firetrail discussed for Resmed shares was the gross profit margin. Firetrail said the weaker gross profit margin was due to fight and manufacturing cost pressures, but these effects are only transitory.

Resmed’s FY24 third-quarter update showed a 160 basis point (1.60%) expansion for the gross profit margin.

Pleasingly, the Resmed gross margin is now “almost back to pre-COVID levels”.

The post 3 reasons ResMed shares ‘are just too cheap!’ appeared first on The Motley Fool Australia.

More reading

• 4 founder-led ASX 300 shares that have helped this fund outperform
• Resmed share price higher despite CEO hitting sell on 14,683 shares
• Morgans names more of the best ASX 200 shares to buy in May
• Top brokers name 3 ASX shares to buy next week
• Bell Potter names the best ASX 200 stocks to buy in May

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

ASX healthcare shares are one of only two market sectors trading in the green at the time of writing.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is up 0.55% and is the best sector of the day so far.

These two ASX healthcare shares are having a particularly good day following company updates.

2 ASX healthcare shares soaring on exciting news

Two ASX healthcare shares are flying higher today after the companies announced significant news.

Let’s check them out.

Avita Medical Inc (ASX: AVH)

The Avita Medical share price is currently 10.2% higher at $2.81 per share after the ‘spray-on skin’ burns treatment company announced its first quarter results for 2024.

For the three months ending 31 March, Avita reported a 5.8% lift in commercial revenue, compared to the first quarter of 2023, to $11.1 million. The gross profit margin came in at 86.4%.

Cash and cash equivalents fell 23% to $16,951,000, with Avita’s CFO David O’Toole explaining that the big spend mostly related to several non-recurring expenses.

O’Toole commented:

We acknowledge the significant cash utilization this quarter, however we remain confident in our financial stability and our ability to reach cashflow break even as guided.

The company expects to reach cashflow break even no later than the third quarter of 2025.

As for forward guidance for 2024, Avita said commercial revenue for the second quarter was expected to be in the range of $14.3 million to $15.3 million.

Avita expects full-year commercial revenue at the low end of its previously provided guidance range of $78.5 million to $84.5 million.

During the quarter, Avita launched PermeaDerm, a co-branded biosynthetic wound matrix, in the United States.

Avita CEO Jim Corbett said:

We believe we have taken the necessary measures to invigorate our burns business and improve our commercial sales process to return to sustained growth.

We remain dedicated to establishing RECELL as the standard of care for burn and full-thickness skin defects.

Simultaneously, we are actively transforming AVITA Medical into a broad wound care business by expanding our portfolio to address the full spectrum of clinical needs.

The ASX healthcare share is down 32.7% in the year to date and down 23% over the past 12 months.

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price is currently 7.1% higher at $1.66 per share after the clinical-stage cancer drug biotech announced positive preclinical study results.

Race said bisantrene and decitabine used together had “significantly improved cancer cell killing across a broad panel of 143 tumour cell lines than either drug used alone”.

The company said the results support the use of the combined drugs as a potential treatment for many cancers. These include solid tumours such as lung, prostate, pancreas, breast, and head and neck cancers.

The two drugs will be explored further in a proposed Phase 1/2 investigator-initiated AML clinical trial.

Race CEO Dr Daniel Tillett commented:

These results open exciting new treatment opportunities for both bisantrene and decitabine. While decitabine has proven its effectiveness in haematological cancers, it has not demonstrated clinical utility in solid tumours, like lung or breast cancer.

This new body of work is highly supportive of the results from the University of Newcastle in preclinical AML models using a combination of bisantrene and decitabine.

Race Oncology also released a new investor presentation yesterday.

The ASX healthcare share has streaked 95.3% higher in 2024 so far and is down 0.90% over the past year.

The post 2 ASX healthcare shares rocking higher on big news appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares at 52-week lows or worse
• Morgans names the best small cap ASX shares to buy in May
• Why Avita Medical, NextDC, Predictive Discovery, and Star shares are tumbling today

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 Avita Medical. The Motley Fool Australia has recommended Avita Medical. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A trade ban on enriched uranium could further fuel the explosive run witnessed across ASX uranium shares over the past year.

While Australia continues to squabble over whether nuclear energy is viable, the United States is taking steps to secure the energy source domestically.

A glance at ASX uranium shares today may not show it, but the land of the free implemented a major sanction on enriched uranium supply overnight. Despite the tempered reaction, the decision is a major one that will affect 24% of the uranium used by nuclear power stations in the United States.

Biden takes action on Russian reliance

United States President Joe Biden signed the Prohibiting Russian Uranium Imports Act last night.

As per the White House statement, the act aims to bolster the country’s energy and economic security. To do this, the United States will reduce — and eventually eliminate — its dependence on Russia for the inputs needed for nuclear power.

Unpacking the magnitude of the decision further, U.S. National Security advisor Jake Sullivan wrote:

This new law reestablishes America’s leadership in the nuclear sector. It will help secure our energy sector for generations to come. And—building off the unprecedented $2.72 billion in federal funding that Congress recently appropriated at the President’s request—it will jumpstart new enrichment capacity in the United States and send a clear message to industry that we are committed to long-term growth in our nuclear sector.

The ban on Russian enriched uranium imports into the United States will take effect 90 days from today.

Shifting away from Russian supply will be a major undertaking. According to the U.S. Energy Information Administration, nuclear energy accounted for 18.6% of all electricity generation in the country last year.

This might explain why the government is allowing exceptions until 2028 when the absence of Russian supply would result in a reactor shutting down.

What could it mean for ASX uranium shares?

Aussie investors aren’t making much of the news today. At the time of writing, some of the most prominent ASX uranium shares are skating lower:

• Paladin Energy Ltd (ASX: PDN) down 1.49% to $16.225
• Boss Energy Ltd (ASX: BOE) down 1.58% to $5.60
• Deep Yellow Limited (ASX: DYL) down 3% to $1.615

There’s always a chance the market had already ‘factored in’ the sanction before today. Hence, the common phrase, ‘buy the rumour, sell the news’ among traders.

Alternatively, some may see this move as a negative for all uranium producers outside the United States. The country is actively pouring billions into making a local industry, which may present a risk to all foreign demand.

Nevertheless, the price of uranium is still perched near its 17-year-high of US$100 per pound.

The post Will ASX uranium shares run higher on this ‘historic’ supply ban? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Why Judo Capital, NAB, Paladin Energy, and Perpetual shares are falling today
• How to invest in uranium on the ASX
• Here are the top 10 ASX 200 shares today
• Paladin Energy share price hits a 12-year high: Too late to buy?

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.

Four S&P/ASX 300 Index (ASX: XKO) shares were just re-rated by top brokers.

One operates in the credit-impaired consumer debt segment.

The second is a biopharmaceutical company.

The third provides vehicle fleet leasing, fleet management, and diversified financial services.

And the fourth is a New Zealand-based building and materials company.

Any guesses?

Keep those in mind.

(Broker figures courtesy of The Australian.)

ASX 300 shares getting re-rated

The first ASX 300 share getting re-rated is Credit Corp Group Ltd (ASX: CCP)

The Credit Corp share price is up 4.0% in intraday trading at $15.47 a share. That sees the stock up more than 23% over six months.

And Macquarie believes it’s still undervalued after that strong run. The broker raised Credit Corp to an ‘outperform’ rating with an $18.32 price target. That represents a 19% potential upside from current levels.

Credit Corp shares also have a strong history of delivering reliable passive income. Over the past 12 months, the company has paid out 62 cents a share in fully franked dividends. That equates to a current trailing yield of 4.0%.

Which brings us to the second ASX 300 share getting a broker re-rate today, Neuren Pharmaceuticals Ltd (ASX: NEU).

The Neuren Pharmaceuticals share price is up 6.1% in intraday trading at $20.22 a share. Shares are now up a whopping 42% over six months.

And according to JP Morgan it still looks like a bargain at these levels.

The broker gave Neuren an ‘overweight’ rating and a $23.60 price target, representing a potential 17% upside from current levels. The company does not pay dividends at this time.

Also getting re-rated

Also getting re-rated today is ASX 300 share FleetPartners Group Ltd (ASX: FPR).

The FleetPartners share price is down 4.1% today at $3.31 a share. However, shares remain up 19% over six months.

And Morgan Stanley thinks today’s sell-down is likely misguided. The broker increased its price target for FleetPartners by 22% to $3.90 a share and maintained its ‘overweight’ rating. That represents a potential 18% upside from current levels.

FleetPartners shares last delivered dividends in 2018.

Rounding off the list, the fourth ASX 300 share getting re-rated today is Fletcher Building Ltd (ASX: FBU).

(Did you guess all four?)

The Fletcher Building share price is down 3.0% today at $2.79 a share. The stock has tumbled 35% over six months.

Fortunately, Morgan Stanley believes the worst of the pain should be over.

While the broker cut its price target by 23% to $2.84 a share, Morgan Stanley maintained its ‘equal-weight’ rating.

Fletcher Buildings suspended its interim dividend payment for FY 2024 due to challenging trading conditions.

The post Guess which four ASX 300 shares were just re-rated by top brokers appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX shares at 52-week lows or worse
• Why ANZ, Fletcher Building, Macquarie, and Sayona Mining shares are dropping today
• This ASX 200 stock just slashed its earnings guidance by 17%
• Brokers name 3 ASX shares to buy now

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 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.

One of my personal investing mottos is “the market is straight up kooky dooks“.

Not only did I think of this saying again today, I also felt it fitting that it was paraphrased from a movie – in this case the Disney (NYSE: DIS) animated movie Moana.

That is because, as I woke up this morning and checked the overnight news, I saw that the share price of American cinema company, AMC Entertainment (NYSE: AMC), increased by over 78% overnight.

On a whim, I then looked at the share price of GameStop (NYSE: GME), a company whose story is now intrinsically linked with AMC Entertainment. Yep, it too saw its share price rise dramatically overnight. In this case 75%.

It appears the “meme stock” days are back.

My first feeling was one of sadness.

I hoped that this was a saga that we left back in the dark days of the COVID pandemic. Whilst many saw it as an entertaining side show, or even a David vs Goliath story, I saw it differently. I knew that a lot of regular people were going to lose a lot of money that they couldn’t afford to lose.

I watched with horror as people, many who were entering the markets for the very first time, piled into, what I believed to be, “bad” companies.

I’ve seen this film before. I know how it ends and I don’t like it.

Unsurprisingly, fast forward a few years later, and the share price of AMC Cinemas is down over 99% and GameStop down 59% from their 2021 peaks. I am sure many of those who were wiped out will never trust the share market again despite it being, overall, a great tool for people looking to build wealth.

So, it is again I feel my stomach churn seeing the potential sequel with people piling into companies which, in my opinion, have really bad fundamentals and are suffering from an enormous list of structural headwinds that they will struggle to overcome.

I could go on and on about the various tips, techniques and lessons that I have learned to become the investor I am today. I could also go on for pages highlighting why I personally wouldn’t touch the shares of the above businesses with a 100-foot pole. However, in this case, I feel there is only one thing to remind you all…

Whilst the share market can, and will, do almost anything in the short term. Over the long term, share prices tend to, almost always, track the fundamentals of the underlying business.

Some meme stockers will tell you that fundamentals don’t matter. They are playing a different game. They’ll tell you to just trust them. That I am part of the enormous Wall Street conspiracy looking to keep the regular folk down.

But fundamentals do matter. In fact, if you plan on holding for years, you can argue that they are the only thing that matter.

So, if you find yourself looking at the recent share price rise of companies like AMC Entertainment and GameStop and getting tempted to press “Buy”, ask yourself, do I think these companies have good fundamentals? Do I think these companies are going to be earning significantly more revenue and profits in 2, 3, 5, 10 years’ time than they are today?

If you, like a lot of others, think the answer is no. Then don’t buy.

There are countless other opportunities (both from listed companies and passive investment vehicles like ETFs) that offer high quality, growing and profitable opportunities. So, don’t waste your time trying to ride a wave of what many consider to be irrationality.

All you really need to do is buy great companies, at fair prices, and hold on to them for as long as they remain great companies.

It is that simple.

This is also the best way to make a short seller‘s life miserable, much better than trying to outsmart them by trying to fight them directly when the fundamentals are against you.

The post Invest in quality, not meme stocks appeared first on The Motley Fool Australia.

More reading

• Will ASX uranium shares run higher on this ‘historic’ supply ban?
• Guess which four ASX 300 shares were just re-rated by top brokers
• Short sellers up the ante on Qantas shares
• Why this $1.5 billion ASX 200 stock just surged 10%
• Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy)

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

Qantas Airways Limited (ASX: QAN) shares are changing hands for $6.24, up 0.24% at the time of writing.

The share price of the ASX travel stock is up 16.45% in the year to date but down 2.3% over 12 months.

Following many dramas for the company over the past year, it seems some professional traders have lost faith in Qantas, with an increasing amount of short selling going on of late.

This means traders are placing bets that the Qantas share price will fall.

Let’s look at what’s happening.

More short sellers betting against Qantas shares

The beleaguered airline has been in the headlines for all the wrong reasons over the past year.

Scandals include illegally sacking 1,700 workers, advertising tickets for tens of thousands of flights it had already decided to cancel, and cancelling other flights without immediately informing ticketholders.

The Australian Financial Review (AFR) reports today that hedge funds are once again targeting Qantas shares and driving short selling back to multi-year highs.

The AFR reported that short bets peaked at 2.69% of Qantas shares on 6 May, which was the highest level since late 2020 when a once-in-a-century pandemic had essentially shut global travel down.

On 6 May, that short interest was worth $258.8 million based on the closing Qantas share price that day.

On the same day, Qantas announced it would pay a civil penalty of $100 million plus $20 million to more than 86,000 customers in a settlement with the Australian Competition and Consumer Commission (ACCC) over those cancelled flights.

That news appears to have sparked some trading, with some short sellers closing their positions.

By the next day, the short interest in Qantas shares had fallen from 2.69% to 2.58%, according to the daily short position report published by the Australian Securities and Investments Commission.

That’s the equivalent of 1,813,143 shares no longer being shorted.

While 2.58% short interest is significant in historical terms for this ASX 200 blue-chip, it’s not high when compared to the most shorted ASX stocks on the market at the moment.

Australian Eagle Trust, a long-short fund, told clients that it was still shorting Qantas shares but had reduced its short position in March.

In a recent quarterly update (courtesy AFR), the fund said:

Despite a clean-out of top executives and an aggressive public relations campaign, the company has been forced to decrease airfares due to increasing flights from competitors while cost inflation and fuel prices have put further pressure on margins.

The post Short sellers up the ante on Qantas shares appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 5 ASX shares to buy following the market selloff
• Are Qantas shares too expensive at over $6?
• 4 reasons this fund manager thinks Qantas shares are a cheap buy
• Qantas share price sinks on $120 million ‘egregious and unacceptable’ ruling

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 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.

S&P/ASX 200 Index (ASX: XJO) stock GUD Holdings Ltd (ASX: GUD) is off to the races on Tuesday.

Shares in the diversified automotive market products company closed yesterday trading for $9.77. At the time of writing in late morning trade today, shares are changing hands for $10.71 apiece, up 9.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Here’s what’s piquing investor interest.

ASX 200 stock soars on confirmed earnings guidance

Investors are bidding up the GUD Holdings share price after the company confirmed that its full 2024 financial year (FY 2024) underlying earnings before interest, taxes and amortisation (EBITA) is forecast to be at least $193.5 million.

That’s in line with management’s prior expectations, and based on updated April 2024 unaudited, management estimates.

Excluding its AutoPacific Group (APG) segment, the ASX 200 stock’s automotive was reported to be continuing to trade well across all its key business units.

Management said this reflects the ongoing execution of its diversification strategy and the resilience of the aftermarket. They added that the end user workshop demand also remains positive.

As for APG, the company now expects this business, which it acquired in November 2021, to deliver approximately $63 million in underlying EBITA for the full financial year. That’s $3 million below what was expected when GUD reported on its half-year results (H1 FY 2024).

The ASX 200 stock cited various headwinds impacting APG’s earnings.

Among those is the New Zealand market’s slower-than-expected recovery. The New Zealand market was reported to be operating “marginally above breakeven to date” in FY 2024. However, the NZ business has delivered some $10 million less in EBITA in FY 2024 to date than management’s base case assumptions.

APG was also impacted by lower Toyota volumes, with second-half volumes declining, along with “emerging consumer-related softness in the trailering market”.

Despite that weak caravan market, management said earnings from Cruisemaster are in line with FY 2023, “reflecting market share gains”.

Looking ahead, the company expects revenue and EBITA growth from APG in FY 2025 “as headwinds partially moderate and new business wins begin to contribute”.

GUD Holdings’ corporate costs, cash conversion and leverage were also said to be tracking in line with management’s expectations.

As for passive income

The ASX 200 stock is also popular among passive income investors for its long-term track record of paying two fully franked dividends per year.

GUD Holdings paid a final dividend of 22 cents per share on 14 September and an interim dividend of 18.5 cents per share on 8 March.

That works out to a full-year payout of 40.5 cents per share.

At the current share price of $10.71, this ASX 200 stock trades on a fully franked trailing yield of 3.8%.

The GUD Holdings share price is up 16% over 12 months.

The post Why this $1.5 billion ASX 200 stock just surged 10% appeared first on The Motley Fool Australia.

More reading

• 9 ASX All Ords shares elevated to ‘strong buy’ status in April

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.