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QBE Insurance Group Ltd (ASX: QBE) shares have been a great investment over the past 12 months.

During this time, the insurance giant’s shares have generated a return of 19%.

But those returns are behind us now, what might happen if you were to invest $10,000 into the company’s shares today? Let’s find out.

$10,000 invested in QBE shares

With QBE shares currently changing hands for $17.61, if you were to invest $10,000 (and a further $2.48) you would end up own 568 units.

What could those shares be worth in a year? Well, Goldman Sachs has just responded to the insurance company’s quarterly update by reiterating its buy rating with an improved price target of $20.90.

This values those 568 shares at a total of $11,871.20. That’s a return of 18.7% or $1,868.72 on your original investment.

But wait, there’s more!

QBE is traditionally one of the more generous dividend payers on the Australian share market. Goldman expects this trend to continue and is forecasting a 5.3% dividend yield this year, a 5.4% dividend yield in FY 2025, and then a 5.5% dividend yield in FY 2026.

This will mean dividends of approximately $530 over the next 12 months, which boosts the total return to $12,400 or 24%.

Why is Goldman bullish?

Goldman was pleased with QBE’s “strong” quarterly update and notes that its guidance has been reaffirmed. It said:

1Q24 print was operationally strong a) Guidance reaffirmed – COR 93.5%/ GWP mid single digit b) Strong investment result (in line) – 4.8% running yield at May-24 c) Net impact across both Apr-24 YTD Perils experience & PYD flagged perhaps ~$50m positive (on our estimates) before full reserve calcs at half year. We had estimated PYD from the Italian hail event at $50m. Further, we note that QBE increased its risk asset allocation to 15% (from 12%) over the quarter which we think will be a capital strain of ~3-5bps to PCA ratio. Outside of capital management, this signals confidence in QBE’s capital position / ROE of business.

Commenting on its bullish view on QBE shares, the broker concludes:

QBE is a global commercial insurer with three main geographical operations across Australia Pacific, International (encomassing Europe) and North America. We are Buy-rated on QBE because 1) QBE has the strongest exposure to the commercial rate cycle. 2) QBE’s achieved rate increases continue to be strong & ahead of loss cost inflation. 3) North America on a pathway to improved profitability. 4) Valuation not demanding. 5) Strong ROE.

The post What could $10,000 invested in QBE shares be worth in 12 months? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• The QBE share price is marching higher on Friday. Here’s why
• Morgans names the best ASX dividend shares to buy in May
• 5 ASX dividend shares to buy next week
• Buy NAB and these ASX 200 dividend stocks

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.

In recent times, the Australian share market has provided income investors with an average dividend yield of approximately 4%.

While this is a good yield, you don’t have to settle for that. Especially given that there are analysts forecasting 6%+ dividend yields from some ASX dividend shares.

Let’s take a look at three that analysts are feeling bullish about:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share that analysts are tipping as a buy right now is Accent Group. It is the owner of numerous footwear retail store brands such as HypeDC and Platypus.

Bell Potter likes Accent Group due to its strong market position and its “growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy.”

The broker currently has a buy rating and $2.50 price target on its shares.

As for income, Bell Potter expects the company to pay fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. Based on the latest Accent share price of $1.84, this represents dividend yields of 7% and 7.9%, respectively.

APA Group (ASX: APA)

Another ASX dividend share that analysts are bullish on is APA Group. It is an energy infrastructure business that owns and operates a portfolio of gas, electricity, solar and wind assets valued at $27 billion.

The team at Macquarie thinks it would be a great option for income investors. Particularly given its belief that the company’s long run of dividend increases can continue.

Macquarie has an outperform rating and $9.40 price target on its shares.

As for those dividends, the broker is forecasting dividend increases to 56 cents per share in FY 2024 and then 57.5 cents per share in FY 2025. Based on the current APA Group share price of $8.78, this equates to 6.4% and 6.55% yields, respectively.

Healthco Healthcare and Wellness REIT (ASX: HCW)

A final ASX dividend share that analysts are bullish on is Healthco Healthcare and Wellness REIT. It is a property company with a focus on health and wellness assets such as hospitals, aged care, and primary care properties.

Bell Potter also sees it as a dividend share to buy and expects some big yields from its shares in the near term.

The broker is forecasting dividends per share of 8 cents in FY 2024 and 8.3 cents in FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.19, this will mean yields of 6.7% and 7%, respectively.

Bell Potter has a buy rating and $1.70 price target on its shares.

The post These ASX dividend shares offer 6%+ yields appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Why I’d buy high-yield ASX dividend shares for superannuation in retirement
• 1 compelling ASX dividend share I’d buy for its big yield
• Telstra shares and 4 other defensive income stocks to buy now
• 4 ASX retirement shares to buy in May

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

On Friday, the S&P/ASX 200 Index (ASX: XJO) ended the week on a positive note. The benchmark index rose 0.35% to 7,749 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge lower

The Australian share market looks set to start the week in the red despite a relatively positive finish on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 15 points or 0.2% lower. On Friday in the United States, the Dow Jones was up 0.3%, the S&P 500 rose 0.15%, and the Nasdaq traded largely flat.

Oil prices fall

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a poor start to the week after oil prices weakened on Friday. According to Bloomberg, the WTI crude oil price was down 1.25% to US$78.26 a barrel and the Brent crude oil price was down 1.3% to US$82.79 a barrel. A stronger US dollar weighed on prices.

ANZ going ex-dividend

ANZ Group Holdings Ltd (ASX: ANZ) shares are likely to trade lower on Monday after going ex-dividend for the bank’s upcoming interim dividend. Last week, the big four bank released its half year results, reported a cash profit of $3,552 million, and declared an interim dividend of 85 cents per share. Eligible shareholders can look forward to receiving this 65% franked interim dividend on 1 July.

Gold price pushes higher

ASX 200 gold mining shares including Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a good session after the gold price charged higher on Friday. According to CNBC, the spot gold price was up 1.15% to US$2,366.9 an ounce. The precious metal extended its gains on Friday after US jobs data supported rate cut bets.

QBE rated as a buy

The QBE Insurance Group Ltd (ASX: QBE) share price could be undervalued according to analysts at Goldman Sachs. In response to the insurance giant’s quarterly update, the broker has retained its buy rating with an improved price target of $20.90. It said: “1Q24 print was operationally strong a) Guidance reaffirmed – COR 93.5%/ GWP mid single digit b) Strong investment result (in line) – 4.8% running yield at May-24 c) Net impact across both Apr-24 YTD Perils experience & PYD flagged perhaps ~$50m positive (on our estimates) before full reserve calcs at half year.”

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• $20,000 invested in these ASX 200 shares 10 years ago is worth…
• Here are the top 10 ASX 200 shares today
• Should you buy ANZ shares before they trade ex-dividend next week?
• It was huge week for ASX 200 bank shares. Here’s why

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

ASX 200 mining stocks have vastly underperformed ASX 200 bank stocks in recent months.

Take a look at this chart below comparing the S&P/ASX 200 Banks Index (ASX: XBK) and the S&P/ASX 200 Resources Index (ASX: XJR) in the year to date.

ASX 200 bank stocks have risen 8.57% whilst ASX 200 resources stocks have lost 7.41% of their value.

This is an interesting situation, given the mining and banking stocks comprise a huge proportion of the ASX 200’s total market capitalisation.

With one going up and one going down, is it any wonder the S&P/ASX 200 Index (ASX: XJO) is virtually flat in the year to date at 7,749 points, up just 1.59%?

So, what’s going on?

Ray David, Portfolio Manager and Partner at Blackwattle Investment Partners discussed the divergent performance between the two stock types in a recent interview with ausbiz.

Why are ASX 200 mining stocks underperforming bank stocks?

In terms of ASX 200 mining stocks, David explained that the market is concerned about the iron ore price amid weakness in China’s property market.

This has weighed on the performance of mega iron ore shares BHP Group Ltd (ASX: BHP), down 15% in the year to date, and Rio Tinto Ltd (ASX: RIO), down 4.8% in the year to date.

David says there’s an opportunity for investors to snap up weakened BHP and Rio Tinto shares while commodity prices are rising.

He said:

So you’ve seen softer property sales, softer property prices, and a lack of stimulus [in China]. So that’s really weighed on Rio and BHP. But if you actually look at underlying commodities for RIO and BHP, iron ore is up about 12% over one year, and copper — which is about 25 to 30% of earnings — is up by about 17%, so we think there’s a real opportunity for investors …

In terms of ASX 200 bank stocks, David said the banks “look like they’ve overstretched on valuations”.

… so banks are trading about … 16x earnings. Markets have gotten excited that bad debts really won’t tick up but we still think there’ll be some pressure there.

In terms of deciding between ASX 200 mining stocks vs. bank stocks, David sums it up:

… the concerns around demand for iron ore and copper in our view are probably too cautious, and so there’s an opportunity for investors to be overweight materials because the valuation multiples are a lot cheaper than the banks. They’re trading on 11x, 12x cash earnings.

Which other miners are a buy?

David said Blackwattle looks for mining stocks that tick four boxes:

• Low-cost
• Long reserve lives
• Strong balance sheets
• Good management.

One of his ASX 200 mining stock picks is lithium producer IGO Ltd (ASX: IGO).

He describes decarbonisation as “a theme for the next century”. It will mean the adoption of much more electrification and a reduction in fossil fuels and emissions.

He says there are four commodities that stand to benefit most from decarbonisation. They are lithium, copper, rare earths and aluminium.

David said:

So the way we’re playing decarbonisation is through our ownership in … IGO.

IGO owns a 25% interest in the lowest-cost spodumene producer in the world. So, the Greenbushes mine, it’s producing under US$400 dollars a tonne, that’s well below the current spodumene lithium price of US$1,100 a tonne.

And again, it’s long reserve life, so a mine life out to 2040; it’s got no debt so the balance sheet will see you get through the volatility of commodity prices, and also there’s a management team that’s now in place that’s focusing on improving shareholder outcomes because the previous management team did destroy some value through some poor acquisitions in nickel.

David admits “the market hates lithium at the moment” following a 52% decline in commodity prices over 12 months.

But he said Blackwattle sees the demand profile for lithium in the future as quite strong.

… and if you’re producing at the lowest cost, you’ll be able to produce lots of cash flow for shareholders, which IGO should, and again the valuation is attractive, with no debt on the balance sheet.

IGO shares finished the session on Friday at $7.92 apiece, down 0.25%. The ASX 200 lithium mining stock has fallen 13% in the year to date.

The post ASX 200 banks vs. mining stocks: Which is the better buy today? appeared first on The Motley Fool Australia.

More reading

• 4 excellent ASX 200 dividend shares to buy for your income portfolio
• Should you buy BHP stock on a pullback?
• Buying BHP shares for the Anglo takeover? Here’s why it might be a ‘crazy’ move
• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost
• Is it too late to buy surging ASX copper shares like Sandfire?

Motley Fool contributor Bronwyn Allen has positions in BHP 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 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.

If you have room for some new exchange-traded funds (ETFs) in your portfolio, then read on!

Listed below are five ASX ETFs that are highly rated right now and could be good options for investors when the market reopens next week.

Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ASX ETF to look at is the BetaShares Asia Technology Tigers ETF. It could be a great option if you’re feeling positive on the long term Asian economic outlook. That’s because it provides investors with super-easy access to many of the best tech stocks from China and the rest of Asia (but not Japan). Many of these are the region’s equivalents of the West’s biggest and best tech companies and appear well-positioned for long-term growth.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ASX ETF to consider buying next week is the BetaShares Global Cybersecurity ETF. It provides investors with access to the global cybersecurity sector. And this could be a great place to be right now. That’s because the sector has been tipped to grow materially over the next decade or two due to the rising threat of cybercrime and the shift to the cloud. It invests in the leaders in the sector and emerging players.

Betashares Global Uranium ETF (ASX: URNM)

Another ASX ETF for investors to look at next week is the Betashares Global Uranium ETF. It could be a good option if you believe that nuclear power is the key to decarbonising the planet. As its name implies, this fund provides investors with exposure to a portfolio of leading companies in the global uranium industry. These companies stand to benefit greatly from increasing demand for the chemical element.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

A fourth ASX ETF to look at next week is the very popular VanEck Vectors Morningstar Wide Moat ETF. Much to the delight of its unitholders, the MOAT ETF has delivered very strong returns for investors in recent years. This has been underpinned by its focus on investing in high-quality companies with fair valuations and sustainable competitive advantages. These are the qualities that legendary investor Warren Buffett looks for when making investments. And it is never a bad idea to follow the Oracle of Omaha’s lead.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ASX ETF for investors to consider buying next week is the Vanguard MSCI Index International Shares ETF. This popular ETF gives investors access to more than 1,000 of the world’s largest listed companies. This means that you are left owning a very diverse group of quality companies. Many of which are absolute behemoths and household names.

The post 5 excellent ASX ETFs to buy next week appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy for your superannuation fund in May 2024
• Does the VanEck Wide Moat ETF pay a decent ASX dividend?
• 2 ASX ETFs to buy and hold forever in your investment portfolio
• How to invest in uranium on the ASX
• 5 ASX ETFs to invest $10,000 into next week

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 BetaShares Global Cybersecurity ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended Betashares Capital – Asia Technology Tigers Etf, Betashares Global Uranium Etf, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. 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:

Lovisa Holdings Ltd (ASX: LOV)

According to a note out of Bell Potter, its analysts have retained their buy rating on this fashion jewellery retailer’s shares with an improved price target of $36.00. Bell Potter has been reviewing the retail sector and continues to feel very bullish about Lovisa. In fact, the broker believes that the company’s store network can grow even quicker in new markets than first thought after taking into account some recent data points from markets such as Netherlands, Ireland, Canada, and Peru. Bell Potter now estimates that Lovisa can grow its store network by 10% per annum between FY 2023 and FY 2034. In addition, its analysts highlight encouraging trends out of the ecommerce platforms in both Australia and the US compared to its key rival. Combined, this has led to the broker boosting its earnings estimates and valuation accordingly. The Lovisa share price ended the week at $31.77.

Qube Holdings Ltd (ASX: QUB)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating on this logistics solutions company’s shares with an improved price target of $3.95. This follows Qube’s investor day event, which went down well with the broker. Goldman notes that the company’s Patrick operation is unmatched and has an advantage at Port Botany via automation, its 1,400m quay line, and efficiencies. In addition, the broker was pleased to see that trading conditions are improving and execution risks at Moorebank are reducing. Overall, this has led to the broker lifting its earnings estimates for the coming years and boosting its valuation. The Qube share price was fetching $3.58 at Friday’s close.

REA Group Ltd (ASX: REA)

Analysts at Morgan Stanley have reaffirmed their overweight rating and $210.00 price target on this property listings company’s shares. This follows the release of REA Group’s quarterly update, which revealed very strong sales and earnings growth from the realestate.com.au operator. Morgan Stanley notes that the company slightly outperformed analyst expectations but significantly outperformed its closest rival. This is cementing its market leadership position further, which bodes well for the future and appears to support Morgan Stanley’s forecast for further strong growth in the coming years. The REA share price ended the week at $187.32.

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

More reading

• I’d buy these ASX retail shares if economic fragility starts a fire sale
• Brokers name 3 ASX shares to buy now
• 5 ASX shares to buy following the market selloff
• Why is this ASX 200 stock avoiding the market selloff and pushing higher?
• Why 4DMedical, Orica, PSC Insurance, and REA shares are rising today

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

JB Hi-Fi Ltd (ASX: JBH) shares have soundly beaten the market, rising by 23% in the past year (seen on the chart below), compared to a 7% rise for the S&P/ASX 200 Index (ASX: XJO). However, sales growth is now challenging amid the high cost of living situation.

Investors got a look at the latest quarter‘s performance earlier this week. The sales numbers in Australia weren’t inspiring.

Sales recap

JB Hi-Fi reported that for the three months to 31 March 2024, JB Hi-Fi Australia’s total sales decreased by 0.1%, JB Hi-Fi New Zealand’s total sales improved by 16.8%, and The Good Guy’s sales dropped by 0.8%.

Added to the first two-quarters of FY24, total JB Hi-Fi Australia sales were up 0.5%, JB Hi-Fi New Zealand sales rose 8.5%, and The Good Guys sales dropped 7.3%.

The ASX share described these sales as “resilient” and in line with the group’s expectations.

Is the JB Hi-Fi share price a buy?

Brokers seem mixed on the business after seeing that update.

According to reporting by The Australian, the broker JPMorgan decided to increase its rating on JB Hi-Fi shares to overweight, meaning buy. The price target is where the broker thinks the share price will be trading in 12 months from now. JPMorgan’s price target on JB Hi-Fi shares is $63, which is more than 11.92% higher than where it is now.

However, the broker Macquarie decided to reduce its price target on JB Hi-Fi shares by 5% to $61. That represents a potential rise of more than 8%, even though Macquarie’s rating was reduced to neutral.

The broker UBS has a neutral rating and price target of $59 on the business, which would be a rise of less than 5%.  

UBS said it’s cautious on the FY24 fourth quarter because JB Hi-Fi is cycling against a strong final quarter of the prior financial year, particularly JB Hi-Fi Australia.

Another issue is there is a potential downside risk to the earnings before interest and tax (EBIT) margin because of rising costs, including wages and rent (which are being driven higher by inflation). UBS suggested that saving costs is difficult because the company already has a “lean cost base,” especially with JB Hi-Fi Australia.

UBS thinks operating ­de-­leverage is likely in the third quarter because of the sales decline and the cycling against a strong quarter ending 30 June 2023 for the FY24 fourth quarter.

Based on UBS’ estimates, the JB Hi-Fi share price is valued at 15x FY24’s estimated earnings and 15x FY25’s estimated earnings. It could pay a grossed-up dividend yield of 6.2% in FY24 and 6.1% in FY25.

It seems some brokers think the JB Hi-Fi share price is capable of rebounding, but it faces challenges to profitability in the last few months of the 2024 financial year.

The post Are JB Hi-Fi shares still a buy as growth slows? appeared first on The Motley Fool Australia.

More reading

• Why Baby Bunting, JB Hi-Fi, Temple & Webster, and Westpac shares are falling today
• 2 ASX 300 retail shares tumbling lower on key updates today

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 JPMorgan Chase and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Coles Group Ltd (ASX: COL) share price has held firm in 2024, while the Woolworths Group Ltd (ASX: WOW) share price has tanked.

Coles shares finished the session on Friday at $16.24 and are up 0.5% in the year to date.

The company’s chief competitor and Australia’s supermarket sector leader, Woolworths, closed at $30.72 on Friday with the share price down 18% in the year to date.

As my colleague Seb points out, Coles shares are trading at a more attractive P/E ratio at the moment. But will that last?

Let’s canvas the views of a few top brokers to see if they think Coles shares are a good buy at today’s price.

Stable Coles share price vs. Woolworths wash-out in 2024

Bell Potter has a buy rating on Coles and a 12-month price target of $19.

The broker notes moderating costs, supply chain improvements, and a positive long-term outlook for the company, commenting:

Costs are expected to remain elevated but should moderate through FY24 and FY25 as general inflation tapers off.

In the medium term, 1) higher immigration should support grocery spending, and 2) Coles is entering a period of elevated capex intensity as it reinvests to modernise its supply chain and to catch up to competitors on online and digital offerings, which should help Coles maintain its market position.

Morgans has an add rating on Coles with a 12-month share price target of $18.95.

Equities strategist Andrew Tang explains why they like Coles shares:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL.

While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

UBS also has a buy rating on Coles with a share price target of $18.25. 

The broker says there are tailwinds for the business. These include a potential expansion of gross profit margins in 2024 and various cost savings that are helping it deliver “improved earnings momentum”.

Then there’s the outlier…

Goldman Sachs has a completely different view. The top broker says Coles shares are a sell and has a 12-month price target of $15.40 on the stock.

In a recent note, analysts Lisa Deng and James Leigh said Coles had under-invested in its digital transformation and omnichannel strategy, which is “the primary reason for structural market share loss”.

They explained:

Even though the company is stepping up its investments in supply chain, we would like to see the company better illustrate its end-to-end digital strategy including sourcing, warehouse/distribution, merchandising, consumer data/analytics and loyalty to ultimately drive ARPU and market share gains together with cost efficiencies.

Deng and Leigh expect Coles to report lower comps sales and EBIT margin growth in FY25/FY26 compared to Woolworths.

They are also concerned about potential further delays with the Witron/Ocado project.

The post Coles share price holds firm while Woolworths tumbles 18% in 2024. Time to buy? appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares that look way too cheap to ignore right now
• Telstra shares and 4 other defensive income stocks to buy now
• Top ASX shares to buy for your superannuation fund in May 2024
• Which of these ASX 200 shares is the better bargain in May?
• 4 ASX retirement shares to buy in May

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 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.

My endless hunt for wealth creation has led me to ASX retail shares more recently.

Investors decimated the industry yesterday, slicing 2.5% off the consumer discretionary sector. Disappointing sales updates from a handful of listed retailers, such as JB H-Fi Ltd (ASX: JBH) and Super Retail Group Ltd (ASX: SUL), spooked the market following weak retail trade data last month.

There’s a wise Japanese proverb I reflect on in uneasy times: “Fear is often greater than the danger itself”. Humans are wired to amplify a perceived threat so that we might live another day. This innate response can lead to overreactions in the stock market.

Those rare moments of disproportional distress are where transformative investments can be made.

3 ASX retail shares ready for rough times

Suppose we fall on hard times in the near future. Some companies will be positioned better than others. However, there’s every chance investors will sell indiscriminately, overcome with fear.

That’s why it is valuable to prepare for the storm. Know which companies are likely to withstand the catastrophic forces ahead of time. Doing so gives you an edge over others who will be paralysed by panic.

Batten down the balance sheet

Recessions can destroy businesses. When sales dry up quicker than expenses can be reduced, a company can be caught with insufficient cash to fund its operations. That’s where a pile of cash and little debt can be a game-changer.

I think Premier Investments Limited (ASX: PMV) is an ASX retail share in tip-top financial shape. The owner of Peter Alexander, Just Jeans, and Portmans — among others — recorded $492 million in cash and $69 million in debt at the end of the first half.

A strong balance sheet paired with above-industry average profit margins gives me confidence Premier Investments would make for an opportune investment amid a sell-off.

Staying on budget

People will often trade down in a weaker economy rather than go completely without. Savvy shoppers begin looking for the best bang for their buck, giving the right retailers a boost.

I believe Lovisa Holdings Ltd (ASX: LOV) is a prime candidate for a more frugal shopper. The jewellery seller is a more affordable option without compromising on the desired look. Furthermore, the company is now in a net cash position, reducing its debt from its previously lofty level.

Making it last

Buying a brand-new car is the last thing someone wants to do when money is tight. For this reason, automotive retailers are often dubbed ‘recession-resilient’, as people choose to repair rather than replace.

Super Retail Group Ltd (ASX: SUL) reported mixed sales growth yesterday in its second-half trading update. Some analysts are labelling the owner of Supercheap Auto, BCF, Macpac, and Rebel as overvalued after these figures.

Meanwhile, I’m prepping my account to buy this ASX retail share if the market punishes it further. The Supercheap Auto business is best-in-class, in my opinion. Additionally, Super Retail Group is now sitting on $321 million in cash (and no debt), giving it plenty of financial headroom for hard times.

The post I’d buy these ASX retail shares if economic fragility starts a fire sale appeared first on The Motley Fool Australia.

More reading

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Commonwealth Bank of Australia (ASX: CBA) shares were in focus last week when the banking giant released its third quarter update.

In case you missed the announcement, let’s have a quick look at what the company reported.

For the three months ended 31 March, CBA posted a 1% decline in operating income.

Management advised that this reflects one less day in the quarter and slightly lower net interest margins due largely to continued competitive pressures and customers switching to higher yielding deposits.

So, with CBA’s expenses increasing 2% due to higher amortisation and staff costs, Australia’s largest bank reported an unaudited statutory net profit after tax of $2.4 billion. This represents a 3% decline on the first half average and 5% on the prior corresponding period.

And although the bank reported rising arrears across home loans, credit cards, and personal loans, its balance sheet remained strong. CBA finished the period with a healthy customer deposit funding ratio of 75%, an LCR of 138%, and an NSFR of 120%.

But what about the CBA dividend? Has this results release had an impact on what the market is expecting from the bank in FY 2024 and beyond?

Let’s now take a look at what analysts are forecasting for the coming years.

CBA dividend forecast

According to a note out of Goldman Sachs, its analysts have increased their earnings estimates slightly for the next few years to reflect lower bad and doubtful debts. However, there are no changes to the broker’s dividend estimates.

The note reveals that Goldman continues to expect CBA to pay a $4.55 per share fully franked dividend in FY 2024. Based on the current CBA share price of $117.54, this will mean a 3.9% dividend yield for investors.

Goldman expects the bank to maintain its dividend at $4.55 per share in FY 2025 despite predicting a year on year decline in earnings. This will mean another 3.9% dividend yield for investors to look forward to that year.

Moving onto FY 2026, the broker expects the bank to make it three in a row and pay another $4.55 per share fully franked dividend. This of course means yet another 3.9% dividend yield based on its current share price.

Are CBA shares in the buy zone?

Goldman thinks investors should keep their powder dry and wait for a sizeable pullback before investing in the banking giant.

In response to the third quarter update, the broker reiterated its sell rating with an improved price target of $82.61.

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

More reading

• It was huge week for ASX 200 bank shares. Here’s why
• Do CBA shares justify their ‘valuation premium’ following the bank’s Q3 update?
• 5 things to watch on the ASX 200 on Friday
• Why are CBA shares sliding following the bank’s quarterly update?
• CBA share price on watch following $2.4b third quarter profit

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.