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With the new financial year underway, many investors are wondering what ASX stocks to buy in the current market cycle.

The artificial intelligence (AI) theme dominated markets in FY 2024. Names like NVIDIA Corp (NASDAQ: NVDA) surged to record heights of over $1,000 per share before its 10-for-1 stock split.

Whereas AI frontrunner Microsoft Corporation (NASDAQ: MSFT) rallied 31% over the past year following its purchase of OpenAI, owner of the well-known “ChatGPT” language model, in 2023.

Various money managers are now sceptical about AI’s dominance moving forward. Global fund manager GQG Partners is one such entity. After a strong run riding the tech rally, the firm is reportedly rotating out of tech and into the consumer staples sector.

Two notable consumer staples stocks recently catching the attention of investors are Coles Group Ltd (ASX: COL) and Qantas Airways Ltd (ASX: QAN). Brokers currently recommend these two ASX stocks as buys. Here’s why.

Why GQG is shifting away from AI and tech

As to what ASX stocks to buy outside of tech, GQG Partners recently offered some insight. The global fund manager recently slashed its tech exposure, including AI-related stocks like Nvidia, according to The Australian Financial Review.

The GQG team reduced its tech holdings from 43% of the portfolio to just 21%, citing concerns over the sustainability of the AI-driven rally.

“From the semiconductor standpoint, things weren’t broadening out as much – spending was really isolated to that cluster around AI and data centres,” said portfolio manager Brian Kersmanc, per the AFR.

Additionally, GQG found that the market was pricing in some “blue sky scenarios” for these shares. This could impact what ASX stocks investors buy in FY 2025.

“[A]lthough optically [they] looked cheap on a price-to-earnings basis”, Kermansc added, “to get to the estimates that were prevailing in the market, you had to get to some pretty aggressive assumptions”.

Instead, GQG is now focusing on consumer staples stocks. It believes these are more attractively priced. For instance, Coca-Cola Co (NYSE: KO) – now considered a defensive name – is a major holding. This is due to the combination of lower valuations and stable earnings.

“We’re seeing staples stocks trading at 52-week lows because they had a multiple de-rating, falling from around 29 times earnings as people realised they didn’t want to pay a premium for safety because a recession wasn’t happening,” Kermansc said.

Are these two ASX stocks to buy?

Coles shares are currently trading at around $17 apiece, equating to a price-to-earnings (P/E) ratio of 22 times. This represents a significant drop from its P/E of 33 times in January 2021.

Analysts at Morgans suggest that Coles remains an ASX stock to buy. According to my colleague James, the broker has an add rating on Coles with a price target of $18.95, suggesting a potential upside of 11.5% at the time of writing.

For FY 2024, Morgans also forecasts fully franked dividends of 66 cents per share, yielding approximately 3.8%, and 69 cents per share in FY 2025, yielding around 4%.

If an investor were to buy the ASX stock today, the total shareholder return could be around 15.5% over the coming 12–24 months if Morgans is right.

Qantas could be another ASX stock to buy according to Goldman Sachs. Shares in the airline are trading at a P/E ratio of 6.3 times at the time of writing. This is down from a P/E of 22 times in June 2023.

Despite its recent regulatory hurdles, Qantas has caught the eye of investors.

Goldman Sachs rates Qantas as an ASX stock to buy with a price target of $8.05. This indicates a potential upside of over 36% as I write. The brokers also notes that Qantas’ FY 2024/2025 earnings projections are ahead of pre-pandemic levels.

Consider ASX stocks to buy over AI?

AI stocks have enjoyed a massive rally, but the excitement may be waning. GQG Partners’ shift from tech underscores the risks of over-reliance on high-growth sectors with uncertain future prospects.

In contrast, experts say Coles and Qantas could offer stable earnings and dividends, making them potential ASX stocks to buy in economic turbulence.

The post Why these losing ASX stocks could be a better buy than AI right now appeared first on The Motley Fool Australia.

More reading

• Are Qantas or ANZ shares a better buy?
• Can Wesfarmers shares keep beating the ASX 200 index?
• Should Coles shares be in your shopping basket with its FY25 outlook?
• How much could $10,000 invested in Coles shares be worth in a year?
• Here are 3 ASX retirement shares to buy in July

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 and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Microsoft. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s been a rough start to the trading week for ASX shares so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has slumped by 0.35% and is back down to around 7,740 points. But let’s talk about one ASX tech share that is getting even more severely punished today.

That ASX tech share is none other than WiseTech Global Ltd (ASX: WTC). This logistics company closed at $100.30 a share last week. But this morning, those same shares opened at $98.54. They have since dropped a hefty 4.33% to $96.07 each.

It’s a hefty drop for this former WAAAX star. Wisetech shares have had a stellar showing over 2024 to date. Even after today’s plunge, the Wisetech share price remains up a sturdy 26% or so over 2024 to date. The company has also risen by 23.9% over the past 12 months.

But what’s going on this Monday that has elicited this awful drop?

Well, it looks as though a new ASX filing that was released last Friday after market close may be responsible.

This ASX filing revealed that Wisetech co-founders Richard White and Marie Isaacs have offloaded a significant chunk of this ASX tech share.

Should ASX tech share investors be worried about this massive founder sell-off?

Yep, the form reveals that White and Isaacs, through a holding company RealWise Holdings Pty Ltd, sold 478,415 shares of Wisetech between 21 June and 28 June in a series of on-market trades. Realwise received an average sell price of $95.19 per share for these sales, meaning that the holding company has bagged a whopping $45.54 million for these efforts.

Wisetech CEO Richard White owns 91.83% of RealWise Holdings, while Isaacs owns the remaining 8.17%. This means that White has benefitted to the tune of $41.82 million from these sales, while Isaacs has bagged $3.72 million.

So should investors be worried about this Wisetech founder sell-off?

Well, that’s up to them. No investor likes to see the management team of their companies sell down their stakes in the business they are being handsomely paid to manage. After all, it decreases any financial alignment that management has with shareholders.

But founders, CEOs and members of a company’s management have their own financial obligations to tend to. Perhaps they have a large tax bill to pay or a new house they want to buy. Perhaps they just want to diversify their wealth away from one single investment.

Even after these significant sales, White and Isaacs retain massive stakes in Wisetech. White still indirectly owns 117,837,565 shares of this ASX tech share, valued at $11.32 billion at today’s prices. So this sale is something of a drop in the ocean for him.

Meanwhile, Isaacs retains 10,479,200 shares, worth just over $1 billion.

So again, it’s up to Wisetech investors to decide if they approve or disapprove of White and Isaacs’ recent moves regarding this ASX tech share. But judging by today’s share price sell-off, it has put at least some investors offside.

The post Guess which ASX tech share is sinking after $45 million founder sell-down appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• These 3 ASX shares have unstoppable dividend growth
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• 7 excellent ASX growth shares to buy next week

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

S&P/ASX 200 Index (ASX: XJO) coal shares are smoking hot today.

How hot?

Well, at the time of writing, the ASX 200 is down 0.46%.

But don’t blame the big Aussie coal shares for that retrace.

Here’s how these three leading coal stocks are performing at this same time as we head into the Monday lunch hour:

• Whitehaven Coal Ltd (ASX: WHC) shares are up 6.8%
• New Hope Corp Ltd (ASX: NHC) shares are up 3.8%
• Coronado Global Resources Inc (ASX: CRN) up 10.1%

Now, none of these companies have released any price-sensitive information.

So, what’s spurring investor interest?

ASX 200 coal shares lift on Anglo’s woes

Investors look to be snapping up ASX 200 coal shares today after Anglo American (LSE: AAL) reported that it has suspended production at its Grosvenor metallurgical coal mine in Queensland.

Metallurgical, or coking coal, is primarily used for steel making, as opposed to thermal coal, which is mostly used to generate electricity.

The global miner, the subject of a recently rejected takeover offer from BHP Group Ltd (ASX: BHP), said it is halting work after an underground coal gas ignition hit the mine on Saturday.

Anglo American’s workers were all safely evacuated from the mine without injury.

Its mine team is now working with specialist teams from the Queensland Mines Rescue Service and the regulatory authorities to extinguish the underground fire.

Once that’s out, management will assess the steps towards a safe re-entry into the mine. Due to the likely damage underground, it is expected these procedures will take several months.

But some industry insiders fear that may be optimistic. Fears which look to be benefiting ASX 200 coal shares today.

As ABC News reports, Mining and Energy Union industry safety and health representative Jason Hill said workers were being sent home indefinitely, with some fearing the Grosvenor coal mine might never reopen. The mine has previously recorded high gas levels during routine monitoring.

What’s at stake?

As for what’s at stake for the ASX 200 coal shares, Anglo American’s steelmaking coal business is forecast to produce around 8 million tonnes of product in the first half of 2024. The Grosvenor mine is expected to contribute some 2.3 million tonnes of that total.

Looking at the full 2024 calendar year, Anglo’s production guidance for its steelmaking coal business is 15 to 17 million tonnes, of which Grosvenor was expected to contribute around 3.5 million tonnes. That Grosvenor guidance already represented lower production in the second half of 2024 due to a planned longwall move.

Still, the Grosvenor fire means that 1.2 million tonnes of Aussie coal now might not hit the markets in the second half of the year. And the outlook for 2025 remains uncertain.

Anglo American said it would update the market on its steelmaking coal production guidance once more information is available.

As for today, investors appear confident that the ASX 200 coal shares could benefit from the Anglo’s production hit.

The post Why are ASX 200 coal shares smashing the market today? appeared first on The Motley Fool Australia.

More reading

• Which ASX dividend shares are predicted to have the highest yields in FY25?
• What this expert predicts will be the best-performing ASX sectors in FY25
• Retirement planning guide: 710,000 Aussies to retire over next 5 years
• Why did the BHP share price go backwards in June?
• 4 ASX 200 dividend giants to buy in July

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.

ASX growth shares that are growing revenue at a relatively fast pace could achieve good returns for investors.

Smaller businesses can have much more return potential because they are typically much earlier on in their growth journeys than stocks like BHP Group Ltd (ASX: BHP) or Westpac Banking Corp (ASX: WBC).

One of the main elements that I like to look for is businesses with operating leverage where they can grow profit margins as revenue rises, enabling profit to grow even faster than the fast-growing revenue.

Below are two stocks that have global growth ambitions that I’m bullish about.

Siteminder Ltd (ASX: SDR)

This ASX growth share provides software called Siteminder that aims to unlock the full revenue potential of hotels. It also has Little Hotelier, an all-in-one hotel management software that “makes the lives of small accommodation providers easier.”

Siteminder is an important part of the travel sector. It has the largest partner ecosystem in the global hotel industry, generating more than 115 million reservations worth over $70 billion in revenue for its hotel customers each year.

It’s worth noting that Siteminder’s management team includes Trent Innes, who serves as the company’s chief growth officer. Innes previously held the position of managing director at Xero Australia and Asia, where he played a key role in helping the software company achieve 1 million subscribers. It’s evident that Siteminder has a strong team with high-quality individuals.

The company is also growing rapidly – in the third quarter of FY24, revenue rose by 23.3% year over year to $46 million. The contribution from Siteminder’s ‘metasearch’ offering, called Demand Plus, was especially strong, driven by accelerated adoption and strong booking activity. Annualised recurring revenue (ARR) increased 24.8% year over year to $187.6 million.

Profit margins are rising quickly – it reported underlying operating cash flow of $5.1 million for the FY24 third quarter, an improvement from a $3 million loss in the prior corresponding period, which the company attributed to sustained organic growth and operating leverage.

The business is targeting an organic revenue growth rate of 30% In the medium term, which suggests to me that profit could significantly rise from here. It looks good value, in my opinion, after falling around 10% in the past three months.

Corporate Travel Management Ltd (ASX: CTD)

This ASX growth share is one of the world-leading businesses that provides corporate travel management services.

The company has dropped more than 35% since 29 January 2024, making it significantly cheaper. That’s despite the business having a much stronger market position than it did before COVID-19.

Corporate Travel is aiming to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) at a compound annual growth rate (CAGR) of 15% over the next five years through new client wins, a high retention rate and project execution.

The company is aiming for revenue growth of at least 10% per annum over the next five years, with a target of winning $1 billion of new clients in FY25, with this rising to $1.6 billion per annum by FY29.

Corporate Travel also believes it can limit its cost growth to 5% per annum through productivity and innovation projects. This can help grow its market share and increase the usage of automation.

According to the profit estimates on Commsec, the Corporate Travel Management share price is valued at 15x FY25’s estimated earnings and 12x FY26’s estimated earnings. If the ASX growth share achieves those projected profit numbers, it could seem very cheap today.

The post I’d buy these 2 top ASX growth shares in a heartbeat appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in July 2024
• 2 ASX shares that would pass Peter Lynch’s favourite valuation metric
• What’s ahead for ASX 200 travel shares in FY 2025?
• Here are the top 10 ASX 200 shares today
• Near its 52-week low, this ASX growth stock could be the bargain of the year!

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

ASX dividend shares with big dividend yields could be what some investors are looking for in FY25.

The new 2025 financial year has just started (for most businesses) and this could be a good time to consider which stocks may deliver the biggest payouts.

Of course, dividends are not guaranteed and the highest yields of FY25 may not be sustainable in FY26, depending on what happens with their profitability.  

For a business to have a dividend yield of at least 10%, it’s likely that the company has a relatively high dividend payout ratio and a fairly low price/earnings (P/E) ratio.

Big yields from these ASX dividend shares

Forecast dividends are not guaranteed to occur, but analysts expect the upcoming payouts from the below selected stocks for FY25.

ASX coal share New Hope Corporation Ltd (ASX: NHC) is expected to pay a grossed-up dividend yield of 10.4% according to Commsec.

ASX retail share Shaver Shop Group Ltd (ASX: SSG) is projected to pay a grossed-up dividend yield of 11.9% according to Marketscreener.

Retailer Adairs Ltd (ASX: ADH) is forecast to pay a grossed-up dividend yield of 11.25%, according to Commsec.

Office property owner Centuria Office REIT (ASX: COF) could pay a distribution yield of 10.5% according to Commsec.

Salary packaging and fleet management business McMillan Shakespeare Ltd (ASX: MMS) is projected to pay a grossed-up dividend yield of 11.75%, according to Commsec.

Shoe retailer Accent Group Ltd (ASX: AX1) is forecast to pay a grossed-up dividend yield of 10.5%, according to Commsec.

Would I buy these stocks?

I’d be attracted to considering the retailers as ASX dividend share because they could be cyclical opportunities.

Discretionary spending isn’t always going to be consistent – weaker economic conditions can lead to less household spending in the short-term, which hurts retailers. But I believe that things could start improving in the medium-term as wages keep rising and eventually interest rates come down. I think the lower share prices are opportunities with these retailers.

I don’t know enough about McMillan or the salary packaging industry to feel confident about investing in the stock for dividends, or whether the business will be able to achieve long-term earnings growth.

Energy is integral to our western and emerging market economies, so New Hope could continue paying good dividends. However, many countries are talking about moving away from coal in the longer-term, so there could be lower demand for coal in the foreseeable future. I’d be wary of investing with that apparent dynamic to play out in the coming decade or two.

The post Which ASX dividend shares are predicted to have the highest yields in FY25? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 coal shares smashing the market today?
• 2 high-yield ASX shares predicted to pay huge dividends in FY26
• 1 ASX dividend stock to buy that’s down 60%
• Forget term deposits and buy these ASX dividend shares
• 3 ASX dividend stocks to buy with 5% to 7% yields

Motley Fool contributor Tristan Harrison has positions in Accent Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Accent Group, McMillan Shakespeare, and Shaver Shop Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you didn’t have Commonwealth Bank of Australia (ASX: CBA) shares in your portfolio in FY 2024 then you missed out.

During the 12 months, Australia’s largest bank’s shares thumped the market with a gain of 27%.

As a comparison, the ASX 200 index rose 7.8% over the same period. Both figures don’t include dividends.

Why did CBA shares thump the market?

It is worth noting that CBA was not alone when it comes to strong gains in the banking sector.

In fact, as covered here, it was only the fourth best-performing ASX bank share during the period despite its mouth-watering return.

Investors were piling into the sector after a series of results and updates that were in line with expectations boosted sentiment. In addition, the Australian economy held up nicely despite rising interest rates.

In fact, there were no meaningful increases in bad debts in the sector. And with the market believing that the rate cycle is coming to an end and rates will fall from here (maybe after one more hike), the outlook for the sector was looking positive. Particularly given that mortgage competition is expected to ease.

How did CBA perform financially?

During the first half, CBA’s profits held up nicely in the tough economic environment.

The bank’s operating income was up slightly to $13,649 million. This was supported by volume growth and higher volume-based fee income, offset by margin compression.

CBA’s operating expenses increased 4% to $6,011 million due to inflationary pressures and additional spending on technology to support the delivery of strategic priorities.

While this led to cash net profit after tax falling 3% to $5,019 million, it didn’t stop the CBA board from lifting its fully franked interim dividend by 2.4% to $2.15 per share.

Since then, it was more of the same for the bank. During the third quarter, CBA reported a 1% decline in operating income for the three months ended 31 March. Management advised that this reflects one less day in the quarter and slightly lower net interest margins due to continued competitive pressures and customers switching to higher yielding deposits.

CBA reported a quarterly unaudited statutory net profit after tax of $2.4 billion, which was down 3% on the first half average and 5% on the prior corresponding period.

What’s next?

All the major brokers believe that CBA shares are overvalued at current levels.

But it is worth remembering that they were saying the exact same thing 12 months ago.

So, while it seems somewhat unlikely that the bank’s shares will deliver big returns in FY25, it certainly isn’t impossible.

The post Why did CBA shares jump 27% in FY24? appeared first on The Motley Fool Australia.

More reading

• These were the five best ASX bank shares to own in FY24
• Retirement planning guide: 710,000 Aussies to retire over next 5 years
• Want the latest Vanguard Australian Shares Index ETF dividend? Here’s what to do
• The CBA share price trounced the benchmark again in June! Here’s how
• Which ASX shares to buy if interest rates rise (and which to avoid)

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 Rio Tinto Ltd (ASX: RIO) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock closed Friday at $119.00. In late morning trade on Monday, shares are swapping hands for $119.92 apiece, up 0.77%.

For some context the ASX 200 is down 0.33% at this same time.

This comes as the miner reports on its latest sustainable production initiatives.

Rio Tinto share price lifts on low-carbon aluminium

The Rio Tinto share price is in the green after the company announced it will install carbon-free aluminium smelting cells at its Arvida smelter in Quebec, Canada.

This will see the ASX 200 miner using the first technology licence issued by the ELYSIS joint venture. Rio Tinto noted this investment would support the ongoing development of the ELYSIS technology and enable the company to build expertise in its installation and operation.

Management said the facility will use the same technology that’s already been successfully demonstrated at the ELYSIS Industrial Research and Development Center, also in Quebec.

Rio Tinto will design, engineer, and build a demonstration plant equipped with ten pots operating at 100 kiloamperes (kA). A new joint venture will own the plant.

Rio Tinto will invest US$179 million in the JV, and Quebec’s state government will invest US$106 million via Investissement Quebec. That will see the equity partners kick in a total investment of US$285 million (AU$426 million).

The plant will have the capacity to produce up to 2,500 tonnes of commercial-quality aluminium per year without direct greenhouse gas emissions. The first production is targeted for 2027.

Commenting on the green production plan that could offer the Rio Tinto share price some ongoing tailwinds, the miner’s Aluminium CEO Jerome Pecresse said:

This investment will further strengthen Rio Tinto’s industry-leading position in low-carbon, responsible aluminium in North America with our hydro-powered smelters and our recycling capacity.

Becoming the first to deploy the ELYSIS carbon-free smelting technology is the next step in our strategy to decarbonise and grow our Canadian aluminium operations.

In addition to delivering even lower-carbon primary aluminium for our customers, this investment will allow Rio Tinto to build its expertise on installing and operating this new technology, while the ELYSIS joint venture continues its research and development work to scale it up to its full potential.

Quebec Minister of Economy, Innovation and Energy Pierre Fitzgibbon added: “This is a technological innovation with unprecedented benefits for our aluminium sector, which remains an undisputed world leader.”

Potentially offering some additional support for the Rio Tinto share price, the miner said ELYSIS joint venture partner, Alcoa Corp (NYSE: AA), will have the option to purchase a portion of the aluminium produced over the first four years at the demonstration plant through an offtake agreement.

The post Rio Tinto share price marching higher amid $426 million ‘industry-leading’ step appeared first on The Motley Fool Australia.

More reading

• What this expert predicts will be the best-performing ASX sectors in FY25
• Buy Rio Tinto and these ASX dividend shares in July
• Could this move unlock $40 billion for Rio Tinto shares?
• 5 things to watch on the ASX 200 on Thursday
• Buy these ASX dividend shares for 5% to 6% yields

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 Fortescue Ltd (ASX: FMG) share price has been through some pain recently. It’s down 21% from 22 May 2024 and it has fallen 27% in the past six months, as shown on the chart below.

It has been one of the worst-performing ASX blue chips in 2024 to date.  

When investments fall heavily, there is an opportunity to buy them at a discounted price. There’s no guarantee that the ASX mining share will rebound in the short term or longer term. However, history has shown that commodity prices can move cyclically, and therefore, the Fortescue share price could be a candidate for a contrarian opportunity when it’s at a low price.

Iron ore price sinks

The iron ore price fell by approximately 10% in June amid uncertainty regarding demand from China, the top consumer of iron ore. According to Trading Economics, there have been signs of “abundant supply” in the country, which “weighed on the market”.

On top of that, Iron ore production from Chinese miners increased 13.4% year over year from January 1, 2024, to May 2024, while iron ore imports rose by 7%. Despite this, steel production declined by 1.4% year over year.

There is uncertainty about what the upcoming Chinese manufacturing PMI (purchasing managers’ index) figures will show – it could provide useful insights into the world’s second-largest economy.

However, Trading Economics also points to some positives. For example, Beijing reportedly recently relaxed homebuying curbs which could boost the property market and increase steel demand for housing construction. Some of those measures, revealed at the end of June, included lower mortgage rates and minimum downpayment ratios which have already been enacted.

Iron ore is the key earnings generator for Fortescue, so weakness in the iron ore price isn’t ideal, but it explains why the Fortescue share price has fallen as far as it has.

Is this a good time to invest at this Fortescue share price?

I believe it can be beneficial to invest in cyclical stocks when they are at their lowest points in the cycle. I wouldn’t describe the iron ore price as being at a depressed level, as it is still trading above US$100 per tonne. If it were to drop below that level, I would anticipate a drop in Fortescue shares. Should Fortescue shares fall below $20, I think it could be a smart idea to consider investing.

I should mention that the company is also becoming increasingly involved with green energy through green hydrogen, green ammonia, and high-quality batteries. We also learned recently that Fortescue is selling software related to electric batteries, which could be another nice earner for the business if it wins more customers. The Fortescue share price sell-off means we can get cheaper exposure to this side of the business.

According to the estimates on Commsec, the Fortescue share price is valued at under 9x FY25’s estimated earnings with a grossed-up dividend yield of 9.4%.

The post Is the Fortescue share price too low to ignore? appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 mining shares just downgraded by top brokers
• Are Fortescue shares a contrarian buy after falling 20% in a month?
• Is the FY25 outlook for Fortescue shares compelling?
• Top 10 most traded ASX shares and US stocks in May
• 5 reasons everyone’s talking about Fortescue shares this week

Motley Fool contributor Tristan Harrison has positions in Fortescue. 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.

Imagine life without electricity. Our modern lifestyles increasingly rely on energy, and this dependency intensified post-pandemic as digitalisation swept through every aspect of daily life.

In parallel, industries are facing mounting demands from artificial intelligence (AI) and digital infrastructure, heightening the need for reliable and abundant electricity like never before.

Tesla Inc CEO Elon Musk predicts power shortages will be the next big challenge. In a March 2024 interview at the Bosch Connected World conference, he said:

A year ago, the shortage was chips, neural net chips. Then, it was very easy to predict that the next shortage will be voltage step-down transformers. Then, the next shortage will be electricity.

They won’t be able to find enough electricity to run all the chips. I think next year, you’ll see they just can’t find enough electricity to run all the chips.

As I highlighted here, Australia is not free from this global trend.

In light of this, do you wonder if there are any ASX small-cap shares that may capitalise on the anticipated electricity shortages and capital investments? I’ve done the homework for you.

IPD Group Ltd (ASX: IPG)

IPD Group is a leading distributor of electrical and automation solutions in Australia, with more than 70 years in the industry. Partnering with global giants like ABB Ltd and General Electric Co., IPD Group offers a comprehensive range of services encompassing power distribution, industrial control, and renewable energy solutions.

Recently, IPD Group expanded its portfolio into solar energy by acquiring Addelec. This enhanced its capability to deliver full-scale photovoltaic (PV) system solutions.

IPD Group expects robust growth for FY24, forecasting earnings before interest, taxes, depreciation, and amortisation (EBITDA) between $39 million and $39.5 million — a 42% increase from the previous year. This growth is largely driven by strategic acquisitions like EX Engineering and CMI Operations.

Through these acquisitions, IPD Group aims to further expand its value chain. The company now provides comprehensive support for critical infrastructure development, including data centres and electric vehicle (EV) charging facilities.

The IPD Group share price has lifted by 10% over the past year, and its shares are trading at 16x FY25 EPS estimates by S&P Capital IQ.

DUG Technology Ltd (ASX: DUG)

Founded in Perth in 2003, DUG Technology specialises in advanced computing and data solutions. From two founders — Dr Matthew Lamont and Dr Troy Thompson — DUG has grown to more than 250 staff with offices in Australia, the United States, the United Kingdom, Malaysia, and most recently, Abu Dhabi.

With a focus on delivering high-performance computing (HPC) solutions to industries such as oil and gas exploration, DUG is known for its expertise in seismic processing and imaging. The company uses cutting-edge computational techniques to enhance data processing speeds and accuracy.

DUG highlights that its new technology, Multi-Parameter Full Waveform Inversion (MP-FWI) imaging technology, consumes only 10% of the time and 7% of the manpower compared to conventional imaging solutions.

The company uses a unique cooling mechanism, DUG Cool, which the company claims cuts power usage by up to 51% and significantly reduces maintenance.

In 3Q FY24, the company reported a 39% increase in revenue and a 24% growth in EBITDA. DUG’s co-founder and managing director, Dr Lamont, is optimistic about the future. He said:

These are very exciting times for DUG. The order book funnel, which includes project awards and risk-weighted opportunities and leads, remains very strong.

Following a decision to establish a business development presence in Abu Dhabi, a great deal of opportunity has been unearthed. As a result, plans are underway to start a new business unit in the Middle East. This will be our fourth business unit following Australia/Asia, Americas and UK/Europe/Africa.

The DUG share price has surged 136% over the past year, placing its shares at 40x their FY25 EPS estimates.

The post 2 ASX shares to benefit from anticipated power shortages appeared first on The Motley Fool Australia.

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

It has been a shocking start to the new financial year for shareholders of one ASX gold stock.

This morning, the gold miner dropped a bombshell announcement that revealed that receivers have been called in despite the sky-high gold price.

Which ASX gold stock is going bust?

This morning, it was revealed that Calidus Resources Ltd (ASX: CAI) is on the brink and has called in administrators.

In a very brief statement from the administrators, it says:

Notice is hereby given that Hayden White and Daniel Woodhouse of FTI Consulting (Administrators) were appointed as joint and several voluntary administrators. […] It should be further noted that Richard Tucker and John Bumbak of KordaMentha were appointed as Receivers and Managers by the senior secured creditor Macquarie Bank to Calidus Resources, Keras (Pilbara) and Calidus Blue on 28 June 2024.

This will no doubt come as a big surprise to shareholders. Particularly given how the ASX gold stock only recently raised $22.5 million from investors and restructured its operations.

Commenting at the time, Calidus’ managing director, Dave Reeves said:

This financial restructure will deliver a host of substantial benefits to Calidus, headlined by increased production and cashflow this year. This will in turn help us achieve our target of producing 120,000oz per annum within three years.

What’s going on?

It remains unclear what has triggered the voluntary administration. However, it is worth noting that the company owes Macmahon Holdings Ltd (ASX: MAH) a sizeable amount.

In fact, Macmahon shares are sinking on the news. It responded to the receivership bombshell, commenting:

Macmahon understands that the appointment of the Receivers and Managers had been made in response to the decision by Calidus’ Board of Directors to appoint Voluntary Administrators on 28 June 2024 as outlined in the ASX announcement by KordaMentha dated 1 July 2024.

Macmahon provides mining and drill and blast services to Calidus at their Warrawoona mine. Macmahon’s preliminary assessment of net current exposure under the contract is circa $33.9 million. Macmahon also holds an equity interest in Calidus listed shares with a value of $5.7 million at the close of trading on 28 June 2024.

One positive for the ASX gold stock is that receivers want to keep its mine operating during the process. It said:

Macmahon has received confirmation from the Receivers and Managers that Macmahon’s ongoing services are required. These ongoing services during the receivership will be governed by purchase orders and payment from the Receivers and Managers, thereby minimising any increase in net current exposure. Macmahon will continue to monitor developments and update the market as necessary.

Here’s hoping the gold stock finds a way out of this mess.

The post ASX gold stock goes bust despite soaring precious metal price 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 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.