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The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is in reverse on Monday morning.

This follows the release of the company’s full year results for the 2022 financial year.

At the time of writing, the regional bank’s shares are down 5.01% to $10.24.

Bendigo Bank share price sinks amid a ‘challenging and competitive environment’

• Total income up 0.4% to $1,709.9 million
• Statutory net profit after tax down 6.9% to $488.1 million
• Cash earnings after tax up 9.4% to $500.4 million
• Fully franked final dividend per share of 26.5 cents
• CET1 ratio up 11 basis points to 9.68%

What happened in FY2022?

For the 12 months ended 30 June, Bendigo Bank reported a 9.4% increase in cash earnings after tax to $500.4 million. This was underpinned by disciplined cost management and lower loan provisions.

The net interest margin (NIM) declined 11 basis points in the previous half to 1.69% reflecting the historically low interest rate environment. Variable and fixed residential loan competitive pressure led to a decline of around 15 basis points over the first half.

In addition, the company’s Common Equity Tier 1 (CET1) ratio – a key measure of financial strength – rose again, up 11 basis points to 9.68%. This is above Australian Prudential Regulation Authority’s (APRA) benchmark target for standardised banks. Bendigo Bank stated that its strong capital position reflects a well-managed balance sheet and strong risk management.

The robust performance allowed the Bendigo Bank board to declare a fully franked final dividend of 26.5 cents per share. This takes the full year dividend to 53 cents apiece, up 6% from the 50 cents in the prior corresponding period.

Management commentary

Bendigo Bank’s CEO and managing director, Marnie Baker touched on the company’s performance in FY2022. She said:

These results show we have delivered what we promised in a challenging and competitive environment. Bendigo and Adelaide Bank has delivered continued growth in loans, deposits and customer numbers. We have reduced costs and improved our cost to income ratio while maintaining a strong balance sheet and preserving our credit quality.

We have achieved a fourth consecutive half of positive jaws and our transformation agenda is on track. Our performance for FY22 is evidence that our strategy is working. The Bank is proud of the progress it has made and the discipline we have shown however we know we have more to do.

What’s the outlook for FY2023?

No guidance has been given for FY2023. However, Baker spoke about focusing on the company’s overall returns. She concluded:

What we hoped was going to be a relatively smooth economic landing coming out of COVID has got a little bumpy, as we face into growing inflationary pressures, a tight jobs market, rising wages and general global uncertainty.

Cash rate increases from the Reserve Bank are beginning to have an impact on property values in some markets and we can expect credit growth to moderate and competition to remain intense.

Taking inflationary headwinds into account, our aim is to keep costs broadly flat. Our investment spend will remain at current levels through to FY24 before declining and impairment expenses should return to historical averages over the medium term.

The post Bendigo Bank share price slumps 5% following FY22 results appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Should investors buy Bendigo Bank shares for dividends?
• Why Goldman Sachs says the Bendigo and Adelaide Bank share price is great value
• Is the Bendigo Bank share price a buy ahead of next month’s earnings?
• What might ANZ’s Suncorp deal mean for competition among ASX 200 banks?

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 positions in and has recommended Bendigo and Adelaide Bank 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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The JB Hi-Fi Limited (ASX: JBH) share price is edging into the red on Monday morning. This follows the release of the Australian retailer’s official financial reports for FY22.

At the time of writing, JB Hi-Fi shares are down 0.33% to $45.40 apiece after initially climbing on market open. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.54%.

Let’s check the highlights of the company’s reports.

JB Hi-Fi share price lifts on another record year

• Total sales up 3.5% to a record $9.23 billion
• Online sales lifted 52.8% to $1.63 billion
• Earnings before interest and tax (EBIT) up 6.9% to $794.6 million
• Net profit after tax (NPAT) up 7.7% to a record $545 million
• Declared final fully franked dividend of $1.53 per share, up 43% from the prior year

Notably, these strong results have flowed through during the first full financial year under JB Hi-Fi group CEO Terry Smart.

What else happened in FY22?

The latest financial year was one defined by online sales and strong consumer demand for JB Hi-Fi. According to the company’s reports, online sales accounted for 17.6% of all group sales in FY22. In the second half, despite all physical stores being open, online sales still represented nearly 12% of all sales.

Furthermore, sales in Australia were underpinned by demand for consumer electronics and home appliance products. Meanwhile, in New Zealand, total sales inched 0.3% higher to NZ$262.4 million from growth in visual, games hardware, and smart home categories.

Finally, the Good Guys segment recorded a 2.7% improvement in sales to $2.79 billion. This was bolstered by key product categories such as laundry, portable appliances, floor care, and dishwashers.

What did management say?

In light of the positive momentum, JB Hi-Fi group CEO Terry Smart stated:

These results reinforce the enormous trust our customers have in our brands and the strength of our multichannel offer, which continues to provide customers with choice on how to shop.

In terms of how a tightening economy may impact the retailer, Smart highlighted its value-oriented business as a beneficiary.

As we enter an increasingly uncertain retail environment and household budgets come under further pressure, customers will gravitate to trusted value-driven retailers. Our ongoing strategy of providing customers with the best value and outstanding service every day, will ensure our brands continue to deliver for our customers and remain a destination of choice into the future.

What’s next?

While the company did not provide future guidance, it did provide a July sales update. Last month, JB Hi-Fi Australia witnessed total sales growth of 9.7% compared to the prior corresponding period. However, the New Zealand division experienced a 0.9% reduction.

The Good Guys business also recorded a 7.8% lift relative to the prior period.

JB Hi-Fi share price snapshot

The JB Hi-Fi shareholder has had a slightly better experience this year compared to the S&P/ASX 200 Index. Year-to-date, JB Hi-Fi shares are down 5.73% compared to the benchmark’s disappointing 7.3% fall.

Based on today’s NPAT, the company now trades on a price-to-earnings (P/E) ratio of around 9.1 times. For context, the industry average currently sits at 10.5 times.

The post JB Hi-Fi share price dips as full-year dividend jumps 43% appeared first on The Motley Fool Australia.

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More reading

• Could this ASX 200 share be heading for a short squeeze?
• Down 20% since March, is this ASX 200 share a misunderstood investment opportunity?
• What’s impacting ASX 200 retail shares today?
• Here are the top 10 ASX 200 shares today
• ‘Recession-like levels’: Why ASX retail shares could still be in for a bumpy ride

Motley Fool contributor Mitchell Lawler 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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AGL Energy Limited (ASX: AGL) shares will likely be front of mind this week as the energy producer and retailer gears up to release its full-year earnings.

The S&P/ASX 200 Index (ASX: XJO) giant is expected to drop its financial year 2022 results on Friday, alongside many other market favourites.

The AGL share price slumped slightly over the last financial year. It’s currently trading at $8.51.

So, what might market watchers expect to hear of AGL’s earnings, dividends, and expenses later this week? Let’s take a look.

AGL shares in focus as the company gears up to report

Interested in AGL shares this reporting season? There are a number of reasons the company’s earnings might disappoint some market watchers.

Let’s start with the energy giant’s own expectations. AGL downgraded its full-year guidance back in May, blaming a generator fault at its Loy Yang A power station.

Its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is now expected to come in between $1.23 billion and $1.3 billion. Meanwhile, its underlying after-tax profit is expected to be between $220 million and $270 million.

For context, it reported $1.66 billion of underlying EBITDA and an after-tax profit of $537 million for financial year 2021.

AGL also offered investors 75 cents per share of unfranked dividends in financial year 2021. Brokers have tipped that to fall significantly this time around.

AGL’s latest interim dividend was 16 cents – down 60% on the prior corresponding period.

While some brokers think the company’s final payout might match its interim dividend, others are sceptical. Indeed, many believe AGL’s final dividend for financial year 2022 will be in the single digits, as my Fool colleague Tristan reports.

AGL’s controversial demerger might also weigh on the stock this earnings season. The company ultimately binned its plan to split in two, but not before forking out $160 million.

Finally, AGL’s ASX 200 peer Origin Energy Ltd (ASX: ORG) dropped its June quarter earnings late last month. Its CEO Frank Calabria said the three months ended 30 June were “an extraordinarily challenging quarter for the energy industry globally and in Australia”.

Thus, the final stretch of financial year 2022 could have been rough on AGL too.

No doubt all eyes will be on the AGL share price on Friday when the company drops its full-year earnings.

The post Hoping to pounce on AGL shares? Here’s what to watch when the energy giant reports this week appeared first on The Motley Fool Australia.

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More reading

• Guess how much AGL has paid in dividends over the past 5 years?
• AGL share price down amid Fortescue Future Industries hydrogen hub news
• Why was the AGL share price undercooked in July?
• ‘Massive untapped demand’: The $3 trillion opportunity ASX 200 energy shares could be missing
• Can the AGL dividend bounce back this earnings season?

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 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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Australia has been called ‘the lucky country’ for a long time. Certainly, it has a large amount of in-demand resources. Iron ore, copper, gold, lithium, and so on can all be found here. But, interestingly, coking (or metallurgical) coal could also see strong and growing demand in the coming years.

Coal may not sound like a forward-facing commodity. But it’s important to note that there are two different types of coal.

Thermal coal is the coal that typically gets negative attention because it is used to generate energy and is seen as a major source of carbon emissions, adding to climate change.

But it is metallurgical coal that I want to talk about in this article. Metallurgical coal, also known as coking coal, is a vital part of the steel-making process when using a blast furnace.

There are several miners on the ASX that give exposure to metallurgical coal including Whitehaven Coal Ltd (ASX: WHC), Yancoal Australia Ltd (ASX: YAL), New Hope Corporation Limited (ASX: NHC), and BHP Group Ltd (ASX: BHP).

How could Australian metallurgical coal benefit?

While China is a big purchaser of Australian iron ore, Indian steel giant Tata Steel has big plans for using more Australian coking coal.

The Australian Financial Review reports that a large amount of Queensland coal already ends up in Tata Steel mills. As it stands, Tata Steel has mills in the UK, the Netherlands, Thailand, and India. It reportedly bought 33% of Australian metallurgical coal exports.

Now India wants to double its steel production to 300 mt annually by 2030.

Tata managing director Thachat Viswanath Narendran said (as reported by the AFR):

Demand for coking coal in India is going to grow, it is going to double in the next 10 years. India is already a bigger importer of coking coal than China.

The concern I have at this stage is that I don’t see too much investment happening in growing coking coal capacities in Queensland because there is concern about coal as a whole.

The Tata business said that India will “use a lot of coal for a long time because India doesn’t have gas”. It was noted that India is working on renewables, but it “can never fully substitute the grid”.

What about the net zero target of 2045?

On net zero concerns, Thachat Viswanath Narendran said:

The way we see it, even in 2045 we will be running blast furnaces, but we will have fully captured a lot of the carbon dioxide that is being emitted at that time. That is why carbon capture becomes a very important part of the solution. There will be a rising share of production without using coking coal, but there will not be [zero] production with coking coal, that may happen let’s say by 2070 or some time in the future.

The point is coking coal demand is not going to fall off a cliff. Tata Steel has a 2045 ambition, but no other steel producer in India has said net zero by 2045, and we are going to be only 20 per cent of the production in India. So there is a huge market for coking coal out there. It is not as though five or 10 years later there will no demand for coking coal.

In other words, coal could continue to be in demand for at least the rest of this decade.

Coal miner snapshots

Let’s check ASX coal shares over the last six months:

The New Hope share price has risen 78%.

The Yancoal share price has inicreased 61%.

The Whitehaven share price has gone up 117%.

The post Why India can’t get enough of Aussie coking coal and which ASX shares have exposure appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why are ASX coal shares having such a stellar end to the week?
• Why did the Whitehaven Coal share price just hit an 11-year high?
• Here are the top 10 ASX 200 shares today
• ASX coal shares in the spotlight amid fresh supply warnings

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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S&P/ASX 200 Index (ASX: XJO) share ResMed Inc (ASX: RMD) is currently benefitting from the situation in its sector.

The ResMed share price has been on quite a journey during 2022. It fell by more than 20% from the start of the year to May 2022. However, since the May lows, it has gone up 20%. It’s currently down around 7% in the calendar year.

While some businesses are struggling in the current environment with rising interest rates and elevated inflation, ResMed is one company that is still doing well. Part of that is down to a competitor having to recall its products.

In a recent profit update, the ASX healthcare share advised investors that for the three months to June 2022, its revenue increased by 4% and (net) income from operations increased by 6%.

The end of the fourth quarter meant that the business could tell investors about its full-year result for the 12 months to June 2022. Revenue increased by 12% to $3.6 billion and income from operations grew 11%.

After seeing that, one fund manager is bullish about the ASX share.

Jun Bei Liu, fund manager from Tribeca Alpha Plus Fund, spoke to Livewire about her thoughts on the business.

Expert’s views on ResMed shares

Liu said the business’ result was in line with expectations in terms of the earnings before interest and tax (EBIT), while operating profit was 4% better than expected.

One of the key highlights for Tribeca was that United States device sales were “incredibly strong” (with 11% growth) even though it’s cycling against strong growth in the prior year.

Jun Bei Liu said that gross profit was “okay” from the ASX 200 share and in line with expectations, while cash flow was “just a tad weaker”. She explained the positive reason for that to Livewire:

It’s mainly because they do need to build some inventory. The demand has been so strong they’re just selling everything they build. They had to build a little bit of inventory just to sell through different channels.

What is the outlook for ASX healthcare share?

The fund manager likes ResMed shares and the wider healthcare sector because it’s “very defensive” and has structural growth. She doesn’t think that earnings will be hurt by economic uncertainty.

Tribeca thinks that ResMed’s outlook is “very bullish”. She pointed out that, on an earnings call, management talked about increasing production quarter on quarter, which she called “very strong”, partly due to the issues faced by Phillips, its competitor. ResMed management reportedly indicated that Phillips “won’t come back into the market for at least another 12 months”. She said that’s really good for ResMed.

Liu also pointed out that ResMed has strong pricing power, which it can use to offset the inflation on the costs side of the business.

Is the ResMed share price an opportunity?

The fund manager said to Livewire:

I would buy this stock, particularly when it has a dip on a result that is very strong, and it is giving a very bullish outlook for the next 12 months as well.

She also said that the 5% fall for the company on the day of the report was an “overreaction”.

The post The ASX 200 company selling everything it makes due to its major competitor being out of the market: fundie appeared first on The Motley Fool Australia.

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More reading

• Carsales share price on watch as full-year profit jumps 23%
• Why this leading fund manager’s favourite ASX 200 bank share is NAB
• 2 quality ASX shares Wilsons just bought
• Here are 3 ASX blue-chip shares reporting this week
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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 has travelled lower since the company last reported its results.

This comes as the pure-play iron ore producer tries to navigate its way through the current challenging market environment.

At Friday’s market close, Fortescue shares finished the day down 0.73% to $18.94.

This means its shares are down 12% from when the company delivered its H1 FY22 financial scorecard on 16 February.

Below, we take a closer look to see if investors can learn anything from the company’s last earnings season.

What happened in the first half of FY22?

On the day the company dropped its half-year results to the market, investors sold off the Fortescue share price by 2%.

While this wasn’t by any means a significant fall despite the company recording double-digit losses across key financial metrics, the share price continued to decline.

In fact, over the period from 16 February to 15 March, Fortescue shares sank 20%.

This appeared to be in relation to several brokers weighing in on their thoughts for the mining giant.

While Fortescue shares staged a mini revival in the following weeks, it was short-lived as market confidence deteriorated.

External factors such as a weakened demand on the iron ore outlook mixed with the Chinese property crisis attributed to the cause.

Consequently, Fortescue shares tumbled to a year-to-date low of $16.24 on 15 July before ticking up a notch.

Since this time, the share has gained ground by more than 16% as the broader market begins to recover.

What should investors look out for?

With Fortescue due to report its full year results on 29 August, investors should have a good understanding of what to expect.

This follows the company’s fourth quarter production report which highlighted record iron ore shipments and higher average revenue realisation.

Management summed up the year’s performance with FY22 shipments of 189 million tonnes, exceeding the top end of guidance.

Average revenue of US$99.80/dry metric tonne (dmt) represented revenue realisation of 72% of the average Platts 62% CFR Index of US$137.99/dmt.

However, FY22 C1 cost of US$15.91/wet metric tonne (wmt) was 14% higher than the US$13.93 achieved in the previous year.

Fortescue achieved a net debt position of US$0.9 billion at 30 June 2022, compared with net debt of US$2.4 billion at 31 March 2022.

Fortescue share price snapshot

In 2022, the Fortescue share price is relatively flat on the back of mixed investor sentiment across the resources sector.

For context, the S&P/ASX 200 Resources Index (ASX: XJR) is up 2% over the same time frame.

Fortescue has a price-to-earnings (P/E) ratio of 4.49 and commands a market capitalisation of roughly $58.75 billion.

The post How did the Fortescue share price respond last earnings season? appeared first on The Motley Fool Australia.

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More reading

• Can the iron ore price regain its March highs in 2022?
• Still down in 2022, is the Fortescue share price now on the road to recovery?
• Are Fortescue shares a buy for income or are they a dividend trap?
• AGL share price down amid Fortescue Future Industries hydrogen hub news
• What’s driving the Fortescue share price to an 8-week high today?

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 Rio Tinto Limited (ASX: RIO) share price looks like an opportunity worth digging into, in my opinion.

This massive mining business has seen much volatility over the last six months. Certainly, resource businesses are known to be cyclical as resource prices move up and down regularly. When the price of a commodity changes, it heavily impacts the current profitability of the business.

Remember, it costs roughly the same to produce one mt of iron ore whether the iron ore price is at US$100 per mt or US$150 mt. That’s aside from higher payments to the government at higher prices. A higher commodity price can largely fall to the net profit after tax (NPAT) line of a miner’s financials.

But, the same is true when resource prices fall – it significantly hurts the potential profit making of the miner.

We don’t know when resource prices are going to rise or fall. But I believe that it can be an opportunity to consider the shares of that miner when both the resource price and share price fall. Bear in mind though that a company isn’t necessarily a ‘buy’ just because its share price has fallen. However, if an investor is interested in owning shares, I think it makes sense to buy when the price is lower and sentiment is weaker.

I think the Rio Tinto share price is looking attractive

Over the past six months, the Rio Tinto share price has sunk around 20%. For such a big business, that’s a hefty fall.

It probably won’t be surprising to know that iron ore and copper prices have both fallen in the ballpark of a 20% (ish) drop as well, over the same time period.

Will those commodities keep falling? Possibly.

But, the Rio Tinto share price and iron ore price may not move in tandem throughout the rest of this cycle. Share markets are forward-looking, so some investors may make predictions of where they believe the iron ore price will settle and where the Rio Tinto share price should be right now based on that prediction.

Increased exposure to decarbonisation

I’m not saying Rio Tinto shares are worth buying just because the iron ore price has dropped, though that seems helpful for investors looking to invest.

I like the moves that Rio Tinto has been making which should help it generate good cash flow long into the future.

For example, it has been growing its exposure to lithium. It has completed its acquisition of the Rincon lithium project in Argentina. It has signed a non-binding memorandum of understanding (MoU) with Ford for a “significant” off-take agreement to support Ford’s production of electric vehicles.

It has commenced underground mining at the Oyu Tolgoi copper-gold mine in Mongolia, one of the world’s largest new copper-gold mines. It has also launched a bid of C$34 per share to buy the rest of Turquoise Hill Resources that it doesn’t already own. The Mongolian government owns 34% of the project and Turquoise Hill Resources owns 66% of Oyu Tolgoi.

I think that having exposure to copper and lithium will help the Rio Tinto share price over the long term, which is a key reason why I think it looks like a long-term opportunity today.

The post Here’s why I dig the Rio Tinto share price right now appeared first on The Motley Fool Australia.

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More reading

• Can the iron ore price regain its March highs in 2022?
• Why AMP, OFX, Rio Tinto, and Telstra shares are dropping
• Do any ASX lithium shares pay dividends?
• Why is the Rio Tinto share price sinking today?
• Time is running out to secure the Rio Tinto dividend. Here’s what you need to do

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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If you’re looking for ASX 200 dividend shares to buy, then you may want to check out the two listed below.

Both have recently been named as buys by analysts. Here’s why they rate them highly this month:

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The first ASX 200 dividend share that analysts are positive on is ANZ Bank.

The big four bank was recently tipped as a buy by analysts at Citi. The broker currently has a buy rating and $29.00 price target on the bank’s shares

Citi appears to believe the acquisition of the banking operations of Suncorp Group Ltd (ASX: SUN) could be a boost if everything goes to plan.

If integrated successfully, we believe the deal looks to represent fair value, with the acquisition PE of 13.8x offset by substantial cost synergies (~35% of SUN Bank cost base), funding cost benefits (due to ANZ’s AA rating) and lower capital intensity (a move to AIRB accreditation) over time.

As for dividends, the broker is forecasting fully franked dividends of $1.42 per share in FY 2022 and $1.65 per share in FY 2023. Based on the current ANZ share price of $24.02, this will mean yields of 5.9% and 6.9%, respectively.

BHP Group Ltd (ASX: BHP)

Another ASX 200 dividend share to look at is mining giant BHP.

The Big Australian could be a top option for income investors thanks to the high levels of free cash flow it is generating from its world class and diverse operations.

Morgans certainly thinks this is the case. It has an add rating and $48.40 price target on its shares.

The broker commented:

We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP’s operations also supplies some defence against direct Covid-19 impact on earnings contributors. While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.

In respect to dividends, the broker is expecting a $3.97 per share dividend in FY 2022 and then a $3.88 per share dividend in FY 2023. Based on the latest BHP share price of $38.83, this equates to massive fully franked yields of 10.2% and 10%, respectively.

The post 2 ASX 200 dividend shares analysts rate as buys 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 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 Santos Ltd (ASX: STO) share price has had a rough time over the last couple of months. Since 8 June 2022, Santos has fallen by almost 20%.

The oil price has taken a dive over that same time period. So it probably makes sense that Santos shares have gone down as well.

Businesses that generate their revenue, net profit after tax (NPAT) and cash flow based on commodity prices can see quick and large swings in investor sentiment.

Considering the cyclical nature of resources and the respective share prices, does this decline mean that Santos is now an opportunity?

Analysts at Macquarie have given that question some thought after the large oil business went for another acquisition.

What has Santos acquired?

On 11 August 2022, Santos announced that it had acquired Hunter Gas Pipeline Pty Ltd. Hunter Gas Pipeline owns an approved underground gas pipeline route from Wallumbilla in Queensland to Newcastle in New South Wales.

Santos said the underground pipeline route passes close to Santos’ Narrabri gas project. Its goal is to work with infrastructure developers and owners to construct the pipeline and deliver “much-needed” gas to east coast domestic markets in the shortest timeframe possible.

The pipeline will also be designed to transport hydrogen as customer demand evolves during the energy transition.

Santos noted that once fully operational, Narrabri has the potential to deliver more than half of NSW’s gas demand. Subject to receiving the remaining government approvals, construction of the pipeline is expected to commence in early 2024.

So, how might this impact Santos shares?

Macquarie’s thoughts on the Santos share price

As reported by The Australian, the investment by Santos represents a “lost investment opportunity” by APA Group (ASX: APA). Santos will be increasing competition with APA. In doing so, it deprives APA of the chance of being part of the “key” hydrogen pipeline development.

Macquarie noted that the Hunter Gas Pipeline offers hydrogen development, which would mean it could extend the asset life “well beyond” 20 years, which would offset the higher steel and distance costs.

If Santos’ pipeline can be fully utilised, gas to Newcastle would be “in the order of about $1.92 per gigajoule over 20 years,” according to Macquarie.

Extending the Hunter Gas Pipeline’s life to 40 years by providing alternative usage (namely hydrogen) would lower the average cost to around $1.50 per gigajoule. This could be potentially cheaper than the Western Slopes Pipeline proposed by APA.

How would APA respond to this threat? It could lower prices, but that would lower the returns on the APA pipeline.

Macquarie currently rates Santos as outperform, with a price target of $10. That implies a possible rise of almost 40%. At the current Santos share price, Macquarie’s estimates put Santos shares at under 7x the FY22 projected earnings.

The post Is the Santos share price a buy following the energy giant’s latest acquisition? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Own Santos shares? Here’s what the company just announced
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 energy shares mixed amid bearish oil price outlook

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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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.

At the time of writing, Apple, Microsoft, Alphabet, and Amazon are the only four U.S. companies with a market capitalization of $1 trillion or greater. Tesla is not far behind, with a market cap of $907 million.

These are elite businesses that have earned shareholders tremendous gains. It goes without saying that these companies all had much smaller market caps not too long ago. Amazon’s market cap was $105 billion exactly 10 years ago. 

Generally, a good place to look for the next home-run stocks are growing companies with a market cap between $100 billion to $500 billion. But in this case, let’s first look at Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), which has a higher market cap but could be a timely buy right now.

For higher return prospects, you’ll want to consider Advanced Micro Devices (NASDAQ: AMD) and Salesforce (NYSE: CRM). These are solid growth stories that still have years to play out.

1. Berkshire Hathaway

Berkshire Hathaway is one of the safest stocks you can hold for the long term. After rising 50% over the last five years, it carries a market cap of $653 billion. That puts it within shooting distance of the $1 trillion milestone. There are a few reasons Berkshire will keep growing in value.

Berkshire has a sterling balance sheet with $122 billion of cash and fixed securities. The company has a large stock portfolio worth $327 billion at the end of the second quarter. Buffett’s investment vehicle holds large stakes in Apple, Bank of America, and Coca-Cola, among other stocks. Buffett has most recently been adding to large stakes in Chevron, Occidental Petroleum, and leading PC brand HP (formerly Hewlett-Packard). 

Another piece of Berkshire’s intrinsic value is its dozens of privately held businesses. The company’s subsidiaries span everything from candy to railroads. It also owns several insurance companies that provide $147 billion in float, or money that Berkshire collects from insurance premiums that it can reinvest in stocks, bonds, or acquisitions. Many of these Berkshire-held businesses tend to be immune from the changes in technology, which adds a degree of predictability to their long-term performance — something Buffett no doubt considered.

One of Buffett’s best stock ideas lately has been Berkshire Hathaway itself. Through the first half of 2022, he bought $4 billion worth of the company’s shares — a sign that Buffett sees the stock as undervalued. The stock’s price has tripled over the last decade and could repeat that return, which would push Berkshire’s market cap over $1 trillion by 2032.

2. Advanced Micro Devices

Owning companies that serve megatrends in technology, such as spending on data centers, cloud computing, and other advanced computing needs could pay off big. Advanced Micro Devices has emerged as a key supplier of high-performance chips in these markets.

There is a reason why AMD CEO Lisa Su is considered one of the top business leaders right now. Su has done a marvelous job guiding this underdog to industry leadership, and its best days are still ahead.

AMD currently sports a low forward price-to-earnings ratio of 23, based on 2022 earnings estimates, and has a market cap of $159 billion. To reach $1 trillion in 10 years, the share price needs to climb at a compound annual rate of 20%. That is achievable for this fast-growing chipmaker.

For a long time, AMD was the underdog in the semiconductor industry. It’s always played the role of a low-cost alternative to leaders like Intel and Nvidia, but not anymore.

While AMD is still way behind Intel in central processing units (CPUs) and Nvidia in graphics processing units (GPUs), it is winning over customers with its renewed focus on designing high-performance chips. Data center operators are now looking at AMD’s Epyc server chips as a viable alternative to Intel. In the last quarter, AMD again gained market share over its CPU rival. Revenue grew 70% year over year in the second quarter, driven by strong growth in data center chips and consumer chips for notebooks and gaming.

The data center accelerator market, which includes spending on CPUs and GPUs, is expected to grow at a compound annual rate of 34% through 2027, reaching $75 billion. AMD just completed the acquisition of Xilinx, a leading supplier of field-programmable gate array (FPGA) chips, which fills out its product lineup to tackle this enormous opportunity. The strong tailwind in the data center market, along with AMD’s modest valuation, could deliver market-beating returns to investors over the long term.

3. Salesforce

The name Salesforce doesn’t sound like a growth tech stock that is worthy of the elite club of $1 trillion companies, but every investor should know about this amazing business.

Former Oracle executive Marc Benioff co-founded Salesforce in 1999 and currently serves as the company’s chairman and co-CEO. Salesforce pioneered the software-as-a-service business model. Companies save money by subscribing to Salesforce’s cloud-based software, which lowers in-house expenses by maintaining, installing, and keeping systems updated.

Salesforce has grown tremendously and has been ranked the No. 1 customer relationship management (CRM) software provider for nine years. Its flagship product is the artificial intelligence (AI)-powered Customer 360 platform, which offers a suite of software that helps companies manage sales, marketing, and e-commerce, and it continues to expand into new categories.

It has reinvested its growing profitability into strategic acquisitions that expand its offering and competitive lead in the market. Last year, it acquired Slack Technologies, which offers a communication platform for employees, for $27 billion. 

What’s most remarkable about Salesforce is its consistency, which speaks volumes about the size of its long-term growth opportunity. After two decades of high revenue growth, Salesforce is still growing quarterly revenue over 20% year over year. 

It generated $27 billion in revenue over the last four quarters, but the total addressable market for the company’s services is expected to reach $284 billion by 2026, according to Gartner Research. It can grow for a long time. However, if Salesforce continues its record of strategic acquisitions, its addressable market could widen even more as it expands its product offering.

With a market cap of $189 billion, Salesforce is well on its way toward $1 trillion. It has the industry leadership and massive market opportunity to deliver market-beating returns to investors.

Now is the perfect time to buy shares. At a price-to-sales ratio of 6.8, the stock is near its cheapest valuation in the last 10 years. 

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

The post 3 US stocks that could be worth $1 trillion by 2032 appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Ballard has positions in Amazon, Nvidia, and Salesforce, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Berkshire Hathaway (B shares), and Salesforce, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended 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 Australia has recommended Berkshire Hathaway (B shares) and Salesforce, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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