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Commonwealth Bank of Australia (ASX: CBA) shares have been riding high over the past 12 months. During this time, the banking major’s stock price is up 31.5% trading at $133.5 per share at the time of writing.

This is a 20% advantage over the S&P/ASX 200 Index (ASX: XJO) over the past year. The chart below shows that the trend took off around November.

However, some brokers believe the good times for CBA shares may be nearing an end, projecting a sharp decline in market value. Let’s dive into the details.

Are CBA shares overvalued?

Despite touching record highs of $133.5 today, E&P Financial Group thinks the stock is now fully valued.

Analyst Azib Khan reiterated his negative sentiment on CBA shares, noting the company might be “priced for over-perfection”. According to The Australian, Kahn said:

While the Australian major banks are generally priced for perfection, CBA is priced for over-perfection.

While we do not expect anything untoward in the upcoming result (14 August) to trigger a de-rate – particularly if CBA opts to release credit loss provisions – we see business lending asset quality risks building on the horizon.

CBA currently trades on a price-to-earnings ratio (P/E) of 22.8 times, meaning investors are paying nearly $23 for every $1 of the bank’s earnings.

In comparison, the P/E ratio for the iShares Core S&P/ASX 200 ETF (ASX: IOZ), which tracks the benchmark index, is 18.7 times. CBA shares trade at a premium to the benchmark.

Another concern of Kahn’s is CBA’s lower dividend yield, which is “the only one below the cash rate” among the major banks.

The analyst set a target price of just $80 for CBA shares, implying an eye-watering 40% downside potential from the current price of $133.5.

What are other analysts saying?

It’s not just E&P that’s bearish on CBA shares. The consensus of analyst estimates rates it a sell, too, according to CommSec.

Bell Potter has a sell rating on CBA shares due to its high valuation relative to growth potential. According to my colleague Kate, the broker suggests investors consider taking profits. It cited limited growth prospects in a competitive banking sector.

L1 Capital also signalled CBA’s expensive valuation and lack of earnings growth in its June investment letter, indicating that the current price may not be justified by the fundamentals.

The bank’s reported net profit after tax (NPAT) of $5 billion was down 3% year over year in H1 FY24. Moreover, according to S&P Capital IQ, analysts expect earnings-per-share (EPS) to grow by just circa 1% per year from $5.76 to $5.91 by FY26.

Meanwhile, Goldman Sachs reiterated its sell thesis on CBA shares in a June note. Again, valuation was the cause for concern. Analysts at Goldman Sachs wrote:

We are Sell-rated on CBA given: While CBA’s volume momentum in housing lending has improved and BDDs charges remain benign, we don’t think this justifies the extent of CBA’s valuation premium to peers.

Foolish takeaway – what should investors do?

While CBA has delivered strong returns, its high valuation is raising concerns among the experts. Analysts from multiple firms suggest that CBA shares might be overvalued at current levels.

However, I’d point out that similar concerns were raised a year ago, and CBA still delivered substantial gains. Whether or not the fun is over depends on CBA’s fundamentals and the market’s overall sentiment.

Remember that past performance is never a predictor of future results, and conduct your own due diligence.

The post 40% downside! Broker values CBA shares at $80 — is the fun over? appeared first on The Motley Fool Australia.

More reading

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• Is now the time to take some profits on CBA shares?
• Here’s the lithium price forecast through to 2027
• Prepare for earnings! What ASX bank share buyers can learn from Wells Fargo results?
• ASX 200 shatters record. Why it could still be ‘relatively cheap’ to invest

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.

The S&P/ASX 200 Index (ASX: XJO) is back on form on Wednesday and charging higher. In afternoon trade, the benchmark index is up 0.95% to 8,075.3 points.

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

Deep Yellow Limited (ASX: DYL)

The Deep Yellow share price is down 4% to $1.37. This follows broad weakness in the uranium industry today which has offset the company’s presentation at a mining conference today. In respect to the latter, Deep Yellow has talked up its significant production capability. It notes that “once in production, Deep Yellow will be the largest pure-play uranium producer on the ASX [with] production capacity 7Mlb+ per annum. Management also highlights the “significant exploration upside with potential to develop large scale, long-life projects within the Deep Yellow portfolio.”

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down 17% to $1.67. Investors have been selling this counter drone company’s shares after its incredible rally ran out of steam. While DroneShield is growing at a rapid rate, its market capitalisation had ballooned to approximately $2 billion. This was arguably well ahead of fundamentals and has led to a combination of profit taking and then panic selling from investors. And while there has been talk of short selling, the available data at present shows that short interest is still extremely minimal.

Mount Gibson Iron Ltd (ASX: MGX)

The Mount Gibson Iron share price is down 10% to 38.7 cents. This follows the release of the iron ore miner’s quarterly update. Mount Gibson reported iron ore sales of 0.9 million wet metric tonnes (wmt) for the June quarter at an average grade of 65.2%. This brought its total sales for the year to 4.1 million wmt at a grade of 65.3%. This was near the upper end of its annual guidance of 3.8 million wmt to 4.2 million wmt. However, its costs came in higher than expected and it is forecasting a sharp decline in iron ore sales volumes in FY 2025.

Praemium Ltd (ASX: PPS)

The Praemium share price is down 9.5% to 47 cents. Investors have been selling this investment platform provider’s shares following the release of its quarterly update. This is despite the company reporting a 30% increase in total funds under administration to $57.4 billion. Praemium’s CEO, Anthony Wamsteker, was pleased with the quarter. He said: “The strong growth in FUA on VMAAS highlights the tremendous potential of that service. Our non-custodial capability remains market leading and represents a significant opportunity for Praemium.”

The post Why Deep Yellow, DroneShield, Mount Gibson Iron, and Praemium shares are falling appeared first on The Motley Fool Australia.

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• What’s next for Droneshield stock after Tuesday’s 22% drop
• Big ASX news! DroneShield share price crashes 31%
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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 DroneShield and Praemium. 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.

A little-known ASX gold stock has made its shareholders very happy over the past eight trading days.

The company in question is Far East Gold Ltd (ASX: FEG), which has a current market cap of just $46 million.

Though that’s double what it was worth at the start of the month.

On 4 July, you could have bought shares in the junior ASX gold stock for 9.6 cents apiece. Earlier today, those same shares were changing hands for 20.5 cents, up 113.5%.

At the time of writing, shares are trading for 18 cents, up 5.9% in intraday trading.

Here’s what’s been spurring investor interest.

What’s sending the ASX gold stock soaring?

The Far East Gold share price certainly won’t have suffered from the surging gold price.

The yellow metal hit fresh all-time highs overnight, trading for US$2,474.5 per ounce. At the time of writing, that same ounce is fetching US$2,472.29. That sees the gold price up more than 20% so far in 2024 as investors up their bets of Federal Reserve interest rate cuts.

While that offers some nice support, the ASX gold stock got its supersized boost on Monday, 15 July.

That’s when the miner announced it had executed a Binding Term Sheet with PT Iriana Mutiara Idenburg to acquire up to 100% of the Idenburg gold project.

According to the release, Idenburg is an advanced, high-grade and highly prospective 95,280-hectare gold project, located in Indonesia’s Papua province.

Far East Gold noted that the same province hosts world-class multi-million-ounce gold and copper deposits. And Idenburg already benefits from more than US$25 million in historical exploration, including more than 5,500 meters of diamond drilling. Yet only 30% of the area has been explored in detail.

Commenting on the acquisition that saw the ASX gold stock soar 16.7% on Monday and gain another 21.4% on Tuesday, Far East Gold managing director Shane Menere said, “It is rare to find a project of such calibre with a substantial historical database of work completed by many of the world’s major gold miners.”

Menere added:

The main reason the project was not advanced further in the past was due to previous forestry classifications over the major prospect areas which restricted open cut mining. These restrictions have now been removed, paving the way for further development of this highly prospective project, which we know from previous exploration, has returned wide and high-grade gold intervals in multiple instances from surface…

We are very excited based on the extensive historical database of exploration work and many high-grade drill intercepts that demonstrate the potential for Idenburg to host a multi-million-ounce company maker’.”

With the past week’s share price surge, the ASX gold stock is back in the green for 2024, up 29%.

The post Have you heard of this ASX gold stock? It’s up 114% in 8 days! appeared first on The Motley Fool Australia.

More reading

• Why Deep Yellow, DroneShield, Mount Gibson Iron, and Praemium shares are falling
• Why Cettire, Core Lithium, Northern Star, and Step One shares are charging higher
• ASX 200 hits record high, UBS keeps end of year target steady
• Citi names these 3 ASX shares to buy now
• Zip shares frozen amid $267 million debt wipe plans

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 S&P/ASX 200 Index (ASX: XJO) is having a strong session today. At the time of writing, the benchmark index is up 0.9% to 8,071.4 points.

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

Cettire Ltd (ASX: CTT)

The Cettire share price is up 4% to $1.56. This follows the release of additional financial metrics relating to the online luxury products retailer’s performance in FY 2024. Cettire advised that gross revenue is expected to be $975 million to $980 million, up 81% to 82% year on year. This was driven by a 6% to 7% increase in average order value and a 64% jump in active customers to 692,000. Cettire’s shares remain down over 30% since this time last month despite today’s gain.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up 9% to 12 cents. Investors have been buying this lithium miner’s shares following the release of its quarterly update. Core Lithium reported that it achieved record quarterly shipments of 33,027 dry metric tonnes (dmt) of spodumene concentrate during the three months ended 30 June. This was sold at an average price of US$1,078 per dmt, which is 16.5% higher than the prior quarter. However, all mining and processing activities are now suspended due to low lithium prices.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price is up 4% to $14.55. Investors have been buying Northern Star and other ASX gold stocks today after the price of gold surged to a record high overnight. Traders were bidding the precious metal higher after the market started to price in a 100% probability of an interest rate cut by the US Federal Reserve in September. The S&P/ASX All Ords Gold index is up 2.7% at the time of writing.

Step One Clothing Ltd (ASX: STP)

The Step One share price is up 17% to $1.71. This online underwear retailer’s shares are racing higher today after it released a trading update for FY 2024. Step One revealed that it has returned to form and expects to report revenue of $84 million for the year. This is up 29% on FY 2023’s revenue and 16.3% on what it recorded in FY 2022. Growing even quicker was the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA). Management expects its EBITDA to increase by 42% year on year to $17 million.

The post Why Cettire, Core Lithium, Northern Star, and Step One shares are charging higher appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is showing no signs of exhaustion in 2024, having nudged to a new all-time high in Tuesday’s session.

On July 15, the Australian benchmark index poked its head above the 8,000 mark for the first time in history. It now rests at 8,049 points just before lunch time today.

Despite the rush hour of gains, investment bank UBS has maintained its end-of-year target for the ASX 200 at 8,000 points.

This means the index would track sideways until yearend, if UBS is correct. Let’s take a look.

ASX 200 hits new highs

The ASX 200 soared to its second new record high this week, surpassing 8,000 points for the first time in history.

As my colleague Seb reported, it was a “momentous session” for Australian equities – and rightly so. The Aussie index has braved off inflation, higher interest rates, geopolitical risks, and whatever else to notch this milestone.

It has climbed over 18% since October last year when it was below 6,800 points. This surge has been driven by strong performances from key sectors, particularly financials and mining.

UBS’ take on the ASX 200

UBS strategist Richard Schellbach remains optimistic about the ASX 200, despite keeping an end-of-year target at 8,000 points on the benchmark.

Schellbach notes that the index is trading at a higher valuation multiple, yet the dividend yield remains comparable to historical levels. According to The Australian, he noted:

Right now the [price-to-earnings-ratio (P/E)] relative of Australian stocks versus global [stocks], sits roughly in the range they have maintained over the last two decades.

At 8000, the ASX200 sits on a richer than usual valuation multiple, whilst the current dividend yield still seems comparable to history…The weighting split between key sectors seen now does not indicate any huge shift within the composition of the equity market.

Schellbach also addresses concerns about market concentration. He asserts that the ASX market capitalisation hasn’t become overly concentrated among the biggest stocks.

The top 5, 10, and 20 companies hold similar market cap weights in the index as they did in 2000.

Given what happened in the year 2000 – the “tech bubble” bursting, resulting in one of the sharpest bear markets in history — I’m not sure if this is a good or bad omen. Time will tell.

Future outlook

UBS says the ASX 200 is trading on the expensive side compared to historical averages. But, it notes this trend is consistent with global equity markets.

When adjusting for long-term market cycles, using a ratio called the “cyclical adjusted PE ratio” or “CAPE”, it says there are no signs of an “earnings bubble.”

Schellbach acknowledges that the period of “peak margins” is over, but Australian companies aren’t “overlearning” based on their return on equity (ROE).

Takeout

The ASX 200’s record high is a testament to the resilience of the Australian economy at large. UBS’ steady end-of-year target is interesting. Whilst it is flat on today’s index value, it also implies no downside either.

Despite this, valuations do matter, and past performance is no guarantee of future results. It’s critical to consider your own personal risk tolerances.

The post ASX 200 hits record high, UBS keeps end of year target steady appeared first on The Motley Fool Australia.

More reading

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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.

Now that the new financial year is in full swing, ASX shares continue their ascent, with the S&P/ASX 200 Index (ASX: XJO) marching to new all-time highs on Tuesday.

Brokers are in full swing too. Citi has rated three ASX shares as buys in various reports to clients this week.

Here’s a closer look at what the broker said and what it could mean for investors.

Nickel Industries Ltd (ASX: NIC)

Nickel Industries is the first stock Citi upgraded to a buy this week. Analyst Kate McCutcheon noted the nickel player’s share price dropped 14% over the past 10 weeks, creating an attractive entry point.

The analyst sees positive earnings per share (EPS) growth from consensus upgrades and believes the company’s H1 FY24 earnings before interest, tax, depreciation and amortisation (EBITDA) trough is “now cleansed”, according to The Australian.

The ENC HPAL project, in which it owns 55%, is also ahead of schedule. First production is expected in the third quarter of CY25. McCutcheon says that most consensus estimates haven’t yet factored in ENC to the company’s pre-tax earnings.

Citi also believes the market’s cost expectations for NIC’s newer rotary kiln-electric-furnace (RKEF) projects, Oracle Nicke (ONI) and Angel Nickel (ANI), are too high.

NIC is a bottom quartile producer and has demonstrated profitability through cycle with committed production growth to capture pricing upside.

With nickel sub 17,000 a tonne, nickel production cuts, should support sentiment/price. NIC is now the only pure-play nickel producer left on the ASX.

Citi has set a target price of $1.05 for the ASX share. Bell Potter also rates the stock a buy with a $1.54 price target.

These targets represent an upside potential of 22% and 78% from the current price of 80.6 cents per share, respectively.

CAR Group Ltd (ASX: CAR)

Citi sees significant potential in CAR Group. The broker upgraded its rating to buy and increased its target price on the ASX share to $39.80.

At the time of writing, stock in CAR Group —formerly known as Carsales.com — is fetching $35.70 apiece, up nearly 15% this year to date.

Analyst SIraj Ahmed said the bank expects double-digit earnings growth from CAR over the medium term.

Ahmed projects that FY24 earnings per share (EPS) growth should accelerate to 17% from 13.2% in FY23. CAR’s international business, particularly in Brazil and the US, should benefit from rate cuts, he also noted.

While another RBA rate rise and weakening demand are risks to the Australian business, we see Car Group having a very strong position and expect it to deliver solid growth even in a tough environment.

Potential bolt-on mergers and acquisitions (M&A) could further boost growth, especially in the US, Ahmed says.

Citi values the ASX share at $39.80 apiece, implying an 11.7% upside from the current price.

BlueScope Steel Ltd (ASX: BSL)

Citi’s Paul McTaggart also upgraded BlueScope Steel to buy from the firm’s previous neutral rating.

He expects US steel prices have hit their lows and will rise post-Northern summer. McTaggart also noted that US monetary conditions are set to turn expansionary, which could benefit BlueScope.

We think US steel prices are now near their lows with a post Northern summer uptick expected and with US monetary conditions set to turn expansionary.

We trim our target price to $23.70 from $24 but raise our rating to Buy as we look through near term earnings weakness and likely consensus earnings downgrades.

Despite trimming FY25 earnings before interest and tax (EBIT) to $1.11 billion due to falling export spreads, Citi sees EBIT lifting to $1.73 billion by FY27.

Shares in the ASX mining stock are currently swapping hands at $21.41 apiece, meaning Citi’s price target implies around 11% upside potential.

ASX shares Foolish takeout

Citi’s positive outlook on Nickel Industries, CAR Group, and BlueScope Steel suggests it sees strong growth potential in each of these ASX shares.

Investors looking to diversify their portfolios with promising ASX stocks may find these upgrades compelling. As always, consider your investment goals and risk tolerance before making any decisions.

The post Citi names these 3 ASX shares to buy now appeared first on The Motley Fool Australia.

More reading

• Brokers say buy! 3 ASX shares receiving upgrades today
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy now
• Buy this ASX tech stock for a 20%+ return: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Car Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Zip Co Ltd (ASX: ZIP) shares are motionless this morning despite releasing a fourth-quarter update.

Whether you want to buy or sell, a trading halt prevents shareholders from doing either this morning. The need to hit pause on the company’s share price stems from another announcement released alongside Zip’s quarterly figures.

In addition to the buy now, pay later provider’s results, Zip has unveiled a capital raise. Not to make an acquisition or fund an expansion. No… Zip is rattling the tin to retire its existing corporate debt facility early.

Debt demolition with Zip shares

It appears that management hopes to tap into the enthusiasm following a sensational 273% ascension in the Zip share price over the past year.

Now valued at a market capitalisation of $1.8 billion, the company proposes raising roughly 15% of that by selling new shares in two parts.

The first part is a fully underwritten equity placement for $217 million. The second is a non-underwritten share purchase plan for eligible shareholders that will seek to raise a further $50 million, amassing a grand total of $267 million before costs if all goes to plan.

Shares will be issued at the higher option between $1.52 per share or ‘the price determined by a bookbuild process to be undertaken in respect of the placement’. Zip shares last traded at $1.605, meaning the $1.52 would represent a 5.3% discount.

According to Zip, the transaction will strengthen its balance sheet and reset its capital structure. Furthermore, paying down hundreds of millions worth of debt will provide flexibility and liquidity to ‘pursue further growth’.

The corporate debt facility has a limit of $150 million, and Zip had drawn down $130 million of it as of 30 June 2024. The debt’s maturity is set for December 2027, more than three years away.

What about the fourth-quarter results?

Defying the high interest rate environment, Zip achieved growth in the fourth quarter ended 30 June 2024. Financial accomplishments during the quarter include:

• Transaction volume up 19% year-on-year to $2.6 billion
• Revenue up 22.1% to $223.6 million
• Monthly transacting users up 6.1% to 2.1 million

As usual, most of Zip’s revenue growth came from the United States, increasing 46.8% to $121.5 million. For comparison, the Australia and New Zealand region only grew 1.8% to $102.1 million. Similar differences in growth were apparent for transaction volume and number of transactions.

Conversely, Zip saw its number of active customers slip in both regions. Consequently, total active customers decreased by 2.9% to 6 million.

Additionally, bad debts rose to 4.7% of Australian consumer receivables in Q4 — its second-highest level since June 2022. Despite this, cash earnings before tax, depreciation, and amortisation for FY24 are expected to be between $67 million and $70 million.

Zip held $353 million in total cash on its balance sheet at the end of June.

Zip shares are up 159% since the start of the year.

The post Zip shares frozen amid $267 million debt wipe plans appeared first on The Motley Fool Australia.

More reading

• Zip shares fall despite return to ASX 200 index
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• Is it too late to buy Zip shares at their 2-year highs?
• 3 ASX small-cap shares that soared 250% to 675% in FY24

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. 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 300 Index (ASX: XKO) is up 0.6% today, with one beaten-down ASX 300 stock doing a lot of the heavy lifting.

The surging stock in question is online luxury goods retailer Cettire Ltd (ASX: CTT).

The Cettire share price closed yesterday trading for $1.50. In morning trade on Wednesday, shares leapt to $1.65 apiece, up 10%. After some likely profit-taking, shares are currently changing hands for $1.58, up 5.5%.

Here’s what’s piquing investor interest in the ASX 300 stock today.

Why is the ASX 300 stock flying higher today?

The Cettire share price is charging higher after the ASX 300 stock released additional financial disclosures for its full FY 2024 operations, covering the 12 months through to 30 June.

The company reported on its preliminary expectations for the full year on 24 June. That update saw investors overheat their sell buttons, with the ASX 300 stock closing the day down a precipitous 49.3% at $1.135 a share.

Today, Cettire said it is in a position to confirm gross revenue, average order value, active customers and gross revenue from repeat customers.

These unaudited, now-confirmed metrics are as follows:

• Gross revenue of $975 million to $980 million, up 81% to 82% from FY 2023
• Average order value of $795 to $800, up 6% to 7% year on year
• Active customers of just over 692,000, up 64% from the prior year
• Gross revenue from repeat customers represented 61% of the total, up 3% from FY 2023

Cettire expects to release its full-year FY 2024 results in the second half of August.

What is management saying?

Commenting on the headwinds dragging on the ASX 300 stock in June, Cettire CEO Dean Mintz said that a softening demand environment and an increase in promotional activity “has been visible across our footprint, particularly in the last several weeks as the market has entered the Spring Summer 24 sale period”.

Mintz added:

Additionally, we believe the market is currently being impacted by clearance activity as certain players exit parts of the market.

To continue to expand our market share, Cettire has selectively participated in the promotional activity, leading to an increase in marketing costs relative to sales and a decline in delivered margin percentage.

But all is not doom and gloom for the online retailer.

“The company continues to grow rapidly, is profitable and cash generative,” Mintz stressed.

Cettire share price snapshot

Despite today’s welcome lift, shares in the ASX 300 stock remain down 46% year to date.

The post Down 48% in 2024, why did this ASX 300 stock just surge 10%? appeared first on The Motley Fool Australia.

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

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

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

Hub24 Ltd (ASX: HUB)

According to a note out of Bell Potter, its analysts have retained their buy rating and $53.20 price target on this investment platform provider’s shares. This follows the release of a fourth quarter update which revealed that total funds under administration (FUA) increased 30% year on year to $104.7 billion. This comprises platform FUA of $84.4 billion and non-custodial FUA of $20.3 billion. Bell Potter was pleased with Hub24’s performance and believes its shares look cheap relative to other high growth specialist platform providers. Especially given its belief that the positive outlook for principal net flows should underpin incremental earnings growth. It also highlights that it likes the company due to its large exposure to superannuation assets and its ability to deliver complex integrations. The Hub24 share price is trading at $47.44 on Wednesday.

Rio Tinto Ltd (ASX: RIO)

A note out of Morgans reveals that its analysts have upgraded this mining giant’s shares to an add rating but trimmed their price target on them slightly to $130.00. This follows the release of the miner’s second quarter update, which revealed a strong performance from the key Escondida copper operation and improved productivity. And while there are risks emerging for its iron ore production growth in the Pilbara and costs are rising, Morgans remains positive and sees plenty of value in its shares at current levels. The Rio Tinto share price is fetching $117.25 at the time of writing.

Seek Ltd (ASX: SEK)

Analysts at UBS have retained their buy rating on this job listings company’s shares with a reduced price target of $27.10. According to the note, the broker has been busy reviewing the online classifieds space and likes what it has seen. It continues to believe that the industry is well-placed for underlying growth thanks to improving yields and price increases. And while it has trimmed its expectations for Seek slightly for FY 2025, it believes its shares remain undervalued at current levels and sees scope for them to rise strongly over the next 12 months. The Seek share price is trading at $21.31 this morning.

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

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Motley Fool contributor James Mickleboro has positions in Seek. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24. The Motley Fool Australia has recommended Hub24 and Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Step One Clothing Ltd (ASX: STP) shares are catching the eye on Wednesday morning.

At the time of writing, the ASX small cap stock is up a massive 25% to $1.82.

What’s going on with this ASX small cap stock?

Investors have been buying the direct-to-consumer online underwear retailer’s shares this morning after it released a strong trading update.

This will no doubt be a welcome relief to shareholders that have endured some hard times since Step One’s IPO in 2021.

After listing at $1.53 per share in November 2021, the company’s shares climbed as high as $3.00 in the first few weeks. However, it wasn’t too long until its shares were down in the low 20s, losing over 90% of their value from top to bottom.

Investors were selling the ASX small cap stock down following a sudden deterioration in its performance caused by challenging trading conditions.

However, it seems that the company has found its legs again and is predicting strong growth in FY 2024.

Strong FY 2024 growth

According to a trading update released this morning, it expects to report revenue of $84 million in FY 2024. This is up 29% on FY 2023’s revenue and 16.3% on what it recorded in FY 2022.

Getting investors even more excited, though, was its earnings growth. Management expects its earnings before interest, tax, depreciation, and amortisation (EBITDA) to increase at the even quicker rate of 42% year on year to $17 million.

This is now higher than the prospectus forecast of $15.1 million for FY 2022, which it previously failed to achieve. Better late than never.

No further financial information was provided by the ASX small cap stock. So, investors will have to wait and see what the above means for net profit and dividends when it releases its full-year results next month. This release is expected to be made on 21 August.

Step One’s founder and CEO, Greg Taylor, was pleased with the company’s performance in FY 2024 and highlights its expanding customer base. He said:

I am pleased to report another period of profitable growth for Step One. Our high-quality sustainable innerwear products, in-house marketing capabilities and brand ownership continue to resonate well with customers. With a strong financial position, we are well positioned to continue expanding our customer base, establish new retail partnerships and grow our brand presence globally. I remain very confident that Step One is in a strong position to continue its profitable growth.

The post ASX small-cap stock rockets 25% on ‘another period of profitable growth’ appeared first on The Motley Fool Australia.

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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.