Tag: Motley Fool

Coles Group Ltd (ASX: COL) is one of the larger S&P/ASX 200 Index (ASX: XJO) companies. It also has a growing reputation as an ASX dividend share.

The supermarket business has been steadily growing its dividend for investors since 2019.

I think that dividends are an attractive way for investors to benefit from the net profit after tax (NPAT) and cash flow generated by a business each year.

We don’t know what Coles shares are going to do each year, but I think dividends can provide a relatively attractive and stable part of the returns.

What was the latest Coles dividend?

Coles pays a dividend every six months to shareholders. Let’s look at the last two dividends paid.

For the FY22 half-year result, Coles decided to pay an interim dividend of 33 cents per share, which was the same as the FY21 half-year interim dividend.

The final FY21 dividend per share was 28 cents per share. That represented an increase of around 2% compared to the FY20 final dividend.

Coles’ trailing grossed-up dividend yield is 4.6% with the trailing 12 months of dividends amounting to 61 cents per share.

Will the dividend keep growing?

Rounded to the nearest cent, the estimate on CMC Markets is that Coles will pay an annual dividend per share of 62 cents per share. That would be a grossed-up dividend yield of 4.7% for FY22.

Further dividend growth is expected from the ASX 200 dividend share in FY23 and FY24.

Estimates on CMC Markets suggest an annual dividend per share of 67 cents in FY23 and 72 cents in FY24.

If these projections come true, then the current Coles share price offers a grossed-up dividend yield of 5% in FY23 and 5.4% in FY24.

Is the Coles share price an underrated opportunity?

Coles will soon reveal its FY22 result — it’s due to report on 24 August.

But, the higher inflation environment could benefit Coles’ earnings if it’s able to pass on the higher cost of food to shoppers.

We haven’t seen the numbers for the last quarter of FY22, but investors did see growth in the FY22 third quarter. Total sales for the business were up 3.9% to $9.3 billion. Supermarket sales were up 4.2% to $8.23 billion.

The company said that cost price inflation was impacting suppliers as a result of increased raw material, commodity, shipping, and fuel costs.

In its fourth-quarter update, Coles said (on 28 April 2022) that the fourth quarter to date had recorded a “solid” trading period with no COVID-19-related restrictions on traditional family events such as Easter. Coles said supplier input cost inflation was expected to continue into the fourth quarter and FY23.

It’s hard to say how long food price inflation will remain elevated. I wouldn’t say that the Coles share price is cheap at this level.

Citi is a broker that rates Coles as a buy, with a price target of $21 partly due to inflation and expectations of growing profit. Ord Minnett has a ‘lighten’ rating, with a price target of $17. That’s a possible decline of around 10% due to a potential impact on consumer demand for the ASX 200 dividend share.

The post Is Coles an underrated ASX 200 dividend share with potential? appeared first on The Motley Fool Australia.

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More reading

• Why I think this boring ASX 200 share is anything but
• 5 things to watch on the ASX 200 on Monday
• Is the VAS dividend yield bigger than an ASX 200 index fund?
• Top brokers name 3 ASX shares to buy next week
• What goes up when the share market crashes?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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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An ASX share that gains 29% in one month is impressive enough, but what if that was just the start of its ascent?

That’s the situation we have with car dealership network Eagers Automotive Ltd (ASX: APE), according to the analysts at Celeste Funds Management.

The team informed clients in a memo that the company put out a strong trading update early in July.

“Despite continuing supply chain constraints on new vehicle deliveries, Eagers upgraded PBT (adj) guidance to $195m for H1 2022, compared to profit guidance between $183 million and $189 million provided in May, noting growth in the order bank and the benefits from on-going productivity and cost-out programs.”

The Eagers share price rose more than 5% that day then kept flying for the rest of the month — to end up 29% higher than when July started.

The party has only just begun

Despite its spectacular performance, the Celeste team feels like there is more to come.

That’s despite Australians potentially having less to spend on big-ticket items as interest rates rise.

“While we are cognisant weakening macro conditions could be a drag to consumer sentiment, we believe Eagers’ short-medium term earnings growth will be supported by an elevated order book, in addition to a strong balance sheet that will support organic and inorganic growth.”

The impact of higher interest rates on the business itself was also notable.

“Net corporate debt of $13 million had also materially improved compared to $128 million as of the 31st of December 2021.”

Eagers Automotive is due to release its interim results on 25 August.

Insiders loving the outlook for Eagers

Company executives and directors sell their shares in the business for all sorts of reasons. Perhaps they need some cash to buy a new boat, pay private school fees, or to go on a lavish overseas holiday.

But there is only one motivation that they would have to buy stocks in their own business. It’s that they see a positive outlook.

After all, why would they want to put their own personal money in danger?

With this in mind, it was interesting to note Eagers non-executive director and Sydney Roosters chair Nick Politis buy up shares like there was no tomorrow.

The Motley Fool reported that Politis bought up a total of $1.5 million of Eagers stocks over July.

“Despite the Eagers Automotive share price surging 26% in a month, the company’s non-executive director, Nick Politis is continuing to increase his holdings,” wrote The Motley Fool’s Aaron Teboneras.

“This means that Politis now has over 70.36 million Eagers Automotive shares and is its largest shareholder by some margin.”

The Eagers Automotive share price closed 2.36% higher on Friday at $13.

The post This ASX share rocketed 29% last month, but it’s not too late to buy: Celeste appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• This ASX 200 director bought $1.5 million worth of his company’s shares in July… and he’s still buying
• Guess which ASX 200 share this billionaire has been topping up on
• Here are the top 10 ASX shares today
• Eagers Automotive share price lifts on ‘improved outlook’

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 Vanguard MSCI Index International Shares ETF (ASX: VGS) is one of the most popular exchange-traded funds (ETFs) with a fund size of more than $4.4 billion.

It may also provide an alternative to investing in technology shares but let’s look at the detail.

ASX technology shares include names like Xero Limited (ASX: XRO), Altium Limited (ASX: ALU), and WiseTech Global Ltd (ASX: WTC).

Globally, there are many household names that investors can choose from, including Microsoft, Alphabet, and Apple.

But, the tricky thing is knowing which one to invest in. Technology and trends can change quickly. Just look at what happened to MySpace and Blackberry. One way to mitigate the impact of that could be to go for a diversified investment option that enables investors to get exposure to a whole bunch of different technology businesses.

Is the VGS ETF the answer?

The Vanguard MSCI Index International Shares ETF is invested in a total of 1,473 businesses across the world.

The purpose of the ETF is to track the MSCI World ex-Australia Index. This means the VGS ETF is an index fund.

Looking at the weighting of its portfolio, 21.5% is officially classified as ‘information technology’. That’s a much larger allocation than its second-largest weighting of healthcare at 14.2%.

But, it’s important to remember that plenty of names we may think of as ‘technology’ are actually classified as something else. For example, Alphabet, Amazon, Meta Platforms, and Tesla aren’t classified as IT businesses.

If more IT and tech businesses rise up the ranks to become global leaders, then the VGS ETF could have an even bigger weighting to IT in the future than it already does.

Considering the Vanguard MSCI Index International Shares ETF has an annual management fee of just 0.18%, I think it seems like an effective way to get exposure to many of the world’s leading technology names.

Are there other options?

The VGS ETF is a good option. But, there are other ETF options that could also be a useful way to get exposure to tech.

For example, the iShares S&P 500 ETF (ASX: IVV) has an IT weighting of 28.3% because the US share market is more tech-weighted than the global share market.

The Betashares Nasdaq 100 ETF (ASX: NDQ) has an IT weighting of 50.8%. This is focused on the 100 largest non-financial businesses on the NASDAQ.

There are a number of other targeted ETFs that are not as diverse but are heavily invested in technology businesses such as Betashares Asia Technology Tigers ETF (ASX: ASIA), Betashares Cloud Computing ETF (ASX: CLDD), and Betashares Global Cybersecurity ETF (ASX: HACK).

So, there are plenty of options to get exposure to tech shares, however, the VGS ETF is the one that provides the most global diversification of the ones I’ve mentioned.

The post Is the Vanguard MSCI International ETF (VGS) a good alternative to global tech shares? appeared first on The Motley Fool Australia.

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More reading

• 2 quality ETFs for ASX investors to buy next week
• 3 wonderful ETFs for ASX investors to buy today
• Is the Vanguard VGS ETF a good idea for dividends?
• 3 popular ASX ETFs for investors to buy
• Is VGS the best international shares ETF on the ASX?

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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Altium, Amazon, Apple, BETA CYBER ETF UNITS, BETANASDAQ ETF UNITS, Meta Platforms, Inc., Microsoft, Tesla, Vanguard MSCI Index International Shares ETF, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS, BETANASDAQ ETF UNITS, WiseTech Global, and Xero. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BetaShares Asia Technology Tigers ETF, Meta Platforms, Inc., Vanguard MSCI Index International Shares ETF, and iShares Trust – iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Suncorp Group Ltd (ASX: SUN) share price will be one to watch on Monday.

This follows the release of the insurance giant’s full year results this morning.

Suncorp share price on watch following FY22 profit decline

• Revenue up 14% year over year to $16,169 million
• Net profit after tax down 34% to $681 million
• Final dividend per share of 17 cents
• FY 2023 targets reaffirmed

What happened during FY 2022?

For the 12 months ended 30 June, Suncorp reported a 14% increase in revenue to $16,169 million. This was driven by record second half premium growth, a return to growth in home lending, and improved underlying margins.

However, things weren’t quite as positive on the bottom line, with the company reporting a 34% decline in net profit after tax to $681 million. This reflects volatile investment markets and elevated natural hazard costs.

Management notes that the prevailing La Niña weather pattern across Australia and New Zealand led to 35 separate weather events and around 130,000 natural hazard claims. This led to the company exceeding its natural hazard allowance by $101 million.

Whereas volatile investment markets, including rapidly rising yields and widening credit spreads, drove mark-to-market losses across the company’s $14.9 billion investment portfolios. This saw Suncorp record a net loss from investment markets of $190 million compared to a profit of $453 million in the prior year.

Positively, as the company holds its fixed interest investments to maturity, the majority of these FY 2022 accounting losses are expected to unwind to profit over the coming periods.

Finally, for the second half, Suncorp declared a final fully franked dividend of 17 cents per share. This is payable on 21 September and will bring its full year dividend to 40 cents per share.

How does this compare to expectations?

The bad news for the Suncorp share price today is that this result appears to have fallen a touch short of expectations.

According to CommSec, the market was expecting the company to report a net profit after tax of $699 million and declare a full year fully franked 46 cents per share dividend in FY 2022.

Management commentary

Suncorp’s CEO, Steve Johnston, acknowledged that this was challenging year for the company. Nevertheless, he was pleased that the company maintained momentum and delivered on its key strategic initiatives.

[W]e have maintained our focus on executing our strategic initiatives and this has allowed us to offset increasing inflationary pressures, particularly in home and motor vehicle repairs.

A highlight of this result is the GWP [gross written premium] growth that has been delivered and the increased underlying ITR [insurance trading ratio], which demonstrates that we can meet the needs of customers and make good progress against our strategic initiatives.

Outlook

Johnston also reaffirmed the company’s FY 2023 targets. He said:

We are proud of what we have delivered this year and the hard work we have done over the past three years means we are able to reaffirm our FY23 targets.

This includes an ITR target of 10% to 12%, GWP growth in general insurance, and a cost-to-income ratio target of ~50% by the end of FY 2023.

The Suncorp share price is down 9% over the last 12 months.

The post Suncorp share price on watch after FY22 profit falls 34% appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Why has the Suncorp share price gone backwards since the ANZ takeover news?
• Here are the top 10 ASX 200 shares today
• What might the ANZ deal mean for Bank of Queensland shareholders?
• ANZ to buy Suncorp’s banking business, and real wages going backwards. Scott Phillips on Sky News First Edition

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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Are you looking for some small cap shares to add to your portfolio? If you are, then have a look at the two listed below.

Here’s why they analysts are bullish on these small caps:

Airtasker Ltd (ASX: ART)

The first small cap ASX share to consider is this online marketplace provider for local services.

It could be a top option thanks to its material growth opportunity both at home and overseas. For example, management estimates that it has a total addressable market (TAM) of $600 billion across Australia, the UK, and the US.

Morgans remains a big fan of Airtasker. At the end of last month, the broker retained its add rating on the company’s shares with a price target of $1.05. This implies potential upside of 160% for investors based on the current Airtasker share price of 40.5 cents.  It commented:

Whilst acknowledging the current volatile market conditions and broader sector sentiment, we continue to remain attracted to the strong growth opportunity ahead for ART, predicated on the company successfully implementing its strategy of penetrating the prodigious TAM opportunity both domestically and offshore.

Serko Ltd (ASX: SKO)

Another small cap ASX share to look at is this online travel booking and expense management software provider.

Serko was hit hard by the pandemic but is bouncing back strongly now. And with the company well-funded, it is now able to focus on its global marketplace strategy. This strategy is aiming to transform the company from an online booking tool into a distributed marketplace. This will also be supported by its game-changing deal with Booking.com.

Citi is positive on Serko. It recently retained its buy rating and $5.10 price target on the company’s shares. This suggests potential upside of 57% from the current Serko share price of $3.25. The broker commented:

We continue to see a high degree of uncertainty in terms of forecasting the Booking.com for Business in the near term, however expect the expansion into unmanaged travel in partnership with Booking.com to drive solid earnings growth over the medium term and also help the core business.

The post Experts name 2 exciting small cap ASX shares to buy with huge upside potential appeared first on The Motley Fool Australia.

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More reading

• Why I think these ASX tech shares are buys in August
• Brokers name 3 ASX shares to buy today
• ‘We are benefiting from the inflationary environment’: Airtasker share price rockets 16%

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. owns and has recommended Elmo Software and Serko Ltd. The Motley Fool Australia owns and has recommended Elmo Software. The Motley Fool Australia has recommended Serko Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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APA Group (ASX: APA) is a top S&P/ASX 200 Index (ASX: XJO) share in my opinion.

It may not be a household name, but it is an essential business to the Australian economy. It owns 15,000 km of natural gas pipeline that connects supply sources and markets across the Australian mainland. It delivers half of the country’s natural gas usage.

Pipelines may not sound like the most exciting idea but, hopefully, the attractiveness will seem clearer once I’ve outlined some of the key positives.

Past performance is not a reliable indicator of future performance but I think it’s worthwhile pointing out that over the past six months, the APA share price has risen by around 20%. That compares to the ASX 200 which has dropped 1.3%.

Inflation protection

Most investors are keeping a close eye on inflation and interest rates.

The higher the interest rate goes, the lower (most) asset prices are meant to go, in theory. Higher inflation could hurt household budgets as they are forced to spend more money on essentials like petrol, energy, and food.

But, APA could be protected from what’s going on, thanks to how it generates its revenue, profit, and cash flow.

APA says it’s positively leveraged to rising inflation with the large majority of its revenue indexed to inflation.

Contracts within Australia that contain inflation-linked escalations typically apply a formula based on either quarterly, bi-annual, or annual Australian CPI inflation. The Wallumbilla Gladstone Pipeline contract escalates annually, based on November US inflation. For the 2022 calendar year, the increase due to US inflation will be 7.5%.

In terms of APA’s drawn debt, it’s fully hedged with an average maturity of seven years. In other words, it won’t feel the impact of higher interest rates as a cost for a while.

The ASX 200 share also boasts that it has a high earnings before interest, tax, depreciation and amortisation (EBITDA) margin. In the FY22 half-year result, the underlying EBITDA margin was around 77%.

Green energy

APA is actively participating in hydrogen feasibility projects as the commercialisation of hydrogen evolves.

For example, it’s partnering to assess green hydrogen opportunities through the Central Queensland Hydrogen Consortium with the development of a hydrogen hub in the region for domestic supply and export to Japan’s industrial market.

The ASX 200 share is also involved in other hydrogen efforts.

The Parmelia Gas Pipeline hydrogen project is the proposed 100% hydrogen conversion of a section of existing pipeline in Western Australia. Phase two is underway, with lab testing of the pipeline materials in gaseous hydrogen conditions.

The Victorian Transmission System is a proposal to develop Australia’s first blueprint for state-wide hydrogen blending. It is believed that up to 20% of the gas being transmitted in pipelines could be hydrogen when blended with natural gas.

APA is also looking to invest in electricity transmission and renewable energy generation.

Core business growth

Management believes that natural gas still has an important role to play for decades, particularly when it comes to “affordable security of supply”.

APA continues to invest in new pipelines for customers.

For example, it’s investing around $460 million to build a 580km pipeline to connect the Perth Basin to the Goldfields region. This will provide an alternative source of secure energy and double the capacity, according to APA. This also creates a platform for additional growth as more resource customers seek new energy solutions to replace traditional ones.

Growth of the ASX 200 share’s cash flow enables a growing distribution. It targets a payout ratio of between 60% to 70% of free cash flow.

It grew the FY22 distribution by 3.9% to 53 cents per security. That translates into a distribution yield of 4.4% at the current APA share price.

The post Why I think this boring ASX 200 share is anything but appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Is the VAS dividend yield bigger than an ASX 200 index fund?
• What goes up when the share market crashes?
• 5 proven investment strategies you can use to ride out a recession
• The iron ore price has slumped 10% in 5 days. Here’s how ASX 200 mining shares have responded.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. 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 Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is gaining the attention of investors as news emerges of more potential acquisitions.

This company is a diversified conglomerate invested across an array of different ASX shares and sectors.

Industries represented in the portfolio include telecommunications, building products, property, banks, resources and so on.

In terms of the actual ASX shares in the portfolio, it’s invested in businesses like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG), Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

Soul Pattinson also has a growing portfolio of private companies, which are “platforms” for further growth. That includes agriculture, electrical business Ampcontrol, swimming school business Aquatic Achievers and Ironbark Asset Management.

According to reporting by the Australian Financial Review, Ironbark is involved with the potential acquisitions. Ironbark says it delivers a “range of innovative financial solutions including funds management, corporate trustee services and bespoke investment solutions.” Soul Pattinson owned 30.7% of Ironbark at the latest disclosure.

What’s Ironbark doing?

According to the AFR, Soul Pattinson has agreed to fund around $30 million for Ironbark through a capital call structure that was put in place in late June.

This money would be used over time, so its ownership of Ironbark would rise as the capital was used.

The newspaper’s reporting noted that the funds management part of the company attracted money for external fund managers to manage through Ironbark-branded funds. An example of this is New York-based Apis Capital. The wealth advisory segment has reportedly been “taking minority stakes in advice businesses.”

In its FY22 half-year result, Soul Pattinson noted that it had seen an increased profit contribution from Ironbark and expected to “allocate additional capital to expand this portfolio of private investments which in turn provide platforms for further growth.”

The ASX share said there were “multiple avenues for growth in existing and new opportunities” with its private equity portfolio.

Soul Pattinson share price snapshot

Over the last month, the Soul Pattinson share price has risen by close to 10%.

The post Acquisitions ahoy: Soul Pattinson share price in focus appeared first on The Motley Fool Australia.

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More reading

• This is the one ASX share I would spend $10,000 on today
• Here’s why I just bought more Soul Pattinson shares
• Own Soul Patts shares? Here’s what to look out for in FY 2023

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom 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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If you’re wanting to boost your income with some dividend shares, then you might want to consider the two listed below.

Here’s what you need to know about these dividend shares:

Elders Ltd (ASX: ELD)

The first ASX dividend share to look at is Elders. It is an agribusiness company that provides a range of services to rural and regional customers across the Australia/New Zealand region.

Elders has been a very strong performer this year. For example, during the first half of FY 2022, the company reported an 80% increase in first-half EBIT to $132.8 million.

Since then, however, the Elders share price has pulled back materially. The team at Goldman Sachs believes this has created a buying opportunity. Particularly given the long term structural growth opportunities still in front of the company.

Last week Goldman reiterated its conviction buy rating with a $21.00 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 50 cents in FY 2022 and 53 cents in FY 2023. Based on the current Elders share price of $12.00, this implies attractive yields of 4.15% and 4.4%, respectively.

South32 Ltd (ASX: S32)

If you don’t mind investing in the resources sector, then South32 could be an ASX dividend share to buy.

It is a diversified mining and metals company with operations spanning alumina, aluminium, bauxite, copper, energy and metallurgical coal, lead, manganese, nickel, silver, and zinc.

It has been generating bumper free cash flow this year thanks to the strong demand and favourable prices it is experiencing for its products. Pleasingly, this is expected to continue in the coming years and underpin big dividends.

Citi, for example, is forecasting a 38 cents per share dividend in FY 2022 and then a 40 cents per share dividend in FY 2023. Based on the current South32 share price of $3.83, this will mean yields of 10% in both years.

Citi also sees plenty of upside for its shares with its buy rating and $5.50 price target.

The post Brokers name 2 ASX dividend shares to buy with 4%+ yields appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy today
• Top broker predicts 50% upside for South32 share price. Here’s why
• Why Goldman is tipping 80% upside for the Elders share price
• 5 things to watch on the ASX 200 on Friday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders 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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A couple of weeks ago, The Motley Fool reported on an ASX share that had fallen in price so much that 77% of its valuation was now the cash it holds.

That tip about Touch Ventures Ltd (ASX: TVL), which came from Cyan Investment Management portfolio manager Dean Fergie, attracted tremendous interest from our readers.

“This stock’s gone from a listing price of 40 cents back to, it’s currently trading at, 13 cents,” Fergie told The Motley Fool last month.

“They have, in net cash, 10 cents per share on their balance sheet.”

This week another expert named a different stock in a similar position, which may also pique the interest of keen investors:

‘The lines are big and the pizzas are expensive’

Wilson Asset Management senior analyst Shaun Weick rated entertainment venue operator Event Hospitality and Entertainment Ltd (ASX: EVT) as a current buy.

“This stock does provide strong leverage to the [post-COVID] reopening themes,” he said in a Wilson video.

“They own a collection of cinema assets in Event, hotel assets in QT and Ridges.”

The company also operates the Thredbo ski resort.

“If anyone’s seen images of Thredbo recently, the lines are big and the pizzas are expensive.”

Current share price giving away the business pretty much for free 

As well as increased business from cooped-up Australians coming out of their shells, Weick’s team likes Event shares as a “valuation play”.

“If you back out the implied value of the operating businesses at the moment, you’re paying roughly two to three times EBITDA — for businesses that we think can earn significantly more coming out of COVID.”

But the best feature is that the real estate it owns makes 87% of the current share price.

“They’ve got $2 billion property assets on the balance sheet — current market cap‘s $2.3 billion,” he said.

“We think this one’s a good play in this market.”

Coverage is sparse for Event Hospitality and Entertainment. But three out of four analysts surveyed on CMC Markets currently agree with Weick, rating it as a buy.

The company is due to report its financials on 22 August.

The post Buy this ASX share where 87% of its value is real estate: expert appeared first on The Motley Fool Australia.

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More reading

• ‘Extraordinarily cheap’: The ASX share where 77% of its value is cash
• 5 small-cap ASX shares sitting on a pile of cash: experts

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 BHP Group Ltd (ASX: BHP) share price was a positive performer on Friday.

The mining giant’s shares ended the week with a gain of almost 2% to $38.81.

Can the BHP share price keep climbing?

The good news is that this gain could be the start of even greater gains according to analysts at Morgans.

According to a recent note, the broker has retained its add rating and lifted its price target to $48.50. Based on the current BHP share price, this implies potential upside of 25% for investors over the next 12 months.

But it gets better. Morgans expects BHP’s significant free cash flow generation to support some big dividends in the coming years.

It is forecasting fully franked dividends per share of US$2.84 in FY 2022 and US$2.57 in FY 2023. This represents yields of 10.5% and 9.6%, respectively, which brings the total potential 12-month return to approximately 35%.

What did the broker say?

While the broker acknowledges that the next few months carry some level of uncertainty, it remains positive on the outlook of the key commodities BHP produces.

The broker commented:

While the next 2-3 months hold uncertainty, particularly around the rate of growth in key commodity consumer China, we continue to see healthy fundamentals for iron ore, coal and base metals heading into 2023.

In light of this, Morgans feels that the BHP share price is attractively priced at the current level. It explained:

This in leaves BHP’s share price looking attractive at current levels. Supported by an FCF yield of 13%, dividend yield of ~10% fully franked, and trading at a ~30% [now 25%] discount to our target price, we see BHP’s share price as having drifted into attractive value territory. Maintain Add rating with a A$48.50 target price.

The post BHP share price has ‘drifted into attractive value territory’ with 25% upside: broker appeared first on The Motley Fool Australia.

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More reading

• The iron ore price has slumped 10% in 5 days. Here’s how ASX 200 mining shares have responded.
• Which ASX 200 shares will prove to be dividend heavyweights this earnings season?
• Looking to buy BHP shares? Here’s how the miner is gearing up to secure its share of booming EV demand
• Top brokers name 3 ASX shares to buy today
• Broker names 3 of the best ASX shares to buy in August

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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