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Superannuation services provider Vanguard says there has been a “shift in asset allocations” among investors with self-managed superannuation funds (SMSFs) in 2024.

Vanguard says SMSF trustees have reduced their allocation to cash (from 22% to 18%) and direct shares (from 31% to 27%) and nearly doubled their allocation to exchange-traded funds (ETFs) (from 5% to 8%).

ASX shares, including ETFs, are the preferred assets of SMSF investors. ATO figures show that $271 billion was invested in shares out of a total of $933 billion in assets under management in the March quarter.

Cash and term deposits are the second favourite category among SMSFs, with $145 billion invested.

Why are self-managed superannuation investors buying ETFs?

Vanguard said the increased allocation to ETFs was a trend among advised and non-advised SMSF investors. In fact, non-advised SMSFs accounted for the bulk of the increase.

This reflects general trends showing ASX investors are ploughing more money into ETFs as they learn more about them.

ETFs are a relatively new type of investment. They first traded on the New York Stock Exchange in 1993 and on the ASX in 2001.

Vanguard says new SMSF investors intend to contribute to the trend.

A survey of 2,200 SMSF trustees for its 2024 Investment Trends Self Managed Super Fund (SMSF) Report found nearly 60% of newly established SMSFs intend to invest in ETFs over the next 12 months.

Vanguard said there were three reasons why self-managed superannuation investors were turning to ETFs. They are easy diversification, exposure to specific overseas markets, and liquidity.

More Aussies setting up SMSFs to take control of investments

Vanguard says an increasing number of Australians are setting up SMSFs to take control of their superannuation savings.

Renae Smith, chief of Personal Investor at Vanguard Australia, said:

The sustained rebound in SMSF establishment rates reflects the growing interest and confidence among investors in managing their own superannuation funds and the autonomous nature of this cohort.

Their desire for control or choice over investment products or their fund’s asset allocation far outweighs the time, effort and complexity required in managing their funds.

There were a net 7,099 SMSFs established in the March quarter, according to the ATO. This was the third-biggest quarterly increase over the past five years.

There are now 616,400 SMSFs in operation in Australia, with 1.15 million members. As we recently reported, the average wealth per SMSF member is $780,254.

The largest cohort of SMSF members is 75–84-year-olds (15.1% of members), followed by 60–64-year-olds (12.7%) and 65–69-year-olds (12.1%).

The superannuation preservation age is between 55 and 60 years, depending on when you were born.

The post Which stocks are rising in popularity among self-managed superannuation investors? appeared first on The Motley Fool Australia.

More reading

• These ASX shares could rise 20% and ~40%
• 4 of the best ASX ETFs to buy and hold for a decade
• Brokers name 3 ASX dividend shares to buy
• Retirement regret: What 1 in 4 Aussies wish they’d done after quitting work
• Down 15% in 4 months, is it time to buy this ASX growth stock?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

Are you looking for big returns for your investment portfolio?

Of course you are! Who wouldn’t want to grow their wealth at a rapid rate?

So, without further ado, let’s take a look at three ASX shares that analysts have named as buys and are tipping to rise strongly. Here’s what you need to know about them:

Flight Centre Travel Group Ltd (ASX: FLT)

Morgans thinks that Flight Centre could be an ASX share to buy for big returns.

This is due to the benefits of its transformed business model and the travel recovery. It said:

FLT has the greatest risk, reward profile of our travel stocks under coverage. The risk is centred around execution given its changed business model, while the reward is material if FLT delivers on its 2% margin target. If achieved, this would result in material upside to consensus estimates and valuations. FLT is targeting to achieve this margin in FY25. With greater confidence in the travel recovery and the benefits of Flight Centre’s transformed business model already emerging, we think the company is well placed over coming years.

Morgans has an add rating and $27.27 price target on its shares. This implies potential upside of 38% over the next 12 months.

Smartgroup Corporation Ltd (ASX: SIQ)

The team at Bell Potter is bullish on Smartgroup and sees the salary packaging company as an ASX share to buy.

It believes the company would be a good option due to its exposure to the growing electric vehicles market. It said:

SIQ provides a unique exposure to the growing demand profile for renewable fuels and vehicle electrification on the ASX. Australia will need to achieve a 50% sales share for low emission vehicles by 2035 to meet transport emission targets of 95.3 Mt CO₂-e; and we view the New Vehicle Efficiency Standard as an additional means to meet this ambition through incentivised dealer volumes. EVs currently represent around 1% of the light duty vehicle stock in Australia.

Bell Potter has a buy rating and $11.00 price target on its shares. This suggests that upside of 28% is possible from current levels.

Worley Ltd (ASX: WOR)

Analysts at Goldman Sachs think that this engineering company’s shares are undervalued at current levels. Particularly given how the company remains well-placed to benefit from the energy transition. It said:

WOR is well positioned to play a role in enabling the transition from fossil fuels to a more sustainable energy mix in the LT, leveraging its experience in providing engineering and maintenance services for complex energy/chemicals works, existing client relationships, and management’s stated focus on expanding the company’s transition footprint.

Goldman has a buy rating and $17.50 price target on the ASX share. Based on its current share price of $14.25, this implies potential upside of 23% for investors over the next 12 months. The broker also expects a 3.7% dividend yield in FY 2024.

The post These ASX shares could rise 20% and ~40% 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 Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’re looking for an easy way to invest your money for the long term, then it could be worth looking at the exchange traded funds (ETFs) in this article.

Here’s why they could be quality long-term options for investors this month:

Betashares Energy Transition Metals ETF (ASX: XMET)

The first ASX ETF that could be a good long term option is the Betashares Energy Transition Metals ETF. It gives investors easy access to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements. These are all metals that will be pivotal to the decarbonisation of the planet. Analysts at Betashares named it on the fund manager’s list of 12 ASX ETFs ideas for 2024. They note that “both electric cars and clean energy use notably more metals than their conventional counterparts, and many of these minerals have highly concentrated and insecure supply chains.”

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ASX ETF that could be a great long term option is the BetaShares Global Cybersecurity ETF. It provides investors with access to the leading players in the cybersecurity sector. This is a big market to be in. Betashares highlights that “an estimate of the total addressable market by McKinsey suggests that the cybersecurity market is $1.5-$2.0 trillion globally, and at best only 10% penetrated with a very long runway for growth.” This gives the companies included in the fund a significant growth opportunity over the next decade.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

If you are looking for long term options, then it is hard to ignore the extremely popular BetaShares NASDAQ 100 ETF.  It isn’t hard to see why so many investors buy this ETF. That’s because it gives investors access to 100 of the largest non-financial shares on the famous NASDAQ index. These are the giants of our age. They provide ours phones, electric vehicles, social media sites, streaming services, spreadsheets, online stores, search engines, and graphics cards we use daily.

iShares S&P 500 ETF (ASX: IVV)

A fourth ASX ETF that could be a top option for investors is the iShares S&P 500 ETF. This fund give you access to 500 of the top listed companies on Wall Street. This means that you will be investing in a diverse group of shares, including countless household names, from a range of different sectors. This includes the majority of the companies included in the NASDAQ 100 ETF.

The post 4 of the best ASX ETFs to buy and hold for a decade appeared first on The Motley Fool Australia.

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• Want to buy Nvidia but don’t have a US share account? Buy these ETFs instead
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• Can the iShares S&P 500 ETF (IVV) continue its strong run in FY25?
• Why these 5 ASX ETFs could be quality options for investors

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Cybersecurity ETF, BetaShares Nasdaq 100 ETF, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF and BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you hunting for some ASX dividend shares to add to your income portfolio next week?

If you are, then take a look at the three listed below that brokers rate as buys.

Here’s what they are expecting from them in the near term:

Challenger Ltd (ASX: CGF)

Analysts at Goldman Sachs think that this annuities company could be an ASX dividend share to buy. The broker currently has a buy rating and $7.50 price target on its shares.

It likes “CGF because: 1) it has exposure to the growing superannuation market across Life and Funds Management; 2) higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins; 3) its annuity book growth looks well supported through a diversified distribution strategy.”

As for income, the broker is forecasting fully franked dividends of 26 cents per share in FY 2024, 27 cents per share in FY 2025, and then 28 cents per share in FY 2026. Based on the current Challenger share price of $6.74, this will mean dividend yields of 3.85%, 4%, and 4.15%, respectively.

Dexus Industria REIT (ASX: DXI)

Another ASX dividend share that has been named as a buy is Dexus Industria. It is a real estate investment trust with a focus on industrial warehouses.

Morgans is a fan of the company. This is due to its belief that “DXI’s industrial portfolio remains robust with the outlook positive for rental growth.”

The broker expects this to support dividends per share of 16.4 cents in FY 2024 and then 16.6 cents in FY 2025. Based on the current Dexus Industria share price of $3.02, this will mean dividend yields of 5.4% and 5.5%, respectively.

Morgans has an add rating and $3.18 price target on its shares.

Transurban Group (ASX: TCL)

A third ASX dividend share that could be a buy for income investors according to brokers is Transurban. It manages and develops urban toll road networks in Australia and the United States.

Citi is bullish due to its positive exposure to inflation. It has a buy rating and $15.50 price target on its shares.

Its analysts are also expecting some good yields from its shares in the near term. Citi is forecasting dividends per share of 63.6 cents in FY 2024 and then 65.1 cents in FY 2025. Based on the current Transurban share price of $12.55, this will mean yields of 5.1% and 5.2%, respectively.

The post Brokers name 3 ASX dividend shares to buy appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 and Transurban Group. The Motley Fool Australia has recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are 4.2 million retirees in Australia today, and according to new research by life insurer TAL, 28% of them wish they’d spent their money more freely and enjoyed the early years of their retirement more.

A further 16% wished they’d worried less about saving their superannuation for a rainy day.

TAL has just released a research paper documenting what retirees wish they’d known before retiring.

Let’s delve deeper and discover the lessons this provides for pre-retirees still in the workforce today.

Retirement regret 1: Not planning well enough

The research shows 22% of current retirees are concerned their superannuation monies will run out. This has led to financial stress among 32% of retirees aged over 80 years as they draw down their savings.

The AFSA Retirement Standard provides guidance on how much Australians need for retirement.

It says Australian couples need $690,000 in superannuation, and singles need $595,000, plus full home ownership and a part-pension, to afford a ‘comfortable retirement’.

Alternatively, just $100,000 in superannuation for couples and singles, plus a part-pension and full home ownership, is enough for a ‘modest retirement’.

These figures assume retirees draw down their super capital and invest it with a return of 6% per annum.

According to the Australian Bureau of Statistics (ABS), superannuation is the main source of income for more than one in four retirees and at least one source of income for almost 40% of retirees.

Retirement regret 2: You may be forced to retire early

Many people expect to retire between the ages of 65 and 69 but 59% retired earlier, according to TAL.

This reinforces the need to plan ahead financially, as you may not have until your 60s to get organised.

A new report from the ABS reveals four of the top five reasons for retirement involve unforeseen circumstances. Examples include redundancy, injury, or having to care for someone else.

Ashton Jones, General Manager of Growth, Retirement & Wealth Partnerships at TAL, said:

When retirement arrives sooner than expected, it can derail a person’s ability to prepare as much as they’d like to.

Some common themes that emerged for retirees were that many wish they’d put more into superannuation when they had the chance, or that they’d started salary sacrificing earlier.

Financial advisory Findex says more than one in two Australians are unaware of the significant tax savings available through salary sacrificing or making extra personal contributions to their superannuation.

Retirement regret 3: Not expecting to live this long!

The TAL report reveals one-third of retirees expect to live longer than they anticipated when they first retired. TAL says this highlights the benefits of retirement products that pay an income for life.

Upon retiring, Australians typically take one of five actions with their superannuation nest eggs.

The most popular choice is converting super into a regular income stream via a pension account (34%). A further 27% left their money in their existing super account. A lump sum was taken by 15%. Finally, 18% moved some or all of their super monies into a lifetime retirement income stream, like an annuity.

Were retirees happy with the decisions they made?

With the benefit of hindsight, it seems many people would have made different financial choices in retirement.

The research showed 56% of retirees who withdrew all or most of their super were happy with that decision.

By contrast, 87% of retirees who moved their money into a lifetime income stream or pension account were happy with that call.

The post Retirement regret: What 1 in 4 Aussies wish they’d done after quitting work appeared first on The Motley Fool Australia.

More reading

• 4 of the best ASX ETFs to buy and hold for a decade
• Brokers name 3 ASX dividend shares to buy
• Down 15% in 4 months, is it time to buy this ASX growth stock?
• Here’s when Westpac says the RBA will now cut interest rates
• How to turn your savings account into a gold mine starting with $10,000

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

PWR Holdings Ltd (ASX: PWH) is a leader in advanced cooling systems, supplying Formula 1 teams, automotive and other tech industries.

Its shares have consistently delivered good returns to their holders. However, since hitting its all-time high of $12.98 in February following its robust 1H FY24 results, the shares have traded weaker, down more than 15%.

Is this recent drop a good time to buy this ASX growth share?

A global leader in cooling systems

Established in 1997 by its current CEO, Kees Weel, PWR Holdings designs, develops, and manufactures advanced cooling systems.

But it’s more than just a radiator producer. The company is a global leader in this niche, delivering high-performance products across the motorsport, automotive, aerospace and defence sectors. In 1H FY24, the company reported a 22% growth in its revenue to $64.2 million.

The motorsport sector is the largest business unit, representing 47% of its 1H FY24 revenue. The company is renowned for its cutting-edge cooling systems used in high-performance motorsports, including Formula 1. PWR’s products are designed to withstand the extreme conditions of competitive racing.

In the automotive sector, representing 22% of its revenue, PWR provides bespoke cooling solutions for high-end and luxury vehicles. Its products are designed to enhance the performance and reliability of supercars and luxury automobiles.

The aerospace and defence sector is relatively new but growing rapidly, with its revenue contribution rising to 12% in 1H FY24 from just 7% a year ago.

PWR Holdings serves a diverse customer base across multiple continents. For the last 12 months to December 2023, PWR generated approximately 90% of its total revenue overseas, mainly in the United Kingdom and the United States.

Superior margins and return on investment

Its precision-focused product portfolio contributed to superior profit margins. PWR Holdings consistently delivers gross margins of 77% to 80%. Operating profit margins have a wider range but are still well above 20%. This level of profitability is exceptional for a manufacturer.

Such high margins flow down to its returns on equity (ROE) of approximately 29%. Impressively, the company maintained such high ROEs over the past decade, with the lowest point being 24% in FY20 during the COVID-19 pandemic.

Are PWR Holdings shares too expensive?

PWR Holdings has demonstrated robust financial performance, driven by its diversified revenue streams and strong market position.

But, some investors may find its current valuations too lofty.

PWR Holdings shares are currently traded at 34x FY25 earnings estimates by S&P Capital IQ. While this is high compared to other manufacturers on the ASX, this is actually not too bad relative to its own price-to-earnings (P/E) ratio history of 20x to 52x.

The market anticipates PWR Holdings’ earnings per share to increase by more than 20% each year in FY25 and FY26. If the company can meet these expectations, the current multiple may still be justified.

The PWR Holdings share price closed flat at $10.96 on Friday. At the current price, the shares offer a dividend yield of 1.25%.

The post Down 15% in 4 months, is it time to buy this ASX growth stock? appeared first on The Motley Fool Australia.

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• 3 of the best growth-focused ASX shares to buy in June

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

Last week, the Reserve Bank of Australia (RBA) held its latest monetary policy meeting to decide on interest rates.

As was widely expected by the market, the RBA board decided to leave the cash rate unchanged at 4.35%.

The central bank noted that inflation remains above target and is proving persistent. As a result, the board “expects that it will be some time yet before inflation is sustainably in the target range.”

What does this mean for interest rates? Will they be going higher before they go lower? Let’s see what the economics team at Westpac Banking Corp (ASX: WBC) is saying following the RBA meeting.

What is Westpac saying about interest rates?

Besa Deda, the Chief Economist from Westpac Business Bank, has been running the rule over the RBA’s remarks.

According to the latest Westpac Weekly economic report, Deda notes that the central bank doesn’t sound overly confident that inflation will fall to its target range. The chief economist said:

Governor Bullock’s remarks, together with the changes to the accompanying Board statement, reveal the RBA has become more alert to upside inflation risks. Additionally, the Board appears less confident inflation is moving sustainably towards the inflation target within a reasonable timeframe.

In perhaps one of the more telling remarks of the press conference, Bullock said “we need a lot to go our way if we are going to bring inflation down to the 2–3% target” and the economy’s narrow path is “getting a bit narrower.”

However, the good news for borrowers is that Deda doesn’t believe the RBA will take interest rates higher from here. This is because Australia’s oldest bank continues to believe that the next quarterly inflation reading will come in lower than what the RBA is forecasting.

In light of this, Westpac remains confident that the next move by the central bank will be to lower interest rates in November. She added:

Our inflation forecasts for the upcoming June quarter report are below that of the RBA’s, leaving us comfortable with our view that the next move in the cash rate will be down and arrive in November. But we acknowledge there’s a greater risk of rate relief slipping into next year. Swap markets have no rate cuts priced for this year and two rate cuts priced in for 2025. The timing of the first rate cut has been pushed out from February to April next year after today’s meeting.

Westpac is forecasting interest rates to fall to 4.1% in November, 3.85% by March 2025, 3.35% by September 2025, and then 3.1% by December 2025.

The post Here’s when Westpac says the RBA will now cut interest rates appeared first on The Motley Fool Australia.

More reading

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

If you have $10,000 sitting in a savings account and no plans for it, then it could be worth putting it to work in the share market.

That’s because the potential returns on offer in the share market could turn your savings into a gold mine if you are willing to be patient.

Turn $10,000 into a gold mine

If you leave $10,000 in a Commonwealth Bank of Australia (ASX: CBA) saving account, it will grow. But at a much slower rate compared to what would be expected from ASX shares.

For example, let’s imagine you are able to average a 4% interest rate on your savings account over the next 20 years. This would turn your $10,000 into approximately $22,000.

Now let’s imagine that you also add an extra $10,000 to your account each year. Doing this for 20 years with an average 4% interest rate would lead to your savings account growing to be worth $330,000.

That’s a bit of a gold mine itself, but just wait until you see what could happen with the share market.

Share market vs savings accounts

Over the long term, the share market has generated an average total return of approximately 10%.

And while there’s no guarantee that this will happen again in the future, I think it is reasonable to base our assumptions on this return.

If you were to invest your $10,000 into ASX shares and averaged a 10% per annum return, your investment portfolio would compound to be worth $67,000 in 20 years.

That’s $45,000 more than if you had just left it in your savings account for two decades.

Now let’s see what would happen if you put an additional $10,000 into the share market each year over the 20 years.

If you did this and achieved a 10% per annum return, your investment would grow materially and become worth approximately $700,000.

That is $370,000 greater than what would have happened if you just stayed with your savings account.

And while it is worth remembering that savings accounts are risk free and ASX shares carry risk, I believe the potential rewards are compelling enough to justify choosing stocks.

Which ASX shares should you buy?

Rather than risking your money in speculative stocks, investors may want to consider buying companies that have strong business models, sustainable competitive advantages, and fair valuations.

This is a strategy that Warren Buffett has used for decades. And given that he has smashed the market return since the 1950s, it’s fair to say the strategy has its merits.

The post How to turn your savings account into a gold mine starting with $10,000 appeared first on The Motley Fool Australia.

More reading

• Can the good times keep rolling for ASX 200 bank shares in FY25?
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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.

The Woolworths Group Ltd (ASX: WOW) share price has fallen significantly over the past year, as the chart below shows. Currently, it has declined 16% over the past 12 months.  

However, the Woolworths share price has lifted more than 10% since I called it out as a solid buy in early May.

I believe it’s still an attractive opportunity, with more upside in its recovery and longer-term growth.

Ongoing sales growth

The strong sales tailwinds of COVID-19 demand and inflation appear to have subsided. However, the company continues to deliver revenue growth.

In the third quarter of FY24, Australian food sales increased 1.5% to $12.6 billion, while Australian business-to-business (B2B) sales rose 3.2% to $1.1 billion. Total third-quarter sales (including New Zealand and BIG W) sales rose 2.8% to $16.8 billion.

Despite cycling against a very strong FY23 third quarter, where Australian food sales rose 7.6%, Woolworths’ supermarkets were still able to report growth.

It also reported that adjusted’ sales growth in April was “broadly in line” with the third quarter, with inflation continuing to moderate and the number of items sold showing “ongoing modest growth”.

Considering the current economic conditions, I think Woolworths’ recent resilient sales performance has demonstrated its strong market position.

Strong e-commerce results

Woolworths is achieving excellent growth with its e-commerce sales, and if this growth could continue, it could play a more significant role in accelerating growth and helping support the Woolworths share price.

In the FY24 third quarter, WooliesX (which includes e-commerce) grew 17.8% to $1.63 billion.

Woolworths said its e-commerce sales penetration reached 12.4%, an increase of 178 basis points (1.78%) over the prior year.

With the ongoing digitalisation of the economy, Woolworths is leading the way when it comes to online food shopping. Coles Group Ltd (ASX: COL) reported $856 million of e-commerce sales in the FY24 third quarter, much less than Woolworths.  

I think Woolworths’ digital sales can be an important driver of earnings in the coming years.

Solid long-term earnings growth projected

I don’t believe Woolworths is the type of business that will deliver extraordinary earnings growth — supermarket retailing is usually consistent year to year. However, Woolworths is projected to deliver net profit after tax (NPAT) of $1.63 billion in FY24 and $1.64 billion in FY25.

However, after FY25, the broker UBS predicts that Woolworths’ earnings will rise at a good pace in the next few years.

UBS suggests the company’s net profit could rise 7.4% to $1.76 billion in FY26, lift 11.6% to $1.96 billion in FY27 and then rise 10.8% to $2.18 billion.

Those numbers suggest the Woolworths share price is valued at 25x FY24’s estimated earnings and 19x FY28’s estimated earnings.

It’s also projected to pay a grossed-up dividend yield of 4% in FY24 and 5.5% in FY28.

With good profit growth projected in the coming years, I’d say the Woolworths share price is a solid buy at the current level.  

The post The Woolworths share price is down 16%: Time to buy the stock? appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy now
• These 3 top ASX 200 shares just earned substantial broker upgrades. Here’s why
• Could Woolworths shares beat the market in FY25?
• Buy these ASX shares for a winning retirement portfolio
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25

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

ASX 200 bank shares have had a ripper six months of share price growth. This period has included new multi-year highs for all bank stocks except one and a new all-time peak for the biggest of the bunch.

Australia’s biggest bank, Commonwealth Bank of Australia (ASX: CBA), once again reset its record high on Friday, reaching $128.25 per share.

This put it within striking distance of overtaking mining behemoth BHP Group Ltd (ASX: BHP) as the most valuable company on the ASX 200 by market capitalisation.

BHP is the biggest mining company in the world, with a market cap of $218.5 billion at its intraday high on Friday. At CBA’s peak share price yesterday, its market cap was approximately $214.6 billion.

Also this week, National Australia Bank Ltd (ASX: NAB) shares reached a nine-year high of $36.42, and Bendigo and Adelaide Bank Ltd (ASX: BEN) soared to its highest price in almost five years at $11.42.

All of the Big Four ASX 200 bank shares, along with Macquarie Group Ltd (ASX: MQG) and Bendigo Bank, have hit multi-year peaks this year. The Bank of Queensland Ltd (ASX: BOQ) is the only exception.

As shown below, talk of interest rates nearing their peaks back in November set off this run of price growth.

Such a sustained run is a bit unusual, given ASX 200 bank shares are traditionally seen as dividend shares, not growth stocks (with the exception of CBA and Macquarie).

So, can the good times keep rolling in FY25? Let’s find out.

What the experts expect from ASX 200 bank shares in FY25

In a note this month, Goldman Sachs said ASX 200 bank shares valuations are “skewed to the downside” from here.

The broker notes that Aussie banks’ return on tangible equity (ROTE) was the world’s second-highest on average in 2015. Today, the banks’ ROTE is the lowest of comparable global banks. This is due to compressed net interest margins (NIMs) and reduced low capital-intensive non-interest income.

Despite this, ASX 200 bank shares remain the most expensive in the world. The broker notes that “this valuation discrepancy has expanded in recent times, despite weaker relative profitability”.

The broker said: “We recently took a more negative view on Australian banks, reflecting absolute and domestic relative valuations being heavily skewed to the downside.”

Philip King, CIO at Regal Funds Management, said Australian banks are being “attacked from all angles” by new competitors.

They include buy now, pay later operators, non-bank lenders, and the burgeoning private credit sector.

King is holding a short position on CBA shares. He expects earnings per share (EPS) to fall over the next 10 years.

Schroders head of Australian equities Martin Conlon says ASX 200 bank shares’ profits will be “flat at best” unless they can wind back costs, which is difficult for any business to do in today’s economy.

Conlon said: “We have very indebted consumers already. Getting them more indebted is tricky.”

Asset Management portfolio manager Dominic Mlcek says ASX 200 bank shares are facing a “negative environment”. He questions their “lofty valuations” today.

“Given the lack of growth outlook in our view, we’re maintaining an underweight exposure towards the big four,” Mlcek said.

In light of all this, let’s take a look at some 12-month share price targets for the ASX 200 bank shares and compare them to where they are trading today.

Bank share prices compared to FY25 targets

On Friday, Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares closed at $28.94, down 0.86% (see our FY25 outlook article). UBS has a price target of $30. Goldman has a buy rating and target of $28.15.

Westpac Banking Corp (ASX: WBC) shares finished at $27.24 on Friday, down 0.037% (see our FY25 outlook article). Goldman Sachs has a sell rating and target of $24.10. Morgans has a hold rating and target of $24.15. Citi has a sell rating and a $24.75 target. Morgan Stanley has an underperform rating and a $24.50 target.

NAB shares closed at $36.21 on Friday, up 0.055% (see our FY25 outlook article). UBS has a sell rating on NAB shares due to a “fully valued” price. Its 12-month target is $30.

The CBA share price ended the session at $127.68 on Friday, down 0.055% (see our FY25 outlook article). UBS has a $105 price target on CBA shares. Goldman Sachs has a sell rating and a 12-month price target of $82.61.

Macquarie shares closed at $199.03 on Friday, up 1.29%. Morgan Stanley has a buy rating on Macquarie shares with a price target of $215.

Bank of Queensland shares closed at $5.83 on Friday, down 0.17%. Goldman Sachs has a sell rating on BOQ shares and a 12-month share price target of $5.44.

Bendigo Bank shares finished the week at $11.33 per share, down 0.088% on Friday. Goldman Sachs has a neutral rating and a 12-month price target of $10.51.

The post Can the good times keep rolling for ASX 200 bank shares in FY25? appeared first on The Motley Fool Australia.

More reading

• Top 10 most traded ASX shares and US stocks in May
• 3 top ASX 200 stocks that could create lasting passive income into retirement
• 2 ASX 200 bank shares smashing new multi-year highs today
• Beaten-up ASX 200 stock rebounds 15%. Macquarie says more to come
• 5 things to watch on the ASX 200 on Thursday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Anz Group, BHP Group, Commonwealth Bank Of Australia, and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.