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DroneShield Ltd (ASX: DRO) shares are taking a fall today in what could present an opportune buying opportunity.

Shares in the All Ordinaries Index (ASX: XAO) drone defence company closed on Friday trading for $1.455. During the Monday lunch hour, shares are changing hands for $1.42 apiece, down 2.75%.

For some context, the All Ords is down 0.09% today.

But you’re highly unlikely to hear any longer-term shareholders complain about today’s underperformance.

As you can see on the chart above, DroneShield shares have been on fire over the past year. Despite today’s retrace, shares remain up 480% over 12 months and are up 266% in 2024 alone.

To give you a better idea of just what that means, if you’d invested $5,000 in the company this time last year, you’d now be sitting on $29,000.

Not bad!

And the tremendous growth run for this booming ASX tech stock may have a lot further to go.

Why DroneShield shares could keep on booming

Frazis Capital founder Michael Frazis looks for top technology stocks with the potential for explosive share price growth.

And he believes DroneShield shares fit that bill.

 “DroneShield recorded revenues of $55 million in 2023, more than triple the $17 million in 2022,” Frazis said (quoted by The Australian Financial Review). “And analysts forecast 2024 revenues of over $90 million, with the bulk coming from high margin defence contracts.”

“The opportunity is immense. Less than 1% of infantry units, ships, military bases, and civilian targets are protected against low-cost drones,” Frazis added.

What’s been going right for the ASX All Ords tech stock?

DroneShield shares have been among the biggest beneficiaries of the increased conflicts and accompanying sabre rattling we’re witnessing across the globe.

And the rapid advancement of AI technology is only likely to increase the threats that drones can pose to military and civilian personnel and infrastructure. Meaning the demand for ever-better defence systems to protect against those evolving threats is likely to keep growing as well.

Indeed, as Frazis points out, only a tiny fraction of potential targets are currently protected by anti-drone measures.

And the growth potential of DroneShield shares has certainly grabbed investor attention.

On 18 April DroneShield announced it had completed its share purchase plan (SPP), which was capped at $15 million. Had it not been capped, the company would have raked in $40 million.

As the company reported on the day:

The SPP generated significant support from DroneShield’s existing shareholders and applications received substantially exceeded the maximum capped raising amount of $15 million set by the company, with DroneShield receiving total applications for fully paid ordinary shares for $40 million.

The post Why the ‘opportunity is immense’ for DroneShield shares: fundie appeared first on The Motley Fool Australia.

More reading

• Does DroneShield stock pay dividends?
• If I’d put $5,000 into DroneShield shares just 1 year ago, here’s what I’d have now
• Unstoppable: How much higher can the DroneShield share price fly?
• 7 ASX All Ords shares rocketing higher while the market sinks
• 3 ASX All Ords shares raised to ‘strong buy’ status in May

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

If you’re fortunate enough to have $10,000 sitting in your savings account and no immediate use for it, then it could be worth putting it to work in the share market.

After all, with a historic return in the region of 10%, that $10,000 could become $11,000 in 12 months if history were to repeat itself.

In addition, if you can find an ASX share with market-beating potential, then you could grow your wealth even more.

But which shares could do this? Could CSL Ltd (ASX: CSL) shares beat the market? Let’s find out.

$10,000 invested in CSL shares

At present, the CSL share price is trading at $289.24. This means that if you were to invest $10,000 (and a further $123.40), you would end up owning 35 units.

According to a recent note out of Morgans, its analysts see scope for the company’s shares to rise from current levels. The broker said:

While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares trading at 25x, a substantial discount (20%) to its long-term average.

Morgans has an add rating and $315.35 price target on CSL’s shares. This implies potential upside of 9% and values those 35 units at $11,037.25.

Bigger returns

The good news is that even bigger returns could be on the cards according to analysts at Macquarie.

A recent note out of the investment bank reveals that its analysts have an outperform rating and $330.00 price target on the company’s shares. This suggests that upside of 14.1% is possible over the next 12 months.

If this recommendation proves accurate, those 35 CSL shares would have a market value of $11,550. That’s almost $1,500 greater than your original investment.

But it gets better. Macquarie is feeling very positive about the outlook of the CSL Behring business. This is particularly important given how it is far and away the biggest contributor to CSL’s overall earnings.

As a result, the broker sees scope for CSL’s shares to rise significantly over the next three years thanks to the strength of the CSL Behring business. So much so, it believes that a share price of $500 is possible by 2027.

If that happens, it would mean those 35 shares will be worth a sizeable $17,500. That’s a very large increase on the original outlay of $10,123.40.

Here’s hoping that Macquarie is on the money with its recommendation and valuation.

The post How much could $10,000 invested in CSL shares be worth next year? appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX 200 blue chip shares to buy now
• 3 steps to take for a rich retirement with ASX shares
• 3 high-quality ASX 200 shares to buy forever
• 3 ASX 300 healthcare stocks ‘well positioned to outperform’
• CSL shares can ‘absolutely’ head to $500: ASX expert

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

The Sigma Healthcare Ltd (ASX: SIG) share price remains in focus after its much-anticipated merger with Chemist Warehouse hit a major roadblock in the last week, putting a potential Chemist Warehouse ASX listing back on the agenda.

The Australian Competition and Consumer Commission (ACCC) raised its concerns about the merger in an announcement, where it questioned the deal’s implications for independent pharmacies.

News of the ACCC’s “preliminary concerns” caused the Sigma share price to drop sharply. It has now slipped around 5% in the last month to $1.19 per share at the time of publication.

Sigma share price hits turbulence

Sigma’s share price has hit turbulence since the announcement last week. Investors appeared to have taken note of what was said.

The ACCC detailed several issues it had with the merger. For one, it said the transaction represents a “major structural change for the pharmacy sector.”

Secondly, it wants to know if the merger could reduce competition and raise consumer prices. It says the combined entity would be “uniquely vertically integrated”, with a large footprint across the wholesale and retail markets.

At the same time, the Commission also believes the merger could limit options for independent pharmacies and raise barriers for new competitors due to Chemist Warehouse’s discounting strategies. For instance, Chemist Warehouse passes on full discounts on Pharmaceutical Benefits Scheme (PBS) prescriptions to its customers.

News of the ACCC’s concerns last week hit the Sigma share price. Investors traded it down from $1.21 to $1.16 per share by market close on Friday. But they seemed to have shown renewed confidence on Monday, with Sigma up 3% at the time of publication.

Now analysts at investment bank Barrenjoey have claimed that The ACCC left a major player in the pharmacy supply chain out of its calculations when arguing against the merger.

It says Clifford Hallam Healthcare (CH2) was excluded from the equation and that CH2 is “increasing investment in capacity to grow its [market] share”, per The Australian Financial Review.

Even if independent pharmacies decided they did not want to be supplied by the combined group, we think wholesale supply competition for this business would remain healthy

The firm also told its clients that factors like vertical integration are industry norms and that Chemist Warehouse “will be Sigma’s largest wholesale customer” regardless of the outcome. This news is potentially positive for the Sigma share price.

Could an IPO be the solution?

In my view, both Sigma and Chemist Warehouse will likely work with the ACCC, but one can’t rule out the ACCC blocking the transaction either.

And with the ACCC crawling all over the deal, many question whether an initial public offering (IPO) of Chemist Warehouse shares could be a viable option.

A lot of the heavy lifting has already been done, for one. Investors have also gained a far deeper understanding of Chemist Warehouse as well.

There is no saying what that means for the Sigma share price. But this groundwork could facilitate a quick move towards a public listing if the merger fails.

Foolish takeaway

The Sigma share price is in focus as the future of its merger with Chemist Warehouse remains uncertain. Investors are closely watching the ACCC’s next moves.

Whether through a merger or an IPO, Chemist Warehouse’s journey to the ASX has a ways to go yet.

The post Sigma share price: What’s next with the Chemist Warehouse ASX listing? appeared first on The Motley Fool Australia.

More reading

• Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today
• Sigma share price dives 6% on Chemist Warehouse merger hurdle
• Here are the top 10 ASX 200 shares today

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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small decline. At the time of writing, the benchmark index is down 0.15% to 7,711.6 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Bapcor Ltd (ASX: BAP)

The Bapcor share price is down 2.5% to $4.87. This morning, this auto parts retailer announced that it has successfully refinanced $200 million of debt facilities that were due to mature in July 2025. Bapcor has increased this debt facility by $100 million to a total of $300 million split into tenors maturing in July 2028 and July 2029. Investors may be concerned that this could be a sign that Bapcor isn’t interested in being taken private. Last week, it received an unsolicited, indicative, conditional and non-binding proposal from Bain Capital for $5.40 cash per share.

Chalice Mining Ltd (ASX: CHN)

The Chalice Mining share price is down over 4% to $1.28. This may have been driven by a broker note out of UBS this morning. According to the note, the broker has downgraded the mineral exploration company’s shares to a neutral rating (from buy) with a $1.50 price target. In addition, as we covered here earlier, short sellers continue to successfully target the company. A total of 9.6% of Chalice Mining’s shares are held short at present.

Integral Diagnostics Ltd (ASX: IDX)

The Integral Diagnostics share price is down 4% to $2.44. This follows news that the diagnostic imaging company has made an offer to merge with rival Capitol Health Ltd (ASX: CAJ). Given that it is an all-scrip deal, it seems that some investors don’t believe that Integral Diagnostics shareholders are getting a good deal. Capitol Health shares are up 15% on the news.

Winsome Resources Ltd (ASX: WR1)

The Winsome Resources share price is down 14.5% to 82.5 cents. This has been driven by the completion of the lithium developer’s equity raising. Firm commitments have been received to raise a total of $25 million. This comprises $13.2 million at $1.275 per new share via Canadian flow through financing and a share placement of $11.8 million at a discount of 85 cents per share. The funds will be used to advance key project initiatives. This includes the Adina Lithium and Renard project studies, which are on track for completion in the third quarter of 2024, and exploration and resource growth drilling to expand the current mineral resource estimate of 77.9Mt @ 1.15%.

The post Why Bapcor, Chalice Mining, Integral Diagnostics, and Winsome Resources shares are dropping appeared first on The Motley Fool Australia.

More reading

• Up 15% last week, why is this ASX 200 share sinking on Monday?
• Why Capitol Health, Capricorn Metals, Credit Clear, and Telix shares are storming higher
• Why is this ASX lithium stock crashing 16% today?
• This ASX All Ords stock is rocketing 20% after accepting a takeover offer
• These are the 10 most shorted ASX shares

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

Investing in the stock market can be a bit daunting, especially if you’re just starting out.

Here are three ASX shares that I believe are perfect for beginners. These shares are known for being stable and reliable, making them ideal choices for those new to investing.

Steadfast Group Ltd (ASX: SDF)

The first pick goes to the insurance brokerage group Steadfast, which provides general insurance brokerage and underwriting services.

Steadfast has delivered consistent earnings growth. Over the past five years, the company’s earnings per share (EPS) have grown at a compound annual growth rate (CAGR) of 13%, reaching 10.2 cents per share (cps). For the full year in FY24, management anticipates underlying diluted EPS growth of between 11% and 16%.

During the same period, the dividend per share (DPS) has risen at a CAGR of 15% to 16 cps. At the current share price, the company offers a dividend yield of close to 3%.

Steadfast reported a robust set of numbers in its 1H FY24 results. Its underlying revenue rose 19.4% from a year ago to $790.4 million, and underlying net profit after tax (NPAT) 17.5% to $106 million. Such growth was driven by strategic acquisitions as well as a solid organic profit growth of 13.4%.

The company insiders own approximately 8.5% of the company. This includes a 5% stake in Mr Jim Angelis following the acquisition of Coverforce Holdco, which Angelis founded.

Its shareholders include some major institutional investors. Australian Super owns 7.5%, followed by First Sentier Investors owning 5%, and Fidelity Management & Research company (FMR) at just about 5%.

The Steadfast share price fell 10% over the past year, which is a rare event based on its trading history. Steadfast shares are trading at $5.40 at the time of writing.

Brickworks Limited (ASX: BKW)

Next up is Brickworks, a building materials provider that also engages in property development.

It’s largely an asset story. Brickworks owns a substantial portfolio of investment assets, including listed shares and property development ventures.

One of its key holdings is a 26.1% stake in Washington H Soul Pattinson Ltd (ASX: SOL), which is another excellent investment. In property development, Brickworks collaborates with Goodman Group (ASX: GMG) to unlock the hidden value of its extensive land holdings.

If you’re familiar with Sydney’s property market, you know how bustling Western Sydney has become with the construction of the second airport and the residential property shortage. Brickworks owns a large parcel of land in this area.

In its May 2024 trading update, the company estimated its net asset value (NAV) at around $5.6 billion or $36.68 per share. This is far above its share price of around $26.50 today.

Over the past ten years, the company has increased its dividends annually. Impressively, it has maintained a record of 48 years without reducing its full-year ordinary dividend since 1976, as my colleague Tristan highlighted.

At the current share price, Brickworks offers a fully-franked dividend yield of 2.5%.

The Brickworks share price fell approximately 13% from its 52-week high of $31.4 in March 2024. Brickwork shares are trading at $26.67 at the time of writing.

BHP Group Ltd (ASX: BHP)

Last but not least, BHP Group is a leading global resources company involved in the exploration, production and processing of minerals and oil.

Cyclicality is inevitable for any mining company. However, BHP is well-positioned to weather market fluctuations thanks to its improved operating efficiency and balanced product mix.

The company aims to grow its core iron ore production while expanding its copper exposure through the acquisition of Oz Minerals.

BHP boasts a high return-on-equity (ROE) of 19% using the latest 12-month financials. Its ROE tends to range from single digits to above 40% throughout the commodities cycle. However, it’s one of the lowest cost producers in its respective mining sectors compared to its peers.

Using FY25 EPS estimates by S&P Capital IQ, BHP shares are trading at just about 11 times. At the current price, the company offers a dividend yield of 5.5%.

The BHP share price is down 7.4% over the past year to $42.68 today.

Foolish takeaway

I believe the three ASX shares are attractively valued based on their fundamentals and carry relatively low risks, making them suitable options for beginners.

The post 3 lower-risk ASX shares I think are perfect for beginners appeared first on The Motley Fool Australia.

More reading

• Are BHP or Wesfarmers shares a better buy?
• Top brokers name 3 ASX shares to buy next week
• Tax-busters: 5 fully-franked ASX dividend shares I’d buy for FY25
• 2 outstanding ASX 200 shares to buy and hold for a decade
• 2 ASX shares with shareholder-friendly policies

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

S&P/ASX 200 Index (ASX: XJO) share Bapcor Ltd (ASX: BAP) is giving back some of last week’s blistering gains today.

Shares in the auto parts company closed on Friday trading for $5.00. In late morning trade on Monday, shares are changing hands for $4.87 apiece, down 2.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Here’s what’s happening.

ASX 200 share falls amid debt refinancing

Last Tuesday, the Bapcor share price surged to close up 14% after the company confirmed it had received a non-binding takeover proposal from United States-based private investment firm Bain Capital for $5.40 a share. That saw the stock end the week up 14.6%.

There’s been no update on those acquisition discussions.

However, this morning the ASX 200 share did provide a financing update.

Bapcor said it has refinanced $200 million worth of debt facilities that were due to mature in July 2025. The debt facilities were increased by $100 million and now total $300 million. Those now mature in July 2028 and July 2029.

The auto parts company now has access to a total $720 million debt facility with a number of major lenders including Australia and New Zealand Banking Group Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

Management noted that the refinancing improves the ASX 200 share’s financial position and provides additional funds for general corporate purposes.

Commenting on the transaction, Bapcor interim chief financial officer (CFO) George Saoud said:

We are pleased with the outcome of our refinancing. We appreciate the continued support of our banking partners, and with their support Bapcor has strengthened its financial foundation. The new debt facility has competitive terms and pricing and provides the opportunity for us to prepare for future growth.

What else is happening with Bapcor shares?

In a non-price-sensitive announcement, the ASX 200 share also reported that, as of 1 July, George Saud will transition from interim to permanent CFO.

Saud took over as interim CFO on 14 March.

Commenting on the appointment, Bapcor interim CEO Mark Bernhard said, “Bapcor is delighted to confirm George’s permanent appointment as CFO following an extensive search.”

Bernhard added:

George is highly experienced and has held senior financial and commercial positions across a range of complex corporations including Coles Group, Metcash Supermarkets and Fantastic Holdings. George is a great addition to Bapcor’s Group leadership team and will be pivotal in driving the company’s performance in the future.

With today’s intraday dip factored in, the ASX 200 share is down 9% in 2024.

The post Up 15% last week, why is this ASX 200 share sinking on Monday? appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Chalice Mining, Integral Diagnostics, and Winsome Resources shares are dropping
• 3 ASX 200 shares going gangbusters in June
• 7 ASX All Ords shares rocketing higher while the market sinks
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• Here are the top 10 ASX 200 shares today

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 Bapcor. 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 an underwhelming start to the week. In afternoon trade, the benchmark index is down 0.2% to 7,708.5 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising today:

Capitol Health Ltd (ASX: CAJ)

The Capitol Health share price is up 15% to 28.2 cents. This morning, this diagnostic imaging company announced that it had accepted an offer from Integral Diagnostics Ltd (ASX: IDX). The latter tabled a merger offer with an implied exchange ratio of 0.12849 Integral Diagnostics shares for every Capitol Health share. This equated to an offer of 32.6 cents per share, which represented a 33% premium to Friday’s closing prices. Management intends to recommend the offer to shareholders, subject to a number of conditions.

Capricorn Metals Ltd (ASX: CMM)

The Capricorn Metals share price is up 4.5% to $4.66. This appears to have been driven by a broker note out of Bell Potter. According to the note, the broker has retained its buy rating on the gold miner’s shares with an improved price target of $6.53. Bell Potter made the move in response to news that Capricorn Metals has reduced its gold hedge book by 52,000 ounces. Bell Potter notes that the buyback of approximately half of its remaining hedge book mirrors the successful strategy of 2023, which resulted in a relative cash benefit of ~$13 million.

Credit Clear Ltd (ASX: CCR)

The Credit Clear share price is up 5% to 25.2 cents. This morning, this technology and debt collection provider announced that it was upgrading its guidance again. FY 2024 revenue is now expected to be at the upper end of the $40 million to $42 million guidance range. Whereas FY 2024 underlying EBITDA guidance is up from in excess of $3 million to in excess of $3.7 million. Management notes that this represents a ~23% increase in minimum expectations. It also notes that the guidance upgrade “reflects an improving underlying EBITDA margin, which is a key focus and expectation in the company’s continued growth.”

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix Pharmaceuticals share price is up 3.5% to $17.18. This may also have been driven by a broker note out of Bell Potter. At the end of last week, the broker upgraded the radiopharmaceuticals company’s shares to a buy rating with a $19.00 price target. It believes that recent share price weakness has created a buying opportunity. The broker said: “The pullback represents an opportunity to buy the stock ahead of an exciting period of news flow over the second half of the CY24 which will include potential FDA approvals for Zircaix and Pixclara.”

The post Why Capitol Health, Capricorn Metals, Credit Clear, and Telix shares are storming higher appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Chalice Mining, Integral Diagnostics, and Winsome Resources shares are dropping
• Leading brokers name 3 ASX shares to buy today
• This ASX All Ords stock is rocketing 20% after accepting a takeover offer
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

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

The Mexican food business Guzman y Gomez (GYG) is planning to list on the ASX this week with an initial public offering (IPO). As there is so much attention on the company, I am going to outline what attracts me to it and why I plan to buy shares.

It’s scheduled to trade on the ASX on Thursday, 20 June 2024, on a conditional and deferred settlement basis. Normal trading is expected on the ASX on a normal settlement basis on 25 June 2024.

The business is planning to raise $200 million in primary proceeds and $135.1 million through existing investors selling down some of their stake.

Strong sales growth and international potential

The Mexican food company has grown significantly in the last several years.

In FY15, the business generated $101 million of global network sales, which increased to $759 million in the 2023 financial year. That’s a compound annual growth rate (CAGR) of 29% over the period. Management is expecting further growth in the coming years.

Guzman y Gomez has forecast that global network sales can increase to $954.4 million in FY24 and $1.14 billion in FY25. That would be an increase of around 50% between FY23 and FY25.

I believe GYG can continue to grow its global network sales at a double-digit rate for years to come because of its growing Australian and international presence.

The company’s pro-forma (underlying) earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to increase from $29.3 million in FY23 to $59.9 million in FY25. 

Store rollout plan

Some successful businesses have generated excellent returns by expanding their store networks. Just think about global winners like McDonald’s, Yum! Brands, and Chipotle.

I’m not suggesting GYG will do as well as those businesses. On the ASX, Collins Foods Ltd (ASX: CKF) has done very well for shareholders over the past decade. But GYG isn’t a franchisee business like Collins Foods, so GYG can benefit from franchisee sales growth locally or globally.

Guzman y Gomez has a hybrid restaurant ownership model with a mix of corporate and franchise restaurants. It has 185 restaurants in Australia, including 62 corporate restaurants and 123 franchise restaurants. The business has four corporate restaurants in the US.

GYG also has 16 restaurants in Singapore and five restaurants in Japan which are owned and operated by separate master franchisees. GYG earns royalty revenue from franchisee sales.

In Australia, GYG expects to open 30 new restaurants in FY25 and thinks it can increase its annual openings to 40 per year within five years. It thinks it can reach over 1,000 Australian locations over the “next 20+ years”. The Guzman y Gomez listing value may not be cheap, but I’m thinking about where the business may be in three years, five years and ten years, not just its position in June 2024.

The company plans to expand in the US, though it will “continually assess and adjust the pace of restaurant expansion to ensure it is underpinned by robust restaurant economics.” It’s expecting to have seven US stores in FY25, up from four now.

Becoming bigger can help drive the underlying profit margins and value of the business.

Rising margins

Investors often like to value a business based on how much profit it’s making now and what it can make in the future. Rising profit margins can help the bottom line grow even faster than revenue.

Guzman y Gomez showed in its prospectus that its EBITDA to global network sales margin was 3.8% in FY22 and 3.9% in FY23. GYG projects this to increase to 4.5% in FY24 and 5.3% in FY25. Rising margins are a promising sign of economies of scale.

In five years, the Mexican food business could be much bigger and earn even stronger margins (on much higher revenue), which bodes well for future profit.

Foolish takeaway

There could be a lot of volatility with GYG shares in the short term because some investors think they’re overvalued, and others think they have compelling long-term value. I’m planning to start with a minimal investment and then buy more on any weakness or buy more over time as the business executes its store rollout plan and delivers high margins.

The post Why I’m planning to buy Guzman y Gomez shares and own for the long-term appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Chalice Mining, Integral Diagnostics, and Winsome Resources shares are dropping
• 3 lower-risk ASX shares I think are perfect for beginners
• Up 15% last week, why is this ASX 200 share sinking on Monday?
• Why Capitol Health, Capricorn Metals, Credit Clear, and Telix shares are storming higher
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Tristan Harrison has positions in Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Chipotle Mexican Grill. The Motley Fool Australia has recommended Chipotle Mexican Grill and Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

BlueScope Steel Limited (ASX: BSL)

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating on this steel products company’s shares with an improved price target of $30.10. The broker is feeling positive about BlueScope’s outlook thanks to its exposure to painted steel products. Its analysis indicates the US painted steel growth opportunity could deliver ~$400 million (~20%) EBITDA upside for the company. In addition, the broker believes that BlueScope’s shares are undervalued compared to their US steel peers. As a result, it thinks that this is a great opportunity for investors to pick up shares on the cheap. The BlueScope share price is trading at $20.18 today.

Capricorn Metals Ltd (ASX: CMM)

A note out of Bell Potter reveals that its analysts have retained their buy rating on this gold miner’s shares with an improved price target of $6.53. This follows news that Capricorn Metals has reduced its gold hedge book by 52,000 ounces. Bell Potter notes that the buyback of approximately half of its remaining hedge book mirrors the successful strategy of 2023, which resulted in a relative cash benefit of ~$13 million. And while this has resulted in the broker reducing its earnings forecasts for FY 2024 due to higher financing costs, it has lifted its future earnings estimates meaningfully and has boosted its valuation accordingly. The Capricorn Metals share price is fetching $4.63 at the time of writing.

Light & Wonder Inc (ASX: LNW)

Analysts at Morgans have initiated coverage on this gambling products and services provider’s shares with an add rating and $172.00 price target. According to the note, the broker has been impressed with the way the company’s restructuring and rebranding has resulted in the significant capture of land-based market share in Australia. But the real reason Morgans is bullish is that it believes Light & Wonder can replicate this in the massive United States market. In addition, the broker highlights that its digital segments are performing well with its social casino division, SciPlay, significantly outpacing the rest of the market. The Light & Wonder share price is trading at $140.15 on Monday.

The post Leading 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 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 Light & Wonder. The Motley Fool Australia has recommended Light & Wonder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX growth stock Close The Loop Ltd (ASX: CLG) is showing its growth potential today.

Shares in the company, which provides reuse, recycling, and sustainability solutions, closed on Friday trading for 34 cents. Shares leapt to 36 cents apiece shortly after market open today, up 5.9%.

After some likely profit-taking, shares are currently swapping hands for 35 cents, up 2.9%.

For some context, the All Ordinaries Index (ASX: XAO) is down 0.1% at this same time.

Here’s what’s spurring investor interest in the ASX growth stock today.

ASX growth stock expanding its reach

Investors are bidding up Close The Loop shares on Monday after the company reported on a range of potential growth opportunities.

The ASX growth stock said it is looking into opportunities to expand its footprint in the United States, Europe and the Middle East. Over the next 12 months, the company expects to establish new facilities in these locations to support its expanding operations.

The planned expansions are focused on providing enhanced IT refurbishment services and solutions. That includes a new IT refurbishment plant in Mexicali, Mexico. Close The Loop expects that plant will be operational by October.

The company also highlighted its growing HP Inc relationship, noting that IT refurbishment opportunities have been identified with HP Renew Solutions.

And in Europe, the ASX growth stock is expanding its European print consumables program, Circular Planet, into Spain and Portugal.

Commenting on the growth plans, Close The Loop CEO Joe Foster said: “We are excited about the potential opportunities that lie ahead and are dedicated to ensuring a smooth and successful implementation of this expansion plan.”

According to Foster:

We acknowledge the importance of effectively managing our resources to support our growth objectives without impacting on the FY 2024 guidance or expected financial results as previously advised to the market. As we move forward, we will diligently leverage our existing working capital and debt facilities to achieve our strategic milestones.

Foster added:

FY 2024 has seen Close the Loop focus and refine its growth strategy in the IT refurbishment space. We have an opportunity to expand into new geographies, work deeper into the consumer business electronic product lifecycle and nurture new OEM [original equipment manufacturer] relationships.

These growth opportunities are a validation and realisation of the ISP Tek Services acquisition and the synergies we expected to flow from the combined businesses.

Close the Loop share price snapshot

With today’s intraday moves factored in, the ASX growth stock is down around 7% in 2024.

The post This ASX growth stock just leapt 6% on international expansion plans 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 positions in and has recommended Close The Loop. The Motley Fool Australia has recommended Close The Loop. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.