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The Silver Lake Resources Limited (ASX: SLR) share price is in the red after the company announced a drop in profits even as sales increased in FY22.

Shares in the Australian and Canadian gold miner are down 3.52% to $1.3025 at the time of writing. By comparison, the All Ordinaries Index (ASX: XAO) is also 1.75% lower in morning trade.

It isn’t only Silver Lake’s FY22 result that’s weighing on its shares. The 0.2% dip in the gold price to US$1,747 an ounce and the broader market sell-off is also weighing on ASX gold shares today.

Let’s take a closer look at the company’s FY22 details below.

Summary of Silver Lake’s FY22 results

• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $267.6 million (-8% vs FY21) at an EBITDA margin of 42% (-13% vs FY21)
• Net profit after tax (NPAT) of $77.7 million (-21% vs FY21)
• Gold produced 256,538 ounces (+3% vs FY21)
• Averaged realised gold price A$2,482 an ounce (+7% vs FY21)
• All in sustaining cost (AISC) A$1,756 (+18% vs FY21)

Silver Lake’s FY22 results highlights

Management blamed the drop in earnings and profits on increased depreciation and amortisation. It also mentioned non-cash mining costs associated with the treatment of stockpiles at Mount Monger and the inclusion of the Sugar Zone operation post 18 February 2022 to explain the year-over-year (yoy) movement in its financials.

Inflationary pressure also weighed on margins, but management pointed to the resilience of its Western Australian operations where free cash flow increased 20% yoy to $89.2 million.

A new processing circuit and a second high grade ore source was introduced at its Deflector gold-copper mine in WA. This led to a 24% increase in production and a 19% lift in sales.

The miner took advantage of Silver Lake’s share price volatility during FY22 as it bought back shares on market. Silver Lake can purchase up to 10% of its ordinary shares through to 23 February 2023.

What management is saying

Silver Lake said in its ASX announcement:

Silver Lake executed several operational and strategic objectives through FY22. Our business demonstrated a high level of resilience to manage the prevailing operating climate and allowed Silver Lake to strengthen its operations and the growth outlook, in parallel with the commencement of capital returns to shareholders.

Outlook

The miner gave a positive outlook for FY23 but noted that cost pressures will rise. It is forecasting sales of 260,000 to 290,000 ounces at an AISC of A$1,850 to A$2,050 per ounce.

Silver Lake’s total gold sales in FY21 was 255,994 ounces. The midpoint of its FY23 sales guidance represents a 9% yoy sales growth on an absolute basis and 6% growth on a sales per share basis.

The contribution from the newly acquired Harte Gold Corp and its Sugar Zone mine in Canada will undoubtedly help.

Silver Lake share price snapshot

The Silver Lake share price has held its value relatively well over the past year as it only dipped 4% before today’s trade.

In contrast, its larger peers have fared worse. The Newcrest Mining Ltd (ASX: NCM) share price has tanked 27% and Northern Star Resources Ltd (ASX: NST) share price lost 22% over the period.

This compared to a 6% decline in the All Ordinaries over the past year to last Friday.

The post Silver Lake share price tumbles on weaker FY22 results appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brendon Lau has positions in Newcrest Mining Limited. 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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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted share after its short interest rose to 15.2%. With living costs rising and squeezing budgets, short sellers appear to believe the travel market recovery could falter.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 12.8%. Last week this betting technology company posted a 371% increase in revenue to $91.7 million but a whopping $89.2 million loss.
• De Grey Mining Limited (ASX: DEG) has leapt into the top ten out of nowhere after its short interest surged to 11%. Short sellers seem to believe the market is too optimistic on the development of the Mallina Gold Project.
• Block Inc (ASX: SQ2) has short interest of 10.8%, which is down slightly week on week once again. However, the remaining short sellers will be pleased to learn that the payments company’s shares are expected to crash lower on Monday following a selloff on Wall Street.
• Nanosonics Ltd (ASX: NAN) has short interest of 10.6%, which is down slightly week on week. This infection prevention company’s shares sank deep into the red last week after the release of a disappointing result. Rising costs and delays to a new product launch weighed on sentiment.
• Lake Resources N.L. (ASX: LKE) has short interest of 10%, which is flat week on week. Short sellers aren’t giving up on this lithium developer despite a significant rally recently. There are doubts over the validity of its DLE technology.
• Zip Co Ltd (ASX: ZIP) has seen its short interest rise to 9.6%. Short sellers will have been pleased to see this buy now pay later provider’s shares tumble last week after it reported another large loss.
• Inghams Group Ltd (ASX: ING) has short interest of 8.4%, which is up week on week. Short sellers have been loading up on this poultry company’s shares after the release of a disappointing result driven by higher input costs.
• Regis Resources Limited (ASX: RRL) has short interest of 8.3%, which is down week on week again. Production issues have been weighing on this gold miners shares this year.
• Megaport Ltd (ASX: MP1) has seen its short interest fall to 7.7%. Concerns over this network as a service provider’s valuation could be behind this high level of short interest. Based on Macquarie’s estimates, Megaport’s shares trade at ~88x FY 2024 earnings.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Here’s what brokers are saying about the Flight Centre share price
• ASX 200 reporting season weekly wrap: Top risers and fallers
• Here are the top 10 ASX 200 shares today
• Here’s why UBS tips the Zip share price to halve
• BetMakers share price pops then drops as full-year revenue leaps 370%

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 Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, Nanosonics Limited, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Flight Centre Travel Group Limited, and MEGAPORT FPO. 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 Fortescue Metals Group Limited (ASX: FMG) share price is losing ground on Monday morning.

This comes as the company just released its full-year results for the 2022 financial year.

At the time of writing, the mining giant’s shares are down 0.96% to $19.68.

Fortescue share price retraces amid dividend cut

• Record shipments of 189 million tonnes, exceeding the top end of guidance
• Total revenue down 22% to US$17,390 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) down 36% to US$10,561 million
• Net profit after tax (NPAT) down 40% to US$6,197 million
• Earnings per share (EPS) down 40% to US 201 cents
• Final dividend down 43% to A$1.21 per share, fully franked
• Strong balance sheet with cash on hand of US$5.2 billion at 30 June 2022

What happened in FY 2022?

For the 12 months ended 30 June, Fortescue achieved record annual shipments of 189 million tonnes, exceeding the top end of guidance. This was driven through the integration of the Eliwana mine and rail project, combined with a consistent performance from existing operations.

The outstanding performance contributed to the second highest earnings and operating cash flow in Fortescue’s history.

However, revenue fell 22% to US$17,390 million due to a 26% reduction in price realisation to US$100 per dry metric tonne (dmt). In FY 2021, the average realised price for iron ore stood at US$135/dmt.

Fortescue linked this to steel demand and steel production curtailments, particularly in the first half of FY 2022. COVID-19 restrictions disrupting China’s steel demand as well as a weakening global economic outlook impacted the second half.

C1 costs averaged US$15.91 per wet metric tonne (wmt) for the year, which was 14% higher compared to the prior period. The increase in C1 costs reflected market inflationary pressures such as a disrupted labour market and an increase in energy and fuel costs.

Cash generated from operations came to US$10,515 million which represented a 37% decline over FY 2021. This was largely a result of lower underlying EBITDA.

At 30 June, Fortescue had US$5,224 million of cash on hand and US$1,025 million available under the revolving credit facility. Total debt was US$6,103 million, inclusive of US$755 million of lease liabilities.

The board declared a final dividend of A$1.21 per share for FY 2022, which is 43% lower than the $2.11 paid out in the prior comparable year.

What’s the outlook?

Looking ahead, Fortescue provided a guidance for FY 2023, stating the following:

• Iron ore shipments in the range of 187 million tonnes to 192 million tonnes
• C1 costs for hematite between US$18.00 to US$18.75 (based on assumed average exchange rate of AUD: USD 0.70)
• Capital expenditure (excluding Fortescue Future Industries) of US$2.7 billion to US$3.1 billion
• Fortescue Future Industries expenditure is anticipated to be around US$600 million to US$700 million

Fortescue CEO Elizabeth Gaines briefly touched on Fortescue’s outlook, saying:

We have experienced a strong start to FY23 and through operational excellence, a sustained focus on productivity and a disciplined approach to capital allocation, we will continue to deliver benefits to all our stakeholders

Fortescue share price snapshot

The Fortescue share price has risen by 3% in 2022 but is flat when looking over the last 12 months.

The post Fortescue share price backtracks as final dividend is slashed by 43% appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Earnings preview: Here are 3 ASX 200 shares reporting next week
• Guess which ASX All Ords share rocketed 15% on a rare earths deal with Twiggy Forrest
• Here are the top 10 ASX 200 shares today
• Fortescue share price rises ahead of Monday’s earnings result

Motley Fool contributor Aaron Teboneras 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 Lovisa Holdings Ltd (ASX: LOV) share price is in the green after the jewellery retailer released its earnings for financial year 2022 (FY22).

After opening 6% higher at $19.80, the Lovisa share price is currently $19.92, 6.7% higher than its previous close.

Lovisa share price rises as dividend doubled

Here are the key takeaways from the company’s earnings for the 53 weeks ended 3 July:

• Revenue came in at $458.7 million – a 59.3% improvement on that of the prior corresponding period (pcp)
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) lifted 61.6% to $97.2 million
• Net profit after tax (NPAT) rose 116.3% to $59.9 million
• Earnings per share (EPS) increased to 55.7 cents
• Declared a 37 cent, 30% franked final dividend – more than double that of FY21, bringing full-year dividends to 76 cents

Lovisa’s comparable store sales also lifted 19.9% in FY22 on those of the pcp despite COVID-19-induced store closures in Australia, New Zealand, and Malaysia early in the period. Meanwhile, its e-commerce sales grew 30%.

In response to rising inflation, the company implemented price increases in the third quarter. That delivered sales growth with minimal impact to volumes.

It ended the period with $24.2 million of net cash.

What else happened in FY22?

Sadly, the Lovisa share price slumped 11% over the course of FY22 despite posting a 12% gain on the back of its half-year earnings.

The retailer also bid goodbye to its former CEO of 12 years Shane Fallscheer last financial year. He was succeeded by Victor Herrero.

Finally, the company opened 104 new stores and closed 19 during the period, entering new markets in Poland and Canada, as well as new franchise markets in Cyprus and Lebanon.

What did management say?

Herrero commented on the company’s earnings, saying:

I’m thrilled with the acceleration in the performance of the business over this financial year. I would like to thank the team for helping to deliver a seamless transition for me into the business and remaining laser-focused on the continuing success of Lovisa globally. The financial result the team have been able to achieve this year is very pleasing, with the business continuing to go from strength to strength and well placed to take advantage of future opportunities as they arise.

What’s next?

The company didn’t provide any new earnings guidance today. Though, it did provide a trading update for FY23 so far.

Its comparable store sales lifted 21% over the first seven weeks of this fiscal year on that of the pcp. Total store sales have also grown 66.1%, with the pcp having been impacted by lockdowns.

The company has also entered two new markets – Hong Kong and Namibia – since the end of last financial year.  

Lovisa share price snapshot

The Lovisa share price has outperformed the broader market in 2022.

It has sunk 4.5% since the start of the year and 1.4% since this time last year.

For comparison, the All Ordinaries Index (ASX: XAO) has dumped 7% year to date and 6% over the last 12 months.

The post Lovisa share price lifts as full-year profit surges 116% appeared first on The Motley Fool Australia.

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More reading

• The retailer that’s a ‘recession-proof’ ASX share to buy: analyst
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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 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 Aussie Broadband Ltd (ASX: ABB) share price has plunged in early trade after the company released its 2022 financial year results on Monday morning.

No doubt caught up in the general sell-off of growth shares after United States Federal Reserve chair Jerome Powell’s comments over the weekend, at the time of writing Aussie Broadband shares are down 18.47% to $2.56.

What did the company report?

• Record revenue, up 56% to $546.9 million
• Record earnings before interest, taxation, depreciation and amortisation (EBITDA), up 107% to $39.4 million
• Net profit after tax (NPAT) up 118% to $5.3 million
• Total broadband connections up 46% to 584,793
• NBN broadband market share (excluding satellite) up from 4.74% to 6.46%

What else happened in FY22?

The big event for Aussie Broadband was its acquisition of IT solutions provider Over the Wire Holdings Ltd, which was also formerly listed on the ASX. That $344 million deal wrapped up in March.

Aussie Broadband also continued building out its own dark fibre network, which gives it independence from the larger wholesale telcos. That project is 90% complete, according to Monday’s financial report.

What did management say?

Aussie Broadband co-founder and managing director Phillip Britt said:

I am extremely proud of the work the whole team has put in to deliver these outstanding results. We have achieved strong growth in revenue, earnings and market share, and are well positioned to achieve our goal of becoming Australia’s fourth largest communications company providing a full suite of solutions across enterprise, wholesale, residential, and government sectors.

Aussie has come a long way from our early days as a residential internet service provider. Today we are growing a complete communications and technology solution across multiple market sectors. This enables us to develop closer relationships with a broader range of customers while also driving increased profit margins. 

What’s next?

Aussie Broadband has forecast 2023 financial year revenue to fall between $800 and $840 million. 

After growth in enterprise and government clientele plus full integration of Over The Wire, the EBITDA margin will be around 10% to 10.5%, which is up from 7.2% for the 2022 financial year.

Aussie Broadband share price snapshot

Like most technology shares, the journey for the Aussie Broadband share price has been on a stomach-churning ride this year.

The stock has more than halved since mid-April, and is down 46% since the start of 2022.

The post Aussie Broadband share price plummets 18% despite record revenue, earnings appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Why Aussie Broadband, Temple & Webster, United Malt, and Zip shares are dropping
• Aussie Broadband share price plunges 15% as quarterly results fail to impress

Motley Fool contributor Tony Yoo has positions in Aussie Broadband Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

A big drop sent the Dow down more than a thousand points

Market participants have been concerned for weeks about what Federal Reserve Chair Jerome Powell might say at the central bank’s annual symposium in Jackson Hole. Apparently, they were quite discouraged by what they heard, as Powell restated the Fed’s determination to push interest rates as high as they needed to go in order to ensure that inflationary pressures don’t become permanently entrenched in the US economy. For those who had hoped for a more dovish response, that was bad news, and the Dow Jones Industrial Average (DJX: .DJI -3.03%) ended the day down more than a thousand points. Percentage drops for the S&P 500 (SP: .INX) and Nasdaq Composite (NASDAQ: .IXIC) were also in the 3% to 4% range.

Index	Daily percentage change	Daily point change
Dow	(3.03%)	(1,008)
S&P 500	(3.37%)	(141)
Nasdaq	(3.94%)	(498)

Data source: Yahoo! Finance

Among large-cap stocks, there were only a handful of gainers as most share prices followed the broader market lower. Some now fear that the rebound that the market saw from mid-June to about a week ago may well prove to have been only a bear market rally, with today’s downward move reestablishing a bearish trend that could take market indexes far lower.

There’s no way to predict short-term price movements in the stock market. However, efforts to fight inflation, if successful, should result in better long-term results for investors than if the Fed simply backed off and allowed higher price trends to become a permanent feature of the US economy.

Stubborn inflation

The big question still facing investors is whether inflation has peaked. Many of those watching economic data were pleased to see the upward moves in the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCE) start to moderate recently. However, just because inflation has stopped accelerating doesn’t mean that it’s under control.

The latest numbers from the Bureau of Economic Analysis on the PCE tell the story well. The headline number that most people emphasised was that the price index fell 0.1% in July, with goods prices falling 0.4%.

However, looking more closely at what goes into the PCE price index gives a more complete picture. Much of the downward pressure on the index came from a 7.7% drop in the sub-index for gasoline and other energy goods. That by itself was enough to send nondurable goods prices down half a percent, even as food and beverage prices jumped 1.3% month over month.

Some other key components showed continued rises. Housing and utility costs were up 0.6% for the month, extending their gain over the past 12 months to 7%.

Perhaps most importantly, even larger declines in a single month wouldn’t by themselves reverse adverse trends. Energy costs are still more than 45% higher than they were this time last year. Food and beverages are up nearly 12% year over year, and even when you exclude food and energy, core PCE prices are up 4.6% since July 2021 — more than double the 2% target that the Fed pursues.

Is a recession worth long-term prosperity?

Investors worry that a prolonged set of interest-rate increases from the Fed will push the economy into recession and restrain business activity. If that view from the Fed was unexpectedly hawkish, then it could leave stock market participants facing downward revisions on earnings estimates that could send stock prices lower once again.

In the long run, though, the impact of inflation on stock prices historically has been more difficult to overcome than short-term business cycle fluctuations. When you look back at recent bouts of inflation in the 1970s and early 1980s, for instance, you’ll notice significant volatility in stock markets that led to subpar returns. Only when inflationary pressures were resolved did solid bull markets result, and the long bull markets of the 1990s, mid-2000s, and 2010s all came in economic environments with little or no inflation.

It’s indeed possible that a central bank with tight monetary policy might bring short-term pain to the stock market and an end to what might materialise as a bear market rally. However, I believe investors will be happier with this outcome in the long run than they would be with sustained inflation and the complications that come with it.

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

The post Did the Fed just kill the bear market rally? appeared first on The Motley Fool Australia.

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More reading

• Should you really be buying stocks right now?
• 3 ASX 200 shares trading ex-dividend on Tuesday
• Are Pilbara Minerals shares better value than Allkem right now?
• Is the $400m buyback a good thing for Qantas shares?
• Here’s what brokers are saying about the Flight Centre share price

Dan Caplinger 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 S&P/ASX 200 Index (ASX: XJO) is a hunting ground for dividend investors right now as companies release results and hand back some of their profits to shareholders.

When a company declares a dividend, it must set a cut-off date to determine which shareholders are entitled to the payment.

This is also known as the ex-dividend date. Any shares you buy on or after this date won’t come with the latest dividend payment.

A company’s shares typically fall on the day they turn ex-dividend. This is because money is flowing out of the company to line the pockets of shareholders. As a result, it has less cash on its books, so theoretically it’s worth less.

What’s more, some investors will look to sell their shares once they’ve locked in the dividend payment.

With this in mind, there’ll be downwards pressure on these three ASX 200 shares tomorrow as they turn ex-dividend.

Evolution Mining Ltd (ASX: EVN)

Today is the last day Evolution Mining shares will be trading with a fully franked final dividend of 3 cents.

The ASX 200 gold miner recently unveiled its FY22 results, declaring its 19th consecutive dividend for shareholders since 2013.

The payment date for this final dividend has been locked in for 30 September.

Across the financial year, the company halved its total dividend payments to 6 cents per share.

At current levels, Evolution Mining shares come with a trailing dividend yield of 2.4%. Including franking credits, this yield dials up to 3.4%.

Beach Energy Ltd (ASX: BPT)

Beach Energy is another ASX 200 share turning ex-dividend tomorrow. 

The oil and gas company recently declared a fully franked final dividend of 1 cent. Beach has held its interim and final dividends steady at 1 cent since 2017.

Investors who own Beach shares by the time the market closes today should pencil in a payment date of 30 September.

Investors also have the option of participating in a dividend reinvestment plan (DRP) instead.

Beach’s total dividends for FY22 come to 2 cents, putting shares on a trailing dividend yield of 1.1%. This grosses up to 1.6% including franking credits.

Bapcor Ltd (ASX: BAP)

Rounding out this trio of ASX 200 dividend shares going ex-dividend on Tuesday is automotive aftermarket specialist Bapcor. 

The company recently announced a fully franked final dividend of 11.5 cents, which will be paid on 16 September.

Adding in the company’s 10-cent interim dividend declared earlier in the year brings total FY22 dividends to 21.5 cents.

This means Bapcor shares are currently flashing a trailing dividend yield of 3.1%, which grosses up to 4.5%.

The post 3 ASX 200 shares trading ex-dividend on Tuesday appeared first on The Motley Fool Australia.

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More reading

• Hoping to bag the next Beach Energy dividend? Here’s what you need to do
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• Dividend beasts: 3 ASX 200 shares that have delivered reliable payouts over the past 7 years
• Can the gold price outshine sticky inflation?

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 Bapcor. 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.

In July, analysts at Bank of America came out with a pretty sombre forecast for the S&P 500 through to the end of 2022. They revised their year-end target for the benchmark from 4,500 to 3,600 by the end of this year.

With the S&P 500 at 4,200 as of 25 August, that would mean it would drop another 14% by the end of the year, on top of the 12% it is already down. And the Nasdaq Composite is already in bear market territory, down about 20% year to date as of 25 August.

That’s not to say Bank of America’s forecast will be correct. The market could surge higher the rest of the year. But the uncertainty has caused many investors to sit on the sidelines and wait for the market to turn back north. It raises the question: Should you really be buying stocks right now? While it is prudent to be cautious, it is also smart to be opportunistic. Here’s why.

Bad news can be good news

You have no doubt heard the famous Warren Buffett quip: “Be greedy when others are fearful and be fearful when others are greedy.” That is easier said than done for the average investor, but the larger point is, down markets are a great time to find good, cheap stocks that will grow and flourish when the market does turn around.

As Buffett himself told The New York Times back in 2008: “Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.”

Some of Buffett’s best and most lucrative purchases came in down markets. Buffett bought Berkshire Hathaway‘s second-largest current holding, Bank of America, in August 2011 when it was trading at around $6 per share. It is now trading at $35 per share — even though it is down 21% year to date. Still, that investment has posted a 17% annualised return for Buffett.

Now, not all investors have the expertise or track record of Warren Buffett, but just as there was after the Great Recession, there are a lot of good stocks available at low valuations right now, if you know where to look.

What to look for

The first thing to know is that bear markets do not last as long as bull markets. According to an analysis by the Hartford Funds, the average bear market lasts about 289 days, or just over nine months, while the average bull market lasts about 991 days or 2.7 years. Further, stocks on average lose 36% during a bear market and gain 114% in a bull market.  

It is also worth noting that about half of the S&P 500’s best days in the last 20 years occurred during a bear market, while another 34% occurred in the first two months of a bull market. So, there is indeed value in adding to your current or investing in new stocks.

But proceed cautiously, as there remains a lot of uncertainty out there. Your best bet is to find companies that have seen their valuations drop, as measured by price-to-earnings (P/E), price-to-book (P/B), or price-to-sales (P/S) ratios. Also, look for companies that are established in their industries or markets with a history of consistent earnings and revenue increases. 

Generally speaking, stocks that still have high valuations, a disproportionally high amount of debt, relatively little cash flow, high expenses, and a spotty history of profitability or earnings should raise red flags.

So, yes, you should be looking to invest in stocks right now, but proceed cautiously and do your research.

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

The post Should you really be buying stocks right now? appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). 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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The Pilbara Minerals Ltd (ASX: PLS) share price has risen strongly over the past couple of months. But, Allkem Ltd (ASX: AKE) shares have also increased significantly recently as well.

Since 22 June 2022, Pilbara Minerals shares are up by 72%, with Allkem rising 39% over the same time period.

They are both major ASX lithium players. But there are fairly big differences between them.

Allkem is headquartered in Buenos Aires, Argentina. It has lithium brine operations in Argentina, a hard-rock lithium operation in Australia, and a lithium hydroxide conversion facility in Japan. It also has new project developments underway “across the globe” to enhance its international scale.

Pilbara Minerals says that it owns 100% of one of the world’s largest independent hard-rock lithium operations. It’s located in WA, called the Pilgangoora project. The company is pursuing a growth and diversification strategy to become a low-cost lithium producer and fully integrated lithium raw material and chemical supplier.

Which one is better value?

I suppose value is in the eye of the beholder.

One of the ways to compare businesses is by looking at the price/earnings (p/e) ratio. This tells us the multiple of earnings that each business is trading at.

Using estimates on CMC markets, the Pilbara Minerals share price is valued at six times FY23’s estimated earnings and under nine times FY24’s estimated earnings.

However, looking at the Allkem share price, it’s valued at 10 times FY23’s estimated earnings and around nine times FY24’s estimated earnings.

On an earnings projection, Pilbara Minerals does appear to be cheaper.

What do brokers think of these two ASX lithium shares?

Brokers are thinking that ASX lithium shares typically have attractive outlooks because of the expected growing demand for electric vehicles.

However, some brokers are more optimistic about some ASX lithium stocks than others.

Opinions are very mixed. Macquarie has an ‘outperform’ rating on Pilbara Minerals, with a price target of $5.60. That implies a rise of more than 50% over the next year. Macquarie is also bullish about the next few years due to expectations of strong lithium prices.

However, Credit Suisse currently has a rating of ‘underperform’ on the business, with a price rating of $2.30. That would be a fall of the Pilbara Minerals share price of more than 30%. Higher costs in FY23 is  one of the main factors that the broker is cautious about.

Using those same brokers for Allkem, it’s a similar story.

Macquarie rates Allkem as ‘outperform’ with a price target of $21. That would be a rise of around 50%. While the company is benefiting from high prices, production guidance for FY23 was decreased.

Credit rates Allkem as ‘underperform’, with a price target of just $10.30. That would be a drop of around 25%. The broker noted the decreased production guidance and higher expected costs.

The post Are Pilbara Minerals shares better value than Allkem right now? 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 recommended Macquarie Group 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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Qantas Airways Limited (ASX: QAN) shares are getting plenty of attention after the airline released its FY22 result and announced a $400 million share buyback.

Initially, the Qantas result may not have seemed that positive considering it reported in the 12 months to 30 June 2022, it made an underlying loss before tax of $1.86 billion and a statutory loss before tax of $1.19 billion.

However, within the result, it also told investors that its net debt had declined to $3.94 billion, down from a high of $6.4 billion. The $3.94 billion figure was below its “optimal” target range of $4.2 billion to $5.2 billion. Before COVID-19, it had net debt of $4.71 billion.

How did it manage to reduce its debt?

Qantas explained that strong revenue intake, the sale of surplus land, and lower invested capital combined to help it lower its debt.

It sold 13.8 hectares of land in Mascot for gross proceeds of $802 million. Qantas will lease back portions for a period of time while arrangements are made to relocate some of the functions the land is currently used for. It has entered into discussions with the purchaser, LOGOS, about potential future development options for the sites, including the creation of a dedicated precinct for the airline.

The airline also said that a further $270 million in cost benefits were achieved in FY22, bringing the total achieved under its COVID recovery plan to $920 million since FY20. The annualised benefit of $1 billion is on track from FY23 onwards.

What is a share buyback and what does that do for Qantas?

A buyback is a way for a business to return money to shareholders, but it’s not a dividend.

It’s when the company is buying shares from investors, either on the ASX share market or directly from the investor.

By buying shares (hopefully at a time when the Qantas share price is at a fairly low price), it can help boost earnings per share (EPS) and return on equity (ROE). By reducing the number of shares on issue, it can also support the share price because the value of the overall business is being split between fewer shares.

According to the ASX, Qantas has a market capitalisation of $9.16 billion. So, a $400 million buyback at the valuation would represent more than 4% of the company.

Is the share buyback a good thing?

I think it is a good thing, assuming Qantas also puts enough money to work to get its customer service standards back to pre-COVID times.

Qantas is expecting its domestic capacity will be 95% of pre-COVID levels in the first half of FY23 and 106% in the second half of FY23. The international capacity is expected to reach 84% of pre-COVID levels by the second half of FY23.

With an expectation of returning demand and the net debt position better than expected, it seems like a good way to help Qantas shares and, therefore, shareholders. I think it seems like management is confident about the outlook, which is a good thing.

The post Is the $400m buyback a good thing for Qantas shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy today
• Why Bega Cheese, Jumbo, Pilbara Minerals, and Qantas shares are rising
• Is the Qantas share price a buy following the airline’s latest results?
• Here are the top 10 ASX 200 shares today

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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