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Are you an income investor on the hunt for new ASX dividends stocks to buy?

If you are, then you may want to check out the two listed below that analysts are tipping as buys. Here’s what they are saying about them:

Cedar Woods Properties Limited (ASX: CWP)

A recent note out of Morgans reveals that its analysts are feeling positive about this property company and see it as an ASX dividend stock to buy.

In fact, the broker has put Cedar Woods’ shares on its best ideas list with an add rating and $5.60 price target.

Morgans thinks that the company’s shares are undervalued and deserve to trade on higher multiples. The broker explains:

CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP’s exposure to lower priced stock in higher growth markets sees further potential to drive earnings. On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.

In respect to dividends, Morgans is forecasting dividends per share of 18 cents in FY 2024 and then 20 cents in FY 2025. Based on the current Cedar Woods Properties share price of $4.80, this will mean dividend yields of 3.75% and 4.2%, respectively.

Suncorp Group Ltd (ASX: SUN)

Analysts at Goldman Sachs are tipping insurance giant Suncorp as an ASX dividend stock to buy right now.

The broker currently has a buy rating and $18.00 price target on the insurance giant’s shares.

Goldman is feeling positive about the company due to tailwinds in the general insurance market and potential capital returns. It said:

We are favourably disposed to Suncorp, noting in large part the tailwinds that exist in the general insurance market – i.e., very strong renewal premium rate increases and the benefit of higher investment yields. We think the strong rate momentum that SUN is getting should offset any volume pressures. SUN’s underlying margins are also expected to stay within 10-12% despite higher reinsurance costs, increased perils allowances and lower reserve release assumptions as SUN benefits from significant price increases. Further, we note that we could start to see more meaningful benefits to margin from underlying claims inflation abating. Separate to our thesis, we also see possible catalysts on the horizon for SUN including capital return post the bank sale, if completed.

As for income, Goldman expects this to support the payment of fully franked dividends per share of 79 cents in FY 2024 and then 85 cents in FY 2025. Based on the Suncorp share price of $17.03, this will mean yields of 4.6% and 5%, respectively.

The post Analysts say these ASX dividend stocks are top buys appeared first on The Motley Fool Australia.

More reading

• Buy Coles and these ASX 200 dividend stocks in July
• Leading brokers name 3 ASX shares to buy today
• 3 ASX 200 passive income stocks to buy in July
• Analysts say these ASX dividend shares are top picks in July
• 5 things to watch on the ASX 200 on Monday

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.

The share market is a great place to find great dividend stocks that offer an ASX dividend yield of at least 7%.

It’s pleasing to receive annual passive income without having to do any work.

An investor with $20,000 to invest in ASX dividend shares can unlock a pleasing level of cash flow. But, we shouldn’t expect to generate enough income to retire with $20,000 instantly.

Income-seeking investors want a generous ASX dividend yield from their investments – a 2% dividend yield isn’t going to cut it. However, trying to find stocks that yield above, say, 10%, can be dangerous because that may not be sustainable.

Finding the right balance

It’s important to understand why businesses have a high dividend yield before we buy them.

Does a stock have a high yield because the share price has been crunched, profit is falling, and the next dividends are going to be smaller?

Is the yield currently high, but the company is in a very cyclical industry, and therefore, the dividend is unreliable?

Or perhaps the stock is wrongly undervalued by the market and it can maintain that level of dividend payments for the foreseeable future?

One major factor to consider is the dividend payout ratio – how much of the company’s annual profit is paid as dividends. The higher the payout ratio, the higher the ASX dividend yield, but also the less that’s being retained in the company to reinvest for future growth.

Some businesses are capable of growing earnings and sustaining a very high dividend payout ratio, while others may need to keep some profit just to keep next year’s earnings at a similar level.

ASX dividend shares I’d choose for yield

I’d go for businesses that are expected to have a high ASX dividend yield for the foreseeable future and can deliver earnings growth.

Telstra Group Ltd (ASX: TLS) shares could provide a large dividend yield, supported by growing earnings amid rising mobile prices and subscriber growth. According to Commsec, the telco is expected to pay a grossed-up dividend yield of 7.1% in FY25, with further growth in FY26.

Metcash Ltd (ASX: MTS) supplies various independent food and liquor retailers, including IGA, IGA Liquor, Bottle-O, Cellarbrations and Porters Liquor. It also owns hardware businesses, including Mitre 10, Home Timber & Hardware and Total Tools. Population growth and a recovery of hardware earnings are potential future tailwinds. Commsec estimates imply a grossed-up dividend yield of 8% in FY25 and growth in FY26.

Medibank Private Ltd (ASX: MPL) is the largest private health insurer. It’s benefiting from rising premiums, strong investment returns on its assets and growing subscriber numbers. Commsec numbers suggest a grossed-up dividend yield of 6.6% in FY25, with further growth in FY26.

Universal Store Holdings Ltd (ASX: UNI) is a retailer of premium youth fashion. It has grown its dividend each year since 2021, when it started paying one. The business can benefit from an ongoing store rollout and an eventual recovery of household retail spending. Commsec numbers suggest a forecast grossed-up dividend yield of 7.7% in FY25 and an even bigger dividend in FY26.

I think that’s a good starting point for an ASX dividend portfolio. The forecast average grossed-up dividend yield for FY25 of the stocks I’ve mentioned is about 7.3%, so a $20,000 investment spread evenly between them would generate $1,460.

The post Here’s one way to invest $20k to target an average 7% ASX dividend yield appeared first on The Motley Fool Australia.

More reading

• Buy Telstra and these ASX dividend stocks this week
• Buy these ASX dividend shares with 5% to 7% yields
• Here is the earnings forecast out to FY28 for Telstra shares
• Why analysts rate these ASX dividend shares as buys
• If I were 60 I’d buy these ASX shares for dividends

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

Looking for a $1,000 monthly passive income to boost your retirement prospects?

Or maybe to spend on a few luxury extras well before you enter those retirement years, like a fancy vacation, that new living room ensemble, or perhaps even an upgraded car?

While there are a number of quality S&P/ASX 200 Index (ASX: XJO) dividend stocks that can help build that passive income stream, the one I’d buy today is oil and gas company Woodside Energy Group Ltd (ASX: WDS).

Woodside shares have been in an uptrend since 24 June, with the stock up 9% in that time. Still, at yesterday’s closing price of $29.40 a share, the ASX 200 dividend stock is down 18% over 12 months. Which, I believe, represents a potentially opportune long-term entry point.

Now the future, by definition, is uncertain.

But I believe that amid strong global energy demand, both oil and gas prices are more likely to rise over the next 12 months than they are to fall. And even at current Brent crude prices of close to US$86 per barrel, Woodside is well in profit range and likely to continue rewarding shareholders with outsized passive income.

We’ll get to that below.

But first, an important reminder.

Spread your risks

In this article, we look at only one ASX 200 dividend stock to garner our $1,000 in monthly passive income, or $12,000 a year.

Of course, if I only buy Woodside shares, then my entire income stream is reliant on this one company’s performance. That might work out swimmingly. But if the company runs into unexpected headwinds it could also see my income take a big, unexpected hit.

With that in mind, I’d eventually expand my passive income portfolio to a larger number of ASX dividend shares. There’s no magic number. But 10 is a decent target. Ideally, these will operate across a range of different sectors and locations, helping to lower my overall risks.

Also, bear in mind that the yields you generally see quoted are trailing yields. Future yields may be higher or lower depending on a range of company-specific and macroeconomic factors.

Drilling into Woodside shares for $1,000 a month in passive income

Now, let’s return to the one ASX dividend stock I’d buy today.

Over the past 12 months, Woodside paid a fully franked interim dividend of $1.244 a share on 28 September and a fully franked final dividend of 91.7 cents a share on 4 April.

That equates to a full-year passive income payout of $2.161 a share, with potential tax benefits from those franking credits.

At yesterday’s closing price of $29.40, this ASX 200 dividend stock has a market-beating trailing yield of 7.4%.

Now, to secure my $1,000 in monthly passive income, or $12,000 a year, I’d need to buy 5,553 shares today.

Granted, that’s a large quantity of stock to buy all in one go.

But as I’ve said before, investing is a long game.

If I can’t buy all those Woodside shares today, I can buy them in smaller allotments over time.

Eventually, I’ll achieve my passive income goal.

The post I’d buy Woodside shares today to generate $1,000 of monthly passive income appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Would Warren Buffett buy Woodside shares?
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• 5 things to watch on the ASX 200 on Monday
• Top 4 reasons why more Aussies are managing their own superannuation

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.

Investing in ASX lithium shares certainly has not come without its fair share of risks.

Most lithium producers and explorers rocketed higher in 2022 and into 2023 as the price of the battery critical metal they dig from the ground hit all-time highs.

But with demand growth slowing and supply growth ramping up, that trend reversed resulting in an 85% collapse in global lithium prices from those record prices.

While prices have somewhat stabilised in 2023, many of the ASX lithium shares with higher costs have found themselves operating at a loss. Some have gone so far as to suspend production, awaiting the return of better market prices.

As for the risk of investing in the lithium miners in the past year, here’s how these top-name stocks have performed over 12 months:

• Pilbara Minerals Ltd (ASX: PLS) shares are down 40%
• Core Lithium Ltd (ASX: CXO) shares are down 87%
• IGO Ltd (ASX: IGO) shares are down 61%
• Liontown Resources Ltd (ASX: LTR) shares are down 66%
• Sayona Mining Ltd (ASX: SYA) shares are down 82%
• Lake Resources (ASX: LKE) shares are down 87%
• Latin Resources Ltd (ASX: LRS) are down 51%
• Patriot Battery Metals Inc (ASX: PMT) are down 67%
• Mineral Resources Ltd (ASX: MIN) are down 20%

I think those figures speak to the formidable risks on investing in ASX lithium shares.

At least for the year just past.

But what about the year ahead?

Are ASX lithium shares still very risky?

To be clear, every investment comes with its own unique risks.

As for the particular risk of investing in ASX lithium shares, we’ll defer to Blackwattle Investment Partners.

Here’s what the fund managers reported on Blackwattle’s own investments and outlook for the Aussie lithium miners.

In June, the Blackwattle Small Cap Quality Fund lost ground on its Latin Resources and Patriot Battery Metals holdings. Blackwattle noted that the lithium commodity price continued to follow a volatile trading pattern over the month.

As for those risks, the fund manager added:

Perversely, when considering investments in the resources sector, the risk is the lowest when commodity prices are falling toward the lower end of the cost curve for mining companies with tier-one assets.

At current spodumene lithium prices, few hard rock miners are generating much free cash flow today. As such, we continue to maintain modestly sized holdings in the lithium sector. In our view projects with superior economics like Latin Resources and Patriot Metals are well placed to ride out near-term volatility in the lithium price.

Noting that it will take some time for the supply and demand dynamics in lithium markets to balance, Blackwattle said, “At current prices, new projects, such as Pilbara Minerals’ P2000, don’t stack up.”

However, the fund managers are more optimistic about the outlook of Arcadium Lithium (ASX: LTM) after the ASX lithium share plunged 26% in June.

Arcadium, as you may know, started trading on the ASX in December, formed from the merger of the previously ASX-listed Allkem and US-listed Livent.

According to Blackwattle:

The merger has created a quality, vertically integrated global lithium chemicals producer with a significant synergy opportunity & production growth upside.

We see significant upside for LTM outside any moves from the lithium price, as the new business looks to maximise the merger potential through synergies, driving cost & capex reductions as well as improved pricing.

We view a potential rebound in lithium prices at some point as option value.

Foolish takeaway

So, is investing in ASX lithium shares right now risky?

You bet.

But could buying some of the beaten-down, low-cost producers also pay off handsomely over the longer run?

I certainly think it could.

Just don’t invest more than you’re prepared to lose.

The post How risky is buying ASX lithium shares right now? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Who is buying 55,000 Liontown shares this week?
• Why Cettire, Core Lithium, Northern Star, and Step One shares are charging higher
• Core Lithium share price rockets 14% amid ‘positive achievements’
• Own Pilbara Minerals shares? Here’s what to expect from next week’s Q4 update

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

More reading

• ASX 200 hits record high, UBS keeps end of year target steady
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here’s the lithium price forecast through to 2027
• 5 things to watch on the ASX 200 on Tuesday

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

The ANZ Group Holdings Ltd (ASX: ANZ) share price touched a new seven-year high of $30.10 this afternoon. As the chart below shows, it hasn’t been this high since 2017.

Many ASX bank shares hit new highs yesterday, continuing a very strong period for bank share prices.

In 2024 to date:

• The ANZ share price is up 16%
• The Commonwealth Bank of Australia (ASX: CBA) share price is up 18%
• The Westpac Banking Corp (ASX: WBC) share price is up 23%
• The National Australia Bank Ltd (ASX: NAB) share price is up 22%

After such a strong run, should investors consider ANZ shares as an opportunity? Let’s consider the situation.

Recent financial performance

The recent FY24 first-half result did not exactly deliver inspirational numbers. Compared to the second half of FY23, cash profit fell 1% to $3.55 billion and statutory net profit dropped by 4% to $3.4 billion. Earnings per share (EPS) declined by 1% to $1.183.

The result had a couple of positive aspects — it launched a $2 billion share buyback and grew the interim dividend per share to 83 cents. In terms of shareholder returns, it has been a rewarding time.

Property prices are rising in Australia, which lowers ANZ’s risk of bad debts. However, arrears are rising at the major banks as some households struggle to keep up with the elevated interest rates. Changes in market expectations about arrears can influence the ANZ share price.

The bank’s net interest margin (NIM) was 2.32% in the second quarter of FY24. This has dropped significantly from 2.47% in the first quarter of FY23. Indeed, the NIM has dropped every quarter since the post-COVID peak.

There is a lot of competition in the bank space for both loans and deposits, which is a headwind for margins. Competitors like Macquarie Group Ltd (ASX: MQG) have grown their market share.

It’s understandable why ANZ wants to acquire the Suncorp Group Ltd (ASX: SUN) banking operations because it can help grow its market position and improve geographic diversification with a bigger allocation to Queensland. The bigger scale comes with benefits in the banking world.

Is it too late to buy?

Over time, companies that grow their earnings typically see their share price rise.

The broker UBS suggests that ANZ’s net profit will fall in FY24, but it then sees profit growth in FY25, FY26, and FY27, partly due to the bank’s enlarged scale after the deal to buy Suncorp Bank.

ANZ shares are valued at 12x FY25’s estimated earnings and 11x FY27’s estimated earnings, according to UBS forecasts.

If the ASX bank share can deliver earnings growth in FY25 onwards, then the ANZ share price may continue to rise.

However, UBS has a price target of $30 for the business, which may suggest that the bank does not have much capital growth potential over the next 12 months. It may not be too late to buy ANZ shares for their long-term potential, but I wouldn’t expect double-digit capital growth over the next year.

The post ANZ shares strike 7-year high, is it too late to buy? appeared first on The Motley Fool Australia.

More reading

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• Westpac and three other ASX 200 bank shares smashing new multi-year highs today
• Prepare for earnings! What ASX bank share buyers can learn from Wells Fargo results?
• Top 10 most traded ASX shares and US stocks in June
• Why mum and dad investors aren’t buying ASX bank shares like they used to

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

The Liontown Resources Ltd (ASX: LTR) share price is almost unchanged compared to 34 months ago.

At 97 cents apiece, shares in the lithium hopeful are roughly the same value as they were back in September 2021, despite surpassing $3 a pop in the time between. However, the lack of share price appreciation has failed to deter one company insider from loading up on Liontown shares.

Insider transactions provide a glimpse into the sentiment among people who perhaps most intimately know the company and its intrinsic value. While it’s by no means conclusive on whether the shares are ‘cheap’ or ‘expensive’, it certainly can be seen as a vote of confidence.

Hitting buy on Liontown shares

Someone on the board of Liontown Resources made an on-market buy of 55,000 shares yesterday. Because this information must be disclosed to shareholders, we can find all the transaction details.

According to the notice, independent non-executive director Jennifer Morris made the trade on Tuesday. The parcel of Liontown shares was acquired at an average price of 97 cents per share, amounting to a $53,350 investment.

Following the purchase, Morris’ indirect and direct ownership of Liontown totals 141,619 shares. The board member also holds 500,000 unlisted options with an exercise price of $2.45, expiring on 23 November 2024.

Morris’ $53,350 buy arrived the day after Liontown announced an offtake agreement with Beijing Sinomine International Trade (BSIT) on Tuesday. The announcement helped lift the Liontown Resources share price back above $1.00 for the first time since 19 June.

As part of the agreement, Liontown will supply up to 100,000 dry metric tonnes of spodumene concentrate over a 10-month timeframe beginning 30 September 2024 at the latest. The agreement expands upon existing offtake arrangements with LG, Ford, and Tesla.

Is it a well-timed investment?

The price of lithium is down roughly 85% from its 2022 high, taking a hit as demand for electric vehicles dried up amid heightened financing costs.

However, the Tesla Inc (NASDAQ: TSLA) stock price and the broader share market have rallied over the past month as rate cuts begin re-entering the conversation. Investors are growing more optimistic about lower interest rates being within reach, reigniting hopes of greater lithium demand ahead.

As reported by CNBC, forecasts made by BMI of Fitch Solutions suggest there’s a risk of a global lithium shortage next year. Notably, the report highlights an expected 20.4% average annual increase in lithium demand within China between 2023 and 2032 versus a 6% supply growth rate in the country over the same period.

Still, not all analysts are bullish on the battery commodity. As noted by my colleague, James Mickleboro, Goldman Sachs sees little in the way of lithium price upside between now and 2027.

Only time will show whether Jennifer Morris’ $53,350 investment in Liontown shares pays off.

The post Who is buying 55,000 Liontown shares this week? appeared first on The Motley Fool Australia.

More reading

• Here’s the lithium price forecast through to 2027
• Why are Liontown shares roaring higher on Monday?
• These are the 10 most shorted ASX shares
• Top 5 investment themes exciting ASX shares investors in FY25
• Here 3 ASX lithium shares to watch for FY25

Motley Fool contributor Mitchell Lawler has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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 Bank of Queensland Ltd (ASX: BOQ) share price is in the green today, up 1.2%, alongside the S&P/ASX 200 Index (ASX: XJO), which is trading around 1% higher.

Could the ASX bank share be getting a boost on speculation of possible takeover action?

Potential BOQ takeover attempt?

In recent times, the market has seen ANZ Group Holdings Ltd (ASX: ANZ) launch a takeover effort to absorb the banking operations of Suncorp Group Ltd (ASX: SUN) to boost its Queensland presence and overall scale.

Federal treasurer Jim Chalmers recently gave ANZ the go-ahead for the takeover.

Meanwhile, multiple interested parties have considered the Bank of Queensland a potential takeover target, according to reporting by The Australian.

Those groups have reportedly not followed through (yet) after considering a possible deal.

Strategic review

A few months ago, the Queensland-focused ASX bank share launched a strategic review of the business.

The newspaper report suggested that the current BOQ share price was not compelling enough to enact a deal. Even so, those groups have still been considering the bank and its assets.

Some smaller banks, like BOQ, have difficulty trying to be as profitable as the major ASX bank shares.

Analysts’ views on how BOQ could increase profitability after its strategic review included suggestions to become smaller and more margin-focused. It could also pursue securitising its loans more aggressively, make loans without financing them, or sell some assets.

However, some of those options may not be viable or preferred for the ASX bank share.

How much profit is the bank expected to make?

While BOQ’s 2024 financial year is ongoing, the broker UBS forecasts the bank could generate a net profit after tax (NPAT) of $294 million. However, after that, UBS thinks BOQ’s net profit could steadily rise in each financial year between FY25 and FY28. Growing profit could be helpful for the BOQ share price.

Analysts at the broker forecast the BOQ net profit to grow 8.8% to $320 million in FY25 and to $406 million by FY28. If both forecasts are correct, that would be a rise of 38% between FY24 and FY28.

Regarding the potential dividend payment, the forecast on Commsec suggests a possible annual payout of 33 cents per share in FY24 and 34 cents per share in FY25. That would translate into forward grossed-up dividend yields of 7.5% and 7.75%, respectively.

The post BOQ share price rises amid rumoured takeover interest appeared first on The Motley Fool Australia.

More reading

• Here’s why BOQ shares could be on the verge of a turnaround
• Do ANZ shares offer the biggest dividend yield in the ASX bank sector?
• Is the fully franked 6.2% yield on Bank of Queensland shares for real right now?
• Can things get better for BOQ shares in FY25?
• ASX 200 bank shares ‘don’t appear overly expensive’ compared to global peers: UBS

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

DroneShield Ltd (ASX: DRO) shares are taking another beating today.

In an unusual sell-off for the high-flying All Ordinaries Index (ASX: XAO) drone defence stock, shares closed down a precipitous 22.2% yesterday trading for $2.02 apiece.

That came on the heels of Monday’s 11.1% surge, which saw DroneShield shares surge to an all-time closing high of $2.60.

Today, the selling action continues, with the stock down 18.8% at $1.64 a share.

As the above chart shows (if you look closely), shares in the ASX drone defence company have been sold off for the past two days, sending them down 37%.

However, even after that big fall, shares remain up 335% so far in 2024.

Here’s what’s happening.

Why has the ASX drone defence come under pressure?

As Motley Fool analyst Sebastian Bowen reported, the big selldown in DroneShield shares appears to be driven by an article published before market open on Tuesday questioning the company’s high valuation.

The Capital Brief article noted that at Monday’s $2.60 a share, DroneShield commanded a market cap of $1.98 billion.

Rodney Forrest, director of Sublime Funds Management, was quoted as saying, “Its valuation is wild.”

DroneShield responded to an ASX price query, citing the article as the likely reason for the pressure on its shares.

The company noted that article included the following:

• Share price performance over the recent period
• Comparison of DRO’s market cap to several large companies across different industries in the Australian market
• Statements by two fund managers on their opinion of DRO’s valuation being overheated
• Statements from two stock analysts on their outlook for DRO
• A brief summary of DRO’s business
• Reference to DRO being a popularly traded stock on several broker platforms
• A historical sale of DRO’s shares held by one of DRO’s directors, Jethro Marks.

Management added, “There is no new information or change of circumstance around the business” that should impact DroneShield’s share performance.

Time to pounce on DroneShield shares?

To gauge the past two days of selling, it’s important to look at the bigger picture.

On Monday, when DroneShield shares closed at $2.60, the stock was up 863% over 12 months. Yep, a year ago, you could have bought shares for just 27 cents a pop.

Like Icarus, then, the drone defence stock may have flown too high, too fast.

Unlike Icarus, though, I don’t imagine the share price is going to plunge into the sea.

The negative market reaction appears more related to short-term opportunism to make a quick buck, shorting the stock rather than any longer-term fundamental retreat from the company’s strong growth prospects.

The rapid growth of potentially hostile drones is extremely unlikely to abate in the foreseeable future. And the AI revolution will only galvanize this trend. This means that the demand for rugged, effective counterdrone measures is also likely to keep growing apace.

This is a trend we’ve already seen playing out with recent growth metrics in DroneShield shares.

The company recently achieved record first-quarter revenues of $16.4 million, a 10-fold increase (900%) from the prior corresponding quarter.

At the end of April, DroneShield had a $27 million contracted backlog with a sales pipeline of more than $519 million.

So, is it time to pounce?

While shares could certainly still slide further from here over the near term, I believe that following the 37% two-day sell-down, long-term investors will likely look back at today’s $1.64 a share as a bargain entry point.

The post DroneShield shares dive another 19%! Time to pounce? appeared first on The Motley Fool Australia.

More reading

• Why Deep Yellow, DroneShield, Mount Gibson Iron, and Praemium shares are falling
• What’s next for Droneshield stock after Tuesday’s 22% drop
• Big ASX news! DroneShield share price crashes 31%
• Top 10 most traded ASX shares and US stocks in June
• Are ASX small-cap shares back in vogue amid a big shift?

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 DroneShield. 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.

Most of us would be aware that ASX shares have had an exceptional few days of trading on the Australian share market. We’ve seen a flurry of new all-time highs for the S&P/ASX 200 Index (ASX: XJO) in recent days. And we’ve also seen the Vanguard Australian Shares Index ETF (ASX: VAS) soar to some new records of its own.

The Vanguard Australian Shares ETF is the most popular and widely held index fund on the ASX. So news of its new all-time record high today will delight investors all around the country.

Yesterday, VAS units closed at $98.87 each. But this morning, those same units opened at $99.60 before rising up as high as $99.97 – tantalisingly close to that elusive $100 mark.

At the time of writing, the Vanguard Australian Shares ETF remains just a touch below that new high watermark, with this exchange-traded fund currently up 0.98% at $99.94.

We don’t have to look too far to understand why this ETF has just hit a new record today.

Why has the VAS ETF just hit a new ASX high?

The Vanguard Australian Shares ETF is an index fund, meaning it effectively mirrors a broader index. That index is not the S&P/ASX 200 Index (ASX: XJO), but rather the S&P/ASX 300 Index (ASX: XKO).

This index tracks the largest 300 stocks on the ASX by market capitalisation. It should come as no surprise to hear that this index has also reached a new record high today.

At present, the ASX 300 is up an eerily similar 1.02% at 8,015.8 points. That mark is also right on the ASX 300’s new record high.

So with the ASX 300 resetting its record today, it was inevitable that the Vanguard Australian Shares ETF followed suit.

The performance of their mutual underlying holdings has driven today’s new highs for both the ASX 300 and the ASX’s VAS ETF.

Take Commonwealth Bank of Australia (ASX: CBA), now the largest stock on the ASX 300 Index. It, too, hit a new record high of $133.50 a share this Wednesday. All four of the major ASX banks are now at multi-year highs.

BHP Group Ltd (ASX: BHP) isn’t having a great day, but CSL Ltd (ASX: CSL) is also just a touch off of its current 52-week high.

So it’s CSL and the four major banks that ASX investors can thank for the new Vanguard record.

This latest high caps off what has been a relatively successful year for this ASX ETF. VAS units are now sitting on a year-to-date gain of 6.04%, as well as a 10.4% rise over the past 12 months. Let’s now see if the Vanguard Australian Shares ETF can finally hit a three-digit unit price.

The post Here’s why the Vanguard Australian Shares Index ETF (VAS) just hit an all-time ASX high appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in CSL and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.