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The AGL Energy Limited (ASX: AGL) share price is edging higher on Tuesday morning despite some potential bad news.

At the time of writing, the energy company’s shares are up slightly to $7.14.

What’s going with the AGL share price?

Investors have been buying AGL’s shares despite the release of an announcement after the market close on Monday.

This announcement relates to Unit 2 at AGL’s Loy Yang A Power Station in Victoria, which was taken out of service in April due to an electrical fault with the generator.

According to the latest update, the company’s Loy Yang A Unit 2 will not be returning to service as planned this month.

AGL advised that during testing in the final assembly of the generator rotor, a defect in a part was identified. This will require the original equipment manufacturer GE to manufacture a new part in Switzerland.

As a result, the outage is now expected to extend until the second half of October. AGL will make further changes to the outage profile of other units to accommodate this change.

What impact will this have on its earnings?

While the overall outage is expected to have a material impact on AGL’s earnings, this latest day will be less so. That’s because the impact of the latest extension is expected to be offset by a strong performance from its portfolio during August and September as other units returned to service.

Though, investors won’t have long to find out what the impact is. AGL is planning to provide FY 2023 earnings guidance at the end of September, which will reflect the extension of the Loy Yang A Unit 2 outage and the initial outcomes from the review of AGL’s strategic direction.

The post What’s going on with the AGL share price today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• The AGL share price has tumbled 16% in a month. What’s next?
• Are AGL shares offering a bigger final dividend than Origin this year?
• Broker tips 22% upside for the AGL share price
• ‘We would like to see faster progress’: ASX 200 energy shares on notice

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.

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The Ramsay Health Care Limited (ASX: RHC) share price is in the freezer on Tuesday amid rumours its suitor has scrapped its takeover approach.  

The company granted a consortium led by KKR due diligence following an $88 per share takeover bid in April.

However, KKR ran into difficulties when it tried to open the books of Ramsay Health’s European subsidiary Ramsay Generale De Santé SA (EPA: GDS). As a result, the consortium withdrew its offer, replacing it with one the company dubbed “meaningfully inferior”.

The Ramsay Health share price is halted at $70.21 this morning as the company prepares to release an announcement.

The update is expected to outline the withdrawal of KKR’s offer, according to various media reports.

Let’s take a closer look at what’s going on with the S&P/ASX 200 Index (ASX: XJO) healthcare giant on Tuesday.

Is this why the Ramsay share price is frozen?

The Ramsay Health share price isn’t going anywhere just yet as the company gears up to release an announcement to the ASX.

The stock has been put into a trading halt amid reports the company and its suitor have reached an impasse. In response, KKR has binned its bid entirely, the Australian Financial Review reports.

The consortium withdrew its $88 per share cash offer last month. Instead, it offered $88 per share in cash for the first 5,000 Ramsay Health shares held by an investor and $78.20 and 0.22 Ramsay Santé shares for each share thereafter. The part-scrip offer represents a valuation of $85.93 per share.

The company had previously indicated that around 18% of its shares would likely receive the cash offer while approximately 82% of shares would be eligible for the part-scrip consideration.

The Ramsay Health board refused the new offer but left the door open for the consortium to post another bid.

However, according to the masthead, KKR and its partners believe the business has deteriorated since it posted its initial bid.

Additionally, the consortium was disappointed by the company’s latest results, The Australian reports.

The Ramsay Health share price has fallen 2.3% year to date and 12.3% since the initial takeover bid was announced. Though, it’s trading 2.3% higher than it was this time last year.

For comparison, the ASX 200 has fallen 8% year to date and 6% over the last 12 months.

The post No deal? Here’s why the Ramsay share price is on ice appeared first on The Motley Fool Australia.

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More reading

• Why A2 Milk, Life360, Nine, and Ramsay shares are dropping
• 3 ASX 300 healthcare share winners on Wednesday
• 2 healthcare ASX shares ready to go off like a cracker: experts
• These ASX 200 shares are going ex-dividend on Monday
• 6 ASX shares Morgans would buy right now

Motley Fool contributor Brooke Cooper 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 Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX lithium shares are surging to new heights amid the world’s transition to electric vehicles. Some companies, such as Latin Resources Ltd (ASX: LRS), are up as much as 300% year to date.

One downside of the share price increases for lithium shares is that latecomers to the investing party could view them as suspiciously overvalued. After all, no company’s shares can keep going parabolic forever.

There is a different battery metal that goes hand in hand with lithium. Let’s investigate the material, the companies that produce it, and how it stacks up with lithium moving forward.

Graphite challenges ASX lithium shares for the spotlight

According to analysts from Credit Suisse, graphite is another battery material with excellent prospects, as reported by The Age in April.

The analysts said:

It looks a lot more like lithium three to five years ago.

In five years’ time, suddenly graphite pricing will have gone up in my view quite significantly, and it will bring a huge incentive to bring all these projects on board.

The Age published additional analysis on graphite last Saturday, this time with Ausbil portfolio manager James Stewart stating that:

EVs underpin long-term growth for nickel and copper, but here and now, we see very tight markets in graphite and lithium, as mine development has not kept pace with surging demand with this one-time fundamental switch from fossil fuels to renewables.

Stewart continued:

Lithium and graphite pricing is expected to remain elevated for some time, and we believe we will benefit from owing [sic] the lithium and graphite producers and developers.

So, according to analysts, graphite arguably has the same outlook as lithium. Both also benefit from a surge of interest on the demand front, while on the supply end, producers can’t ship the material fast enough to keep up with expected orders.

Aside from this, graphite is also a critical component in creating lithium batteries. One lithium battery in an electric vehicle comprises around 20% graphite.

Companies involved in graphite production

The following companies are in the graphite production space, for investors looking for an alternative to ASX lithium shares.

Sayona Mining Ltd (ASX: SYA) is a mineral explorer with an interest in discovering lithium and graphite. In Australia’s northern region, graphite mineralisation was reported in the East Kimberley site. Shares are up 157.14% year to date.

Syrah Resources Ltd (ASX: SYR) was named “the biggest graphite producer on the ASX” by a broker in September. Shares are down 2.59% year to date.

Argosy Minerals Limited (ASX: AGY) has a graphite project located in Namibia. The company has “not made any final decision on its strategy for the project, pending further review and considering funding opportunities”. Shares are up 48.48% year to date.

Magnis Energy Technologies Ltd (ASX: MNS) owns the Nachu graphite project in Ruangwa, Tanzania. Shares are down 14.04% year to date.

The post Investors are obsessed with ASX lithium shares, but what about this other critical battery metal? appeared first on The Motley Fool Australia.

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More reading

• Why is the Sayona Mining share price soaring 8% on Monday?
• Vulcan Energy share price is one of the worst ASX lithium performers so far this year. Why?
• 4 ASX lithium shares that have rocketed more than 100% in 2022
• Do Sayona Mining shares pay dividends?
• Latin Resources share price follows ASX sell-off amid ‘excellent high‐grade lithium’ news

Motley Fool contributor Matthew Farley 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.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Apple (NASDAQ: AAPL) climbed higher on Monday, adding 3.85% by the close.  

The broader market indexes rallied, no doubt contributing to the iPhone maker’s upswing. However, two analysts — in separate missives — have concluded that presales of Apple’s new iPhone 14 are going better than expected.

So what

Wedbush’s Daniel Ives has been keeping a close eye on Apple’s website and notes that delivery times have quickly been pushed out to mid-October for the more expensive iPhone 14 Pro models, while the remaining preorders will take at least three weeks to process and wait times are quickly getting longer, according to The Fly. Ives noted that not only are iPhone 14 orders tracking ahead of his expectations, but consumers are ordering more Pro and Pro Max models, which will drive up the average selling price (ASP) for Apple. The analyst theorizes that this consumer demand for the Pro models will also be heavy in China, an important sales region for Apple.

It’s worth noting that Ives maintained his outperform (buy) rating on Apple with a price target of $200. This suggests potential gains for investors of 40% compared to stock’s closing price on Friday.

Bank of America (NYSE: BAC) analyst Wamsi Mohan came to a similar conclusion, noting that heavy demand for the iPhone 14 Pro and Pro Max models are resulting in longer wait times compared to the similar iPhone 13 models. Mohan pointed out that the current ship time for the Pro is 30 days, versus 26 days at the same time in the iPhone 13 cycle. Similarly, the Pro Max is 39 days out, compared to 27 days for its predecessor. The analyst found this “particularly impressive” given the tech giant has raised prices in some places to offset the impact of a strong dollar.

Mohan maintained his buy rating and $185 price target, suggesting 18% upside from Friday’s closing price.

Now what

To put this information in context, the iPhone has generated more than 54% of Apple’s $282 billion in sales revenue so far this year, so these presales numbers bode well for Apple’s future. For this and many other reasons, Apple remains a buy. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Apple stock popped on Monday appeared first on The Motley Fool Australia.

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More reading

• Why the Apple share price fell today
• 6 reasons to buy Apple stock now and never sell
• Why the Apple share price traded lower on Tuesday
• This under-the-radar Apple business is growing by leaps and bounds
• Why the shine was off Apple stock on Monday

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Five companies in the S&P/ASX All Ordinaries Index (ASX: XAO) will see their shares turn ex-dividend tomorrow.

This means that today will be the last day to lock in the latest dividend payments from these ASX All Ords shares.

If you buy shares on or after a company’s ex-dividend date, you won’t be eligible to receive the upcoming dividend payment.

But to compensate investors, shares typically drop on the day they turn ex-dividend. After all, these dividends are paid from the company’s cash reserves.

With the money flowing out of the company’s coffers to line the pockets of shareholders, it’s left with less cash on its books. So theoretically, the company is worth less.

What’s more, some investors will look to offload shares once they’ve secured the latest dividend.

So, there’ll be downwards pressure on these five ASX All Ords shares tomorrow. But there could be elevated interest today as investors clamber to snare these dividends before it’s too late.

Costa Group Holdings Ltd (ASX: CGC)

Upcoming dividend: 4 cents
Franking: 100%
Payment date: 6 October
DRP: No
Trailing dividend yield: 3.4%

Costa recently reported its first-half 2022 results, delivering 16% revenue growth and 13% adjusted earnings growth. The company held its interim dividend steady at 4 cents per share, fully franked.

Breville Group Ltd (ASX: BRG)

Upcoming dividend: 15 cents
Franking: 100%
Payment date: 6 October
DRP: No
Trailing dividend yield: 1.4%

The ASX 200 retail share served up a record sales result in FY22 as revenue grew by 19% to $1.4 billion. Net profit after tax (NPAT) lifted 16% with total dividends following suit, up 13% on the prior year to 30 cents per share.

Lovisa Holdings Ltd (ASX: LOV)

Upcoming dividend: 37 cents
Franking: 30%
Payment date: 20 October
DRP: No
Trailing dividend yield: 3.0%

Lovisa pumped out another year of strong growth in FY22 as revenue leapt by 69% to $459 million. Comparable store sales grew by 20% while NPAT more than doubled to $58 million. In response, the ASX retailer boosted its annual dividends by 106% to 74 cents.

Lovisa shares will soon be added to the ASX 200 in the upcoming September rebalance.

MAAS Group Holdings Ltd (ASX: MGH)

Upcoming dividend: 3.5 cents
Franking: 100%
Payment date: 12 October
DRP: Yes
Trailing dividend yield: 1.4%

MAAS Group delivered record pro forma earnings of $125 million in FY22, up 65% from the prior year. Around 60% of this earnings growth was achieved through acquisitions while the remaining 40% was organic. Despite the surge in profit, the ASX All Ords share lifted its total dividends by only 10% to 5.5 cents.

Pepper Money Ltd (ASX: PPM)

Upcoming dividend: 5.4 cents
Franking: 100%
Payment date: 14 October
DRP: No
Trailing dividend yield: 9.2%

Non-bank lender Pepper Money recently announced its first-half 2022 results, printing net interest income of $193 million, up 9% from the prior year. The company grew its loan book throughout the year, with originations up 53% to $5.6 billion.

The ASX All Ords share didn’t declare an interim dividend last year. Instead, it paid one dividend at the end of FY21, so Pepper Money’s trailing dividend yield is inflated.

Unlike FY21, the company expects future dividend payments will be weighted equally between interim and final dividends.

Annualising Pepper Money’s most recent interim dividend spins up a dividend yield of 6.9%.

The post 5 ASX All Ords shares going ex-dividend on Wednesday appeared first on The Motley Fool Australia.

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More reading

• 62% upside: Expert names 2 ASX shares looking beautiful right now
• Leading brokers name 3 ASX shares to buy today
• 3 ASX All Ordinaries shares hitting all-time highs on Monday
• Why A2 Milk, BHP, Lovisa, and Nickel Industries shares are charging higher
• I shouldn’t have sold this ASX share two years ago: fund

Motley Fool contributor Cathryn Goh 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 COSTA GRP FPO and Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has received a boost after the broker Macquarie decided to upgrade its rating on the business to outperform, up from neutral.

ANZ is one of the largest ASX bank shares alongside Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).

Share prices are changing all the time, but it’s interesting that Macquarie has become more positive on ANZ during this period of rising interest rates.

What was the cause of the upgrade for the ANZ share price?

As first reported by my colleague James Mickleboro, Macquarie thinks that banks like ANZ can benefit from rising interest rates and the slower-increasing rate offered for term deposits.

It’s because of this that the broker believes that ANZ’s earnings could do well in the first half of FY23.

However, Macquarie doesn’t think that this is a long-term profit boost. Instead, FY24 and future financial years could see profit hit by a weakening loan book as higher interest rates bite into borrowers’ ability to make repayments.

Despite that, the positive shorter-term outlook led Macquarie to increase the ANZ share price target from $23.50 to $24.

What is the valuation?

Let’s look at the price/earnings (p/e) ratio that Macquarie’s projections put ANZ shares at.

Using the profit predictions, the broker thinks that ANZ is valued at 11 times FY23’s estimated earnings.

Turning to FY23, Macquarie’s numbers suggest that ANZ is priced at under 12 times FY23’s estimated earnings.

How big will the dividend be?

Ultimately, it’s the ANZ board that decides how much of a dividend to pay to shareholders each year.

However, Macquarie has estimated how much the big four ASX bank share may pay to investors.

At the current ANZ share price, the FY22 grossed-up dividend yield could be 8.75% and the FY23 grossed-up dividend yield could be 8.9%.

Margins moving higher already

In the FY22 third quarter, which was for the three months to 30 June 2022, ANZ said that “strong lending and margin momentum was evident across all our major businesses in the quarter”, leading to revenue rising by 5%. Lending volumes rose by $2 billion, or 3% annualised.

Looking at the group net interest margin (NIM), it increased by 3 basis points and the underlying NIM went up 6 basis points to 164 basis points (1.64%). This was largely driven by the impact of rising interest rates, partly offset by “intense” price competition in home lending in Australia and New Zealand.

ANZ is expecting interest rate rises to be supportive of margins in the fourth quarter.

Costs across the group are being “tightly managed”, with ‘run-the-bank’ costs expected to be “broadly flat” in the second half despite inflation.

ANZ share price snapshot

Over the past six months, ANZ has fallen by more than 10%.

The post Why did Macquarie just upgrade its target for the ANZ share price? appeared first on The Motley Fool Australia.

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More reading

• Billions in liabilities could be set to hit CBA and other ASX banks: expert
• ‘It’s a bit like a home renovation’: What does the future look like for ANZ shares?
• Top brokers name 3 ASX shares to buy next week
• Why is the NAB share price diving more than the other big 4 ASX banks today?
• Why rising rates are a ‘sugar hit’ for ASX 200 bank shares: Macquarie

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 recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Appen Ltd (ASX: APX) share price has continued a horrid run on the ASX this year, flopping 66% to levels not seen since mid-2017.

Let’s journey back to see what’s gone wrong for the Appen share price before taking a look at where it could be heading next.

What’s been driving the Appen share price lower?

Formerly an ASX tech darling, the Appen share price hit an all-time high of $43.50 on 26 August 2020. 

The following day, Appen released its first-half 2020 results. Results that failed to meet investors’ expectations, sparking the start of the sell-off for Appen shares.

But the sell-down really gathered steam when Appen downgraded guidance in December 2020 and detailed a number of operational headwinds.

Since then, Appen has restructured its business, acquired location data company Quadrant, missed guidance in FY21, and received a takeover bid in May this year at $9.50 per share.

The bid came and went in a flash, with Canadian firm Telus withdrawing its offer soon after it was made public.

Appen’s first-half 2022 results last month only added more salt to shareholders’ wounds, with the business still battling operational challenges.

In the six months to 30 June 2022, revenue backtracked 7% to US$183 million while underlying EBITDA cratered 69% to US$8.5 million.

Explaining the disappointing performance, Appen’s CEO Mark Brayan said:

The first half of the financial year has been characterised by challenging external operating and macro conditions, which has resulted in weaker digital advertising demand, and a slowdown in spending by some of our major customers.

Is Appen a buying opportunity?

Appen shares have already suffered a mighty fall from grace. But a leading broker thinks there could be more pain in store.

On the back of Appen’s first-half result, Macquarie retained its underperform rating on Appen shares. The broker trimmed its 12-month price target to $3.30. This implies a potential downside of 12% compared to the current Appen share price of $3.76.

Macquarie noted that Appen is making strong strides in China and is diversifying its customer base. However, customer concentration risk remains high, with major customers contributing 81% of total revenue in HY22.

The broker believes the Appen share price could surprise to the upside if the company achieves faster than expected growth in China. Plus, a potential increase in demand for annotation services outside of big tech could drive an acceleration in the growth of overall demand.

In Macquarie’s eyes, downside risks include a larger trend in big tech to move away from external vendors like Appen and instead complete annotation in-house. The broker also pointed to potential pricing pressure from a new increased competition landscape.

Appen share price snapshot

At $3.76, the Appen share price has wilted 91% from the all-time high it achieved in 2020.

Over the last 12 months, Appen shares are printing a 62% fall. 

In comparison, the S&P/ASX 200 Index (ASX: XJO) has retreated 6% across the same period. Meanwhile, the S&P/ASX All Technology Index (ASX: XTX) has shed 30%.

Formerly a multibillion-dollar company, Appen currently commands a market capitalisation of just $464 million.

The post Down 65% this year, where to next for the Appen share price? appeared first on The Motley Fool Australia.

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More reading

• Megaport share price soars 10% as ASX tech shares trump on Thursday
• Down 68% so far in 2022, can Appen shares ‘get through this?’
• Why did the Appen share price just hit a 5-year low?
• Which crypto is ASX 300 tech company Appen holding and why?
• Appen share price rockets then stalls on US$9m half-year loss

Motley Fool contributor Cathryn Goh 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 Appen Ltd. 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.

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Ever since the market turned against high-growth shares in November last year, many experts have urged investors to stick with “quality”.

While the definition of quality does vary depending on who you speak to, attributes that are commonly thrown up include decent cash flow, market dominance, profitability and resilience to economic downturns.

Considering this, if you’re looking for ASX shares to buy, you may be interested in what Bell Potter investment advisor Christopher Watt had to say this week.

He picked out two stocks that he labelled “high quality”, which he wouldn’t be shy about buying right now:

‘Significant upside’ for ‘high quality portfolio’

Real estate company Mirvac Group (ASX: MGR) currently pays out a dividend yield of 4.8%, which is pretty handy at a time when so many investors are seeking income.

Watt told The Bull that “one of Australia’s biggest residential developers” is a buy at the moment.

“Mirvac appeals for its high quality portfolio of assets with low financial leverage and exposure to apartments, which, we believe, may be a favourable part of the residential market in the near term.”

Mirvac has a lot of work coming up, he added.

“It has significant upside from a $30 billion development pipeline, despite potential for declining asset values.”

The Mirvac share price has lost almost 30% so far this year, but many in the wider professional community agree with Watt.

According to CMC Markets, nine out of 14 analysts currently rate Mirvac shares as a strong buy.

‘Reliable earnings’ with expansion in mind

The Lottery Corporation Ltd (ASX: TLC) is fortunate enough to operate in an industry that sees stable demand regardless of economic cycles.

Watt said it is a “high quality business with reliable earnings”. 

“It posted a record fiscal year 2022 result, with revenue up 9.4% on the prior corresponding period.”

The Lottery Corp increased its profit margins, he noted, and has expansion in mind.

“The company is targeting new domestic and overseas acquisitions,” said Watt.

“In our view, The Lottery Corporation has strong earnings characteristics across its lotteries and Keno divisions. Cash generation is attractive.”

Wilsons head of investment strategy David Cassidy said earlier this month that he favoured services providers like The Lottery Corp over companies that made goods, considering the economic uncertainty.

“We prefer service companies…, which should benefit from pent-up demand for these services after COVID restrictions.”

Eight out of 13 analysts surveyed on CMC Markets currently rate The Lottery Corp shares as a buy.

The post 4.8% yield: Expert picks 2 ‘high quality’ ASX shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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.

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The Woolworths Group Ltd (ASX: WOW) share price has been falling in recent weeks. It’s down 6% over the last month.

How does this compare to the wider ASX share market? Let’s have a look. The S&P/ASX 200 Index (ASX: XJO) has dropped by 1.4% over the same period. That’s a sizeable underperformance in just one month.

Within that time, investors have had a good look at what the supermarket business achieved in FY22 and some early commentary on FY23.

FY22 earnings recap

Woolworths reported that its group sales increased 9.2% compared to FY21. However, the group earnings before interest and tax (EBIT) dropped by 2.7% to $2.69 billion. While the group net profit after tax (NPAT) increased 0.8% to $1.51 billion. The company raised its annual dividend per share by 1.1% to 92 cents per share.

Talking about the result, Woolworths CEO Brad Banducci said:

The extremely challenging operating environment caused by supply chain disruptions, product shortages, team absenteeism and flooding led to an inconsistent customer experience and a financial performance that was below our aspirations for the year. However, I am proud of how our team continued to show great care for our customers and each other and ongoing resilience to deliver a strong Christmas, and materially improved trading momentum in the second half.

Trading and outlook

Investors are often forward-looking, so the Woolworths share price can take into account what management said about early FY23 trading.

Woolworths said that the start of FY23 is “clouded” by the cycling of the COVID lockdowns at the start of FY22 in its Australian food business, which significantly impacted New South Wales, the state with the largest population. Total sales in the first eight weeks of FY23 were down 0.5% compared to FY22.

Staff “absenteeism” and supply chain disruptions continued to be above pre-COVID levels, though have improved.

Woolworths also said that inflation is beginning to impact all aspects of the customer shopping experience and behaviour.

Operating conditions in the New Zealand food division are “challenging”. However, Big W total sales have been “strong” in the first eight weeks of FY23, increasing by just under 30% as customers are able to get out and about more freely compared to 12 months ago. It said the discretionary retail spend remains “uncertain”, though Big W’s offering is a “strength” in the current environment.

Woolworths concluded:

In summary, we expect the trading environment to remain volatile and challenging due to endemic COVID disruptions, ongoing supply chain challenges, higher costs across our business and cost-of-living pressures for our customers. However, we are increasingly more agile and purposeful in responding to these challenges and are focused on improving our underlying operating performance across all aspects of our value chain after three years of disruption.

Is the Woolworths share price an opportunity?

Tony Locantro from Alto Capital doesn’t think so. On The Bull’s buy, hold, sell share tips, Locantro recommended that Woolworths shares are a sell:

While cost pressures have eased, we’re concerned about the impact from broad cost of living increases on its customers moving forward.

He’s not the only one with a negative view. The broker Credit Suisse currently rates Woolworths as underperform with a price target of just $31.37. That implies a possible fall of more than 10%. The broker thinks the valuation is expensive compared to the rest of the sector, and the Australian supermarkets segment is seeing high-cost growth.

The post Down 6% in a month, is September a good time to buy Woolworths shares? appeared first on The Motley Fool Australia.

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

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ASX shares with exposure to the defence industry may be set for “runaway growth”.

That’s according to Aron Pataki, global portfolio manager at Newton Investment Management.

As the Australian Financial Review reported, Pataki says the defence sector is a key area he’s keeping an eye on in his hunt for growth stocks amid today’s rising geopolitical turmoil and environment of fast rising interest rates.

Which could throw up some welcome tailwind for ASX shares with exposure to defence spending.

Russia’s war in Ukraine sparks defence spending growth

With inflation rocketing after a decade of ‘stubborn absence’ and interest rates rising fast following 11 years of stable or falling rates, Pataki sees the advantage returning to active investors over passive investors.

According to Pataki (quoted by the AFR):

For decades, passive investing worked very well. It didn’t really matter what you invested in, everything went up, and the mantra was whenever you have a dip, it’s a brilliant buying opportunity. But I suspect the world might be more complicated than that going forward. Active investors like us will benefit where you need to be far more selective.

Russia’s invasion of Ukraine has spurred governments the world over to rethink their defence spending, with further growth in defence budgets widely forecast over the coming years.

Having invested in global defence giants Lockheed Martin Corporation (NYSE: LMT) and BAE Systems plc (LON: BA), Pataki said defence is among the key sectors to watch “for runaway growth”.

Which ASX shares have exposure to the defence sector?

Now, there are no ASX shares that can rival Lockheed Martin or BAE Systems for their sheer size.

At least, not yet!

But a number of small-cap shares trading on the ASX do have significant exposure to increased global defence spending. Though that’s largely yet to filter down to their share price performance this year.

Electro Optic Systems Holdings Ltd (ASX: EOS), for example, develops electro-optic technologies for the aerospace market. The company’s biggest revenue earner is its defence segment, which manufactures advanced fire control, surveillance, and weapon systems. Despite running sharply higher in the weeks following Russia’s invasion of Ukraine, the Electro Optic share price is down 79% in 2022 amid slumping revenue figures.

DroneShield Ltd (ASX: DRO) is another ASX share that stands to benefit from increasing geopolitical tensions. DroneShield provides drone detection and disruption solutions to the defence sectors as well as commercial airports, prisons, and other critical infrastructure. The DroneShield share price is down 3% year-to-date, beating the benchmark performance.

Then there’s Codan Limited (ASX: CDA). Codan develops electronics solutions with a strong focus on metal detectors. Codan sells its equipment to both private and government customers. The Codan share price is down 33% this calendar year despite reporting strong FY22 results. Those results included a 16% year-on-year increase in sales and a record underlying net profit after tax (NPAT) of $100.5 million.

Other ASX shares with a footprint in the defence sector worth exploring include Bisalloy Steel Group Ltd (ASX: BIS), Austal Ltd (ASX: ASB), and Quickstep Holdings Limited (ASX: QHL).

The post Could ASX shares in this sector be set ‘for runaway growth’? 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 Austal Limited, DroneShield Ltd, and Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lockheed Martin. The Motley Fool Australia has recommended DroneShield Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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