Tag: Fool

BHP Group Ltd (ASX: BHP) shares are tracking lower from the open on Friday despite no market-sensitive news from the company.

At the time of writing, shares in the diversified mining giant are fetching $44.49 per share, 0.41% lower from the open.

This continues a more than 11% slide into the red this year to date.

With the company’s trailing dividend yield at 5.3% and iron ore prices showing volatility, let’s explore the reasons behind this dip in BHP shares and what it might mean for investors.

Citi’s caution on iron ore prices

BHP shares faced headwinds in FY24 due to a large retracement in iron ore and copper prices.

In particular, iron ore, BHP’s primary breadwinner, fell from US$117 per tonne at the end of May to US$106 per tonne in June, driven by weakness in China’s economy and rising inventories.

Having peaked at US$144/tonne on 3 January, it now sells at US$113/tonne at the time of writing. Copper – the company’s second-largest revenue earner – is also down from its highs in 2024.

Analysts at Citi have issued a warning that iron ore prices are likely to remain volatile ahead of China’s Third Plenum meeting. The firm predicts prices could fall below US$100 per tonne in the coming months, according to The Australian.

The investment bank sees iron ore prices “fading [in] strength…over the summer,” maintaining a price target of US$95/tonne.

Despite iron ore futures rallying the past month, analyst Shreyas Madabushi said that onshore steel demand in China remained flat.

China is the world’s largest iron ore importer, buying around three-quarters of all global seaborne iron ore.

Madabushi also notes that construction and infrastructure activity is slowing due to inclement weather and the typical summer slowdown. This echos my colleague Tristan’s findings that China has shown a decline in industrial and housing demand.

Citi said that China’s steel inventories are increasing, while port inventories of iron ore remain high, which could reduce output from steel mills.

Meanwhile, the consensus view at the Iron Ore Forum in Singapore was that Chinese iron ore impacts may have already peaked, according to Reuters.

What’s in store for BHP shares?

Despite the recent price decline, BHP remains in favour with the broker crowd.

Analysts at Morgans recently highlighted BHP’s ability to generate substantial free cash flow, supporting significant dividend payments. It has a buy rating with a $48.30 price target on BHP shares.

According to my colleague James, it forecasts fully franked dividends of approximately $2.42 per share for FY24 and $2.17 per share for FY25.

This equates to yields of 5.4% and 4.9% at the current share price, respectively.

BHP is also dealing with legal action from the Mining and Energy Union (MEU), which has filed applications with the Fair Work Commission seeking pay rises for 1,700 labour-hire workers at BHP’s Peak Downs, Saraji, and Goonyella Riverside coal mines.

We will have to wait and see the outcome of this situation.

Foolish takeaway

While the recent decline in BHP shares might concern some investors, the company’s strong dividend yield and robust cash flow generation remain compelling factors.

However, investors should be mindful of the volatility in commodity prices, especially given Citi’s views. It’s essential to weigh these factors carefully before making any investment decisions. Always seek professional financial advice when able.

The post Why are BHP shares trudging lower on Friday? appeared first on The Motley Fool Australia.

More reading

• Buy BHP and these ASX dividend shares
• Morgans names 3 ASX 200 stocks to buy in July
• Top brokers name 3 ASX shares to buy today
• I’d buy BHP shares to generate $1,000 of monthly passive income
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Zach Bristow 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.

Lynas Rare Earths Ltd (ASX: LYC) shares could have market-beating potential.

That’s the view of analysts at Ord Minnett, which believe the rare earths producer’s shares are being undervalued by the market.

What is the broker saying about Lynas shares?

According to a note, the broker has described the mining company as “the safe way to play the sector ” for investors.

This is largely because rare earths prices are currently at depressed levels. And as history shows, it is often best to buy miners at the bottom the cycle.

In addition, Ord Minnett highlights its position as the only significant producer of rare earths outside China. This makes it the “blue-chip” of the rare earths producers. It commented:

Lynas Rare Earths is an integrated source of rare earths from mine to customer. Lynas has a portfolio of aligned assets to explore, develop, mine and process rare earth minerals. These are the Mt Weld project and the Lynas Advanced Materials Plant (LAMP). The main asset of Lynas is the Mt Weld rare earths deposit in Western Australia. REO prices are depressed, which makes it the right time to buy in cheaply.

Most REO companies are still explorers and would-be developers. There is only one significant producer in Australia and the world ex-China – Lynas, at its LAMP in Malaysia. ‍ Lynas is the blue-chip stock of rare earths companies. It defied years of low prices by getting costs even lower and raising product quality. Now it is the non-Chinese producer of critical REOs for the energy transition. The Lynas multiples are punchy but deserved. It is the safe way to play the sector. ‍

Big returns

The note reveals that Ord Minnett currently has a buy rating and $8.00 price target on Lynas shares.

Based on its current share price of $6.55, this implies potential upside of 22% for investors over the next 12 months.

To put that into context, a $10,000 investment would become approximately $12,200 if the broker is on the money with its recommendation.

It is also worth noting that Ord Minnett is not alone with its bullish view on the stock.

For example, last week, Bell Potter put a buy rating and $7.80 price target on its shares. It notes that “with risks mounting to the upside for rare earths we retain our Buy outlook.”

Elsewhere, Goldman Sachs has a buy rating and $7.50 price target on its shares. Earlier this week, the broker declared its shares as “undervalued” based on its long run rare earths price forecast.

The post Top brokers agree that Lynas shares are ‘undervalued’ appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• These ASX shares could rise 25% to 30%
• Guess which top ASX 200 mining stock has 30%+ upside
• 5 things to watch on the ASX 200 on Friday

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 S&P/ASX 200 Index (ASX: XJO) share Brickworks Limited (ASX: BKW) has several appealing factors that make it a great investment opportunity right now.

The company is facing several headwinds at the moment, including high interest rates, inflation, and higher manufacturing costs.

But there are a number of reasons why I think Brickworks shares can deliver strong returns over the long term at the current price, particularly once interest rates start coming down.

Here’s why I’m bullish about Brickworks shares and thinking about buying more for my portfolio.

Population growth

Brickworks’ operating businesses produce building products in Australia and the United States. It’s the biggest brickmaker in Australia and the northeastern US. In Australia, it also produces roofing, masonry, timber battens, cement, and specialised building systems.

The populations of both the US and Australia continue to climb, requiring more dwellings. And larger populations will no doubt add to the long-term demand for products from Brickworks’ businesses.

Construction can be a cyclical industry, so I think now is a good time to consider the business while sentiment is weaker. If interest rates have materially reduced in a couple of years, conditions for the ASX 200 share could be much stronger then.

Ongoing underlying growth

Brickworks owns around a quarter of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and half of an industrial property trust alongside Goodman Group (ASX: GMG).

Both of these assets are seeing longer-term growth in their operational profits, cash flows, and payments to Brickworks, which is driving up their value.

As the values of Soul Patts and the industrial property trust increase, Brickworks’ underlying value lifts, too.

If Brickworks’ balance sheet‘s value goes up over time, this can help increase how much the market is willing to pay for Brickworks shares.

Big asset discount

I love being able to buy businesses that are at a big discount to their underlying assets.

This ASX 200 share has significant asset backing across its building products manufacturing, the land it owns, the industrial and manufacturing property trusts, and the Soul Patts shares, though it also has a (relatively small) level of debt.

Every six months, Brickworks tells the market its underlying (inferred) asset backing. At 31 January 2024, the business had $36.68 of inferred assets per share. The Brickworks share price is at a 27% discount to the January 2024 figure, though the Soul Patts share price regularly changes to alter this discount.

In my opinion, it’s a very appealing valuation discount.

The post 3 reasons to buy this ASX 200 share like there’s no tomorrow appeared first on The Motley Fool Australia.

More reading

• Best 3 ASX 200 healthcare shares for price growth in FY24
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Goodman Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Clinuvel Pharmaceuticals Limited (ASX: CUV) shares are having a strong finish to the week.

In morning trade, the ASX 300 healthcare stock is up a sizeable 12% to $17.00.

Why is this ASX 300 healthcare stock rocketing?

Investors have been buying Clinuvel’s shares this morning after it announced the final set of results from its CUV151 study. It is evaluating the DNA-repair capacity of afamelanotide on skin of healthy volunteers exposed to ultraviolet (UV) radiation.

This study was undertaken at Salford Royal Hospital in Manchester. It is a centre globally acknowledged for its expertise in assessing the effects of UV-induced skin damage.

The results from CUV151 were presented overnight at the British Association of Dermatologists meeting in Manchester.

According to the release, the analysis of biopsies from seven patients with fair skin types taken prior to, and six days after afamelanotide treatment, illustrated that without afamelanotide, UV-irradiation resulted in 625 differentially expressed genes (DEGs) in comparison to non-irradiated skin.

However, with afamelanotide, the DEGs between irradiated versus non-irradiated skin reduced to 183. This is a factor 3.4 less DEGs (p<0.05).

Management notes that the genes evaluated are found to be crucial in the regulation of DNA repair and inflammatory reactions following solar and UV exposure.

What does this mean for CUV151?

The release highlights that for the overall XP-DNA Repair Program, the RNA sequencing results indicate that critical genes expressed after UV-damage can be positively affected with afamelanotide treatment.

For the general population, and specifically individuals with a fair skin type who easily burn in the sun, the results indicate that afamelanotide can reduce oxidative damage and inflammatory reactions after sun exposure and skin damage.

The ASX 300 healthcare stock’s chief scientific officer, Dr Dennis Wright, was pleased with the results. He said:

The results from RNA sequencing complement the earlier results we saw from immunohistochemistry, in that afamelanotide consistently seems to assist repair of UV-damaged DNA in the skin.

Dr Wright revealed that the company plans to confirm these results in a final study. He said:

The significance of these results evaluating the use of afamelanotide in reducing oxidative and inflammatory damage caused by UV is high for those at high risk of solar damage, sunburn and skin cancers, hence we will repeat and confirm these results in a final study.

Despite today’s strong gain, the Clinuvel share price remains down approximately 6% since this time last year.

The post Why is this ASX 300 healthcare stock surging 12% today? appeared first on The Motley Fool Australia.

More reading

• Guess which ASX 300 share could rise over 50%
• 5 things to watch on the ASX 200 on Tuesday

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

The Bank of Queensland Ltd (ASX: BOQ) share price underperformed the S&P/ASX 200 Index (ASX: XJO) during the last year. In the 12 months to 30 June 2024, the BOQ share price rose 5.8% while the ASX 200 went up 7.8%.

BOQ has a different financial year from the regular Australian tax year. The Bank of Queensland’s financial year runs to 31 August each year, so there are still a couple of months left to run.

We recently heard from the bank about how it performed in the six months to February 2024, which saw a number of financial measures go the wrong way. The market also heard several interesting comments about the bank’s outlook.

Earnings recap

BOQ reported that its HY24 cash earnings after tax fell 33% to $172 million. The ASX bank share reported its housing loan portfolio saw a 1% decline in the second half of FY23 or $411 million in dollar terms. It said a continued focus on economic return resulted in a contraction of the housing portfolio.

The company said its net interest margin (NIM) dropped by 3 basis points (0.03%) – compared to the second half of FY23 – to 1.55%. That means it’s making a smaller amount of profit on each dollar it lends.

BOQ blamed “competitive pressures” for its lower margins and the weak lending growth performance. Cash operating expenses also grew by 6% year over year to $524 million.

BOQ also reported that its cash return on equity (ROE) dropped to 5.8%, down from 8.4% in the first half of FY23.

Thankfully, asset quality remains “sound”, despite the higher interest rate environment.

The managing director and CEO Patrick Allaway said at the time of the result announcement:

This result has been impacted by continuing industry headwinds, with heightened competition for lending and deposits and higher funding costs. Pleasingly, in a reduced revenue and high inflation environment, we have held BAU [business as usual] cost growth at just 1.2% in the half.

Outlook for BOQ shares

When the bank announced its HY24 first-half result, it also provided some outlook commentary that could apply to the rest of FY24 and FY25.

BOQ said its loan impairment expense is expected to remain below long run averages, which sounds positive. The bank said it remains “optimistic on the long-term view”.

However, the regional bank said it expects revenue and margin pressures “to moderate” in the second half of 2024, though deposit competition “to continue.” It’s also expecting the home lending decline “to moderate”, and that business banking growth can increase.

The bank’s costs are expected to keep increasing due to inflation and continued investment in the business. BOQ said it’s on track to deliver single-digit business as usual (BAU) expense growth in the second half of FY24.

In terms of analyst expectations, the broker UBS is expecting BOQ’s cash earnings to drop from $450 million in FY23 to $294 million in FY24. However, the ASX bank share could then see cash profit recover to $320 million, though it would still be lower than FY23.

In fact, while UBS has pencilled in a steady recovery of profit in the coming financial years, FY28 is still only expected to show a cash profit of $406 million – lower than FY23.

The broker suggested a higher return on equity (ROE) and BOQ share price re-rating are dependent on improving the NIM and costs.

According to UBS, the BOQ share price is valued at 14x FY25’s estimated earnings.

The post Can things get better for BOQ shares in FY25? appeared first on The Motley Fool Australia.

More reading

• ASX 200 bank shares ‘don’t appear overly expensive’ compared to global peers: UBS
• Which ASX shares to buy if interest rates rise (and which to avoid)
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• 2 ASX 200 bank shares smashing new multi-year highs today
• Is it time to cash in these 2 ASX large-cap stocks?

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.

To say that Fortescue Ltd (ASX: FMG) shares had a turbulent ride in FY24 would be an understatement.

The stock whipsawed from lows of $19.40 per share in September last year to highs of $29.88 by the end of January. With a large consolidation in the iron ore price, the mining giant’s shares are now fetching $22.62 apiece.

In other words, shareholders watched their Fortescue stock move a total of $17.74 per share in that time, including both up and down moves.

The mining stock is now valued at a price-to-earnings ratio (P/E) ratio of 7.7 times, with a trailing dividend yield of 9.64%.

Let’s dive into the key highlights from FY24 that you need to know.

Strong first half for Fortescue shares

A strong iron ore price kept Fortescue shares buoyant in the first half of the financial year.

Currently, iron ore is priced at US$113 per tonne. This is after it peaked at US$144 per tonne in January, finishing an 8 %rally starting in August 2023.

This strength inflected positively on Fortescue’s H1 FY24 results. It clipped a 24% rise in the average revenue per dry metric tonne (dmt) of iron ore sold.

This translated to a 21% increase in revenue to US$9.5 billion, while net profit after tax (NPAT) surged by 41%.

That means that for every new $1 in revenues, Fortescue produced $1.95 in NPAT, which is quite the result.

Consequently, free cash flow increased by 68% year over year to US$2.66 billion, while net debt was reduced by almost half.

The company also rewarded shareholders with a 44% increase in the interim dividend, which is now at A$1.08 per share.

As a result, Fortescue shares were a winner in the first half of FY24. They saw a roughly 33% rise in that period.

But the second half, though? Almost a complete reversal.

Challenges arose from Q3

Despite the strong first half, Fortescue faced some hurdles in Q3 FY24. Not least, the pricing of iron ore weakened significantly and hit a low of around US$100 per ton in April.

Unsurprisingly, the company reported an average revenue per dmt of US$104 per tonne, down almost 4% from its first-half results.

Fortescue reported that iron ore shipments for the three months ended 31 March were 43.3 million tonnes (Mt), down 6% from the previous year. It was also below consensus estimates.

Some of the shortfall was attributed to an ore car derailment and some to weather disruptions. Thankfully, a record shipment month in March helped mitigate the impact. The stock consequently finished the financial year roughly in line with where it started.

Future prospects and iron ore prices

Fortescue shares are highly sensitive to iron ore prices. Looking ahead, the iron ore market remains volatile.

UBS forecasts an average iron ore price of US$113 per tonne for the rest of 2024 – flat with today’s price.

But predicting future iron ore prices is challenging, given commodity markets’ cyclical and unpredictable nature.

While Trading Economics forecasts a potential rebound to US$126 per tonne in the next 12 months, much will depend on economic conditions in China, a major consumer of iron ore.

According to my colleague Tristan, the recent economic data from China has shown a decline in house prices and reduced industrial demand, which could impact future prices.

Goldman Sachs sees further risks for Fortescue shares in FY25. In a July note, the broker reiterated its sell rating on Fortescue, stating that its upcoming guidance “will disappoint.”

It said:

We maintain Sell rating on: (1) Relative valuation vs. BHP & RIO, (2) Widening of low grade 58% Fe product realisations over the medium to long term, (3) Execution and ramp-up risks on Iron Bridge and Gabon, (4) Uncertainties around Fortescue Energy diversification (such as the recent approval of the Phoenix hydrogen hub) and Pilbara decarbonisation and impact on dividend and balance sheet.

The stock is also rated a sell by consensus, according to CommSec. No brokers rate it a buy.

Fortescue shares’ FY24 wrap

Fortescue shares were volatile in FY24, but that’s the risk of owning an ASX mining stock. They are price takers on the commodities they sell – not price setters. Fluctuations in the price of iron ore are likely to strongly influence Fortescue shares.

This year to date, Fortescue is down 22%, having slid 7% into the red in the past month.

The post Fortescue shares: Here are the must-know highlights from FY24 appeared first on The Motley Fool Australia.

More reading

• Fortescue shares red-hot as court reveals company espionage
• What is the outlook for ASX 200 dividend shares in FY25?
• Is the Fortescue share price too low to ignore?
• 3 ASX 200 mining shares just downgraded by top brokers
• Are Fortescue shares a contrarian buy after falling 20% in a month?

Motley Fool contributor Zach Bristow 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.

It was a difficult 12 months for Pilbara Minerals Ltd (ASX: PLS) shares in the last financial year.

During the period, the lithium miner’s shares lost 37% of their value.

This means that a $5,000 investment in the company’s shares at the start of FY 2024 would have turned into approximately $3,150.

Whereas the same investment in the Vanguard Australian Shares Index ETF (ASX: VAS) would have become $5,375. And that’s not including the dividends the ETF paid out over the 12 months.

What happened to Pilbara Minerals shares in FY 2024?

Investors were selling ASX lithium stocks in the last financial year after battery materials prices continued to fall.

In 2022, the lithium carbonate price averaged US$63,232 a tonne and the lithium spodumene (6%) price averaged US$4,368 a tonne. These high prices were underpinned by insatiable demand and supply shortages.

Cracks started to form in 2023, which led to these battery making ingredients averaging US$32,694 a tonne and US$3,712 a tonne, respectively.

Since then, prices have been in free fall. So much so, spot prices (in China) were US$11,167 a tonne for lithium carbonate and US$1,060 a tonne for spodumene 6% this month.

And while the company’s operations remain profitable at these levels thanks to their low costs of A$900 per tonne (CIF), the amount of profit Pilbara Minerals is likely to make this year is now nowhere near the levels that the market was forecasting 12 months ago. And hopes of a generous dividend this year have been wiped out.

Making things worse, and putting more pressure on Pilbara Minerals shares, is that analysts believe a lithium surplus will keep prices at these low levels for several years. This could mean a tough few years for the company and its shareholders.

Should you buy the dip?

While analysts at Bell Potter see value emerging, there’s not enough on the table to justify a buy rating at this point. The broker has a hold rating and $3.40 price target on its shares. It commented:

PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($1.8b net cash at 31 March 2024) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. However, weak near-term lithium market sentiment results in us retaining our Hold recommendation.

The post If I’d invested $5,000 in Pilbara Minerals in FY24 what would I have now? appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares: Screaming bargains or falling knives?
• Down 42%: Are Pilbara Minerals shares good value now?
• Which ASX lithium shares are financially primed to survive this rut?
• Top broker says Pilbara Minerals shares are ‘a super buy at these levels’
• Is it time to buy FY24’s worst-performing ASX shares?

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

In the 2024 financial year that has just passed us by, ASX shares had an uncommonly good time. The shares of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short? Not so much.

Between 1 July 2023 and 30 June 2024, the S&P/ASX 200 Index (ASX: XJO) rose by a healthy 7.3%. Factoring in dividend returns, anyone who owned an ASX 200 index fund would have banked roughly 12% last financial year. Not bad for an index that typically returns 7-8% per annum.

But Soul Patts shares couldn’t quite match that performance. This ASX 200 investing house started July 2023 going for $31.78 each. Last week, those same shares wrapped up FY24 at a price of $32.82.

Sure, that 3.27% gain over FY24 is better than a poke in the eye with a blunt stick. But it falls far short of being a market-matching (let alone beating) investment – a typical criterion we use for assessing the quality of ASX shares as investments.

Soul Patts’ dividends do narrow that gap a little. The company forked out 91 cents per share in fully-franked dividends last financial year. At the company’s starting FY24 price, that adds a yield worth another 2.86% to Soul Patts’ FY24 total return.

Even so, we can conclude that FY24 was a lacklustre one for Soul Patts shares and their owners.

As an owner myself, this doesn’t bother me though. In fact, I think it’s a great opportunity to pick up some more.

Buying Soul Patts shares when they’re ‘marked down’

Why? Well, the legendary Warren Buffett once said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”.

Soul Patts is a company that usually delivers market-beating returns, not market-trailing ones. Back in May, the company affirmed that its shares had averaged a total return of 12% per annum (share price growth plus dividends) over the 20 years to 30 April 2024. That beat the ASX market by 3.3% per annum on average.

But not this year. So, by definition, that makes Soul Patts’ stock ‘marked down’, as Buffett would say.

Say Soul Patts blew the lights out with a 20% rise in FY24. If that were the case, I wouldn’t be in a rush to buy more shares today. However, as the company had a lacklustre year, it is now high on my buy list for FY25.

If the company sticks to its historical average and delivers a 12% return over the coming 12 months (which I think is very possible, but not guaranteed), I’ll be glad to have bought shares.

The post Soul Patts shares had a lacklustre FY24. Here’s why I can’t wait to buy more appeared first on The Motley Fool Australia.

More reading

• ASX passive income: How to make $1,000 per month
• Beginner investors: I suggest you start with these 2 ASX dividend powerhouses for decades of income
• These 3 ASX shares have unstoppable dividend growth
• 1 ASX stock that’s just right for beginner investors
• If I were 60 I’d buy these ASX shares for dividends

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Every month, analysts at Morgans pick out their best ASX stock ideas.

These are the ASX stocks that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe. Morgans notes that they are supported by a higher-than-average level of confidence.

Among its best ideas for July are the three ASX stocks listed below. Here’s what the broker is saying about them:

Clearview Wealth Ltd (ASX: CVW)

Morgans thinks that Clearview Wealth could be an ASX stock to buy. It is an Australian financial services company offering life insurance, superannuation and investment products and services.

The broker is feeling very positive about the company’s outlook. Particularly given its business transformation program, which it expects to support strong earnings. In addition, it highlights Clearview’s solid balance sheet and undemanding valuation. It said:

CVW is a challenger brand in the Australian retail life insurance market (market size = ~A$10bn of in-force premiums). CVW sees its key points of differentiation as its: 1) reliable/trusted brand; 2) operational excellence (in product development, underwriting and claims management); and 3) diversified distributing network. CVW’s significant multiyear Business Transformation Program has, in our view, shown clear signs of driving improved growth and profitability in recent years. We expect further benefits to flow from this program in the near term, and we see CVW’s FY26 key business targets as achievable. With a robust balance sheet, and with our expectations for ~21% EPS CAGR over the next three years, we see CVW’s current ~11x FY25F PE multiple as undemanding.

Morgans has an add rating and 78 cents price target on it shares.

Elders Ltd (ASX: ELD)

Another ASX stock that Morgans is bullish on in July is Elders. It is a leading agribusiness company.

Morgans believes that FY 2025 could be the start of a good run of earnings growth for Elders and sees now as the time to buy. It said:

ELD is one of Australia’s leading agribusinesses. It has an iconic brand, 185 years of history and a national distribution network throughout Australia. With the outlook for FY25 looking more positive and many growth projects in place to drive strong earnings growth over the next few years, ELD is a key pick for us. It is also trading on undemanding multiples and offers an attractive dividend yield.

The broker has an add rating and $9.00 price target on its shares.

TechnologyOne Ltd (ASX: TNE)

A third ASX stock that Morgans thinks could be a buy is enterprise software provider TechnologyOne.

Its likes the company due partly to its large cash balance and impressive track record of earnings growth. In addition, it suspects that the latter could be about to accelerate. Its analysts said:

TNE is an Enterprise Resource Planning (aka Accounting) company. It’s one of the highest quality companies on the ASX with an impressive ROE, nearly $200m of net cash and a 30-year history of growing its earnings by ~15% and its dividend ~10% per annum. As a result of its impeccable track record TNE trades on high PE. With earnings growth looking likely to accelerate towards 20% pa, we think TNE’s trading multiple is likely to expand from here.

Morgans has an add rating and $20.50 price target on its shares.

The post Morgans names the best ASX stocks to buy in July appeared first on The Motley Fool Australia.

More reading

• Can ASX 200 tech shares produce another strong performance in FY25?
• Leading brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Monday
• 3 fantastic ASX growth shares to buy in July
• Here’s how the ASX 200 market sectors stacked up last week

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

Income investors certainly are a lucky bunch. The Australian share market is filled to the brim with dividend-paying shares.

But which ones could be buys right now for income investors? Let’s take a quick look at three ASX dividend shares that have been given the thumbs up by analysts. They are as follows:

BHP Group Ltd (ASX: BHP)

The Big Australian could be a top option for income investors this month according to analysts at Morgans.

Its analysts highlight that the mining giant’s “basket of market exposures share the similar characteristic of typically boasting bumper margins throughout the cycle.” This means that BHP consistently generates large amounts of free cash flow, which is supportive of big dividend payments.

Morgans expects this trend to continue in the near term and is forecasting fully franked dividends of approximately ~$2.42 per share in FY 2024 and then ~$2.17 per share in FY 2025. Based on the current BHP share price of $44.77, this equates to dividend yields of 5.4% and 4.85%, respectively.

The broker has an add rating and $48.30 price target on the miner’s shares.

Inghams Group Ltd (ASX: ING)

Morgans is also tipping Inghams as an ASX dividend share to buy this month. It is Australia’s leading poultry producer and supplier.

The broker has described Ingham’s shares as “undervalued” at current levels. Particularly given its market leadership and favourable consumer trends.

Its analysts expect this to underpin some generous dividend yields in the near term. They are forecasting fully franked dividends of 22 cents per share in FY 2024 and then 23 cents per share in FY 2025. Based on the current Inghams share price of $3.72, this equates to dividend yields of 5.9% and 6.2%, respectively.

Morgans has an add rating and $4.40 price target on its shares.

Orora Ltd (ASX: ORA)

Over at Goldman Sachs, its analysts think income investors should buy Orora shares.

They believe the packaging company’s shares could be cheap after crashing deep into the red over the past 12 months.

In addition, Goldman expects some good yields from its shares. It is forecasting dividends per share of 12 cents in FY 2024 and 13 cents in FY 2025. Based on the current Orora share price of $1.98, this will mean yields of 6.1% and 6.55%, respectively.

The broker also sees major upside potential for its shares. It has a buy rating and $3.00 price target on them.

The post Buy BHP and these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• Morgans names 3 ASX 200 stocks to buy in July
• Top brokers name 3 ASX shares to buy today
• I’d buy BHP shares to generate $1,000 of monthly passive income
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today

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